April 30, 08 - Newsletter - Wednesday, April 30, 2008
Wednesday, April 30, 2008
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@ EconSM: Social Video Explosion: We Don’t Need Hits; Longform Can Work

By Robert Andrews - Tue 29 Apr 2008 08:54 AM PST

Panel moderator Robert Scoble opened by asking our guests for an overview of the emerging social video space. Loic Le Meur, CEO of webcam video commenting startup Seesmic, said “about 200 blogs” had adopted the site’s new video commenting plugin, allowing anyone with a webcam to respond to a blog post by recording video, in the last three days. Le Meur: “We are focusing on enabling conversation in video. The conversation we have on blogs happens only in text; there is no conversation, it’s not very interactive. I believe we will get the same quality of conversation you get in blog comments but in video.”

-- The long and the short: Conventional wisdom says internet users want only short clips. But Jim Louderbeck, CEO of Diggnation production house Revision 3 said: “250,000 people watch (hour-long) Diggnation every week so people will watch longform content. Shortform isn’t going away - the context in how people view is bifurcating.” Meaning, some people will watch a long show on their computer, some on their iPod, some on their cellphone, some on a 50-inch LCD TV. But some will play portions of shows across every device, depending on their situation.

Louderbeck said there are now three primetimes beer-drinking relaxers at 8pm-11pm; bored office workers at 12pm-2pm and now young male geeks at home12am-4am on a Saturday night:"I’ll leave it to you to figure out what they’re looking for. Proving the point about TV-like content, Veoh founder Dmitry Shapiro said 30,000 people every day download Veoh’s electronic program guide app. More online here.

Posted in: Media, Conferences
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@ Econ SM: Keynote Q&A Steve Wadsworth; The Problem Is Too Many Measurements

By Joseph Weisenthal - Tue 29 Apr 2008 09:47 AM PST

Just in case you were curious: The Miley Cyrus pictures will not be appearing on anytime soon, at least according to Steve Wadsworth, President, Walt Disney Internet Group (NYSE: DIS). Stepping back from recent history to ancient history, during a keynote Q&A at EconSM, Kara Swisher asked Wadsworth to go back and discuss Disney’s early (and largely failed) internet forays during the last boom: “Our experience with the internet pretty much parallels the history of the internet.” Basically, like everyone else, Disney thought it was all about being a player in the portal space, and it thought it needed to own the gateway between the consumer and its content. Wadsworth: “"Let’s establish our own position in the space. The thinking was a good one, but the timing was so off.” Swisher: “Other than that Mrs. Lincoln...”

Business models: Wadsworth: “Ultimately, what this game is about is creating phenomenal creative product... We’re focused on creativity—creating content that engages a large audience.” He then talked about the need to keep iterating, learning from what works and applying it elsewhere. For the company’s organically launched Toontown, the initial business model was “sign-up for fr*ee and play for three days and if you don’t give us your credit card, we kick you out.” This failed. Only when it learned from Club Penguin, did it learn to let people play as much for fr*ee as they wanted, but then to charge them for certain specific things. Also, the Club Penguin franchise can go the other way. We’re used to seeing web and merchandise base off of movies (eg Pirates of the Carribean), but there will be opportunities to do offline stuff with Club Penguin.

Deals?: Wadsworth was asked whether Disney could be interested in buying Webkinz, though he demured by insisting “I Don’t know Webkinz is for sale.” Swisher: “Everything is for sale... except Yahoo.” As for other startup trends that Wadsowrth is seeing: “there’s a lot of versions of the same thing” (yes there are).

Advertising: One frustration of Wadsworth’s: “As measurable as this medium is, there are too many measurements.” Brand advertisers still don’t know what kind of ROI they’re getting, or really how to judge what they should be spending on a given chunk of ad inventory: “They understand TV, and they’re familiar with what the metrics mean.” To which he added: “To say they’re slow means they’re being savvy and smart.” Google (NSDQ: GOOG) is the one company that offers a clear proposition, hence their success.

Video advertising: “We have tons of video... mostly it’s 15-second or 30-second pre-roll slots.” This has to change, Wadsworth acknowledged, since pre-roll is an engagement killer. At “interactive ad experience leads to much higher engagement.” The problem is that advertisers are hesitant to spend the money on new creative for these interactive ads... at least that’s Wadsworths view.

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@ EconSM: MTVN’s Social Media Challenge: Reaching $1 Billion In Digital Revenues

By David Kaplan - Tue 29 Apr 2008 10:26 AM PST

Alluding to Viacom’s (NYSE: VIA) decision to pass on buying MySpace, Staci D. Kramer, co-editor/EVP for paidContent parent ContentNext Media, asked a panel of MTV Network executives about missed opportunities in the social media space during one of the morning sessions at our company’s EconSM conference. Missing out on the number one social network hasn’t been too painful for MTVN, the panelists said. In some smaller ways, Viacom-owned MTVN was ahead of the curve, buying kids web company Neopets in 2005 for $160 million. At the time, though, the company was widely viewed as having under-invested in digital.

But the challenge the company faces is balancing the need for its various digital properties to not only be successful in their own right, but to recognize the need to move audiences back to the TV screen, whether it’s MTV or Nickelodeon or Comedy Central. But by the end of session, MTVN exec made it clear that they were focusing aggressively on doubling its digital revenues to $1 billion and that it wasn’t just an adjunct to its TV properties.

-- Making up for missed opportunities: Erik Flannigan, EVP-Digital Media, MTVN Entertainment Group: Video was a big opportunity that we missed. Think of Colbert and South Part across all the viral video space. It seems to fundamental now. We may not have a massive multiplayer game built around South Park, but the fact that we have it available now for embedding is a big step. Another area that MTVN has made up for lost time is in the gaming arena. Steve Youngwood, EVP-Digital Media, MTVN Kids and Family Group: AddictingGames is an acquisition that really has worked out. It is not completely open like YouTube. And it is very viral - you can embed games on your MySpace page for example. More online here.

Posted in: Advertising, Companies, Entertainment, Media, Social Media, Conferences
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@ EconSM: Grown-Up Start-Ups: Profitability Is A Choice; Take Time To Suck

By Robert Andrews - Tue 29 Apr 2008 11:27 AM PST

Shawn Gold, moderator for this session on scaling social media start-ups in to larger enterprises, kicked off with a challenge: “Hands up if your profitable”. Palms went up from half the panel - Wordpress maker Automattic’s CEO Toni Schneider and SocialMedia Networks CEO Seth Goldstein. “Nice!,” said Gold. But how did these new companies do it so quick?

-- A rolling start: Schneider, whose company had written the Wordpress open-source software before launching a parallel commercial venture supporting blogs like New York Times’: “We were lucky in a way - we already had a lot of momentum (from the downloadable Wordpress). We were able to come in and be immediately profitable offering services to large businesses, where they wanted a commercial entity to hold their hand a bit.” Maybe starting a company is a little easier when you have thousands of volunteer staff in timezones around the world - Schneider said thousands of people helped build the software but Auttomatic employs only 200. co-founder Keith Richman: “Profitability is, at this point, a choice of how much we choose to invest in the business. The real inv*stm*nt is just new sales people. Each new sales person has a hard cost of $75,000 to $100,000, depending on how you use a recruiter. So when you grow yours sales organization from three to 15, you are making an inv*stm*nt in the company but it hurts your revenue.”

-- Time to suck: Dalton Caldwell, CEO of ad-supported media streaming social network imeem certainly agrees growing gracefully is best: “The company made a lot of mistakes; we made several iterations of the product and we got it right two and a half years ago in terms of user experience.” More online here.

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@ EconSM: Q&A: Jeff Weiner, EVP Network Division, Yahoo; Lighting Up Yahoo’s Social Connections

By Joseph Weisenthal - Tue 29 Apr 2008 01:56 PM PST

Last week at the Web 2.0 Expo, Yahoo (NSDQ: YHOO) took the wraps off its new social initiative dubbed Yahoo! Open Strategy—but it’s not a social network! “The world doesn’t need another social network,” said Jeff Weiner, Network Division EVP of Yahoo, during a Q&A with ContentNext Co-Editor Staci Kramer at EconSM. Whether that’s true or not, Y!OS is not Yahoo! 360 redux (or so the company hopes). All in all, it’s rather Facebookish, as Weiner talked about leveraging Yahoo’s “social graph” and its unique data.

Consumers: So how will this change the user experience on Yahoo? Winder: “Anecdotally, think of the last time you were on Facebook... everything you see on Facebook is cause you put it there.” This is compared to, where basically nothing is put there because the user wanted it ( is an exception). But don’t expect the Facebook model to replace Yahoo’s model, as Weiner insisted that the two systems aren’t mutually exclusive. A very clear change coming down the pike: Yahoo will move towards single user profiles (this seems pretty necessary to really build up the social experience), rather than its current fragmented system: “We have over 25 different profile experiences on” These include Mail, Chat, Groups, and several others.

Past failures: There are plenty of reasons why Yahoo 360 failed to take off. The product lacked a clear idea of what it wanted to be, and it was too Yahoo-focused, not drawing in content from elsewhere on the web. It also can be chalked up to Yahoo’s internal organization, which was previously broken up into too many silos, preventing any horizontal social experience More after the jump.

The business rationale: All of this talk of getting more social is nice, and bloggers like to write about it, but how will this play to Wall St., which, in the event that Yahoo is a standalone company going forward, is mainly concerned about dollar signs. Weinder didn’t have a planned answer for this, and his vision for how Yahoo will profit sounded a tad Beaconish: ‘The company serving (the ads) can glean the intention to better serve that advertising. One of he challenges a lot of the social exchanges (is) it’s very difficult to abstract the intention... we are in strong position ot understand the intention and monetize that intention.” Good luck that.

If Yahoo were a restaurant: During the audience Q&A, Kara Swisher poked fun at the endless stream of product announcements that come out of Yahoo, many of which are good ideas, but lack coherence. She suggested that before long, Yahoo will likely open a chain of restaurants. When Weiner asked back what kind of restaurant the company would have, Kara shot back with (arguably the line of the day): “If yahoo were a restaurant, they’d serve everything.”

Microsoft: This is the big question that matters, but no news made here, might as well save it for last: “I’m not going to be able to comment on any deal speculation.” Weiner did argue that Ballmer’s wielding a sword over the company’s head hasn’t distracted the company from its new initiative. Yang said as much as well during last week’s conference call.

Posted in: Companies, Social Media, VC+M&A
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@ EconSM: Traditional Media Companies Fight The ‘Lumbering Giant’ Tag

By David Kaplan - Tue 29 Apr 2008 02:00 PM PST

Lumbering giants of the past or the prime innovators of the moment? That was the question moderator and EconSM conference editorial director Elizabeth Osder put to a panel of old media companies representing WSJ and its close relations, as well as Time Inc., Gannett (NYSE: GCI) and Martha Stewart. Upshot? While some collectively conceded to being somewhat lumbering in the past, that’s not the case anymore.

-- Not so lumbering: Gordon McLeod, president, The Wall Street Journal Digital Network : The reality is that everybody, the bloggers, was far ahead of us in terms of social media. The key is not screwing up the brand while adapting to the new changes. Jeff Price, president, Time Inc.’s SI Digital: Last year, digital comprised 15 percent of our revenues. We always knew that sports is social conversation and created a Facebook app. Kinsey Wilson, executive editor, USA Today: We got into social media and blogging three years ago. Last year, our site redesign put social media on every page of our site. Towards the end of the session, Thomas Mueller, VP, Creative/Product, Martha Stewart Living Omnimedia (NYSE: MSO) said getting all the MSLO properties in sync - from TV, print and the web - and it’s a lot easier when you have an idea. “Martha declared Cupcake Week and all the properties rallied around it. That’s how you can leverage the power of large organization.”

-- Where’s the value?: McLeod: Tagging and keywording has been a bomb on Marketwatch, while allowing commenting has been a natural fit. As the commenters have proved accurate, advertisers like Vanguard and other financial services marketers have warmed to the idea. Packaged goods advertisers have been slow to embrace our social media tools. Price: The big questions: why is the user there and how can you avoid getting in the way of the conversation? Ultimately, it’s about authenticity. That’s what advertisers value. He pointed to matching Gatorade with high school sports community Takkle, which also provides important local reach as well. Wilson: Advertisers want to be associated with new and innovative, but at the same time, they want the safe and proven.

-- Looking to mobile: Price: One of the struggles we have with sports is the rights issue. If a fan uploads a photo from his camera phone at a sports event, that brings up a load of legal issues. We don’t want to put ourselves at risk. While an audience member asked about whether mobile would open these companies to citizen journalism experiments, most of the executives say they continue to regard the issue as secondary. McLeod said that WSJ Digital Network and USAT‘s Wilson both said they’re more interested in putting mobile tools in the hands of their professional staffers first.

-- Syndication rules: Price said that syndicating SI’s content has to achieve three things - namely, “Make sure you can have your advertising travel with it, making sure it leads traffic back to the site and extend the brand’s value through widgets or other tools on social nets like Facebook. We’re not going to unbundle our content and not see any return, while some other site reaps the revenue.”

Posted in: Advertising, Broadband, Companies, Media, Mobile, Social Media, Conferences
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@ EconSM: Funny or Die Says Social Media Laughs Can Be A Serious Business

By Tricia Duryee - Tue 29 Apr 2008 02:09 PM PST

Dick Glover, the CEO of Funny or Die, the comedy site known for its smash hit short film “The Landlord,” starring Will Ferrell, and Chris Henchy, head of West Coast coordination for Gary Sanchez Productions, a studio started by himself, Will Ferrell and Adam McKay, spoke at EconSM about how you can turn a few laughs into a serious business. The panel was moderated by Jordan Levin, CEO of Generate, a next-generation production studio, who said since the site launched about a year ago, it’s attracted 18 to 19 million page views, and monthly unique visitors stand at about 3.2 million. In addition, 200 million videos have been watched, while 30,000 have been uploaded.

What do you get when you add a VC, a comedian, and a geek?: “We are not what people would see at Harvard or Stanford business school,” said Glover, “It’s set up to take the best of all the worlds.” The VCs provide the money, the tech-team is in Palo Alto, and the funny guys are in Hollywood. Henchy adds: “Sequoia Capital came to us to create a comedy Web site—We weren’t totally interested, but the more they talked to us, the more they sold us on the idea. They said you can do whatever you want. We thought we’d be involved in the day-to-day mainframes and the infrastructure—we don’t know anything about that.”

On monetising user-generated networks: The site is primarily supported by advertising, however, the company is looking more at product placements and offline opportunities. For instance, Gary Sanchez will promote its upcoming movie on Funny or Die. “We think those things will go hand in hand,” Glover said. As for product placements, “Clearly what we are very willing to do, is work with them [brands] on content that blurs the line between content and advertising...Where we’ve had success is in combining online and offline components in custom solutions. While we sell all the standard stuff, and it’s the bread and butter, the real play is premium content-based solutions. We are still looking for someone who would work for us to produce the worst-product placement ever done. I think you’ll see that someday.”

On managing UGC and professional content: Glover said that it doesn’t matter that there is both user-generated content and professional content on the same page. It’s filters allow the best content to float to the top. “Comedy is hard, so professional content tends to do better than user-generated content, but the users posting up the videos are the best consumers of the site. Many of them are trying to break into it professionally, and we are learning the craft in that way.”

On the company’s future: Glover said they are looking to create new verticals and become a brand both online and offline. “Funny or Die ultimately will be much more than a video site. It will be the comedy studio of the 21st century.” The company has also launched Shred or Die with Tony Hawk, Blue Collar or Die, and next week, they will be launching Eat, Drink or Die, which will be a food site with celebrity chefs. In the next six weeks, they’ll be doing a site in the video-gaming space, and a couple of other sites are in early development. He’s realistic on the timeframe in the sites becoming popular: “We don’t kid ourselves, Funny or Die was greatly accelerated by “Landlord.” Eat, Drink or Die is a really really cool destination Web site, withing an interesting space, but it will take time to build awareness and build a brand. When it’s built, we think there will be great opportunities offline in merchandising and products.”

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@ EconSM: Advertisers’ Love/Hate Relationship With Social Media

By David Kaplan - Tue 29 Apr 2008 03:45 PM PST

Advertisers and media companies have a strange disconnect when it comes to social media. On one hand, they’re heartily embrace the ability to directly engage with consumers. And on the other hand, they fear that engagement and are desperate to figure out how to control it and measure it. A mix of ad execs from the publishing side and the interactive agency side attempted to sort it all out during an afternoon panel at paidContent parent’s EconSM conference.

-- All advertising is local: Joanne Bradford, EVP of National Marketing Services, Spot Runner: Bought a company called Weblistic, have a web shooter and can produce immediate videos. Discussing the political panel that kicked off EconSM on Monday night, Bradford said: “I just thought those people are doing a lot of work and not getting a lot of money.” Larry Kramer, Senior Advisor, Polaris Venture Partners and ContentNext board member, opined that social media itself is the new local. “Everything we used to do in face to face groups, we’ve started experiencing as an online community.”

-- Tapping into passions, not locations: Other panelists mildly disagreed with the geographical aspects that social media allows. Passion and interests have replaced the need to focus on a geography in terms of figuring out how to make the most of a brand’s message, said Patrick Keane, EVP and CMO, CBS (NYSE: CBS) Interactive: Touted CBS’s 200 percent year-over-year growth for March Madness, which got a tremendous boost from its association with Facebook. Everyone wants to beat up social media as un-monetizable. We were able to sell a lot of ads across mobile and online. Music is another area that’s key. That’s why we bought Over half the traffic the site has happens outside of Sports and music are prime points for generating engagement, added Gordon Paddison, EVP of New Media and Marketing, New Line Cinema, which recently released the teen comedy Harold & Kumar Escape From Guantanamo Bay. “We ask people to upload their videos and yes, sometimes you get someone putting a hat on a penis, but obviously, that’s not the kind of engagement we want. Engagement levels are determined by how many social ads are generated, how many pages are created around a subject. Social nets are not in a position to give you adequate numbers to determine success.”

-- Measuring discussion: Ad agencies are still figuring out what numbers to use in order to identify successful use of a social media-based ad campaign. At the moment, a good indicator is seeing how much word of mouth you can get through community sites and blogs. Peter Kang, Group Creative Director, OgilvyWest. “Three years ago, we’d get a call: go make a viral video. Now, it’s make a widget. We try to get past the infatuation with the latest tool. Our clients ultimately care about sales at the end of the day, not what’s the latest technology. Amount of discussion is the only metric we’re linking to sales. There is often a direct correlation between the amount of discussion and sales.”

-- Learning to listen: Kang also said that marketers are using social media in less specific ways, such as “learning to listen” to what users are saying about brands. Paddison was incredulous. “After all these years of advertising, marketers are only now learning to listen to their consumers, thanks to the advent of social media? Well, that’s just pathetic.”

-- A challenge to attendees: Playing the curmudgeon, Paddison praises mobile as a great content platform, but it’s a lousy advertising platform. He happily offered to debate anyone after the conference who believes differently. He essentially argued that the display space is too small to make it worthwhile. He did say after that the iPhone and other phones that offer similar screens offer some hope. “I’m developing apps for the iPhone - but that’s just me. I’d love it if an advertiser could develop a program for the iPhone. But we’re not there yet.”

Posted in: Advertising, Companies, Entertainment, Media, Social Media
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@EconSM: AOL & Bebo; ‘The Final Leg Of The Stool’

By Joseph Weisenthal - Tue 29 Apr 2008 04:45 PM PST

AOL’s (NYSE: TWX) $850 million purchase of Bebo back in March was one of the big social media deals of the year. In a Q&A with ContentNext co-editor Staci Kramer and paidContent:UK Editor Robert Andrews, Ron Grant of AOL and Bebo’s Joanna Shields (live from London!) discussed the deal, and how the company would fit into the broader AOL.

The Plan: Grant: “There’s a real opportunity to open up these platforms and provide an environment that is very friendly to the user. We’re not trying to to build a destination, but rather lean into the fragmentation of the web.” More specifically, Bebo’s engagement marketing will be melded with AOL’s Platform A, an opportunity made available by the broad reach of the service. He described Bebo as the ”final leg of the stool” following the rebuilding of the sites (which has led to an impressive traffic spike) and the establishment of Platform A.

How it’s used: Shields: “In the UK, the 13-24 year olds are watching less and less television... if you’re trying to reach the young demographic, you have to reach them in the language in which they’re interacting with these sites.” Grant touted the redesign of AOL to make the various sites more appealing to youth, which has caused an increase in engagement.

International: Bebo will be a core platform for AOL’s international expansion: “When we think about social networking, we think more about the social anthropological side, and less about the technology and social graph, if you will.” So the challenge is to get the site right for each culture where Bebo is used.

Sponsored content: Robert brought up Bebo’s own sponsored content, and asked whether there were opportunities with Time Warner’s efforts. Grant was a little unclear on this: “I actually met Joanna at a Time Warner event in London.” He noted that the folks at Time Warner immediately felt that Bebo was a very friendly home for content. Shields “We’re not just chopping up television programs, we’re actually creating content that works in our environment.” And she assured that content creation wouldn’t be a costly albatross: “We don’t launch them until we know they’re going to be profitable... they’re all brand sponsored.” Is there anything lost when Bebo-oriented content goes to TV? Shields: “We’ve moved away from the shaky camera third-person type dramas... the expectation from the users is that they want that professional level of content.”

A home for content: A theme that Shields and Grant kept hitting on: Bebo is designed to be a home for content; unlike Facebook, it’s not designed to be a social communications utility. Between this angle and AOL’s Platform A expertise, the opportunity to monetize the site may be superior than what it’s been at other social nets. Or at least that’s the hope.

Justifying the acquisition: How soon can AOL show a dividend on Bebo? Don’t expect that projection anytime soon. Grant noted that the deal hasn’t closed yet and that Time Warner has given AOL broad leeway to do “what’s right” for the business.

The oddity of Bebo: Robert concluded by pointing out how surreal this discussion was: Bebo was start by someone from England, launched in San Francisco, operated largely in the UK, with an American head, being interviewed today by a Briton in LA.

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@ EconSM: Deals And Dealmakers: The Outlook For 2008

By Joseph Weisenthal - Tue 29 Apr 2008 05:17 PM PST

The final panel at EconSM was the deals panel, which ContentNext Editor and Publisher Rafat Ali described as the “flagship” panel.

Economy and outlook for 2008: Geoff Yang, Redpoint Ventures: “There’s been a lot of money raised in the venture business, but there aren’t that many spaces that have a lot of wind in their back... as such, you have a lot of money wanting to investing in the consumer internet... that’s been pushing extremely high valuations.” Companies are worried about the economy, and want to tank up, raising big amounts of cash (especially among later stage companies). However, even if thiings slow down, there will still be a big backlog of cash looking for a place to park itself. “I would expect that the number of acquisitions that have been done at recent prices will go down” But, for the next 2- 3 years, there will still be a vibrant M&A market. Ross Levinson, Velocity Interactive Group: “We’re coming to the end of the cycle.” But that’s not because things are dying down, as Levinsohn claims to be seeing more innovation than ever before. It’s just that this innovation is accompanied by compression. He added that his firm is telling companies to preserve cash and look out for good buyout opportunities: “You’re going to see some big names have to take down rounds.” (You can probably take some guesses on who that would be). Michael Hirshland, GP at Polars Venture Partners, declined to predict what economic effects there would be, and argued that to some extent, startups are economically immune. Later, Yang added that downmarkets are great times to invest: “I’m thrilled when its really dark out.”

Talent: Building the right team has been a challenge that’s frustrated several startups. Hirshland: It’s very difficult: ”We have a recruiting department of four full-time people, and that’s all they do.”

Buyouts: Shawn Colo, Head of M&A, Demand Media: Frequently, it’s more efficient to buy than to build from the inside. Of course, the heavily capitalized Demand Media has made several deals, most recently the social networking player Pluck. Jason Rapp, SVP M&A, IAC: Clearly the severe contraction of the credit markets has limited private equity. And it’s grown harder to be public, so selling to a strategic buyer makes more sense for a lot of companies. Rapp reiterated a point that others have made to defend the health of the consumer internet in the face of a downturn: “The measurability of the internet is what the marketers are looking for, so there’s a certain mitigation there.”

Hedge funds: Yang:” We’ve had a couple of hedge funds come into our companies and offer extremely high prices... and part of the attraction is not having to mark to market.” Basically in a downturn, they won’t have to mark that asset down. Beyond that, they’re hoping to be in a good spot for an eventual IPO once the downturn turns into an upturn: “Their rationalization is kind of a little bit weird... I think it screws things up for us.” Rapp: “An out of the money call on the next Google. There’s an abnormal return out there.”

Metrics: Colo: “For us, it really does boil down to profit metrics (ed note: shocking).. of the number of acquisitions that we’ve made, there have been one or two that haven’t been profitable at the month of acquisition.” Rapp: At IAC, it’s all about asking whether a company fulfills a compelling social need, and if so, then it’s about figuring out the size of that market. Hirshland: “I’d go as far as to say the idea of metrics doesn’t really fit into seed or early stage... it’s really all art.”

YHOO-MSFT: Will a theoretical merger of Microsoft and Yahoo harm the deals market? Yang says yes: “I would rather see a healthy Microsoft and a healthy Yahoo... we do best when there’s arms races.” But: ”Somebody’s gotta stop Google... it’s almost an unnatural share of market that they have.” Both Right Media and Zimbra, Yang noted, were Redpoint portfolio companies: “I’d like that to continue.” And if the deal doesn’t happen, Yahoo could be a huge buyer, predicts Yang, as it may have to make a measure, bet-the-company kind of move to stay competitive. But who, besides Facebook (and that’s not going to happen) would move the needle for Yahoo right now?

Posted in: Social Media, VC+M&A, Conferences
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@ EconSM: Interview: Ron Grant, President, AOL: Bebo Will Return Us To Our Roots

By Robert Andrews - Tue 29 Apr 2008 05:47 PM PST

AOL president Ron Grant, appearing on our EconSM panel, suggested new acquisition Bebo would be used to thread social features throughout AOL’s new-look websites. In a later chat with my colleagues David Kaplan, Staci Kramer and I, Grant expanded on the philosophy and talked about the “turnaround” for a content-conscious AOL (NYSE: TWX). He encapsulated a litany of hinted-at forthcoming social publishing initiatives: “We have a very different approach to content right now.” And how...

“We’re not trying to build a portal. We’re literally putting relevance front-and-center - relevant ads, relevant content, and letting the users decide where to take these platforms. That’s what you’ll see a lot with Bebo. We’re not going to care where the content comes from. We’re just going to put the right stuff in front of the right people.

“We have open APIs, we have the open platform that Bebo has. We have to look at everybody as a potential partner because, right now, it’s not about building destinations; it’s about really engaging people and expanding the reach. I’m not going to speak for Yahoo (NSDQ: YHOO), but what we believe right now is, we want to be able to take this social media aspect and allow the users to take it anywhere they want to go - whether it’s a Bebo environment, a Google (NSDQ: GOOG) environment or a desktop widget or it’s something that’s within a passion point.

You will see AOL much more return to its community roots and Bebo will play a very central role in that.”

“Our audience is growing, but it’s a new audience we’re attracting. Look at (men’s lifestyle site) Asylum - that’s a brand new audience; they don’t even know they’re on AOL.” No title is divulged yet for the imminent women’s version, but: “If you look at what we have already, even if we never launched anything initially, we’re, like, number three and we would catch iVillage and those folks.”

-- Locating Bebo’s president: “She’s going to be in two places basically. She’s going to be part of the (AOL) management team. I’ll leave it up to her whether she wants a corporate title! She’s going to have an office right next to mine in New York. At this point, she’s going to go back and forth. It’s going to be hard to go back and forth but I want to make sure she has a complete presence at headquarters. I know the people at Google (from where Shields joined Bebo) think she’s fantastic; she’s got a great team.”

-- ContentScreen: AOL claims to have a solution to marketers greatest fear about appearing next to objectionable content on social net pages. AOL’s Platform-A is launching a content-screening application that employs the same technology used by AOL’s spam controls. Except this is not for e-mail, this is for serving ads. The screening app will contextually crawl content pages to apply a quality score. Advertising will only be served to pages that surpass a planned “content-screening quality threshold.”

“It’s very much like what we built in our spam tool. We have looked at some of the better spam tools and we’re really able to look at all of the content across the social network and give them a score. That scoring algorithm gives advertisers comfort about what they want to be there and what they don’t want to be there. That’s a very important breakthrough in terms of monetizing social networking.

“The issue with all of these things is that you’re getting the right demographic audience. It’s all about transparency. You want to be able to give an advertiser a tool that is completely transparent so they can make some of the decisions before their ads go. We’ve been putting a lot of inv*stm*nt and emphasis on making sure we can monetize and scale social media.”

-- Sphere: Why did AOL decide to buy blog news search index Sphere this month? One word: “Distribution.” It was one of several small purchases that Grant said is crucial in completing AOL’s transition from an ISP and content and ad-based company.

“It’s this unbundled nature of the web. We are literally embracing fragmentation - that, combined, with relevance, is a differentiator. We’re not trying to build a start page, there’s a company that wants to do that. We’re not trying to build a search engine; there’s a company that does that pretty well. We’re trying to create this intersection between relevance of social media and content of Platform-A.

-- sdf: There were a lot of things we didn’t think were moving fast enough. We needed one salesforce (which we brought together and blended in six weeks), we needed common goals. We were responding to what agencies were asking us for - they wanted a one-stop shop, the ability to buy a whole suite of services in display - both contextual and behavioral - and they wanted to be able to do it through one unified team. That was really the vision of Platform-A.

-- Tacoda: The behavioral ad targeting network AOL bought in 2007 has been facing layoffs and questions over whether it might be dissolved, but Grant defended: “Tacoda is one of the leading behavioral products. You’ll see more announcements about Tacoda being integrated further in to Platform-A. People do leave; it happens in acquisitions - the integration couldn’t be going any better than it is right now.

-- Other actors: “In a fast-consolidating market, where does Yahoo’s possible acquisition fit in with Bebo (it supplies the social net’s UK display ads) and where does AOL minority stakeholder Google fit? Grant couldn’t comment on whether Yahoo will be kicked in favor of Platform-A, saying the Bebo acquisition hadn’t yet closed, but offered: “There’s a lot of good questions... where does Google fit in because of our deal? There’s the Yahoo and the Google thing.”

-- Alliances: Google recently added AOL’s money channel into Google Finance. Grant regards it as validation of the company’s transition efforts as well. Grant: “Google called us up and said you’ve done a great job with the redesign. There was a small acquisition we did within that that really elevated the site, called Relegence. [A news site does] an interesting story, Relegance can find it, pick it up and place it into our finance site.”

-- Internationalizing AOL: “We’re going to lead a lot more in to the cultural issues, in to the in-language stuff. India has got so many different dialects. It will be our intention not to just launch it in English everywhere.

-- Bebo and location: Plans to move staff from London or SF? Grant said he will leave most of that up Joanna Shields, who’s based in London. Location, he said, is not that important, although, it’s conceivable that AOL would want to build up Bebo’s US presence in light of its established strength in Europe. “We’re distributed right now and AOL has big hubs in San Francisco and Mountain View and Bangalore and New York, Dulles, Va. And Tel Aviv. I’m going to leave a lot of this up to Joanna, in terms of where she wants to work, where she wants her people. We can’t announce a lot of stuff because the deal’s not closed. You don’t want to dictate to folks exactly how the things going to work.”

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Delayed Reaction: WSJ Special Committee Now Objecting To Way Brauchli’s Departure Was Handled

By Staci D. Kramer - Tue 29 Apr 2008 02:25 PM PST

Talk about Slo-Mo ... a week after news broke that Marcus Brauchli was leaving as managing editor of the Wall Street Journal at the suggestion of News Corp-appointed execs, the much-criticized special committee for editorial integrity created as part of the Dow Jones acquisition now says it was left out of the process. The way it was presented last week, the committee met with Brauchli prior to the announcement. True, but it turns out that the committee was completely blindsided by the way DJ CEO Les Hinton and publisher Robert Thomson (NYSE: TOC) sought Brauchli’s resignation and his acceptance. Instead, they heard that Monday—after the deal was cut—via phone calls from News Corp chairman and CEO Rupert Murdoch “alerting us to the fact that Brauchli had resigned and reached an “amicable” agreement with News Corp.”

From the committee’s statement: “The Committee intends to exercise fully its role in the approval of a successor managing editor and to take the steps necessary to prevent a repeat of the process it has just been through. The Committee will be meeting directly with Wall Street Journal Publisher Robert Thomson and News Corp (NYSE: NWS). officials in the near future to discuss these and other matters.”

The committee includes the MIT Media Lab’s Nicholas Negroponte; Thomas J. Bray, former Detroit News editorial page editor; Louis Boccardi, former AP CEO; Jack Fuller, former president of Tribune Publishing Co.; the Massachusetts Institute of Technology; and Susan M. Phillips, dean of the George Washington University business school.

WSJ; Brauchli: “It was not our view that I had to report to the committee my voluntary resignation under the terms of the editorial agreement. I regret that they first learned of my resignation late in the process.”

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Macrovision Shareholders Approve Gemstar Buy

By Joseph Weisenthal - Tue 29 Apr 2008 02:14 PM PST

It’s time to put theory into practice: Despite some initial skepticism (that never really went away) Macrovision (NSDQ: MVSN) shareholders have approved the company’s poorly understood acquisition of Gemstar. A statement put out this evening didn’t specify the vote tally, but despite some initial loud objections, opposition never really materialized. With the agreement, Macrovision also announced that it had secured $650 million in debt financing to close the deal.

So what happens with TV Guide now? The company has indicated its plan to sell the print magazine, as it doesn’t fit into the vision, but we’ll learn whether or not it will follow through on its desire to keep the site’s domain. Release.

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Ziff Davis Comes To Agreement on Its Ch 11 Bankruptcy Proceedings

By Joseph Weisenthal - Tue 29 Apr 2008 02:07 PM PST

Ziff Davis, the embattled business media firm, has finished up its Chapter 11 bankruptcy proceedings. The legalese: “it has reached an agreement with an ad hoc group of holders of more than 80% in principal amount of its Senior Secured Floating Rate Notes and the Official Committee of Unsecured Creditors on a consensual plan of reorganization (the “Plan”) that substantially de-leverages Ziff Davis’ balance sheet by converting over $428 million in funded indebtedness to (a) new common stock of reorganized Ziff Davis Media and (b) a new note that will not exceed $57.5 million.”

The plan provides Ziff Davis with sufficient cash to fund its exit from Chapter 11 as well as its ongoing business plan, it said. Additionally, the plan provides for two pools of cash for distribution to general unsecured creditors.The ad hoc noteholder group has agreed to set aside up to $24.5 million to fund the company’s operations during the Chapter 11 case as well as after the company emerges from Chapter 11.

ZD will ask the Bankruptcy Court to confirm the plan in June 2008, and expects to emerge from bankruptcy shortly thereafter.

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CBS, NBCU To Submit Bids For Weather Channel By Mid-May

By David Kaplan - Tue 29 Apr 2008 09:23 AM PST

As expected, NBC Universal (NYSE: GE) and CBS Corp (NYSE: CBS). are going to submit their bids to acquire cable network Weather Channel and its site by mid-May, Reuters reported, citing unidentified sources. This will be the second round of bidding for Weather Channel by parent Landmark Communications, which began planning the sale around the end of last year. The company has been seeking $5 billion for Weather Channel and other properties, though it seems increasingly unlikely that any of the prospective bidders will ultimately want to offer that much. JP Morgan and Lehman Brothers are advising Landmark. So far, some of the other companies that are said to be considering purchasing Weather Channel include Time Warner (NYSE: TWX) and Comcast.

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Lycos Europe Puts Itself Up For Sale; Revenues Continue Decreasing

By Rafat Ali - Tue 29 Apr 2008 06:05 AM PST

Not that anyone cares about it, but Lycos Europe, the independent Euroepan portal, has put itself up for sale, and has appointed Dresdner Kleinwort as its advisor. Its reasoning and hopes: “In light of the current consolidation of this industry sector...a strategic review to evaluate its options, which may include, inter alia, a change or replacement of the main shareholders.”

The more pertinent question: its continued relevance, or lack of it. The company also reported its Q108 revenues today, and had EUR 16.2 million revenues, which decreased compared to Q107 which has revenues of EUR 20.0 million. It had net losses of about EUR 5.9 million, down from a profit of EUR 7.5 million in the year-ago quarter. The company is 32.1 percent owned by Telefonica (NYSE: TEF) and 20 percent by Bertelsmann.

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Earnings: Q1 Revs Up 31 Percent; Stock Falls On Lightness

By Joseph Weisenthal - Tue 29 Apr 2008 06:04 AM PST

Broadening financial info site (NSDQ: TSCM) announced Q1 revenue of $18.9 million, a 31 percent year-over-year increase from $14.5 million. However, because of higher costs across the board, net income slipped 19 percent to $2.4 million ($.07 per share) from $3 million ($.11 per share). Overall, advertising revenue grew 18 percent to $6 million, while marketing services revenue—derived from—accounted for $2.2 million in revenue. Excluding this acquisition, revenue would have grown 15 percent. The numbers are disappointing the market, which was looking for revenue close to $20 million and EPS of $.10 per share. As such, the stock is cratering pre-market, currently down about 13 percent.

Release | Webcast (11:00 AM ET)

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Earnings: CBS Q1 Revs Flat; Net Income Up 14 Percent

By Joseph Weisenthal - Tue 29 Apr 2008 05:49 AM PST

CBS (NYSE: CBS) reported Q1 revenue of $3.65 billion, basically flat from the year-ago quarter, though this partly had to do with having had the Super Bowl last year. Net earnings grew 14 percent to $244.3 million from $213.5 million, although this gain included certain radio station divestitures. On an adjusted basis, which excludes this, as well as stock-based compensation, net income was up 9 percent to $291.4 million (.09 per share). In the announcement, the company touted the strength of its top franchise, including CSI, as well as the NCAA tournament, whose online revenue doubled from last year. Rvenue at CBS’ TV business slipped 1 percent, although this was affected by both timing issues, as well as the writer’s strike.


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Rafat Ali
Publisher & Co-Editor

Staci D. Kramer
Co- Editor

David Kaplan
Senior Correspondent

Joseph Weisenthal

Robert Andrews
U.K. Editor

Amanda Natividad
Editorial Producer



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