The 10 Most Valuable Blogs in 2011

Gawker, the most valuable blog network, is worth $300 million, more than the next five blogs combined, according to 24/7 Wall St.'s calculations

GAWKER/BUSINESSINSIDER/PITCHFORK

After years in the shadows of major media sites, blogs have come into their own. They now compete directly with the most well-funded online content sites, many of which are owned by the largest media companies. With the rise of several blogs, which are extremely successful both financially and editorially, the mainstream content corporations have tried to either flank or buy them. Many mainstream companies like The New York Times have started dozens of blogs of their own.

Those who want evidence of the financial value of blogs need look no further than the buyout of The Huffington Post by AOL earlier this year. The purchase price was $300 million. That was about six times HuffPo's sales and 30 times its operating profits. Since AOL bought Huffington in March, it has built its entire editorial operation around it.

24/7 Wall St. reviews scores of blogs and blog companies each year to choose the 25 that are the most valuable (see the full list here). Value, by 24/7's definition is what a blog would sell for. The values are based on several factors.

The first is revenue and profits. 24/7 Wall St. considers audience size, advertising revenue, subscription sales, and conference businesses. Conferences are sometimes the largest and most profitable operations of some blog companies.

24/7 Wall St. also considers the moat around each blog. In other words, how hard is it for other mainstream media sites to compete with the blog? How likely is it that a new blog could take market share from the website and its related businesses?

We also consider founder risk. For example, if Jim Cramer left the mainstream site TheStreet.com, how much would its value fall? Because of Cramer's fame and visibility at TheStreet, its value would likely be very badly damaged. Some of the blogs on the 24/7 list which rely heavily on their founders for editorial direction, business connections and public relations face a similar problem.

Blogging is now at least 15 years old. The Drudge Report, among the most financially successful and well-read blogs in America, was founded in 1997. Science, tech, and politics blog Boing Boing was started in 1995. Most of the blogs on the 24/7 Wall St. list are over half a decade old. The blog business is mature when the age of the broadband Internet is taken into account.

24/7 used Internet research firm Quantcast to determine the number of visitors a blog has. We used supplemental sources if a site was not measured by Quantcast. 24/7 Wall St. editors examined each blog that was a candidate for this list to determine advertising CPMs, advertising impressions, and operation costs. The largest expense for some of these companies is the use of outside ad networks, which take substantial commission to sell their inventory.

We determined values by multiples of revenue and, in cases where it applied, operating income. The figures were then weighted by our analysis of such factors as founder's risk and moat. 24/7 Wall St. considered only independent blogs - those which are not owned by large media companies - to compile the list.

The blog business is so attractive that well-funded blogs continue to be started regularly. Sports blog network SB Nation and several tech writers announced they will soon launch a new tech blog, Verge. The blog's start-up costs alone are estimated in the millions of dollars. The site already has large sponsors such as BMW. Investors include major venture capital firms Accel and Comcast Ventures. Verge will be launched into the tech editorial sector, which is one of the most crowded in the industry. The founders and investors believe they can have a successful business despite this.

Blogging started as a cottage industry filled with start-up sites, but it is now one that attracts large investors and corporations who see great promise and substantial profits.

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