After years in the shadows of major media sites, blogs have come into their own. They now compete directly with the most well-funded online content sites, many of which are owned by the largest media companies. With the rise of several blogs, which are extremely successful both financially and editorially, the mainstream content corporations have tried to either flank or buy them. Many mainstream companies like The New York Times have started dozens of blogs of their own.

Those who want evidence of the financial value of blogs need look no further than the buyout of The Huffington Post by AOL earlier this year. The purchase price was $300 million. That was about six times HuffPo’s sales and 30 times its operating profits. Since AOL bought Huffington in March, it has built its entire editorial operation around it.

Read: The Twenty-Five Most Valuable Blogs in America – 2011

24/7 Wall St. reviews scores of blogs and blog companies each year to choose the 25 that are the most valuable. Value, by 24/7’s definition is what a blog would sell for. The values are based on several factors.

The first is revenue and profits. 24/7 considers audience size, advertising revenue, subscription sales, and conference businesses. Conferences are sometimes the largest and most profitable operations of some blog companies.

24/7 Wall St. also considers the moat around each blog. In other words, how hard is it for other mainstream media sites to compete with the blog? How likely is it that a new blog could take market share from the website and its related businesses?

We also consider founder risk. For example, if Jim Cramer left the mainstream site TheStreet.com, how much would its value fall? Because of Cramer’s fame and visibility at TheStreet, its value would likely be very badly damaged. Some of the blogs on the 24/7 list which rely heavily on their founders for editorial direction, business connections and public relations face a similar problem.

Blogging is now at least 15 years old. The Drudge Report, among the most financially successful and well-read blogs in America, was founded in 1997. Science, tech, and politics blog Boing Boing was started in 1995. Most of the blogs on the 24/7 Wall St. list are over half a decade old. The blog business is mature when the age of the broadband Internet is taken into account.

24/7 used Internet research firm Quantcast to determine the number of visitors a blog has. We used supplemental sources if a site was not measured by Quantcast. 24/7 Wall St. editors examined each blog that was a candidate for this list to determine advertising CPMs, advertising impressions, and operation costs. The largest expense for some of these companies is the use of outside ad networks, which take substantial commission to sell their inventory.

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We determined values by multiples of revenue and, in cases where it applied, operating income. The figures were then weighted by our analysis of such factors as founder’s risk and moat. 24/7 Wall St. considered only independent blogs – those which are not owned by large media companies – to compile the list.

The blog business is so attractive that well-funded blogs continue to be started regularly. Sports blog network SB Nation and several tech writers announced they will soon launch a new tech blog, Verge. The blog’s start-up costs alone are estimated in the millions of dollars. The site already has large sponsors such as BMW. Investors include major venture capital firms Accel and Comcast Ventures. Verge will be launched into the tech editorial sector, which is one of the most crowded in the industry. The founders and investors believe they can have a successful business despite this.

Blogging started as a cottage industry filled with start-up sites, but it is now one that attracts large investors and corporations who see great promise and substantial profits.

This is the 24/7 Wall Street Twenty-Five Most Valuable Blogs In America – 2011

1. Gawker
> Value: $318 million

Under the deft editorial and business leadership of founder Nick Denton, Gawker has become the most valuable blog network on the web. Comprised of many of the most popular individual blogs, including Gizmodo, Kotaku, and Gawker.com, Gawker ‘s success is built around equal parts snark and celebration of the famous, the infamous and the tech-obsessed. And while Denton has demonstrated remarkable prescience curating top brands and shuttering or selling others, his latest move to reject the very blog-format that made his sites top destinations has not gone over hitch-less. The company’s steady and impressive growth was interrupted earlier this year by Denton’s redesign of the network – one he hoped would ultimately increase pageviews. Though readership has only recently recovered to last year’s numbers, Denton’s bet on impressions may pay off. Pageviews per person have increased steadily since last year, boosting ad impressions along with it.

2. Drudge
> Value: $93 million

Drudge may not be a one-man company, but it is close. The site is the largest link-based blog in America. Its content is built around simple selection of headline links to other mainstream sites and blogs. A recent Outbrain study found that Drudge Report drives twice as much traffic to news sites as mammoth social network site Facebook. Matt Drudge, the site’s founder, is considered to be a conservative, and Drudge content is considered to be on the right of the political spectrum. By most accounts, Drudge has three editors. Its largest cost is commissions paid to its advertising sales representative, Intermarkets.

3. PopSugar Media Network
> Value: $64 million

The well-known PopSugar.com site is part of the Sugar Inc. network, which includes vertical editorial sections on gossip, entertainment, sex, motherhood, health and food. The business was founded by Brian Sugar and his wife Lisa. Sugar claims that blog pioneer Om Malik advised him in 2005 to start a blog for women who traditionally visited sites owned by Time and Conde Nast. PopSugar has raised $46 million in funds from VCs and the venture arms of major media companies for expansion. Most of the blog’s readers are young women. There is a good chance that a media company will eventually take over Sugar for its large audience and ad base.

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4. SBNation
> Value: $56 million

SBNation is a collection of 315 sports blogs, many of which cover local sports. The sites cover the four major league sports, as well as golf, soccer, and tennis. SBNation also has an active fantasy football business. This section of the main site makes it a popular destination as fantasy football members return over and over to track their players and teams. SBNation has a very large staff of over sixty people, making its expense base larger than most blog networks. A fairly large portion of its revenue comes from premium advertisers, but many of the ads are for its own products, including its iPhone app. This suggests it has trouble marketing all of its ad inventory. SBNation is probably a takeover target by large media companies that have substantial websites, like ESPN and Sports Illustrated.

5. Macrumors
>Value: $52 million

Macrumors is the largest of a small number of blogs that cover Apple. These include 9to5mac, AppleInsider, and TUAW. Macrumors has a relatively small staff — no more than a dozen people. Its founder, Arnold Kim, is the site’s editor. He is not well-known enough to present significant founder risk. One of the strengths of Macrumors that is shared with other large tech sites is active conversations held in its forum. These forums are a platform for thousands of visitors who want to discuss hundreds of subjects related to Apple. Visitors must register to use the forums, which are moderated by volunteers who make certain that people do not post messages that violate Macrumors’ rules. Forum submissions number about 10,000 a day. This activity adds meaningfully to return visits and the site’s “stickiness.”

6. Business Insider
> Value: $45 million

Business Insider is one of the most ambitious blog start-ups ever. It remains to be seen if the business can be profitable. Business Insider has certainly flanked many mainstream sites, even though it is little more than two years old. Its online audience is almost as large as TheStreet.com and CNBC. Business Insider’s mix of in-depth financial and business analysis and gossipy and sophomoric content has more than doubled the site’s audience in a year. The site was founded by Henry Blodget, a former Wall Street Internet analyst, and Kevin Ryan, a founder of DoubleClick, one of the most successful start-ups of Web 1.0. Between them they have a large number of industry contacts, which certainly helped the site’s growth. Business Insider management says it has raised about $10 million for expansion. This has helped the company’s rapid growth, but it has also allowed expenses to balloon. The next year should show if BI can produce strong profits. Blodget is the face of Business Insider, so the site has significant founder risk.

7. Seeking Alpha
> Value: $45 million

Seeking Alpha has one of the most original business models among the sites on 24/7’s list. The investing site aggregates over 200 posts a day from nearly 400 regular bloggers around the world on subjects ranging from corporate earnings to mutual funds and ETFs. The content from these authors was free to SA for years. The company has begun to pay the authors modest amounts in the last year, still keeping its cost of content extremely low. The breadth of the content helps the site draw hundreds of thousands of investors. Seeking Alpha carries a moderate amount of brokerage and financial service advertising, which has relatively high CPMs. Founder David Jackson is not very visible and the site has a large staff, so founder risk is low.
8. Cheezburger Network
> Value: $41 million

Cheezburger is perhaps the best example of a site that responds quickly to the changing tastes of the Internet. It began as a site based around pictures of cats with silly phrases attached. Today, the network identifies new Internet touchstones, known as Internet memes, and quickly builds a site around them. Content is driven by user submissions and editorial selection — a business with low costs. Paying for bloggers is cheap. We suspect paying people to identify funny pictures is even cheaper. Though revenue is limited by a low CPM, its large scale makes this a good business.

9. Mashable
> Value: $39 million

Pete Cashmore and his site’s prolific bloggers are the evangelists of social media. Founded only a few years ago out of his parents’ home in Scotland, Cashmore has turned Mashable into the most influential blog on the intersection of social media and business. Because of the subject matter it covers, Mashable often gains traffic from sites like Twitter and Facebook. The impressive lineup from premium advertisers reflects well on the site. Similarly, its successful number of conferences may be an even better indicator. According to a recent article in the New York Times, the blog does not rely on outside investors for financing, and instead has “financed its expansion […] by steadily increasing revenue and carefully managing expenses.” That goes a long way to improve valuation.

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10. GigaOm
> Value: $32 million

Om Malik is one of the original tech bloggers who was able to turn his writing into a large business. The original site, started in 2006, was rudimentary, with only several posts a day, mostly by Malik himself. The advantage was that Malik had been a tech journalist for years and knew the business and many of its characters intimately. He was part of the original Forbes.com editorial team in 1997. In recent years, GigaOm has added sites and new features, including sections on broadband, Apple, cloud computing, and video. According to Malik, together the GigaOm channels have over 4 million monthly readers. The company also runs several profitable conferences. It also has a business that is rare among blogs. It has premium research products that start at $199 a year. These are created by a network of over 80 experts.

11. Perez Hilton
> Value: $29 million

Perez Hilton is a mainstay of the online gossip world. This is particularly impressive because the blog competes with People.com, Us, TMZ, and dozens of other celebrity sites. Hilton still has an impressive 9 million visitors a month. The site’s founder, Perez Hilton, is somewhat of a celebrity of his own. He appears regularly on television and at celebrity events. He is known as a blogger who often writes negatively about celebrities, a practice mainstream media sites avoid because they do not want to alienate them. The site’s forerunner, PageSixSixSix.com, was named “Hollywood’s Most-Hated Website” by The Insider, the TV gossip program. The major cost to run Perez Hilton is its ad sales agent.

12. Funny Or Die
> Value: $27 million

Founded by Will Ferrell and comedy writer/producer Adam Mcay, Funny Or Die is a successful, professionally-backed site dedicated to short-form comedy video. Though it has not had a huge viral success since “The Landlady”, the site’s audience has steadily risen. The site now generates nearly 10 million viewers a month. The blog has launched satellite sites, though none have been nearly as successful as Funny Or Die. In 2010, it inked a deal with HBO, allowing the channel to broadcast a new 30-minute sketch comedy show, “Funny Or Die Presents.” While the site’s display advertising is not impressive, its video ads certainly are.

13. The Blaze
> Value: $24 million

Glenn Beck, of Fox and Mercury Radio fame, has quickly built The Blaze as the conservatives’ answer to The Huffington Post. Leveraging his incredible success as a TV-personality and radio show host, the site has grown to 3.6 million readers in just over a year.  The site also appears to be benefiting from an impressive lineup of media talent. Betsy Morgan, former CEO of The Huffington Post, who helped grow the site from 4 million to over 20 million readers during her tenure, was hired as president of The Blaze in January. Scott Baker, co-founder of conservative blog Breitbart.tv, is The Blaze’s editor-in-chief. The site’s pedigree, along with Beck’s star appeal, appear to be drawing fans. However, despite incredible early numbers, the site may be suffering from the same problem Fox claims it had with Beck’s show. While advertising seems relatively strong for a such a young brand, premium advertising is still sporadic. The site’s greatest asset may also be its greatest weakness – its identity is inextricably linked to that of its founder.

14. Zero Hedge
> Value: $16 million

Zero Hedge may be the most extraordinary site on the 24/7 Wall St. list because it does not observe any of the characteristics of highly successful blogs. The design lacks color, which can make the site’s layout hard to navigate. Many posts seem anonymous because all the bylines are the same, which could make readers question the objectivity and reliability of the site’s content. Most of the posts are about arcane economic subjects that range from the complex finances of EU sovereign debt to mortgage-backed securities. Zero Hedge does share two things in common with many of the most successful blogs. Stories are posted very regularly – often several times per day – and the attitude of the writers toward their subjects is highly irreverent and often insulting. It is also considered to be among the best sources for real time news on the markets. The site has very few writers, so its highest single cost is commissions on ad sales.

15. ReadWriteWeb
> Value: $13.2 million

ReadWriteWeb is one of the most well-read technology blogs for tech and IT-insiders. Unlike other technology blogs that reach a larger audience, ReadWriteWeb’s articles are read by IT decision makers. This highly specialized audience has come to expect probing and forward thinking tech commentary from ReadWriteWeb’s founder and large editorial team. What it may lack in broad appeal, it makes up for in high-end advertisers that know a good demographic when they see one. Its audience numbers are trending down, but sophisticated and engaged readers and particularly high use of LinkedIn social media suggests this is still a destination site for tech readers in the know.

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16. VentureBeat
> Value: $13 million

VentureBeat is yet another technology blog that serves an audience with a voracious appetite. The blog, which includes sections on mobile, gaming, deal making, and cloud computing, looks at technology through a business lens. Though the site covers many of the same stories other tech sites do, like TechCrunch, it focuses on what the implications are to the venture capitalists, deal makers and new developers to the scene. Its audience commands fairly healthy advertising revenue, and its conferences make VentureBeat a powerhouse. A high headcount keeps margins tight.

17. Pitchfork
> Value: $12.9 million

Started in 1995, Pitchfork is the most widely read news source on independent music. Featuring criticism, commentary and interviews, it covers the industry ably. Readership is flat year over year, but 2 million indie readers is still an impressive audience. The blog’s detractors may object to its narrow definition of what’s considered alternative, but music labels and show promoters don’t seem to care. Advertising is strong as a result. The annual Pitchfork Music Festival hosted 45 acts over three days, and was one of the most popular acts of the summer.

18. Mediaite
> Value: $12 million

Mediaite is one of the Internet’s major media blogs and gossip sites. It has a proprietary system that determines what the site calls the “relevance” of dozens of members of the media. The secret process tracks them based on their primary medium — print, TV, or online. The Power Grid, as the system is called, almost certainly keeps many readers returning to the site to watch the contest for relevance among media personalities. Mediaite is part of the Abrams Media Network, which includes SportsGrid, Mogulite, Geek System, Gossip Cop, Styleite, and The Mary Sue. The founder, Dan Abrams, is well-known, but does not contribute enough to the content of the sites to represent much founder risk. The Abrams Media sites carry only a modest amount of premium advertising, which makes high margins difficult to achieve.

19. Newser
> Value: $8 million

Newser selects what its editors believe are the most important news items of the day and summarizes them into short and frequently witty posts, generally no longer than 150 words. Unlike most blogs, including those on this list, Newser is a general interest news site and its 50 or more daily posts appeal to a broad audience. While the editors cover most of the important and media news of the day, they have a knack for picking amusing and even salacious angles. Consistent ad placement and apparently good advertising means they do a lot with a relatively small audience.

20. Boing Boing
> Value:$7 million

What do pictures of people being scared in a haunted house, a field guide of legendary animals and mythical beasts of Tokyo, and self-driving cars of the 1960s have in common? They’re all the product of the mad geniuses behind Boing Boing. The blog evolved from a magazine founded by husband and wife team Mark Frauenfelder and Carla Sinclair focused on “comic books, cyberpunk science fiction, consciousness technology, curious phenomena,” and whatever else amused them. Advertising revenue is constrained by low CPMs and limited placement of ads on the page. The site’s traffic has been flat for a while, but the high number of Facebook likes and comments per article suggest a loyal readership.

21. Gothamist
> Value: $4.2 million

Named after the first city it covered, The Gothamist Network is a collection of blogs that feature the events and personalities that make the country’s biggest cities amusing to read about. Gossip, restaurant openings and local news are written for the city insider. While New York is the overwhelming favorite, SFist and Chicagoist appear to be growing in popularity.  Ads are local, which means CPMs are not stellar.

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22. Breitbart
> Value: $4 million

Judging by the tone of articles written about Breitbart.com’s founder, Andrew Breitbart, he is a pundit that conservative readers love and liberal readers love to hate. Breitbart.com’s early success appears to be closely tied its founder’s gift for being a lightning rod for public scandals invovling the bad behavior of liberal groups and politicians. Breitbart’s other sites, including Big Journalism, Big Government and Big Hollywood, have broken or drawn attention to stories including the ACORN prostitute-tax scandal.. According to critics, his talent for showcasing controversy has undermined his journalistic integrity. Many in the mainstream media point to his “selective editing” of a video of Shirleyl Sherrod, which made it appear the black former USDA employee held racist feelings towards white people. Declining audience and weak ad sales suggest that his exploits may be hurting his brand.

23. Destructoid
> Value: $3.7 million

Other than Kotaku and Joystiq, owned by Gawker and Aol respectively, Destructoid is the largest independent video game blog. Along with ModernMethod Network’s other properties, including Japanese anime blog Japanator, film blog Flixist and collectible toy-blog Tomopop, Destructoid has built a loyal readership that has grown since launching in 2006. Billing itself as “For Gamers. By Gamers,” the blog’s readers certainly are engaged, and comment regularly on posts. Though a niche industry, video game consoles, video game titles and retailers appear to be paying consistently to reach these readers.

24. Breaking Media
> Value: $3.5 million

Breaking Media is a collection of four websites: Above the Law, AltTransport, Deal Breaker, Fashionista. Based on audience size, Fashionista and Above The Law are successful. The others are very small. Above The Law is extremely popular with people in the legal community. The site is particularly well-known for its salary surveys. Fashionista is well-regarded because of its interviews with industry leaders and criticism of fashion brands and industry personalities. Breaking Media has a relatively large staff for a company with an audience of its size. It runs a modest amount of premium advertising.

25. 24/7 Wall St.
> Value: ???

Founded in 2006 by news service editor and trader Jon C. Ogg and former Financial World publisher and tech executive Douglas A. McIntyre, 24/7 Wall St. still operates with a small, but excellent staff. The site posts 15 to 20 stories a day, many of which are picked up by mainstream media, including Comcast, MSNBC, Yahoo!, and Aol. The site has profit margins that are at the high end compared to the other sites on this list.

-Douglas A. McIntyre, Ashley C. Allen, and Michael B. Sauter

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