Twilight of the Blogs

Twilight of the Blogs - Are they over as a business? By Daniel Gross: "The Gullible Latecomers: In the end stages of any investment mania, the clueless and the greedy flood in. Pajamas Media. Last November, the collection of right-wing blogs (with a few lefties thrown in for laughs) grandly announced the closing of a $3.5 million round of venture capital financing. Roger Simon

The Excited Dinosaurs: Big, unwieldy media conglomerates—the types whose large-circulation magazines always publish trend stories six months too late, like Time Warner—are enthralled with this hot new niche. Last October, in a deal that put blogs on the map as a business, Time Warner paid a reported $25 million for Weblogs, Inc., a group of blogs cobbled together by tech-culture-Barnum Jason Calacanis. This week, the Wall Street Journal reported that Time Warner is poised to introduce Office Pirates. The bloggy site is run by Mark Golin, the brains behind Maxim's U.S. edition.

The Smart Guys Cashing Out: Remember Bob Pittman? The early head at MTV became Steve Case's right-hand man at AOL and helped sell the company to Time Warner for a huge premium in early 2000. In other words, he's a great market-timer. In 2003, Pittman paid $3.5 million for a controlling stake in Daily Candy, a bloggish newsletter on what Carrie Bradshaw wannabes should buy, wear, and eat—well, not eat, more like nibble.

The Magazine Cover Indicator: That's a term coined by Barry Ritholtz. Being plastered on the front of a national magazine is fatal for an investment trend. Remember Time's infamous anointing of Amazon.com Jeffrey Bezos as the "Man of the Year" for 1999? More recently, Time's crack trend-sniffing squad was working overtime to prepare this week's cover package on Google just as the stock began to melt down. New York isn't quite a national magazine, but its recent blog cover story will no doubt be quickly copied by the newsweeklies.

There are troubling signs—akin to the 1999 warnings about the Internet bubble—that suggest blogs have just hit their top."