In 2006, the top 50K Blogs Generated $500M in Revenue

Blogs have become profitable businesses for many as a new study proves. The study also shows that the top 15% of Blogs in terms of popularity receive 90% of the revenue.

Michael Arrington at Techcrunch just posted an interesting article about a study just completed by the University of Texas at Dallas and Chitika, a Blog advertising network. The study estimates that the top 50K Blogs earn 500M in advertising revenue. The methodology was a bit suspect and used quite a few assumptions, most of which seemed okay. They include:

• Bloggers on average have 3 sources of revenue on their site. Top Blogs do generally have several different ads and ad networks operating.
• Technorati is a good determinant of the size and popularity of a Blog. Technorati is often criticized for its metrics but it’s as good an indicator as anything else out there.
• Chitika revenue numbers can be extrapolated across the other ad networks. Once again, it may not be exact but it seems ballpark enough.

The conclusions seemed to show that Blog advertising is even more concentrated than the typical 80/20 law. That is:

§ The top 1% accounted for approximately 20% of the total revenue.

§ The top 5% accounted for approximately 50% of the total revenue.

§ The top 10% accounted for approximately 80% of the total revenue.

§ The top 15% accounted for approximately 90% of the total revenue.

The exact ratios may be off but it’s clear that on the Internet size does matter. Advertising money and profits go to those who can grow bigger and attract the most eyeballs, even with ad networks that one would think would compensate for size differences.

You can read the Techcrunch article here.