Selling blogs

I have been out of the loop the last few days soaking in the desert sun in Arizona and getting ready to talk about one of my favorite subjects: contractual choice of law. But I couldn’t resist commenting on the recent post, via, among others (sorry if I omit some) Solove, Caron, Christine, and Steve on what is a blog worth, calculated based on links using AOL's purchase of Weblogs, Inc. Literally couldn’t resist, because of thinking how much money I would lose by not keeping up.

These numbers respresent, at most, what someone would pay for the links associated with the blog. But would the buyer get the links? How much would the Glimmers get for the Rolling Stones, unless they buyers somehow managed to persuade the audience the sellers were still around?

Moreover, it’s important to keep in mind that the links are only a proxy for value. Ad revenue is more like the real value. But what about blogs like mine that don’t sell ads? Can they use comparables like the Weblogs deal?

All this raises a more interesting question of the extent to which a blog can be separated from the individuals. There are partnership cases such as Cardozo’s famous opinion in In Re Brown suggesting that no value attaches to a professional partnership that depends on the individuals. That’s questionable economics, since the firm obviously does have a value as long as the individuals stay that can be cashed in by the leaving partner or his heirs, minus the value he subtracts on departure. Cases like Brown reflect more the courts’ problem of coming up with a number in this situation.

But what could Glenn Reynolds or I convey to a third party if the only person associated with the blog leaves? Possibly a buyer could capture something like the same audience if he's introduced and vetted by the previous owner. The seller’s talents probably aren’t unique. The new owner could mimic the previous writing style, take over many of the contacts, etc.

The key element in the transfer would be the seller’s reputation for accuracy. The blog is a “credence” good, meaning that readers have to take its value on faith at first, until testing it in action.

All of this suggests that, contrary to the image the MSM try to convey, bloggers are not just hacks in pajamas – they have financially valuable reputational capital to protect, as I discuss in my Law and Economics of Blogging. A market for blogs could capitalize this value and thereby provide an additional incentive for accuracy. Carrying ads, like the ads themselves, therefore could be a reputational bonding mechanism.

Blog sales will be something else to watch as the blogging medium develops.

Comments

[Joe Miller]

Great post! I've put up a little item about the "Dear Abby" example at The Conglomerate.

[Larry Ribstein]

Thanks. Good example.