Here is a great article by Dave Winer: How much has been invested in RSS? Besides the large company driven investment cited in the article (Microsoft, Yahoo, …), it also cites examples like venture investments in Technorati, Feedburner, Newsgator, Pheedo, etc.
Let’s take the example of Technorati. It’s Alexa traffic ranking is quite high (561 today), and it is the unquestionable center of the Blogosphere. The obvious revenue model of Google AdSense generates some money. The question is, does it generate enough?
Skype has recently proved that Valuation Without Revenue a la Hotmail, is alive and well. Will Technorati be able to follow suit?
According to Dave Winer’s calculations, more than $8 Billion has been invested in the RSS and Blog eco-system. However, as both Skype and Hotmail have proved in the past, these were businesses without business models.
In the Web 2.0 era, it appeared in the beginning that investors were gun-shy about such businesses. There was much talk about “fundamentals”.
Are we shifting gears again, and getting carried away on the wings, this time, of RSS?
There are proven models in the advertising industry, one of the most important of which is Segmentation. Advertisers like to advertise to demographics and psychographics that are likely to buy their products. Today, Yahoo is a portfolio of haphazardly organized content and services which don’t clearly align with segments desired by advertisers. Neither, for that matter, is Google. For sure, not Technorati.
For the moment, due to lack of viable alternatives, Google and Yahoo continue to reign supreme in online advertising. The rise of MySpace, however, is not going unnoticed by Madison Avenue.
Technorati, especially, needs to ask itself the question: What is my segmentation strategy, around which I can offer my advertisers a compelling marketing vehicle?
The answer is the secret to monetizing their enormous and invaluable traffic momentum.