The Technorati content play is good for the blogosphere

Some parts of the blogosphere are aghast today over news that Technorati is hiring bloggers to add original content to Technorati.com

The normally sensible Boris over at The Next Web claims that Technorati is “biting the hand that feeds it” and has had “an unclear strategy for the future” until now. From the outside I can see to some degree where he’s coming from, but that analysis ignores Technorati’s public behavior under current CEO Richard Jalichandra.

I had the opportunity to sit down with Richard nearly two weeks ago in Technorati’s office in San Francisco. Much of what he told me was off the record, so I can’t repeat all of it. I should also disclose at this stage that Technorati sells our ads here at The Inquisitr. The content play is hardly new, even based on what is currently on the public record.

Technorati strategically shifted with the change of leadership around 2 years ago from a company that seemingly reinvented itself every six months without really having a strong revenue stream, to a company that helped bloggers with more than stats: they started selling ads. Technorati Media was born, and despite not getting a lot of attention, they now count among their number some big blog properties, including the Pet Holdings blogs (I Can Has Cheeseburger, Failblog and more.) They are, at least according to the stats they provided me, among the largest blog ad companies now by volume of traffic.

Ads are only one part of the puzzle, with the content play being the other. Ad networks work best with more inventory; yes, quality comes into that equation, but likewise if you don’t have scale, quality doesn’t mean much. Technorati’s interest in owning content (and therefore inventory) following the move into advertising is best demonstrated when Technorati acquired BlogCritics in August 2008; until recently I always thought that acquisition was a little strange, but Richard explained that it gave them a base from which to learn about what works and doesn’t work with advertising, and it turned out to be a great buy for them.

Blogcritics wasn’t alone though, because Technorati nearly acquired a bigger property again: b5media in April 2008. The TechCrunch coverage is here; that story would have been written by me but I passed it on at the time due to the possibility of a conflict of interest with b5media. I’ve heard the story about the failed acquisition from both sides, and I can’t publicly comment on it, only to say that it went very, very close to happening. The acquisition of b5media by Technorati was primarily an inventory play; Technorati would have purchased a company that at its peak was doing somewhere around 20 million page views a month, a perfect base to build an ad network on.

I’m not aware of any other blog acquisitions Technorati has looked at, but I’d be surprised if they didn’t look at others along the way. Quality blog properties with a ton of traffic that are open to sale aren’t exactly thick on the ground, so we get to the stage that Technorati is hungry for inventory, but either hasn’t been able to buy sites, or has simply moved on to the next stage: creating that inventory themselves, based on the knowledge they acquired by buying Blogcritics.

Is Technorati really biting the hand that feeds them? Zee writes “Whatever their plans are it’s a risky strategy to compete with the same blogs you are tracking. I would have also appreciated it if Technorati would have focused on improving their current services first,” but that analysis completely ignores the fact that Technorati today is primarily an ad network. I should note though that Technorati isn’t ignoring its public blog tracking services, and I’m told by Richard that they are working on new (and dare I say exciting without disclosing what they are) initiatives there, some of which will be available before the end of the year.

Technorati going into content doesn’t bite the hand that feeds them, and the outcome is quite the opposite: Technorati with content not only offers jobs to bloggers directly, but better still the advertising side grows, and the more it grows the better Technorati is able to service existing and future publishers of Technorati Media. I for one want strong advertising companies that understand blogging and bloggers, and Technorati is setting itself up to be one of the leading advertising companies in the space.