Bloggers can make money, but most keep day jobs

The rise of 'contextual advertising' has created a 21st-century version of royalties.

A penny for your thoughts? Kevin Vahey has done a good deal better, turning a personal gripe into $1,000 a year of supplemental income.

Mr. Vahey started a blog called " Charlie on the MBTA" that has become a sounding board for Bostonians frustrated with the city's public-transit system.

After two months, he's gained 1,200 readers a day, the attention of officials, and – like thousands of others putting their interests online – a small revenue stream from advertising. "Yesterday I got the check from [Google], and I said, 'Hmm, that's cool.' I don't feel like I did anything," he says. He's not quitting his day job, but now he commutes to it free of charge: "[The blog] pays my monthly pass."

Through systems like Google's AdSense, advertising now can be added with the click of a mouse to the smallest of websites. The model will soon be expanded to online videos with the announcement last month that YouTube will share ad revenue with content creators.

The rise of what's known as contextual advertising has created a 21st-century version of royalties that's reaching deep into the ranks of amateurs and hobbyists. It points to a future where many people will moonlight online as small-time creators for a little extra income, with a few finding fame and fortune along the way.

"A lot of people say it's sort of like a little investment. They write something every night before they go to bed, and another page on their website gets added. And the more pages they've got, the more chance they've got of earning a little bit of money," says Darren Rowse, the webmaster of problogger.net, a site that helps bloggers improve their income.

He says he makes six figures a year blogging, when factoring in all his sites and the consulting gigs they generate. "You put something out there," he adds, "and it has the potential to earn money forever. And in that way it sort of is like a royalty."

A little more than $1 billion, or one-fourth of all advertising online, went to Google's AdSense program in the third quarter of 2006. Of that, Google shared $780 million with those running AdSense. Approximately 3 million blogs now use AdSense, according to the blog-tracking site Technorati.

What isn't known is how that $780 million was distributed over those roughly 3 million blogs. But anecdotal evidence suggests that there's a majority making nothing, a sizable minority bringing in at least $100 a month, and a few making serious money.

This past November, a survey by problogger.net of 732 self-selected respondents found that of the 625 bloggers using AdSense, 45 percent were making at least $100 a month. Another survey of 104 bloggers at a blogger summit last week in New York found roughly a third making that money, not necessarily with AdSense.

Nearly one-sixth in both surveys made at least $1,000 a month. These samples, of course, skew heavily toward the more committed and successful bloggers.

"The vast majority of people are being read by the writer and his mother, or in some cases not even by his mother," quips Sree Sreenivasan, who runs the new-media program at Columbia University.But for some, he says, new opportunities are emerging that are different from the original Web bubble.

The anecdotal numbers suggest an economic shift based on what Don Tapscott, co-author of "Wikinomics," calls the democratization of the creation of content.

"People can participate in the economy in ways that were once unimaginable. Not just moonlighting, but serious money," says Mr. Tapscott. In the past, writers, musicians, and videomakers needed to prove themselves as "home-run hitters" in order to get distributed and earn significant money. "Now, bunters and single-hitters have a chance to make a living," he says.

The AdSense system allows advertisers to bid on how much they'll pay – in cents per click – to appear on sites with certain keywords. In the case of "Charlie on the MBTA," Vahey has seen ads show up from bus companies – not surprising since he mentions buses frequently. He makes money each time someone clicks on the ads.

With the cost of publishing online close to zero, even small ad money can buoy creative output.

"The definition of 'big enough' has changed. In the old days, [an endeavor] ... had to get an audience of billions to pay for that scarce airtime," says Jeff Jarvis, a new-media expert who makes about $1,000 a month from blogging. "Now, the definition of big enough can be that it covered my costs, [or] it bought me a camera."

He notes with amusement that his son now makes more money from AdSense than from his allowance.

Yet many bloggers and video bloggers are not driven by a desire to get rich. Vahey did not start his blog to make money. And Steve Garfield, one of Boston's earliest video bloggers, doesn't see a YouTube ad model working for him, since he's more interested in forming personal connections.

"I've gotten so much from giving and sharing my videos for free," says Mr. Garfield, whose vblog is at SteveGarfield.com. "I've made so many friends from all over the world."

Still, his approach has yielded some financial benefits, such as free computer equipment, and freelance and consulting work.

It's not uncommon for successful bloggers to parlay their success into consulting. And the top Web entrepreneurs often move away from AdSense to direct relationships with advertisers, says Jeremy Schoemaker, who has a photo of himself holding a check for more than $130,000 from Google. He runs a number of sites, including a ringtones sharing site. [Editor's note: The original version misspelled Mr. Schoemaker's last name.]

AdSense, which he describes as "a great product," does have its limitations. The revenue can be unpredictable, the system encourages visitors to leave a site, and owners do not have enough control over ad content, he says.

Several highly successful bloggers also caution that there's no free lunch. "I worked anything from eight- to 16-hour days over the last three or four years just trying to do this," says Mr. Rowse. "And a lot of people don't see that."