I hear $25 million was the price. I do not know whether this will prove to have been a wise investment on AOL's part.

AOL is big enough that it should be able to drive a lot more traffic to these blogs. It also has a huge ad sales team. My guess is they'll be able to make good money out of WIN.

The question now, of course, is whether Calacanis is going to use the proceeds to get an even bigger loft than Denton's...

The media companies are making the same mistakes all over again. I look at Google and it chills me - new investments all the time, new business launches all the time, hardly any with an obvious revenue stream. But Google is desperate to keep is P/E ratio intact, so it has to at least LOOK like it's going to eventually be worth it. AOL buying blogs is like New Yorkers buying bottled water - they're paying a premium for something they already have. I'm sure AOL will find some way to use the new content, but is a deficit of timely content-generation really a problem at Time-Warner?

And you know, good for Jason. I'm glad for him. Calacanis at least didn't make the same mistake twice.

Here, here Sterling. You are right on the money regarding Google. It may be the most used search engine for now, but a search engine does not generate money, unless they can figure out a way to get web sites to pay to be linked highly by Google. Well, maybe they would need to get rid of all the Meta searches too, and maybe get into bed with Microsoft just to make certain. Otherwise, they are screwed and that stock isn't going to be worth $300.00 + for long.

Then again, we do seem to be ramping back into a tech spending boom, so maybe it's all going to work out for the GOOG millionaires.

Well, Google gets about half its revenue from its Adsense product, which uses Google's database and proprietary algorithms/analysis to place ads in contextually-appropriate content. Theoretically Google could still keep its Adsense revenue stream even if everyone started using a different search engine, although its site metrics would degrade. The greater (and very likely) risk is that upstart ad firms, like Pud's Adbrite, will nibble away at Adsense over time.

It's actually a very complex market. One example: many would argue that adult services industry companies are better at online advertising than Google, but don't bother to compete with Google because the stakes are too small and Google is too well-capitalized. It'd be like Bruce Lee trying to take a Twinkie away from a gorilla - maybe he could do it but why bother? And Google probably won't ever get into the adult services industry, for reasons that have to do with securities regs and potential cultural backlash.

Adbrite rides on top of AVN Ads, which is an adult servics advertising backbone. So basically in that situation you have an entrepreneur who has gone to the adult services people and asked to license their product for mainstream ad serving. I think he - Phil "Pud" Kaplan - is doing OK with it, but I don't read the interactive trades anymore so I couldn't say for sure.

Sanford - Google generates most of their revenue through advertising.

D'oh. Stupid internet.

I thought google cashed in by preferential display payments

That's Adwords - another part of their ad revenue base.

I should have been clearer - Adwords and Adsense are an example of vertical integration of the online ad market. Owning both allows Google to make money on both sides of the ad equation. With Adsense it acquires the property to display ads, and with Adwords it creates a market for advertisers to place targeted ads. All of this is built on a foundation of Google "knowing" what every page is about, because it's algorithms have already categorized each page.

Google does all this for content, but it also does it for search results.

I don't have numbers for this - probably no one does - but I think it's very likely that adult affiliate marketing programs dwarf Google's business. The whole "babelog" phenomenon is built on affiliate marketing revenue, with all sorts of complicated nuances. One example is "traffic share" which is a kind of untracked barter or prestige system - babelogs use their blogrolls as a kind of collateral. I don't really understand how it works, but it has something to do with tracking outgoing versus inbound traffic on a site-by-site basis and then extending or expecting favors as a result.

Felix

Yes, maybe blogs devoted to Manolo Blahnik and shoes generally are the way forward. Let's give up any pretence of intellectual interest or good writing and just resign ourselves to our shiny metrosexual hell.

That Elizabeth Spiers is quite a tasty bird, though, isn't she? I take back what I said about her prose - good writing is so passe, it's mere content devoid of the buzz we all crave, and Liz Spiers has this rather attractive manic intellectual energy about her which gets the old juices flowing.

I thought you were now married though? Surely it's a little tactless to Mrs Felix to start chasing skirt so soon again?

Also worth mentioning that Gawker was hardly an early blog - it soft-launched around late November of 2002, I recall, and went wide in January of 2003. Elizabeth had already been blogging for some time, and traveling in the upper blog echelons, when Nick recruited her to do Gawker.

She was blogging when blogging wasn't cool, to paraphrase Kye Fleming and Dennis Morgan.