A huge chunk of the $6-8B that VCs have used to fund online video startups have a big bet to UGC, that explains why VCs have been hitting so poorly: UGC will account but 4% of online video revenues… something I’ve been saying since, well 2006 when I launched WatchMojo.com.
From the Diffusion Group, via NewTeeVee.
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WatchMojo NewsletterI’d say success is equal or a function of vision, ambition, execution, luck and timing… Nick Denton’s says timing’s got a lot to do with it. Read more here via Valleywag:
A British-born Financial Times beat reporter sent to cover Silicon Valley during the dotcom boom, Denton reinvented himself as a technology entrepreneur. He sold a dotcom events business, First Tuesday, in a luckily timed deal as the bubble was bursting. He briefly entangled himself in an online newsfeeds venture called iSyndicate before starting a direct competitor, Moreover (that’s “more OH ver,” you Yanks.) But he quit as CEO years before VeriSign bought the company. He’s the first to admit that his success is more from good timing than hard work.
Interesting.
You know newspapers will have - and are having - a hard time in the digital age, but what about magazines?
Well, judging by this report, it doesn’t look any better. More analysis and commentary from Paid Content here.
Magazines had a big window of opportunity first in the late 1990s, but they put their head in the sand. They had an even bigger opportunity in the 2001-03 nuclear winter where depressed asset prices could have made them gain footholds in digital, but few really took advantage of any of those chances.
In fact, what they did to exasperate their somber futures was scale back investment altogether. You are sort of seeing something similar, though on a lesser scale now. You would think that both print media (newspapers and magazines) would be diving into online video… but given the lack of online video advertising revenues, many are sitting on the sidelines… which will only hurt them in a year or two when these spike.
Content Next Media - whose PaidContent.org property’s coverage of digital businesses made new media cool again - just got acquired by Guardian Media Group. Fittingly, the story was scooped by Kara Swisher.
For sure, the $30M acquisition price would be too rich for many to pass up, but I think Rafat Ali’s decision shows just how much his finger is on the pulse of the industry he began to cover out of his apartment six years ago on a hot summer day.
Like many, I turned to Ali’s ezine when new media was a joke, untouched, unloved… and Ali’s honest and one-step-ahead-of-everyone-else coverage was the best in the game.
We ranked Paid Content’s parent Context Next as # 2 in our Elite Eight Tech Blog Networks, not because top-ranked Valleywag is a better online source than Paid Content (in their own way, they’re both good reads) but because Valleywag’s parent Gawker Media is arguably one of the best publishing companies - period.
Two side notes:
- I always poked fun at Ali (with nothing else but utmost respect and admiration though) for choosing a URL called PaidContent.org, no, not because of the .org, but because ultimately, “paid content” was a flop, it was free, ad-supported content that paved the way for new media’s resurgence.
- In January 2006, when I left my old gig at AskMen as VP of Sales, Rafat and I explored me helping sell ads for them, but in all honesty, my strength lies in consumer advertisers, and Ali’s site skews B2B. And, truthfully, within 3 weeks of my departure I launched WatchMojo.com and dove into video content.Which takes us to the big question: why now? Let’s address those:
The Guardian Media Group did buy the gold standard in B2B new media/digital business coverage… and it will be hard for anyone else to attain that lofty exit price, for a few reasons.
Free Content is Hard to Scale
The main reason is that as much as scaling content is hard, scaling a blog is even harder… because the instant a blog adds new writers, it dilutes itself. Ali did not dilute the quality when he added his barrage of writers. I’ve met a few and read them all and would have them on my masthead anyday… however, PaidContent became the gold standard because of Ali’s quick wit and hustle.
Which takes us to the next points:
The pace and speed of blogging has changed
When Ali launched, he could bide his time to make sure the stories were true and accurate. Today, rumors and heresay are good enough for one to press publish… and that takes us to the next, main issue:
Heightened competition
I still read Paid Content, but maybe a bit less. It’s nothing against PC, but between Tech Crunch, SAI, Valleywag and yes, countless of sites like our own HipMojo.com, there is way too much similar news. I think that Ali knew that this competitive pressure, combined with the backdrop of the US economy, meant that exits down the road might not be near the $30M price he was being offered…
Which of course touches on another point:
The US Dollar is in the Toilet, Look to Europe for Exits
The Guardian Media Group paid 15M GBP for Paid Content… effectively.
Last but not least… it’s interesting that Ali tips his hat to M&A boutique shop Mesa Global… the bank that I assume repped him in the sale… why is that odd? Two long standing advertisers of his were M&A boutique firms: JEGI and DaSilva & Philipps. But, don’t worry, I am sure those are fine firms… I assume Mesa clinched the deal through an inside connection, perhaps? I could be way off… maybe they were just a commercial bank that provided him with financing early on, or better yet, it’s the other way around and Marc Patricof introduced Rafat to Alan Patricof.
Which takes us to the last point:
Smart Fundraising
I think the reason why Paid Content was able to sell now was that it had only raised $1M from none other than VC dean Alan Patricof. A lot of companies go trigger happy and raise $5-10M before knowing what their business will look like… meaning that they won’t be able to accept most offers. In this case, Ali played it wise, keeping a lid on investment which left the ROI as high as humanely possible for a site that launched on one hot summer day six years ago.
All in all: congrats to Ali, his team, and the smart people who backed him.
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