A few days ago, on the heels of a report by 24/7 Wall St on TechCrunch’s traffic relative to CNET’s, we wondered aloud whether CNET (or some other news organisation) would buy TechCrunch for $100 million. The post provoked a storm of protest.
CNET’s Dan Farber, for example, noted that 24/7 Wall St data was faulty, that CNET’s own blogs generate more traffic in a single morning than TechCrunch does in a month (6 million pageviews, reportedly). Valleywag was kind enough to suggest that our post had been a joke. Scott Raynovich used a $4 net CPM to calculate that TechCrunch has revenue of $120,000 a month, or $1.5 million a year and is therefore worth only $15 million. Felix Salmon at Portfolio was considerate, but sceptical. And so forth.
Here’s why some company, perhaps CNET, is going to eventually buy TechCrunch for big money:
- Blogs are a disruptive technology. Unlike newspapers, et al, they are the right content format at the right time, and they are growing like crazy (at the expense of traditional media companies).
- Newspaper companies are toast. As they finally begin to realise this, they are going are going to have to compete with each other to buy assets that are eating their lunch (e.g., blogs).
- Business magazines are toast: Revenue is plummeting, and by the time the magazine finally arrives, most of what’s in it is out of date. Business magazine companies still have cash and stock they can still use for acquisitions (hurry!), and all that advertising revenue they are no longer getting is eventually going to show up somewhere else.
- CNET, in its current incarnation, has become irrelevant–shoved aside in the tech mind-share battle by the likes of TechCrunch, et al. CNET has a lot more traffic and a lot more revenue than TechCrunch, but its days as a tech-industry-influencer are through (again, in the current incarnation: we believe that CNET can be saved).
- We have heard the TechCrunch’s revenue is $200,000 a month, or $2.5 million a year, but whether it’s $1.5 million or $2.5 million, this year’s revenue is irrelevant. What a buyer would be buying it for are the next 25 years, not this year.
- TechCrunch’s recent conference, the TC40, was a major hit and heralds an era when TechCrunch has a far more diversified revenue stream. We can easily envision a time a year or two from now when TechCrunch has millions of monthly readers and several conferences a year. The brand, the readership, and the future potential is what’s important here, not the current revenue.
What is TechCrunch worth, exactly? Give us the precise traffic, feed, and revenue numbers, and we’ll give you a ballpark number. Regardless of what the company is worth today, moreover, we think someone will eventually buy it for way more than $15 million.
Assuming Arrington & Co. continue building the company aggressively but don’t get too giddy and ramp up a big burn rate in the face of an economic decline, we bet that TechCrunch will eventually claw their way to $10 million of revenue and sell for, yes…$100+ million.