Yesterday, someone calling himself Shylock slapped together some data on the traffic over at Gawker Media, the network of blogs run by immensely cranium'd publisher Nick Denton and written by a rotating cast of editors. Sparing you the calculations on page views and ad rates, we'll cut to the chase: Shylock figured that Gawker Media was making some $52 million in annual revenue. It's okay: We oopsied a little too.
But blogger Greg Allen then took a far more sensible take, deducting all sorts of things from that massive retail number (like ad space that goes unused, probably discounts for advertisers who buy in bulk, commission for sales staff, etc.) and came up with a mere $20 million in annual revenue. We're skeptical Allen is exactly correct, but his figure sounds more reasonable, and, hating math as we do, we'll stick with his number. But, even so, that's still only revenue. When expenses are considered, just how many dollars does the chinny cherub actually get to stuff in his big, British pockets? Let's investigate!
In 2005, Gawker Media's bloggers made $2,500 a month. With the success and expansion of the company have come raises and pay scales, we hear (okay, let's be honest — some of your Intel editors have an, um, intimate knowledge of Gawker's sinister interior. Consider your information officially insider.) site editors, on average, make around $70K now. Counting names on the fourteen mastheads shows approximately 35 full-time editors, which has Denton shelling out $2.5 million in editorial paychecks every year. Already we're down to $17.5 million of profit.
If you look at Gawker Media's Facebook network, you'll see that there are 99 employees (belonging to the network is a company mandate, though intra-office Facebook poking is discouraged). So that's 64 people who are employed but not as editors. Let's blindly assume about 40 of those folks are full-time and also making $70K a year, on average. That's another $2.8 million from Denton's wallet. Including the two dozen or so freelancers and interns, we'll round that up to an even $3 million. That brings the company's net to $14.5 million.
Denton employs an incentive bonus system for his writers based on quarterly traffic targets. There was a time when there was a $10K maximum bonus, per quarter, to be divided among editors on a given site. Nowadays, traffic is bigger and there are more bloggers per site, so we'll guess that the quarterly bonus pool is $15K per site. Of course, bloggers don't typically snare the max bonus, so we'll assume that 33 percent of a site's bonus pool is getting used. That's $5K being dished out, four times a year, across fourteen sites: $280K in bonuses. Then there's probably traffic and sales bonuses for tech, ad, and managerial staff — and based on the edit versions, we'll put that number at $100K. Minus that $380,000, Denton's annual piggy bank now sits at a pitiable $14.1 million.
But the profit just keeps getting smaller: We have it on quasi-decent authority that Gawker pays around $10K per month in rent on their Crosby Street storefront (frankly, if that's accurate, we'd love to see the lease on that baby — must be a gem). Subtract another $120K, and now Denton's left sitting on a pile of $13.9 million, before taxes and business development.
This is all based on the $20 million in revenue estimate. We're not sure it's that low, but the company is hardly making $52 million. Whatever the amount, Denton probably has about $6 million and change in annual expenses. Which, regardless of the actual total revenue, still leaves a nice profit — a $14 million profit on $6 million in expenses sure isn't bad, if not quite as astronomically nice as a $46 million profit.
Now, if you'll excuse us, we have to tend to the barrage of IMs telling us how totally wrong we are.