I'm slightly reluctant to mess with Jason Calacanis, founder of the defunct Silicon Alley Reporter, because he might get addicted to the attention. Heck, he already got addicted to the attention, back in 1999, and has been in search of his next fix ever since. So here goes.
   The backdrop: Calacanis thinks exciting b2b blogs such as gridcomputing.weblogsinc.com are going to be worth gazillions. His evidence? Ad revenues for Gawker and Gizmodo, Rafat Ali's site, and Matt Drudge.
   Data points! Yay! Except Calacanis gets his numbers all wrong. His estimate on Drudge comes from Business 2.0, and assumes, heroically, the site sells out all its ad inventory. And Calacanis seems, trapped in his boomtime warp, to forget about those irritating items called expenses. Editorial, production, commission on ad sales, web hosting. The Gawker sites, particularly as more launch, won't be profitable for years.
   Finally, in calculating valuations, Calacanis assumes a revenue multiple of 2-4 and an earnings multiple of 3-5. Which would imply, miraculously, earnings of 66-80% of revenues, which would give blogs margins about twice as fat as the most profitable media businesses in history.
   Blog gold! A harmless fantasy, right? (And good for suckering investors and writers.) Yeah -- unless the merchant starts sucking on his own hype, as Calacanis should know. This is, after all, the guy who turned down a c.$100m offer for that jumped-up newsletter called Silicon Alley Reporter. Calacanis should be careful about posing as an expert on valuation.
Can a Blog Be Worth a Couple of Million Dollars? [Calacanis]