Gossip websites: Talk is cheap, but celebrity gossip can be priceless

Celebrity blog DotSpotter has been snapped up by one of America's biggest TV networks for $10m. It's a small price to pay for some of the hottest talent around, says Rebecca Armstrong

Wicked whisper: which ageing US media star has splashed a cool $10m (£5m) on a fresh-faced 10-month-old? Insiders are raising eyebrows at the buy, hinting at ulterior motives...

This may sound like a post on a Hollywood gossip site but in fact it's the story of one such site. CBS, one of America's biggest radio and television networks, last week paid a reported $10m for little-known celebrity gossip blog DotSpotter.com.

The San Francisco-based site, which launched in January, bills itself as "The Pulse of Pop Culture" and offers its readers a mix of gossip, news, pictures and videos that is almost identical to any number of similarly scurrilous websites. So why has the Interactive President of CBS, Quincy Smith, decided to buy up a site that has a relatively paltry 350,000 visitors a month? Particularly in a market that's already crowded with scandal sites such as the notorious – and insanely popular – Perez Hilton.com?

"I doubt that CBS are buying DotSpotter for exposure or reach because the audiences are relatively small," says Alex Burmaster, Internet Analyst for Nielsen/NetRatings. "CBS could be tapping into it with a hope that the site will become more and more popular, with the increasingly insatiable desire for all things celebrity."

Gossip websites and blogs have become must-have acquisitions for mainstream media companies. AOL is the proud owner of TMZ.com, which welcomes a healthy 1.6 million visitors every month and Yahoo! acquired celebrity news site OMG.com in June this year. Some web commentators have accused CBS of jumping on the bandwagon.

"I suppose CBS are banking on DotSpotter becoming much bigger and are getting in now before prices get ridiculous, something that often happens when the 'next big thing' is touted around online," suggests Burmaster.

One reason for the seemingly unstoppable popularity of gossip sites is that websites can attract readers with stories that are much more risqué than anything published by traditional printed publications. Popbitch, a British weekly gossip email that goes out to 360,000 subscribers regularly contains information that could land a celebrity magazine in court. By using an email format, it is easier for its publishers to avoid being sued for libel as its content isn't archived or available online.

HolyMoly.co.uk, Popbitch's main competitor, consists of a website and mail-out with slightly higher production values that it's rival. It too usually manages to operate below the litigation-radar, because stars tend to be reluctant to take small-scale sites to court over rumours mainly because court action guarantees more publicity.

But the bigger the site, the more likely it is to come under legal scrutiny. Perez Hilton's hilariously harsh blog may be produced by one man and his laptop – the Cuban-American Mario Lavandeira – but it can receive up to 4.75 million visitors per day.

Such is his following that slighted celebrities – and their friends – can take his site extremely seriously. Samantha Ronson, Lindsay Lohan's best friend, sued Hilton for defamation just last week. Gossip sites also attract a key demographic that is gold dust to advertisers.

"The audience is particularly concentrated on that 25 to 34 year-old-demographic," says Burmaster. "Females in this age group make up around four times more of the audience of these kinds of sites as they do across the internet as a whole."

Recent advertisers on HolyMoly include TV programmes such as Family Guy, T-Mobile and Garnier – big brands are flocking to sell their wares via edgy online sites. But CBS has an ulterior motive for snapping up DotSpotter, however, according to Quincey Smith.

"I'm not buying this thinking we're giving TMZ a run for their money," Smith told Hollywoodreporter.com. "There's no way we can compete with that." Instead, it's the people behind the site that are what attracted him.

DotSpotter was co-founded by Anthony Soohoo, a former Yahoo! executive, and reportedly has ex-YouTube and current Facebook chief financial officer Gideon Yu as an investor.

"We're going to buy these guys as a core team, and we're going to unleash them on CBS.com." While it seems unlikely that CBS is going to be running scoops on stars wearing no knickers any time soon, it looks likely that the site is going to get one hell of an overhaul if it's going to make Smith's investment worthwhile.

Celebs on the web: the world's top gossip sites

* Perezhilton.com

The self-styled "Hollywood's Most-Hated Web Site!" is also the web's most popular gossip site. The blog started in 2004 as PageSixSixSix.com. Perez Hilton is the pseudonym of 29-year-old Mario Lavandeira whose vitriolic comments and habit of drawing over celebrity pictures have made him one of the best-known bloggers in the world.

Audience: up to 4.75 million daily

* TMZ.com

Launched in 2005 by AOL, TMZ stands for "thirty-mile zone", a term that originally described the area around Hollywood in which "on location" shoots were regulated. Famous scoops include the transcript of Mel Gibson's arrest for drink driving and Anna Nicole Smith's death. A TMZ TV show launched in America last month.

Audience: 1.6 million per month

* HolyMoly.co.uk

The weekly Holy Moly email causes a stir in offices every Friday thanks to its mix of close-to-the-bone celebrity stories and gossip. It has recently launched on Facebook with a live feed.

Audience: 240,000 weekly mail-out subscribers and 750,000 web visitors per month

* Popbitch

Created by former Emap employee Neil Stevenson in 2000, Popbitch is a lo-fi weekly email of gossip and jokes. Stories come from an army of anonymous contributors who dish the dirt on celebs they encounter.

Audience: 360,000 weekly mail- out subscribers

* Usmagazine.com

The online arm of Us Weekly went live in autumn last year. Unlike its UK cousins, Usmagazine.com gives its celebrity subjects an easier ride and has high production values. Offers games, videos, quizzes and polls as well as news and pictures.

Audience: About one million per month

* Defamer.com

Part of Gawker Media, a group of sites set up by English alien in New York Nick Denton, a former FT reporter. Defamer focuses on the Los Angeles showbiz sphere. Because it is independently owned, Defamer.com can break stories that corporation-backed gossip sites can't. Its "Gawker Stalker" section lets visitors upload real-time details of celebrity spottings.

Audience: 2,085,292 per month