Blogonomics: The Valuation of TechCrunch

Sam Gustin slaps

down Henry Blodget today after Blodget suggested

that TechCrunch might be worth $100 million. That’s ridiculous, says Gustin:

"I know CNET, and TechCrunch is no CNET."

The whole conversation was sparked by Doug

McIntyre at 24/7 Wall St. The math is relatively simple: CNet is valued

at $1.2 billion; maybe TechCrunch is worth a twelfth of that?

Certainly, by blog standards, TechCrunch’s traffic

numbers are impressive: at least 1.5 million unique visitors per month,

over 4 million pageviews per month, along with some 575,000 RSS and email subscribers.

More to the point, if you want to reach the most influential individuals in

the technology community, those subscribers and uniques are exactly

the people you’re looking for.

TechCrunch seems to be doing pretty well in terms of selling ad inventory,

but I’m sure it could do much better with a large and dedicated corporate ad-sales

team dedicated to it. Meanwhile, CNet seems to be going absolutely

nowhere, and needs a shot in the arm.

But CNet’s numbers – it measures monthly pageviews in the billions,

not millions – dwarf TechCrunch’s. There’s a good chance that a CNetted

TechCrunch would go the way of a Googled Dodgeball: lost and forgotten as part

of a much larger company. Frankly, I doubt that CNet has the structure or ability

to get anything like $100 million of strategic value out of TechCrunch. And

in any case, CNet is a consumer site: there aren’t actually all that many synergies

with TechCrunch in the first place, either on the reader side or on the advertiser


TechCrunch is a bit like Italian Vogue: hugely important and influential,

but not necessarily the kind of property where you want to see much more growth.

TechCrunch already reaches nearly everybody who matters, and the marginal extra

unique visitor is not going to be particularly valuable to advertisers, compared

with the readers who have been reading TechCrunch for ages.

But let’s generously say that TechCrunch can achieve 100 million pageviews

per year, from important and influential readers. And let’s say that on each

of those pages CNet would be able to sell on average four ad units at a $7 CPM.

That would mean revenue of just under $3 million a year. By the time you’ve

paid the writers and the salespeople and all the other expenses associated with

the site, there’s no way you can get a revenue stream which remotely justifies

a $100 million valuation.

So I’m with Sam on this one. Blogs can be very valuable, and a blog network

like Gawker Media, which got

162 million pageviews in August, would be worth a very large amount of money

if there were anybody rich and foolhardy enough to want to buy it. But the idea

that a single blog, even one of TechCrunch’s standing, might be worth $100 million?

That’s pushing it.

Update: Doug McIntyre defends

the $100 million valuation, saying that "Most analysis of the value

of TechCrunch is based on what a financial model says it is worth. But, that

is not an accurate way to make the evaluation. The real question is what someone

would pay." Basically, he’s saying that TechCrunch is a strategic

asset, rather than a financial asset. But my point is that, really, it isn’t,

or at least that it isn’t qua blog. It might however have much more

value as a conference company than as a blog.

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