Today ReadWriteWeb, one of the leading tech blogs, was acquired by SAY Media for $5 million. It may seem like a lot at first glance, but the site was started 8 years ago and it is one of the top 30 blogs in the world according to Technorati. The reason the site went for so little is that they lost their leadership position in the “tech blog” space to Techcrunch. The content they were producing at that point wasn’t able to monetize very well (it wasn’t targeted at a specific audience).

The best play would have been to become a specialized niche blog, but they opted not to take that route. It validates a bigger theme that I’ve been focusing on in recent weeks: niche content converts extremely well. Once you remove the niche or dilute it, you end up killing your business. The only way you can make money if you take the broad niche approach is to produce incredibly high traffic numbers.

That’s why HuffingtonPost was acquired for so much ($315 million). They’re a content farm that drives massive amounts of traffic. Yet smaller publications that target a specific niche (e.g. InsideFacebook, Copyblogger, etc) can produce much more revenue with a fraction of the traffic. If you are going to invest your time in one or the other, I’d place my chips on the niche route. Best of all, there’s always a chance that your niche business will become mainstream (think of how Facebook started with universities and now has the world). It’s much harder to go from mainstream to niche.

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