They reach large, loyal audiences, they’re fairly cheap to run, and they can be lucrative. Media companies have their checkbooks ready

From Standard&Poor’s Equity Research. From Standard&Poor’s investing newsletter The Outlook

First came social networks. Then virtual worlds. Now blogs are dazzling the eyes of major media publishers as the next takeover targets.

Blogs–especially the big-name brands such as TechCrunch, Gawker, GigaOm, Boing Boing, and the Huffington Post–appear to have attractive business models. This is good news for traditional media companies that are being marginalized online and off, and are hoping to catch up to–and cash in on–a rapidly evolving Web 2.0 world.

That blogs–which generally provide continuously updated commentary on a particular subject, such as politics, economics, local news, or entertainment–are gaining acceptance by old media companies reflects their acknowledgement that Internet users would rather participate in the news than simply consume it. In addition, blogs are typically aimed at a niche audience; and each, with its own particular voice and point of view, develops a”community”of readers, and increases the potential for targeted advertising. Continue reading →