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August 2008 - Posts
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Some stories for this long holiday weekend in U.S.:
-- Chinese Online Traffic Exceeds U.S. Web Sites During Olympics: So says WebTrends, citing its own analytics. To be expected, if only because of sheer numbers in China. CCTV.com, the site run by national broadcaster China Central TV, drew more than 100 million unique visitors during the 2008 Olympic Games...In comparison, NBCOlympics.com reported an average of 4.3 million unique users a day. Yahoo (NSDQ: YHOO) averaged 4.7 million daily.
-- Candidates' Sites Do Behavioral Targeting: And that is a surprise? It has raised alarms from some privacy advocates, who say no one should unwittingly have their political leanings analyzed as they use the Web, or be tracked for the delivery of political ads.
-- For Webisodes, Only Handful of Hits: A long NYT story about why webisodes haven;t broken through the mainstream, yet. Usual litany of reason, with usual litany of defenders…
-- Blogs to Riches: Perez Hilton: A profile of Mario Lavandeira, the blogger behind celeb gossip site PerezHilton.com, and his rise to fame. Ads on his homepage fetch up to $54,000 a day, and his overhead is minimal-- his only employee is his sister Barby, who fields emails and corrects typos. Which means he's pulling down millions a year, the Wired story says. The site now averages 198 million pageviews a month, according to Quantcast. Nielsen Online estimates that while visitors to TMZ.com, one of his main competitors, stay only 15 minutes, those on Hilton's site linger for 45 minutes.
-- IAC (NSDQ: IACI) Goes Kids: IAC, in an attempt to cash in on the big kids virtual worlds audiences, will on Sept. 16 will launch its own virtual world aimed at tweens called ZwinkyCuties.com. It will go head to head with Disney's (NYSE: DIS) Club Penguin and Webkinz, among others. The portal is a spinoff of Zwinky.com, a two-year-old site aimed at teenagers that claims more than 16 million registered users globally and six million unique visitors per month.
-- Fans flock to Disney's Club Penguin Times: The Club Penguin Times is more widely read than New York's Daily News, the Chicago Tribune or the Dallas Morning News. And it's not even 3 years old.
-- Apollo joins bidders in race for Reed Business: Yes, one more...US private equity group Apollo Management has entered the bidding war for Reed Business Information...Bidders are expected to submit final offers at the end of September.
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 The Associated Press, a co-operative started by newspapers to share costs and news, has been getting cancellation notices from papers as large as the Minneapolis Star Tribune since its new rates were distributed in July and now the Spokesman-Review in Spokane, Wash., is challenging the two-year cancellation notice that's part of the current contract. The argument, according to E&P: the new rate structure that starts in 2009 is actually a new contract and the paper should not be bound by the old agreement.
AP takes a different stance, as you can imagine, with spokesman Paul Colford telling us: "There is no new contract involved in what is a service upgrade.
At the same time, the AP will be working with the Spokesman-Review and other papers to help resolve concerns they may have during the rollout of the new Member Choice packaging and pricing plan, which will provide newspaper members with greatly expanded basic news coverage."
AP says its outlets include 1,500 daily English-language U.S. newspapers and that most are members. The wire service also has considerable clients in TV, radio, international, and online. As of April, newspapers represented 27 percent of the co-op's revenues; International (broadcast, newspaper services, etc.), 22 percent; U.S. broadcast, 17 percent; digital, 17 percent; non-member photos/graphics and tech services, 17 percent.
In a letter excerpted by E&P, a lawyer for the Spokesman-Review says the paper "will not be executing a new contract reflecting the changes as required by the AP in the new Member Choice program. ... The new contractual arrangement represents a continued and material shift by the AP of separating services from the basic package so that some services will be available only by signing up for supplemental programs. Thus, AP services that formerly were part of a basic plan will now only be available through a supplemental plan approach. This dilutes the value of the basic Breaking News plan and constitutes a material change in the quality and breadth of the services offered by the AP under the basic contract."
For good measure, the Spokesman-Review also claims local and state service has deteriorated and that the new rate is too high. One translation: we wanted more options and now that we have them, we have an early out. Spokesman-Review editor Steve Smith e-mailed E&P: "On that basis, the old contract will expire Dec. 31 and we'll not sign a new one. In a sense, it's not a cancellation at all, but a decision to decline signing any new contracts."
Star-Trib: Meanwhile, MinnPost.com reported that the Star Tribune has served its 2-year notice. For a sense of what readers their might be missing in 2010, the site counted 18 AP stories or photos in the Strib's news sections the day of its report; a wire-service credit on nearly all national sports news and briefs, plus a half-dozen other items. Strib editor Nancy Barnes has been an outspoken critic of AP pricing but her managing editor Rene Sanchez told MinnPost.com this is "not a hostile gesture, by any means. It's the beginning of an assessment of our business model, not the end." Translation: give us better terms.
Conventional wisdom would say that wire services, particularly one that covers all levels of news, gain importance as gap-fillers when newspapers cut newsroom staffs. But they're also handy budget tools, allowing managers to slash large line items in a single move. Expect more along this line.
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Various state and federal regulatory bodies are still looking into Google's (NSDQ: GOOG) ad relationship with Yahoo (NSDQ: YHOO), but CEO Eric Schmidt says the deal is on for October. Schmidt made the remarks in an interview with Bloomberg, while in Denver hanging out at the Democratic National Convention. That regulatory body may seek to block the deal has been a remote, but possible obstacle since it was announced in early June. The companies have always maintained the opinion that they don't need regulatory approval to go ahead, but that they wanted to give regulators some time to voice any objections now. From the beginning, Google and Yahoo have said they'd wait 3.5 months, about 100 days, to go forward. Meanwhile, in addition to potential trip ups from domestic regulators, Canada's Competition Bureau is looking into things as well. Fortunately, the companies don't have to get the blessing of the EU's hard-nosed regulators, since the agreement only applies to ads served up in the US and in Canada.
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 It's a good time to be covering politics, given the interminable campaign season. In between the two big conventions, Forbes checks in on Politico.com, a news site founded in 2007 by former Washington Post reporters John Harris and Jim VandeHei. The company, which operates a website, a print version and a video operation, has had a few months here and there of profitability.
While the site has generated around 2.3 million uniques last month, according to Nielsen, it has topped the 3 million mark. And if you look at comScore (NSDQ: SCOR) numbers, Politico is much lower, drawing roughly 1 million uniques last month). And with the campaign over in little more than two months, how does it plan to grow? Essentially, by covering politics as intently as ESPN (NYSE: DIS) covers sports, says CEO Frederick Ryan.
-- Yes we can—advertise: The site's biggest advertiser has been Barack Obama's campaign. Politico.com has attracted about $2.4 million in online ad sales since January—the Obama campaign has spent $444,000 on the site since then, according to Nielsen AdRelevance. After that, the next big spender has been the Democratic National Committee, which bought $127,700 worth of ad space. That could be a problem once those two have no reason to advertise. But VandeHei claims those numbers are flawed, insisting that only 20 percent of Politico.com's revenues come from ads tied to the campaign season. Furthermore, despite the decline of newspapers and the rise of the web, VandeHei says 60-70 percent of its revenues come from the "mostly free" 25,000-circulation newspaper that's distributed in Washington.
-- An ad network and a wire service: The typical way to try to boost ad sales these days is to form a vertical ad network. Politico.com is prepping one with 25 newspaper sites. The idea is, with newspapers cutting back on their own staffs, Politico can serve almost like a wire service for DC coverage. Its sales staff is offering to sell politically-focused ad inventory in exchange for syndicated Politico content. The company just made three additions to its eight-member sales staff and is trying to bring in large marketers like Lexus and American Express.
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 Yahoo (NSDQ: YHOO) is closing down its one-year-old social networking site, Yahoo Mash. The site, which has been in private beta, will shut down Sept. 29. In a post on the site, via the Atlanta Business Chronicle, Matt Warburton, Yahoo Community Manager, writes that the company may have accidentally contacted non-Mash members about the site's demise. No word was given as to why Yahoo was abandoning the project. As for the actual users—the number of those taking part in the test was not immediately clear—all of the content on their Mash profile will be unavailable after next month. But Warburton said those who have an account with Yahoo 360, the company's current social net portal, will not be affected. Elsewhere, Yahoo says that users' 360 profiles will be transitioned to a new system sometime in the second half of the year.
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 Troubled online music retailer Napster (NSDQ: NAPS) has hired UBS (again) to explore strategic alternatives, including a possible sale. The news was made in a letter to shareholders, urging them not to vote for three outside activists, looking to get representation on the board. In the letter, the company notes that the candidates' previous work experience—musician, nursing home executive, ice cream franchisee, middle management banking executiv—is "irrelevant to a company like Napster." It also notes that contrary to suggestions, it is open to a sale if that turns out to be the best option. Release.
If this all sounds familiar, it is. The company said exactly two years ago that it had retained UBS to explore strategic alternatives. Unfortunately for shareholders, who have seen the stock decline precipitously, that didn't go anywhere. The difference this time: The stock has gotten so low—trading close to cash, even—that it would be a cheap pickup for many companies. In the meantime, Napster is still doing what it can to breathe some life into its business. It recently launched an 'everything must go' sale, temporarily slashing prices on its core service by nearly 50 percent.
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 In a complex and slightly confusing transaction, Greenfield Online, the online market research and surveys company, which earlier this week rejected a bid by media PE firm Quadrangle, is now being bought by an unlikely buyer: Microsoft (NSDQ: MSFT), for about $486 million, $60 million more than the previous bid. MSFT is paying through a cash tender offer for $17.50 per share for the Wilton, Conn-based firm, as opposed to Quadrangle's $15.50 a share bid.
BUT, as part of this buyout, Microsoft will sell off what Greenfield is best known: its online surveys division, and will only retain its European comparison shopping services part. Greenfield, through its Greenfield Online and its European Ciao comparison shopping websites and affiliate networks, collects, organizes and sells consumer opinions in the form of survey responses to marketing research firms and end users. It was founded in 1994, among the first such online survey firms, and current CEO Albert Angrisan is the former COO and president of survey biggie Harris Interactive.
To give you an idea, for Q208, Greenfield had revenues of $36.0 million, out of which its surveys unit contributed $24.6 million, while the Ciao unit was $11.4 million, though in terms of operating income, Ciao unit was contributed $5.6 million out of a total operating income of $11.7 million.
Ciao's comparison shopping site combines consumer reviews and ratings from a "multimillion-user-strong" online community, and prices from online merchants. It currently has more than 26.5 million unique visitors per month, according to Comscore, across seven countries, who so far have generated about 5 million product reviews. It was founded in Munich in 1999 and in 2005 Greenfield bought it.
MSFT says it has found an as-yet-unnamed financial buyer for Greenfield's Internet survey solutions (ISS) business, and will sell off that part to it. Both these deals are expected to close in Q4 this year, but the consummation of the Microsoft transaction is not contingent on the sale of the ISS business. So essentially for MSFT, it is a European expansion deal, and will give it heft in the market...it says it will integrate Ciao's technology into Microsoft Live Search platform and will also get its merchant relationships as a result.
Under the earlier deal, which had a go-shop provision, Quadrangle had the right to match any superior offer, but turns out it decided not to, and Greenfield Online is required to pay Quadrangle a $5 million breakup fee. It could be that the un-named financial buyer for the surveys unit is Quadrangle itself, but no hints in the company statements.
As a side note, curious if MSFT also looked at buying Kelkoo, the European comparison shopping engine that Yahoo (NSDQ: YHOO) bought in 2004 for a price of about $575 million, but now wants to sell off.
More details in the releases here and here.
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Since it's Labor Day weekend, we'll be taking a short break starting this afternoon, Aug. 29, until Monday evening, Sept. 1. Of course, we'll be updating for breaking news, but our regular newsletter will resume Tuesday morning, Sept. 2.
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 The new cable comanies-backed ad targeting company Canoe Ventures has been trying to push its first project, Elections '08 On Demand, as the new-ish TV channel which lets people watch videos about elections, but this NYT story points out that the channel hasn't caught on among viewers or even advertisers. To be fair, this channel was not conceived by Canoe, which is an advertising JV with the idea to make ad buying across cable networks easier, but it has been trying to promote this channel across its constituent networks: Time Warner (NYSE: TWX) Cable, Comcast (NSDQ: CMCSA), Cablevision (NYSE: CVC) Systems, Charter Communications (NSDQ: CHTR), Cox Communications and Bright House Networks. These cable companies pledged to run at least 100 spots a week promoting it.
The channel is available in 32 million households, and for now is only offering about eight hours of programming. But it is tough to find: on Time Warner, for example, it is Channel 1279; on Cablevision, Channel 500. Though "Elections '08" has been available since January, only 500,000 segments have been viewed on all cable channels. Neither traffic nor ads on the election channel has been particularly strong...Obama is the first major candidate to buy time on it, but only in 15 states, the story points out..besides that only a handful of local politicians—and the Texas billionaire T. Boone Pickens, who is promoting wind energy—have bought ad time.
But, the cable companies say, this at least shows how they can work together. "What we've accomplished with 'Elections '08' may not feel and sound like a huge success story to the layperson, but behind the curtain, we've laid the foundation for the cable operators working together in an unprecedented manner," said David Porter, VP for marketing and new media at the Cox Media division of Cox Communications.
That and the fact that there is no dearth of political coverage of TV and online, in all possible platforms and formats. Not necessarily the best sector to start this ambitious venture with....
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 What a buzz kill ... Amazon (NSDQ: AMZN) spokesman Craig Berman tells the NYT: "Don't believe everything you read. ... There's a lot of rumor and speculation about the Kindle. One thing I can tell you for sure is that there will be no new version of the Kindle this year. A new version is possible sometime next year at the earliest." He didn't fuel any of the other fires, like the textbook version that's the subject of so much speculation these days or the sleeker model predicted for months to arrive this fall.
As a Kindle reader, I hope this doesn't mean Amazon won't upgrade the current model. Nearly a year in, it could use a major update with fixes that don't require a new chassis. For instance, users who purchase after reading a sample have to go back to home base, open the book again and click forward to where they left off. That shouldn't require a new form factor to resolve. The last update was in February.
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Comcast (NSDQ: CMCSA), the country's largest broadband provider, is rolling out restrictions on its service usage, and subscribers whose use of the Internet exceeds 250 GB of data a month will first get a warning call, and then on the second instance, their service will be suspended for a year...its current usage policy was amended online today, and this policy will start October 1, the company announced today. The more interesting part is that Comcast will NOT be provding any tools to monitor bandwidth usage, but has told users to search online for bandwidth monitoring tool, reports News.com. The FAQs about excess usage are here.
Here's how it justifies it: "250 GB/month is an extremely large amount of data, much more than a typical residential customer uses on a monthly basis. Currently, the median monthly data usage by our residential customers is approximately 2 - 3 GB. To put 250 GB of monthly usage in perspective, a customer would have to do any one of the following:
Send 50 million emails (at 0.05 KB/email)
Download 62,500 songs (at 4 MB/song)
Download 125 standard-definition movies (at 2 GB/movie)
Upload 25,000 hi-resolution digital photos (at 10 MB/photo)." Of course HD streaming will also speed up that limit.
This move from Comcast comes after its brush with FCC, where the regulator lambasted the company for blocking and slowing down P2P traffic on its service. Comcast insists this latest move has nothing to do with the FCC ruling against it.
Social Media Deals Report: This 199-page report, filled with charts and data, examines the categories, number and size of VC and M&A deal in social media from 2007 through 2008. Visit the ContentNext Reports page
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DigiMeld, a startup offering its own technology for streaming live video online, has raised a $2 million first round from various unspecified angels. The NYC-based company pitches what it calls "grid streaming" an alternative to traditional CDNs as well as P2P-based solutions. It's main test to date: A trial with NASA Television to stream a shuttle launch. DigiMeld was founded by Alex Mashinsky, previously the founder of Arbinet—in fact, DigiMeld's service relies on Arbinet's OptimizeIP platform. Though the company says it's an alternative to CDNs, it also sees CDNs as potential clients. In addition to technology, it's also positioning its site, DigiMeld.com, as a video portal. (Release via email)
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Another Tribune Company exec departs… Clark Morehouse is the latest to leave Sam Zell's house, exiting as head of Tribune Entertainment to join local digital broadcast network .2 (as in "dot-2"), B&C reports. The network launches December 8 and offers entertainment programming on stations' digital channels. Morehouse is the latest in a string of high level departures on Tribune's broadcast side (the exits on the newspaper side are becoming legion as well). As B&C notes, in recent months, the company has lost WGN Chicago GM Tom Ehlmann, WGN America G.M. Bill Shaw and broadcasting EVP John Vitanovec.
Morehouse told B&C that he began looking towards the exit when Tribune shuttered its syndication business. He worked with .2 on programming and felt comfortable that it was owned by broadcasters and not a conglomerate. The network is owned by Guardian Enterprise Group.
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 It's easy to forget that Microsoft (NSDQ: MSFT) is still a solid leader in at least one key internet category: the browser. By some measures, Internet Explorer still commands about three quarters of the market. So it's no surprise that Microsoft is still trying to use this advantage to make much-needed headway online. A number of folks have looked at the way the latest beta of IE8 will be used as an anti-Google (NSDQ: GOOG) weapon. One aspect of it: a privacy mode that theoretically could prevent Google (or anyone else) from collecting useful information for ad targeting. Fortune also looks at certain features, such as a more refined, Google-circumventing search bar, and a tool that will auto-link addresses to Microsoft's Live Maps. Of course, there was talk that Microsoft could make headway in the search wars with the launch of IE7, since it included a search bar for the first time. Google even made some anti-trust noises, but their fears seem to have been unfounded (also, the DOJ slapped them down). For more, SearchEngineLand takes an in-depth look at how Microsoft is integrating search with the new browser.
Meanwhile, Microsoft's most aggressive competitor, Mozilla's Firefox has extended its relationship with Google that sets the search engine as the default homepage and default in the search bar. Mozilla's Mitchell Baker writes about the deal on her blog: "We've just renewed our agreement with Google for an additional three years. This agreement now ends in November of 2011 rather than November of 2008, so we have stability in income. We're also learning more all the time about how to use Mozilla's financial resources to help contributors through infrastructure, new programs, and new types of support from employees."
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So says U.S. News & World Report president Bill Holiber, talking about the relaunch of its America's Best Colleges online portal, in an interview with Folio. Its flagship franchise list saw about 15 million page views in the last one week, and online revenue around the story is up 500 percent. "We're well into seven figures just online for this story," he said. The publisher has sold major online ad packages on the site to Dell and Microsoft (NSDQ: MSFT) Office Student. Meanwhile, the print edition of the mag is still bleeding: ad pages fell 30.2 percent and estimated ad revenue drop 26.1 percent, according to Publishers Information Bureau figures. It is dropping its weekly frequency to a bi-weekly by next year, and recently formed a new U.S. News Media Group, in an effort to develop more franchises beyond the weekly under it.
If I were them, I would dump everything else, and focus on the online development of its college guide franchise: buys some talent, buy some smaller sites, develop the community, and run with it…
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Some more funding for the MMO sector… Webcarzz, the developer of a forthcoming online game, has raised a $4 million first round led by Meakem Becker Venture Capital. Information on the company is pretty light, as it plans to release more information on its products in the coming months. The SF-based company is helmed by Chris Bergstresser, a former Atari exec. Release.
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Former Digitas exec Neal Prescott has been named CEO of WPP Digital's new production services unit, Deliver. The new unit will tie together production services in Asia, Eastern Europe, Latin America and South Africa and work with all of WPP's digital properties, including Actis Systems (Russia), AGENDA (China), Wunderman's ZAAZ (Seattle), as well as The Ogilvy Group and WPP Digital agencies BLUE (China/Singapore), Quasar (India) and Schematic (Los Angeles/Costa Rica). The creation of this unit is expected to save costs associated with using outside production companies. Prescott left Digitas earlier this year. His most recent post at the Publicis Groupe-owned interactive agency was EVP and Global Head of Technology Enablement. While at Digitas, Prescott was charged with creating an offshore digital production facility. Release
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-- TNS still resisting WPP takeover: Even though German audience measurement firm GfK has pulled the plug on its bid to merge with British research company Taylor Nelson Sofres, that does not mean smooth sailing for WPP Group's takeover plan. The company is reiterating its complaint that WPP's offer is too low. It has the support of Cedar Rock, a British fund manager and TNS' largest shareholder, in trying to find another entity to fend off WPP's continued advances.
-- YouTube banner ad revamp?: The video site might be changing its homepage to accommodate banner ads that run across the width of its homepage, says SAI, citing unidentified sources. The placement is modeled on a recent banner that YouTube created for the Sony (NYSE: SNE) Pictures stoner comedy Pineapple Express. YouTube could charge about $200,000 a day for the spot, much more than it gets from its current pre-rolls, for certain.
-- Layoffs coming to Carat: Due to the worsening ad climate it forecast this past week, Aegis will lay off an unspecified number of employees this year. The UK media agency holding company said in its H108 earnings that the layoffs were part of a wider reorg at Carat, which also includes an office relocation in New York. More details on the earnings on our sister site, PC:UK.
-- CNBC web ads: 'not exactly porn': Web publishers often complain about ad networks sending the wrong kind of ads to their sites. CNBC recently had a prime example: as part of its ad partnership with Microsoft (NSDQ: MSFT), the business network was served display ads featuring women unbuttoning their tops. Allen Wastler, CNBC.com's managing editor, reaction: "These ads aren't exactly porn, but they cross the business journalism decorum code."
-- Media Kitchen spawns ad exchange service: MDC Partners is taking a piece out of its media planning consultancy, The Media Kitchen, to establish Varick Media Management, which it calls a "digital management company." Varick will set clients up with the use of online ad exchanges and media trading, as well as ad networks, investment management advice, audience analysis.
Social Media Deals Report: This 199-page report, filled with charts and data, examines the categories, number and size of VC and M&A deal in social media from 2007 through 2008. Visit the ContentNext Reports page
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Yahoo's (NSDQ: YHOO) losing two more of its senior executives, this time from its mobile division, which falls under the heading of Yahoo's Connected Life. Steve Boom, SVP of Connected Life, who reported to EVP Marco Boerries, and Gary Roshak, VP of mobile advertisers and publishers, are both leaving the company to pursue other opportunities, a Yahoo spokesman confirmed. Boom will leave at the end of the month, following CTIA. Roshak left Aug. 1. More here.
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Sprint (NYSE: S) has integrated a slew of content and location-based services into its upcoming XOHM WiMax wireless broadband network. In the release, the company stressed the importance of developers and customers being able to tap into this information, which sounds more open than most relationships with wireless carriers today. The location services can be utilized in all sorts of devices, including laptops, mobile Internet devices, media players, cameras and car navigation.
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As a reminder, the company will launch its Baltimore network commercially this September with other cities expected in the fourth quarter. I can imagine if and when Sprint and Clearwire (NSDQ: CLWR) merge, they'll adopt these services, rather than have to rebuild them from scratch
Here's some of the services that will be available from the Xohm Portal at launch:
-- uLocate Communications: The company will be the backbone of its service, and provide its WHERE platform, and friend-finding app Buddy Beacon. Users will also have access to restaurant reviews, news, events and weather through partners such as Yelp, Eventful, Topix, NAVTEQ and Accuweather.
-- On Topix, the news aggregation site will provide local news based on current location as a summary, with an option to read full stories and others at its site.
-- Google: The company is contributing Local Search along with additional features and functionality from Google Maps. More details here.
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Competition in the online dating industry is starting to heat up… Speeddate has raised a $6 million second round led by Menlo Ventures, reports TechCrunch The Palo Alto-based company's first round was not specified. Like speed-dating in the real world, the site is designed for quick interactions, based on video. WooMe is another one in this space to have gotten funding, as it also takes advantage of live video to facilitate quick interactions.
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No, this isn't the big one, but nonetheless an important precedent: A federal judge in San Jose ruled today that video-sharing site Veoh was not liable for copyrighted material uploaded to its site, dismissing an early 2006 case filed against it by Io Group, an adult video firm. The site pleaded its defense under the "safe harbor" provisions of DMCA copyright law, which meant it could be safe as long as it removed the infringing video when alerted by the copyright holder, which the judge said that Veoh was doing. Meanwhile Veoh's suit against Universal Music Group is still going on.
In the other higher profile case of Viacom (NYSE: VIA) vs YouTube, on similar grounds, Google (NSDQ: GOOG) quickly came out with a statement welcoming this new decision, reports WSJ, and affirming the legality of its own video-sharing service. "It is great to see the Court confirm that the DMCA protects services like YouTube that follow the law and respect copyrights...YouTube has gone above and beyond the law to protect content owners while empowering people to communicate and share their experiences online," said YouTube Chief Counsel Zahavah Levine.
The full judgement, embedded below:
Veoh vs IO - Free Legal Forms
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