Google's growth

Where does this blog get its money? Well, I guess Google AdSense is a good start. With good targeted advertising, free content from blogs, and sensible traffic, they have a very interesting and novel business model. Their outstanding costs are effectively the maintenance of the servers, and bandwidth costs.

Having just switched to Linux, blogger.com can now cheaply scale up to the needs of a ferocious growth in users. The growth in the number of users is a sign of a pending shift in information delivery.

Fundamentally, this shift in the paradigm of information flow is from mass media to grassroots, so to speak. There is a question of the sustainability of this online mechanism, but the logistics are incredible. As the cost of hardware and bandwidth is consistently dropping, the number of users is growing.

Based on my BlogID, there are up to 8 million users. If even one in a hundred has an advertisement, and only one in a hundred of those has a click once a day, that is still 800 clicks a day, which at $0.50 a click, works out to $400 a day, or $146,000 a year. This very conservative estimate should more than adequately cover the cost of the hardware and bandwidth. It does not cover the cost of development, but google's IPO has provided a substantial amount of funding for that, which can be recovered over time.

In all, this looks to be an interesting change in the relationships between people. Mind you, some blogs have seen millions of users over nearly a decade, such as The Keeper's (warning: contains nudity).

The interesting problem, which Google seems interested in addressing, is how to find people of similar interests, and more importantly perhaps, how to reduce the signal to noise ratio. An old Garfield comic once said "you have two ears and a mouth so you can tell half of what you hear". Some people seem to have a much lower input to output ratio, sometimes for the better, sometimes not.