Twilight of the Blogs


Big props to Dan Gross at Slate for his shout out in his latest column:

"As a cultural phenomenon, blogs are in their gangly adolescence. Every day,
thousands of people around the world launch their blogs on LiveJournal or the Iranian
equivalent. But as businesses, blogs may have peaked. There are troubling
signs—akin to the 1999 warnings about the Internet bubble—that suggest blogs
have just hit their top.

The Magazine Cover Indicator: That’s a term coined by Barry
Ritholtz, a blogger
and hedge-fund manager. Being plastered on the front of a national magazine is
fatal for an investment trend. Remember Time‘s infamous anointing of Jeffrey Bezos as the "Man of the Year" for 1999? More recently,
Time‘s crack trend-sniffing squad was working overtime to
prepare this week’s cover package on Google just as the stock began to melt down. New York isn’t quite a
national magazine, but its recent blog
cover story
will no doubt be quickly copied by the newsweeklies.
(In the article, Clive Thompson concludes that the blog industry has
already tri-furcated into an "A-list of a few extremely lucky, well-trafficked
blogs—then hordes of people stuck on the B-list or C-list, also-rans who can’t
figure out why their audiences stay so comparatively puny no matter how hard
they work." In other words, a few people will make money—journalist money, not
Wall Street money—and the hordes of late joiners will make nothing.)"

Way Cool! Thanks for the props . . .


UPDATE February 17, 2006 5:45am
For the record, I did not create this indicator — its been known for a long while in various forms, and with differing track records for accuracy. I emailed that to Dan last evening, and he wrote back that since I put it into context and re-popularlized it (repeatedly), he was acknowledging my contribution for the phrase. (If you can find prior use of the phrase "Magazine Cover Indicator" prior to January 2001, please email me). 

Here’s the real power of blogs:  Anyone doing research on this subject ends up coming here. On Google, The Big Picture is the first two hits on the phrase "magazine cover indicator," and the first two hits on the phrase "contrary indicator" (with article Dan referenced as the next two hits).   

So I got that goin for me, which is nice.*


Twilight of the Blogs
Are they over as a business?
Daniel Gross
Slate, Thursday, Feb. 16, 2006, at 5:14 PM ET

Contrary Indicators Tip Off Discerning Investors in Year 2000
Barry Ritholtz,1:52 PM ET 1/5/01

*  So I jump ship in Hong Kong and make my way over to Tibet, and I get on as a looper at a course over in the Himalayas. A looper, you know, a caddy, a looper, a jock. So, I tell them I’m a pro jock, and who do you think they give me? The Dalai Lama, himself. Twelfth son of the Lama. The flowing robes, the grace, bald… striking. So, I’m on the first tee with him. I give him the driver. He hauls off and whacks one – big hitter, the Lama – long, into a ten-thousand foot crevasse, right at the base of this glacier. Do you know what the Lama says? Gunga galunga… gunga, gunga-galunga. So we finish the eighteenth and he’s gonna stiff me. And I say, "Hey, Lama, hey, how about a little something, you know, for the effort, you know." And he says, "Oh, uh, there won’t be any money . . . but when you die, on your deathbed, you will receive total consciousness." So I got that goin’ for me, which is nice.   -Carl Spackler

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What's been said:

Discussions found on the web:
  1. jzeide commented on Feb 16

    Yeah the cover curse is a Sports Illustrated thing..he called u a hedge fund manager though… is that now a catchall? :o)

  2. alex parkhurst commented on Feb 16

    I thought that the magazine cover indicator was begun by Paul Macrae Montgomery. I was reading about his indicator 25 years ago.

  3. anon commented on Feb 16

    Dan Gross writes a lot of stuff that is interesting to me. However, I must say this is one of my least favorite works by Gross.

    For starters, Google is not exactly “melting down”. It might be more appropriate to say “retrenching”. Google’s per share price is still far higher than the initial IPO price. Volatility is to be expected. A smart or patient investor may be selling covered puts on Google. Gross needs to be a lot more patient and wait for Google to dip below $100 per share before writing “melt down”.

    “and the hordes of late joiners will make nothing.”

    Some people are blogging as complements for what they do (which may have nothing to do with journalism). Some people are blogging as a way to market themselves for what they want to do. Some people may feel “miserable” and blogging may help health. Some people are blogging to communicate with friends and families and are not trying to be journalists. These people may not make “cash” yet they make or earn something. They derive a utility that has nothing to do with cash or recognition.

    When it come to blogs, the nature (not the size) of the audience is what matters. One message on a blog taken very seriously by someone who manages 100s of millions of dollars may be more effective than a financial column written by a journalist in Slate.

  4. Daniel Nerezov commented on Feb 16

    Blogs were always just a light weight content management system. There were never intended as some sort of a business model.

    The opportunity always was and always will be in offering blogs to small businesses who’ll be able to better differentiate them selves.

    Heaven knows why there are so many people out there who are betting on AdSense to finance their retirement.

  5. anon commented on Feb 16

    Many people may be interested in “learning” about Ad Sense as much as the “earnings” from Ad Sense.

  6. Martha Bridegam commented on Feb 17

    In the past two months or so a lot of blogs have been founded on comparatively narrow business-related topics. I’m helping to start one on reverse mortgages. There’s probably no room for new broad-category weblogs like Instapundit, but blogs addressing a narrow, specific type of query may be something else again.

  7. Dan Green commented on Feb 17

    This is akin to the Madden Cover jinx, too. Woe to my Eagles and Donovan McTurtle.

    A B-List Also-Ran

  8. d commented on Feb 17

    Criminy. People who really think the Internet is about money have a lot to learn. ;^)

    Oh wait, maybe it’s better if they don’t ever learn it… ;^)

    I’ve been on the Internet (and before that, Arpanet) for over 20 years. Companies I’ve worked for were doing cross country and trans-atlantic communications over the Arpanet that were just as sophisticated as anything we use now (minus the pretty pictures, of course). I’ve communicated with people world-wide via computers for over 20 years.

    Anyone who really thinks the only thing that’s important about blogging is making a buck off it simply doesn’t get it.

  9. Michael commented on Feb 17

    Yep, Marty Pring writes PMM’s magazine cover indicator in one of his TA books along with the “guru” indicator (Edson Gould!!! I’m not old enogh for him!) just like Kosmo Cramer.

    Still doesn’t hurt to be reminded.

  10. DG commented on Feb 17

    Hey Wang! I hear this place is restricted. Dont tell ’em you’re Jewish!

  11. blue][erring commented on Feb 17

    blogs are in the sticking fingers in electric sockets stage, not gangly adolescent. there is great brilliance and growth in the toddler stage, and the seeds and signs of the future.

  12. JW commented on Feb 17

    Better to have long-tailed and lost, then to never have blogged at all. But any blog which can deliver the entire Carl Spackler, pitchfork-at-throat life story, is one that deserves its place in the bookmarks. Well done!

  13. haraldb commented on Feb 17

    hey! orange balls…gimme six of those, gimme four of those, gimme a box of those naked lady tees…oh, this is the worst hat I ever saw, what, do you buy a hat like this, I bet you get a free bowl of soup.

    Looks good on you, though.

  14. Lord commented on Feb 17

    Maybe we’ll all get real jobs and won’t have time for them anymore.

  15. Barry Ritholtz commented on Feb 17

    Here’s the feedback on the name cover indicator:

    Yep, Marty Pring writes PMM’s magazine cover indicator in one of his TA books along with the “guru” indicator (Edson Gould!!! I’m not old enogh for him!)

    just like Kosmo Cramer.

    Still doesn’t hurt to be reminded.
    I don’t know about the exact phrase, but the concept I believe originated with Paul Macrae Montgomery in Newport News, Virginia. He was with Legg Mason for years, and now has his own RIA firm, Montgomery Capital Management. He used to be quoted often in Barron’s on this topic, usually by Abelson. I also seem to recall that his first hit with this idea was in 1982 with the Business Week cover “The Death of Equities.”

    Great site, by the way. Indispensable reading for me everyday, if for no other reason than that I share your basic bearish view of the economy at this particular juncture. You articulate our case quite well.

    The guy who popularized the magazine-cover-as-contrary indicator idea is Paul Macrae Montgomery. Here’s a 1998 story from him that we ran at

    Here’s something from 1996 from the IHT

    Here’s one from 1993

    I’m pretty sure Jim Bianco has written about the mag cover indicator for years I put a call into one of his affiliate offices to see if I can get them to dig something up –


  16. Jay Walker commented on Feb 17

    Blogs are just starting to enter general public awareness. To say that it’s “peaking” is hyperbole at it’s finest.

    Let’s think about the 500 channel universe. While each individual channel may earn less, on average, than in the “good old days” of just ABC, NBC and CBS, in the aggregate TV is earning far more. Blogs are fascinating and offer even more potential than the 500 channel universe.

    As one writer here notes, “general” blogs (ie NBC, CBS, ABC) might not offer a lot of opportunity, but there’s massive opportunity for the individual specialty blogs.

    They might not make the writers rich, but they seem capable of providing many interesting writers a fine supplementary income.

    Jay Walker

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