(I’ve actually heard some VC’s say this, minus the exclamation mark and imaginary finger thrust into the air)

The truth is that Jeremy’s right: most small media companies do face these challenges. And many mass-scale media companies do as well.

I just don’t agree with the extrapolation the MSM and many bloggers are making is all

I think the “long tail” theory is an excellent approach to a media network because as you expand further into far reaching niches, you may not get the same traffic, but in some cases, the RPM’s are higher. When (if) traffic increases in those niches, revenue increases exponentially. If traffic doesn’t increase, you still have a decent revenue-producing site (hopefully) with low overhead.

I guess my perspective on the whole MySpace thing is that it’s a problem they created for themselves. MySpace is just like forums: lots and lots of pageviews per user. Way above industry norm. They’ve trained their users to click and click, which has driven the efficiency of ads down, thereby driving down prices.

In addition, because of the glut of inventory, they can’t sell fast enough at 2-3CPM to fill it up, so they’ve reverted to selling more inventory for less.

You can actually buy campaigns on MySpace for as little as 0.10CPM. Reachin 1M people for 100$. Craziness.

Realistically, these are problems they’ll solve. After all, MySpace knows more about its users than anyone else (even Yahoo/AOL who are huge into datamining).

I’d expect MySpace and other massive social networks to begin leveraging this knowledge in the next few years to start inching towards Yahoo/AOL’s 10RPM average. It’ll probably take 5-7 years to get there, but they should be able to do it.

Greg: The 750$ was back-of-the-napkin math on revenue of about 100K/month with about 1.5M unique visitors. It’s probably closer to 250$RPM. But still, that’s just incredibly high. Possibly one of the top 10 highest on the planet.

I’ve believed for a while that depending entirely on traffic and blog network-type ad deals will eventually pay the mortgage and for a modest lifestyle. But nothing special that you couldn’t make journoing in the print world.

As you say, it’s the wider offshoot business that brings in income, at least until you’ve reached a tipping point, maybe 2 – 3 years in.

Until then, you need to survive, hang in there, and keep pressing the buttons.

Stoicism is the most under-rated entrepreneurial quality.

First, thanks for the kind words.

I agree with a lot of what you say. At “middling size” CPMS can be higher than what I laid out. But as you get to real mass scale, you start to run into difficulty in maintaining CPMs. Take Myspace for example, which according to Media Metrix did 40bn page views in January. Given that its media metrix, this number is almost certainly low. Forbes estimates Myspace monthly revenue at $28m. That suggests an RPM of around 70c. The problem is that when you get big, CPMs start to dip again as you start reaching the same users over and over.

Your overall point though is true and I don’t dispute it. There IS money in online advertising. Plenty of people can make a very nice business out of it. But if your aspiration is to build a $50m revenue online media business, then as you conclude, it will be hard!

Cheers

J