Sumolabs

Tim O'Reilly recently posted an article about the Economics of Online Advertising. Immediately, he cites a Mark Jacobsen article which discusses Three ways to build an online media business to $50m in revenue. Do you really need that much?

Here is the math:

* At the $1 RPM (CPM/CPA/CPC) level achieved by most general sites, you need 4 billion page views/month.
* At the $5 RPM level achieved by demographically targeted sites, you need 800 million/month.
* At the $20 RPM level achieved by highly targeted sites, you need 200 million/month.

Most sites can hope to roll in within the $1 through $5 range. So these are scary figures to get to $50m. (Although, revenue isn't that important. I could get $50m revenue easily enough by selling dollars for 99 cents).

Tim explains this scary figures may be why more entrepreneurs are going for low-investment sites that don't need an exit but provide "lifestyle businesses" for their owners.

I think we are seeing this more and more in the industry. For example, 37signals various products (Basecamp, Campfire, Backpack, etc) are not going to be sold for hundreds of millions, but they comfortably employ the whole 37signals staff with their productivity niche.

However, more money is being brought to the online advertising table. Paul Kedrosky reports that internet advertising at $16.8 billion for 2006. Tim points out that tv advertising is at about $80 billion, so there's considerable room for growth as the internet continues to draw attention away from print, tv, radio, and other old media.

Source: decade of internet advertising

With web advertising on the rise, there is going to be an opportunity for bloggers, and other businesses to make a lifestyle living off the web. (Presuming the economy keeps kicking along nicely). Maybe the myth of the poolside blogger will become the rule rather than the exception.