It has been a well known news, thanks to the power of blogosphere. PaidContent first leaked the acquisition of Weblogs Inc. by American Online, and then every second or third blogs I have been reading have reported on it.
LcF blogged about this sale, concluding:
Weblogs Inc. is a successful blogging network. Many of its blogs are top blogs of the Wold. The network earns USD$1 milllion from Google Adsense in a year. That’s still exclude the premium advertisements revenue. USD$20 millions is a good deal.
I have never seen USD$20mil in my life, but was it a “good deal” because Weblogs Inc. has potential to generate 1 million dollars a year “revenue” from AdSense? Let’s say, WIN gets 1.5 million dollars from Google, and another 1 million dollars from other advertisers and affliates. However what about its cost? Besides site hosting, domain name registration (which are negligible), other infrastructure cost, they still need to pay 100+ bloggers under their wings, quite a few staffs and Jason himself.
What’s left as “proft”?
Besides, being a subsidiary of AOL — would that damage their relationship with Google? Wouldn’t AOL resale the advertising themselves without profiting the “middle-man”?
I do not think it was the scenario in the AOL board room a few weeks ago:
Adviser 1: Weblogs Inc — They are just n00b in the media network.
Adviser 2: But Jason claimed he can make one million bucks from Google!
Adviser 1: OMG! w00t! Maybe we should buy them.
Adviser 2: Would 20mil be enough?
Jon M: they pwned.
I am sure AOL has its plans for its newly acquired blog network, but I don’t think “ability to generate 1 million dollars a year from AdSense” is the reason why it has been bought.