Gawker math

By Felix Salmon
August 3, 2009
Zachary Seward has some "very rough, back-of-the-envelope calculations" of the amount of money Gawker pays and receives for a reasonably-successful blog entry like the one Hamilton Nolan wrote about Anne Loehr. The upshot? The cost of the journalism was about $20, while the revenue from the blog entry is about $200. A good business to be in!

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Zachary Seward has some “very rough, back-of-the-envelope calculations” of the amount of money Gawker pays and receives for a reasonably-successful blog entry like the one Hamilton Nolan wrote about Anne Loehr. The upshot? The cost of the journalism was about $20, while the revenue from the blog entry is about $200. A good business to be in!

Do Seward’s numbers make sense? Yes. Ian Shapira reports that Nolan is paid $4,000 a month (which surprises me, I would have guessed he was making more than that). If you divide that $4,000 by the 260 blog entries Nolan writes each month, it comes to about $15; on the other hand, if you reckon that the $4,000 is paying for Nolan’s 2.3 million monthly pageviews, and say that this one blog entry accounted for 12,500 of them, then you get to just over $20. (Gawker’s stats can be found here.)

On the revenue side, Gawker is running three ads on that blog page, with a rack rate CPM of $8 each. If the ads were all discounted by one-third, then Gawker’s getting $16 per thousand pages served, which works out at exactly $200 for 12,500 pageviews.

Of course, Gawker has more expenses than Hamilton Nolan’s $4,000 a month. There’s his bonus, for one — and then there’s the cost of selling those ads, and all of Gawker’s overhead. Plus, it’s the beginning of the month; later on, Gawker might not be selling out its inventory like it is right now.

On the other hand, Gawker has more revenue than just the ads from individual blog entries — it also serves ads on its sites’ home pages, which bring in a lot of money, as well as archived blog entries by bloggers who no longer work for the company. So overall it’s easy to see how Gawker has now grown to the point at which it’s a highly profitable media company.

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