Update: Fixed. We’re back. Thank you to everyone at YouTube and Google for fixing this in a timely manner.
I don’t usually blog about our business relationship with YouTube, at least not specifics. But this is out of bizarro world.
Google is announcing some improvements to its core service. Great. Maybe they want to look into this!
I just realized that a bunch of our videos were unavailable on our account, citing violation of the site’s Terms of Use. In the past, we’ve had the odd incident, and usually it was a technical glitch or something else. When it wasn’t a technical glitch, we have always been right, basically. Bear in mind, we produce videos, so we own the rights to the media.
Anyway, last time I checked (July 16 2008), we had over 1,700 videos on our YouTube account.
This morning, we have 160!
Three words come to mind: What.The.F***. Ok, make that four words: Dude, What the F***?
Needless to say, emails have been sent in to YouTube. I’m hoping this is a glitch. Update to come, soon. Of course, they’re on the West Coast.
Update #1:
- I asked a few people who cover the industry, Liz Gannes of New Tee Vee mentioned (hopefully she does not mind me posting her answer, don’t see why she would):
“I don’t know — at least they didn’t suspend your whole account — they did that recently to Loic Le Meur. It’s usually some conclusion over a copyright claim.”
Did a quick search: French entrepreneur Loic Le Meur covered it here. Incidentally, Loic had uploaded videos of interviews he conducted with a French TV station. That does not seem to be the case with us, as we shoot everything ourselves and don’t upload third party content unless we have a clear right to do so. Moreover, in the 1% of occurrences where we use a sample clip from a movie, for example, it’s either done with permission as promotional content or it’s basically fair use / derivative work.
I still figure this is a technical glitch… as I stated, we’ve had a few occurrences where an individual clip disappeared, and it was a glitch, too. One time, Van Morrison’s peeps asked us to remove a clip, too… but that was a mass takedown request: we were not using any audio or video, just an album cover. I thought that was excessive, his people agreed, so did YouTube. Clip’s back up. The point is: we work very hard to be on the right side of the copyright law and strive to be good corporate citizens, so when someone assaults your integrity, it’s not a pleasant thing. One time we had an issue with MySpace, too… but that too was kosher, in the end.
All to say: details to come.
It’s 8:37am on the West Coast… so I don’t want to go crazy and start calling people’s cell phones… yet. I’m kidding, I think.
Update #2:
A reader emailed me and asked if we got any emails warning us of any infringement. Great question: nope, no emails. This is why I think this is a technical glitch. Deleting 1,600 videos out of 1,760 or so seems wildly crazy… then again, maybe Eric Schmidt, Sergei Brin and Larry Page are trying to cut back on costs. I’m kidding, that’s for sure.
More to come. When do Goobers (what do they call Google’s YouTube employees) get to work, I wonder…
Update #3:
All right, no sense in pressing Refresh a thousand times on our YouTube account or Send/Receive in my inbox - or whatever you do to see if you have new emails in Gmail. Got to run some errands, will be back, soon.
Update #4:
Back from lunch. Boy am I glad we have a cheap pizza outlet in our neighborhood. As I was waiting at the pizzeria, I was checking my Blackberry and wondered: that’s odd, I didn’t even get an email confirmation when I emailed copyright@youtube.com. Maybe Gmail is down. After all, Google Docs is buggy, it says some of the documents were last updated on May 1, though I am sure I used them today! But that’s for another post.
I’m now getting worried: it’s now almost 10am PST… still no sign of life at Google/YouTube.
I hope our friends at YouTube are fine. What if terrorists attacked the compound? That would suck. Maybe there was no terrorist attack, but simply a power outage. Did the weight of Google’s supercomputer crash on itself.
Maybe I should grab my tool kit, grab a pair of tickets and go see if they need help. Montreal to SF is 6 hours, less the 3 hours I save traveling West, maybe we can be up by the time Googlers head home. I wonder, when do they show up to work? That’s the question.
All right, no time to waste: where’s my tool kit, I’ll need that. I can’t seem to find my screwdrivers, but here’s my wrench and sledgehammer, hopefully those will do.
Do you think they’ll let me on the flight with those? More details to come.
Update #5:
Houston San Bruno, we have contact. YouTube is “looking at it” - they’re “trying to figure it out”. Most importantly, it looks like they survived the nuclear strike, if one took place.
Details to come, I hope.
Good thing I got flight adjustment insurance on my flight tickets, no need to get to SF personally. This gives me more time to find my screwdriver, too. I think I would look suspicious if I tried to board a plane with just a wrench and hammer, but completing that duo with a screwdriver would make me look less fishy to customs guards, I’m sure. Nothing like an impatient Canadian-Iranian trying to board a one-way flight to SF from Montreal with a wrench and hammer alone.
Stay tuned folks.
Update #6:
Seems like I misplaced my passport. So no traveling to SF right now. Let’s see if we can solve this puppy remotely. My contact at YouTube rightfully pointed out that while one page in our YouTube account (My Videos) shows that indeed we’ve uploaded 1,788 videos…
Another one (My Account) shows a paltry 160. What gives?
I used to be really good at math (is this calculus or algebra, damn it!), but first calculators, then Excel, and now Google Docs’ online spreadsheets are making me really bad at math… but I am very sure that 160 does not equal 1,788. Regardless, looks like we’re closing in on the culprit.
This begs a question: is it better for your site - which generates 1-3% of your total streams - to be up and running properly or your YouTube account. Before you answer, remember that YouTube commands a 75% share of video streams and 25% of video viewer eyeballs…
Stay tuned for an update, and that question merits a post onto itself.
Update #6:
Oh, my God. The case of the missing 1,622 files is now going into hour 6, if not more. It’s now 2:15pm EST… last flight out of Montreal’s Pierre Elliott Trudeau and into SFO is t 5:15pm. With international flights though (no, Canada isn’t the 51st state) I would have be at the gate a whole 90 minutes before, or 3:45pm, or in a mere 90 minutes.
That’s what we’re working with, I guess.
Will Google manage to fix YouTube’s glitch in the next 90 minutes? If they don’t… this means I can’t fly down there to lend a hand. Maybe they’ll send the Google plane? That would be pretty cool. Cooler still would be if I manage to fix YouTube…
They hired their CFO from Montreal, maybe they’ll hire the YouTube-fixer from here, as well. Not like YouTube is broken of course, but I have previously suggested ways to fix YouTube:
- 13 ways to turn YouTube from a cool site into a profitable business.
- How YouTube can increase revenues and lure advertisers.
- Memo to YouTube: Do This, You’ll Print Money
- 4% is Part of the Solution
- YouTube’s Nuclear Option to Monetize its Content
Here’s a wild idea: maybe if I stop suggesting all of these things, the videos will come back?
Maybe this is karmic revenge? Who knows. Let’s go see.
Nope, still only 160 videos. Where oh where did the 1,622 other videos go?
Oh-oh, it’s now 2:30pm. Must decide: to stay or head to the Bay?
Update #7 @ 4pm EST:
All righty. Got some bad news. Not only did I miss the last flight out to SFO, but it looks like the 1,622 videos have totally fallen through the cracks, somewhere between San Bruno and Mountain View. Gone, forever. No need in getting on that flight… in the end, I need to go back to my cubicle and start uploading those clips, one by one. Come on, I’m just kidding.
The good folks at Google/YouTube are working on it. Thankfully, they seem to be pretty good with tech matters (hey, maybe they can count Yahoo!’s shareholder votes) and we’re told the videos should - knock on wood, Big-Guy willing - be back up soon.
My colleague asked “why oh why did this happen to us”? Frankly - as TubeMogul’s CEO Brett Wilson told me as well - WatchMojo.com is a high maintenance power user (case in point, consider this crazy blog entry), so invariably even if something isn’t our fault, I’m still surprised that things don’t actually get off the rails more often… considering that we do millions of streams every month across thousands of videos (that’s just one partner, YouTube’s command of the rich media video market is awesome and the fact that they don’t have glitches more frequently remains one of the more impressive feats of the industry, in my humble opinion).
Sure, it does suck to have lost an entire’s day worth of streams and revenues off our YouTube channel, but like we do with everything else, I still look at this as glass is half-full, not half-empty.
There’s a silver linings in all of this… and everything else in life (or business), from my earlier post this year:
If you wake up in the morning and are greeted with bad news, don’t worry too much because you’re bound to get worst news later on in the day…
And if ever you are greeted with some good news, enjoy it cause it won’t last, something is bound to go awry…
If you remember these two tenets of startups, then you will be amazed at how much success you can have because you don’t sweat the small negative stuff and you don’t let the good stuff get to your head.
You don’t know what you got until it’s gone, goes the expression… and honestly, seeing our clip count dwindle down from 1,788 to 160 only makes us want to put our entire library on YouTube…
Check out all of the content on our own site in the meantime. Update to come, hopefully today…
Update #8 @ 7pm EST:
Well, it’s a good thing I never made that flight - I’d be somewhere over Chicago now - because the folks at Google and YouTube managed to bring all 1,622 clips back on the grid.
Booyah. Hope you enjoyed keeping track of it… I am sure the folks at YouTube were too busy to read any of this… but hopefully they have a good sense of humor these things.
During the Great Depression, farmers would destroy crops in order to create some kind of floor price for their fruits and vegetables, even though many of their fellow citizens were starving to death. John Steinbeck chronicles this plight in Grapes of Wrath, a book I will pretend to have read (I actually read some of it, but man that book was thick).
Today, despite homelessness being as rampant as ever, some are considering actually demolishing homes in order to create some kind of defense against sliding home prices. As foreclosures skyrocket and empty houses proliferate the marketplace, the specter of unsold, empty homes keeps a lid on recovering real estate prices (in a best case scenario) and accelerates plummeting home values in a worst case scenario. Indeed, according to a recent piece in The Economist:
Of the 129m housing units in America, 18.6m stand empty. At 2.9%, the home-owner vacancy rate, which measures the share of vacant homes for sale, has reached its highest point since measurement began in 1956. At the end of the first quarter there were 2.3m empty homes on the market, an increase of more than 160,000 from the end of 2007.
As horrific as the prospect might be, construction cranes might very well be replaced by bulldozers in a neighborhood near you. While sociologists cringe at the mere thought thereof, economists would be quick to argue the merits of such a strategy when there is endless supply on one side but weak - or non-existent - demand on the other.
Last week, the Wall Street Journal reported that of YouTube’s vast inventory of content, only 4% was monetizable. The remaining 96% consisted either of pirated videos or user-generated content (or crap, as I like to call it). The net effect of this, on a site which generates 70% of the streams online and commands 35% market share of eyeballs, was simple: YouTube cannot really exert any pricing power… especially in a battleground such as display, which gets by even less on mathematical logic and economic determinism and more so on gut feeling and perception.
Allow me to add a quick disclaimer: our company, WatchMojo.com, provides professional content (to which we own the rights) to YouTube, amongst a myriad of other players.
So connecting all of these variables, I wondered, would Google ever consider going nuclear and simply scrub YouTube of all of the crap found on the site? Sure, traffic would take a beating… but if one thing is clear, it’s that online, and with online video in particular, traffic does not (at least not presently) equal revenues.
“There will be new monetization forms. That is what we are seeking. That is the holy grail,” Eric Schmidt said on a conference call after Google reported disappointing second-quarter earnings. “When we find it, it (monetization) is likely to be very large because of the scope and scale of YouTube.”
The idea sounds crazy, but if YouTube gets rid of 96% of the seedier and undesirable content on the site, no doubt you very well might see a proportionate loss of streams, maybe not a drop of 96%, but probably something in the 50-85%.
But what about users? I don’t think YouTube would lose 96%, 69% or even 50% of its users in the short-term.
Initially, people would find something to watch on YouTube… and in fact, they would suddenly find something of higher quality to watch, something that YouTube owns the rights to, in fact.
As such, if YouTube loses even 75% of its streams, it would be left with a leadership position in streams, and it would still remain in a leadership position in terms of eyeballs and market share.
Most importantly, if the site were devoid of the crap that scares away traditional content owners - let alone marketers - many more companies would partner with Google (hint: Viacom) and give YouTube more monetizable content that would in turn open the floodgates with marketers.
But, of course, here’s the problem:
Google might as well launch a new site, called YouTube Prime (or YouTube Light) because what made YouTube YouTube is the UGC, or as I call it, the crap. As a content owner with nearly 2,000 high quality clips on YouTube, I want to see nothing else but Google and YouTube printing money… but when I think of what your typical marketer looks for… I have to say… I’m just not sure if YouTube is the holy grail, it’s an important part of the ecosystem, no doubt… but the holy grail? Je ne sais pas.
In case you are wondering: no, I don’t actually think Google will press the red button and flush YouTube clean, but then again, with mounting bandwidth and legal costs, and no real revenue to match YouTube’s awesome stream count… you have to wonder: what is more likely,
- a publicly traded company burning UGC videos in order to maintain its profit margins and make Wall Street happy,
or
- a government approving the burning of food crops and the destruction of homes which affects the many, in order to protect the investment of a few.
Yeah, welcome to crazy times people… I’m heading for the bunker.
a) my first day at my new company
b) my last day at my old company
c) one of my famous motivational speeches
Office Worker Goes Absolutely Insane - Watch more free videos
For the past 2 years, the WatchMojo.com family has tried hard to get leading thinkers, technorati and pillars of the financial community to respect content creators.
But now, after a lot of effort, time and money, I realize that this isn’t simply trying to change an engine at 30,000 feet, in fact, it’s more like trying to make the world stop and spin in the opposite direction.
It’s just not worth it, nor is it possible. Why continue to go against the grain? “We should not be in the content creation business, we should be in the platform business,” voices echo in my head.
This past weekend I spent a lot of time finalizing terms of a soon-to-be-announced financing round, and as part of the deal, we have to purge the site of all of the original content we’ve produced.
This, I’m told, is the path to riches, the road to attain the brass ring.
That amounts to:
- 3,500 videos published (4,000 in all including pipeline, which also has to go, sadly)
- With each clip being an average length: 1 to 3 minutes.
- 99% of which is in English, with 1% being in French and Spanish, with plans for content in German, Mandarin, etc.
- Across 12 categories: Automotive, Education, Fashion, Film, Food, Health, Music, Politics & Economy, Space & Science, Sports, Technology, Travel, Video Games
- Over 30 or so subcategories: Cooking, Instruments, How To, Workouts, Languages, Tips, etc..
- 100 to 200 hours of programming
- 500 hours of filmed material (I failed to read the fine print of the Term Sheet, I must burn those tapes, too… nothing to prove that once-upon-a-time a content empire stood here)
I’d be lying if I said I agreed with this 100% initially, but after endless hours of discussions, prolonged negotiations and considerable regression analysis in a Google Spreadsheet, I was effectively check mated and came to the conclusion that we should Control + All + Delete everything we’ve done and everything I’ve invested in the company and become a hybrid of:
- a next generation YouTube
- a Digg for non-clickable media files
- a MySpace for broadband files
- a Google of motion picture
- a Facebook of related moving slides
and get the most passionate and volunteer-minded 6 billion people of the world find out about our tools and platform and empower them to use our platform so that we can take on Digg, YouTube, MySpace and Facebook head on. Oh, also Google. Yeah, let’s add Google, they’re rich!
Initially I had my doubts about yet one more platform… but with Bebo being a part of AOL, my newfound backers smelled an opening…
You know what, they’re right: I don’t think it’s too late to create a profile on a 14th website, I really don’t… at least that’s what the investors convinced me of… why own content when you can own an email address? Content is so easy to get your hands on, but an email address? That’s scarce!
Hmm… Obviously if you’ve been reading me for the past two years and wonder why I have made a total 180-degree and capitulating on my content is king mantra… it’s not become I’ve lost my marbles, it’s because it’s April Fool’s Day folks.
More so with every passing day of the calendar… Content is King!
For more April Fool’s Day fun, check out our friends at RWW.
Obviously, this post is in jest, but too bad NYT settled its differences with Harbinger.
Jana Partners is hounding CNET… They own 25% of the outstanding stock.
Harbinger Capital Partners, a part of the Harbert Management Corporation, was doing the same to NYT. They own some 10%.
Here’s a crazy idea: why not merge? I know this has a “no chance in hell” likelihood suggestion hence why we’re making it.
But CNET is worth $1.25B… and NYT is worth $2.75B.
- NYT owns About.com and NY Times is one of the strongest brands out there in journalism…
- CNET is tech-oriented and its slate of advertisers would love to go more mainstream.
CNET owns about 30% of the new corporation and diversifies into lifestyle… basically buys into NYT at a low.
NYT owns 70% of the new entity and gets a shot in the arm in terms of digital.
And, they get the hostile crowd off their back? Any takers?
All right, enough madness.
Yahoo!’s message to marketers: “do as we say, not as we do”
Yahoo! will only win in search if
a) more marketers spend money in online advertising in general and search in particular and
b) if they spend more on Yahoo! than other sites, and of course
c) more users use it.
Clearly, neither one is going according to plan, as Google continues to kick Yahoo!’s ass. But now, to further hurt Yahoo!’s own chances, News.com is reporting (via SAI) that Yahoo! actually advertised on radio to achieve its objectives. Need we think of Ask.com’s wonderful billboard strategy?
Who, may I ask, is the genius who thunk this up? When I say, as a shareholder, that YHOO has no credibility and its upper management has lost its marbles, am I crazy or stating the obvious?
To be fair, some disagree with me: The Yahoo search ads seemed to have the desired effect on one blogger, Luca Filigheddu, who wrote: “I’ll be honest, it works. If I hadn’t listened to it today, (I) wouldn’t ever (have) realized that Yahoo search had improved so much. Good.”
But, want something very troubling? I have used Yahoo! less and less in the last 3 to 6 months. Over 3 years ago I began using Gmail and never went back to Yahoo! mail… though when I started WatchMojo.com I began to use gmail for work… so that had more to do with it.
But even the last bastion of Yahoo!’s defenses has recently failed: I used to live on My.Yahoo! and now I almost spend no time on it (it got buggy after they changed the design then simply stopped using it).
Yahoo! should spend 200% on getting users like me to use Yahoo! products when we’re online and spend 0% of its resources on anything like TV, print, outdoors or radio.
You try not to read too much into this, but NYT is being pursued by activist shareholders, then its subsidiary About.com sees its CEO Scott Meyer resign… the company line is that this was amicable and planned.
Maybe. But then why is NYT Digital dean Martin Nisenholtz taking over?
I don’t know… but maybe I should go ahead and buy About.com and reposition it for the upcoming video revolution (Oh, wait. It’s already started)?
Does anyone have $500M or so to front me? I’ll pay it back…
Last week we lobbied bankers to pony up $500M so we could buy About.com. Shockingly, we did not get a credit memo. So this week, we’re asking for a bit less. Read on.
Revver’s Fate and The State of Online Video
It turns out that Revver’s potential sale to Brad Greenspan (who founded Intermix, then sued to try to block the sale of MySpace to News Corp., and since launched Vidilife.com and LiveVideo.com) fell through, according to CNET. Paid Content and Alley Insider are commenting on it, too. The touchy situation was Revver’s debt, which stands at $1M.
Sometimes, There’s Only a Few Buyers Than Can Reap Value
In today’s market, not everyone can assume debt, especially when there are many stronger, debt-free opportunities on the marketplace, all itching for an exit. But much like News Corp. was uniquely positioned to make an offer for Dow Jones, and Microsoft is uniquely positioned to acquire Yahoo!, I believe that the right company can integrate Revver and build on its assets to create something very valuable and compelling, in an efficient manner.
A Cluttered Landscape Amongst Video File Sharing Sites
For some time now, I’ve been saying that a lot of the video file sharing social networks would be shut down or forced to sell as a result of the over-investment in the space.
When I wrote “the fight for #3 is on” I mentioned that players like Veoh, Metacafe, Break and Daily Motion would be trying to chase YouTube and MySpace TV.
Consolidation to Come, But Are There Enough Chairs When the Music Stops?
Truth is, once Yahoo! Video, MSN Video and AOL Video decide to get serious about video, they will make the lives of independent players like Veoh, Metacafe, Break and Daily Motion very hard. Frankly, the main salvation for Veoh, Metacafe, Break, Daily Motion will be a sale to the likes of Yahoo! Video, MSN Video and AOL Video, or CBS, Viacom, NBC, etc. For the traditional media companies, it will be hard to have a change of heart and buy one of these sites, because many of these sites have thrived on “user generated content”, which is essentially a nice way of saying “user pirated content”.
Revver’s A-List Backers
Alas, I never mentioned Revver in that list, because from my vantage point (a content producer who works with all of these distribution players), it was clear that Revver was smaller. More importantly, I wondered how much longer Revver - under its current incarnation would remain under operation. Ironically, Revver was one of the first file sharing social networks to focus on video. But oftentimes being first is a kiss of death (iFilm anyone?). Given that it had raised $12.7M in funding from top notch backers like Bessemer Venture Partners, Draper Fisher Jurvetson, Draper Richards, William R. Hearst, III, Comcast Interactive Capital and Turner Broadcasting, it would probably not live long enough to survive because investors usually cut off the lifeline once they realize the company won’t command a massive return and continues to lose money.
Stalling the Engines at Revver
It’s a shame, from my interactions with the team at Revver, I see that they’re all nice people. Today CNET reports that the headcount has been halved from what it was 18 months ago. I presume with the deal falling through, no one else would really be interested because the demand and supply dynamics in Revver’s existing market are very challenging. There are over 1,000 YouTube clones out there, many with less complex and convoluted capital structures than Revver.
Of course, 18 months ago, in mid-2006, YouTube was independent too, and were it not for the sale to Google, it could be YouTube who would be falling on hard times for no other reason that its bandwidth fees far outweigh its revenues.
YouTube + Google = Lights Out
Once YouTube got acquired by Google, I said the going got rougher for YouTube competitors, including Revver. Revver had some management changes at the top. And competitor Guba’s CEO even said many people would be exiting the space because YouTube had won the grand prize.
Revver’s days, I felt, were numbered. As a content producer, I continued to root for Revver by providing them with content. However, Revver today not only competes against YouTube, Daily Motion, Veoh, Break and what not, they also compete for content producers’ attention, because content goes where the distribution is.
Video Remains Embryonic
While the explosive popularity of video consumption ensure that costs remain high, the embryonic nature of online video predicts that revenues in 2008 will remain small. Yes, online video advertising expenditures will cross $1B in billings in 2008, but they remain to scale. By 2012, it is predicted to become a $7.1B market in the US alone, but right now, online video is where search was in 2001: a major segment of the online advertising ecosystem, desperately looking for a business model.
One of the reasons why the business model remains to be developed is
a) the large majority of content out there is user-generated and of low quality
b) a lot of the videos consumed belong to old media and are pirated online
These two variables give advertisers a source of hesitation. It’s a catch-22: you need better content to attract advertisers, but advertisers won’t spend online to give owners of content an incentive to shift content online.
Content is King
This dichotomy has created an opportunity, one that WatchMojo.com has exploited perfectly. Recognizing that UGC does not lure advertisers and that old media will be wary to cannibalize their revenues by shifting content online, we have built one of the largest libraries of original video content with nearly 5,000 1 to 3 minute assets representing hundreds of hours of content across the following categories: cars, fashion, health, video games, music, comedy skits, film, travel, etc.
As we continue to grow, it was inevitable that we consider one day acquiring one of these many file sharing networks. Because of Revver’s DNA as a platform serving a network of producers (and not a platform to simply upload any UGC), I think Revver represents a very unique opportunity for WatchMojo.com. In turn, few companies can make the case to spend anything near $300K to $500K plus the assumption of $1M of debt when over 1,000 “YouTube clones” exist out there.
Leverage Assets But Reposition Revver
For us, we would certainly not be interested in doubling up Revver’s efforts to fight YouTube, Veoh, MySpace TV, Daily Motion, Metacafe, Break, Yahoo! Video, MSN Video and AOL Video etc. After all, these companies are valuable and respected distribution partners of ours.
What we would do is use the Revver technology and leverage Revver’s network of loyal content producers to create the 21st century’s answer to a media company. This would be by no means n easy feat. But we are confident in our ability to salvage and reposition Revver’s assets in a way that would create a lot of value in the years to come.
Our strength is in storytelling and packaging. While gifted content producers have chosen to leave Revver for greener pastures, we think that WatchMojo.com can in fact create a hub for content producers all over the world to offer advertisers what they have been looking for - but not been able to find - in online video. Our expertise is in advertiser relations, we do not think that Google’s AdSense, for example, represents the holy grail for Revver or for WatchMojo.com.
We also think that over time, content producers will be looking for homes where they may remain creative and be rewarded for it.
Soul Searching for Debtors
Of course, this begs the question: if I had millions in the bank, would Revver be the best place to park the money? Well, that depends on its network of producers, demographic of its users, technology, and its employees’ desire to tweak the business plan to build something of value and unique enough to stand the test of time.
If all of those things fall in place, then we are confident to be able to strike a fair and reasonable deal with the company’s Board of Directors that would leave all stakeholders happy with the resolution.
So, while this post started off as a pontification on Revver’s fate and the state of online advertising, inadvertently, it has become an open letter to Revver’s stakeholders, all of them.
If the rumors are true that there’s an amount of debt to be serviced, then clearly, the power is in the hands of the lenders.
I know who the shareholders are, but I wonder who the debtors are. I presume they’re reading this, so the ball’s in your court. If you want to chat, you know where to find me (ash@mojosupreme.com).
Dare we say it? If 1995-99 marks the period known as the dot com bubble - or Bubble 1.0 - can we say that 2004-08 is Bubble 2.0?
We all agree that the bubble burst with the Nasdaq crashing from its March 2000 high. We all also agree that the nuclear winter of 2001-03 was a great period in hindsight. Tough, but great. In fact, most of the best all time M&A deals and financing deals of all time were done then.
But after that period we saw a return to the buoyant ways. I think we can all agree that when News Corp. bought MySpace’s parent for $580M, many people said: “oh-oh, here we go again.”
Ironically, much like some of the initial dot com plays were actually worth the hype (Yahoo!, Netscape, Amazon, eBay) and followed by wannabe’s (Webvan, Pets.com, etc.) I would argue that the companies that launched Bubble 2.0 were definitely worthy of the hype (Skype, MySpace, etc.) who were in turn following up with wannabe’s (pick ‘em).
But I’d be lying to you if I said 2008 hasn’t burst the bubble. It has. Look all around you.
All of a sudden we care about the fact that social networks are horrible at generating revenue. Too bad VCs wasted a boatload of investors’ money in many of these ill-fated toilets passing off as business plans.
In 2006 and 2007, I argued that we were not in a bubble, rather, we were seeing pockets of bubbles. Moreover, since these valuations were not driven by public shareholders, I argued that the outcome would not be so negative. Furthermore, since the very mention of a bubble implies that we’re unaware of it being a bubble, I argued that we’re probably not in a bubble.
This did not mean that we were not living in and seeing bubble tendencies. The endless barrage of MySpace clones and social network drones suggested that something was off. YouTube’s $1.65B acquisition - 3x MySpace’s exit - followed the next year with a gargantuan $15B paper valuation for Facebook… coinciding with eBay’s writedown of its eBay investment (whose founders went on to inflate the bubble further with a $45M round for the yet-to-be-proven Joost) suggested that we were definitely in a 2000 mindset.
Then 2007 hit: the excess of loose money made the housing market crash. That knocked off the financing sector which was a guilty accomplice of the housing bubble… and with the financial market squeeze out went the easy money of private capital that funded startups, buyouts, and what not.
Incidentally, much like we saw one last whimper of excess in late 2000… 2008 brought a crazy deal too: Slide raising $50M on a $500M pre-money deal, that some tried to pass off as “prescient” was, let’s face it, lunacy.
Undeterred, many continued to argue that Google and Yahoo! were there to buy out startups (and as such, “this time it was different”), no matter how lame the model of the acquired company.
But as we ushered 2008, all of a sudden, Google’s trio at the top have lost $15B of their value as Google tumbled from $747/share to $495/share.
And, what to make of Yahoo! - the poster boy for Bubble 1.0 - who is about to become acquired by Microsoft for a fraction of its Bubble-era price.
Because of the above-mentioned reasons, the landing is soft for tech companies and new media businesses (unlike the housing market, basically, where foreclosures and bankruptcies have soared).
But if you look around, we’re starting to see some common sense: yesterday Rupert Murdoch confirmed once and for all that Wall Street Journal will remain paid-for, because, well, he’s not crazy. He also confirmed that MySpace was making money because he had positioned it as a media company and locked in revenues from others.
Lastly, he nixed the idea that he would get into a crazy bidding war for either Yahoo! or AOL because he saw someone else do so.
Obviously, the bigger picture remains as healthy as ever. Online advertising is not a gimmick. Online ads will surpass TV advertising, yes. The world has gone digital and I bet that traditional media companies are far more doomed than most new media companies. But even on the new media front: all is not well. CNET, Yahoo! and IAC are all facing shareholder revolts. Meanwhile, old stalwarts like NYT are in the same boat. Yahoo! is being taken over in a hostile bid by MSFT.
Despite the fact that the big picture remains great, the short term landscape has changed: something tells me that 2008 is the equivalent of the 2001-03 era where some of the appetite for nutty decisions will be sucked out of the market.
I suspect that the cycle has shrunk, so within months we’ll get out of this because even though the macro reality will affect advertising, net-net, it’s a plus for digital advertising and interactive marketing.
But, the fact remains: all I can say is THANK YOU GOOD GOD.
From 2001-03, I put my head down and played my part to build an actual business, one who returned 27x the invested capital by 2005. In many ways, I welcome this injection of common sense.
Hopefully cooler heads - and common sense - will prevail.
For the longest time, I’ve been hinting at private equity firms to give me a call so we can rescue Yahoo! That might happen, it might not. But to pull that off, you need a good $40B or so. With Yahoo! at $25B - and reporting earnings as we speak - it might happen.
But today, an easier target. No, I’m not talking about CNET - though I’d love to manage CNET and whip it into shape, too. CNET is in fact facing a hostile takeover from Jana Partners, who has built up a 20% stake in the company.
I’m talking about About.com, the company founded by Scott Kurnit, first sold to Primedia for $690M, then unloaded to the New York Times for $410M in 2005.
Just this past Sunday, I mentioned that I was surprised at how little NYT had invested in developing the videos on About.com. I mentioned that with much lesser resources, we had built a video library twice the size of About.com.
Anyway, Alley Insider is now reporting that NYT wants to sell About.com :
It’s on track to do about $100 million in revenue for 2007, and perhaps $30 million in operating profit, up from $44 million and $11.7 million in 2005 (those numbers include results from recent acquisitions like ConsumerSearch–$33 million purchase price–and UCompareHealthCare.com, $2.3 million). At a 15x Ebitda multiple, About could fetch $450 million. Bump that up to 20x, and it looks a little better: $600 million.
I think About.com will have a hard time finding a buyer because big buyers won’t know what to do with it. With so much focus on social media and networking, an old school Web 1.0 company such as About.com won’t be able to command $500M from many obvious buyers because such companies would rather spend $500M on more high growth opportunities - basic risk and return.
So devoid of such upside, here’s my two not-so-subtle suggestion:
- Lend me $500M.
- We’ll buy About.com for $500M
- We’ll leverage our expertise and library at WatchMojo.com and invest some of that $30M in profits in developing About.com in a video content powerhouse to match its text content strength.
- We’ll integrate our MetaMojo.com vertical search technology to better develop and profit from niche vertical opportunities.
- We’ll let About.com’s columnists use the BloggerMojo.com blog network to publish timely pieces that drive traffic back to the millions of pages deep within About.com.
- We’ll use the StreetMojo.com application and create mini comminities matching users with marketers (b2c) and users with users (c2c).
Overnight - or in 1 quarter - About.com goes from a really useful but stagnant old, new media company, to a rapidly growing company with considerable exposure to both social media and video.
Adding our existing video content alone on About.com’s thousand of SEO-optimized pages alone would reap considerable strategic value. But with video advertising set to cross $1B in 2008 - and cross $7B in 2012 in the US alone - I am pretty sure that I can make About.com be a $10B market cap company in 5 years (7x growth in video market alone in 4 years).
Let’s face it, About.com can attempt to build up video alone etc., but within About.com, that will be hard. With About.com being a part of NYT, it’s impossible.
Something tells me that making a run at CNET is counter-productive. They don’t seem to be a willing, motivated seller. But NYT Company? I think they’d sell that puppy to me in a heartbeat.
Now all I need is a banker. A private banker with $500,000,000.00. Hmm. Where can I find that?
Any takers?
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