Finally you can subscribe to StreetMojo’s RSS feeds and access thousands of contests. Get it here. And yes, if you are a website, you can now parse that good stuff and add promotions, sweepstakes etc. at will.
Feedback, suggestions, etc… send it to ash@mojosupreme.com. More mojo, you wonder… and what is StreetMojo.com, you may ask?
- StreetMojo:
1 - Allows users to log in and access thousands of contests based on category of interest. They can browse all contests for free, and if they choose to sign up to the contest in question, all they have to do is sign up to StreetMojo.com. Once they do, they will be redirected to the contest in question. Check it out here.
If and only if the users are interested, they can opt-in and get a weekly email with the latest contests, based on their interests (music, or travel, or cars, etc.). This avoids the negative connotation of most sweepstakes – notably spam and unwanted emails — and removes the chaotic aspect of looking for contests on the Web.
2- Marketers can use the platform to upload contests and reach targeted consumers and frankly, a lot of record labels, PR firms do. This is basically a self-service tool to bypass publishers.
It’s something I thought of in 2005 when I left my old gig… seeing how neglected and marginalized the promotion space was compared to advertisers… who got all of the publishers’ attention).
3 - On the flip side, it also provides publishers with the opportunity to integrate a feed onto their sites and offer their readers thousands of contests, so that they can focus their energies on selling more ads.
Again, publishers have bigger fish to fry than chase contests.
A moment of entrepreneurial candor (what else would you expect) - I have so dropped the ball on making StreetMojo.com become what I think it can become… which is a mechanism and platform to connect users with marketers with many other applications, such as classifieds, bookmarking tools, etc., all of which have been built but never launched… Shame on me.
But… with the success of WatchMojo.com, StreetMojo.com has been relegated a tad. This begs the question: should I continue to focus 99% on WatchMojo.com and let StreetMojo.com grow in tandem… or should we put some focus on StreetMojo.com, as well?
Nevertheless, a “lot” of the people that subscribe to it (about 5,000 or so!) seem to like it.
Read more here:
XML turns 10 years old. According to the Wikipedia entry:
XML, or the Extensible Markup Language (XML) is a general-purpose markup language. It is classified as an extensible language because it allows its users to define their own elements. Its primary purpose is to facilitate the sharing of structured data across different information systems, particularly via the Internet.
RSS - or real simple syndication - is a subset of XML. XML has drastically simplified syndication.
Let me give you a basic example: in 2000 I worked as an executive at a mid-sized online publisher of text content. When we signed a distribution partnership, we had to manually send the portal the content: the images, text and what not. It was hard to scale. There was a limitation as to how many places our content could end up in.
Today, I run a video content company, but we have managed to scale syndication largely by way of RSS. We can literally tap into a distribution company’s CMS (content management system) and ingest hundreds if not thousands of video files, along with the respective metadata for each. It’s a thing of beauty, and we’ve only scratched the surface.
An unwanted derivative of RSS is that most video search engines are now limited in the sense that they try to index the information and data strictly via the metadata, which is picked up by XML. Ideally, video search engines would pick up the visual data in the video and some already do that, but most don’t.
Over time that will evolve and change… but with regards to partnerships and distribution, XML and RSS have reshaped the landscape quite a bit. From my vantage point, I’d say these helped commoditize distribution. Before a site like MSN, AOL or Yahoo! was restricted to how many content partners it could take on because people had to identify content, ingest it manually and what not. It was tedious and slow. All of that has changed. The winners are both content owners and aggregators, but I think that this explains why we have seen a deportalization take place and niche communities rise.
If content is now able to scale infinitely and reach every nook and cranny of the Web, we have XML and RSS to thank for.
Happy birthday XML!
Editor’s note: I knew we were speaking too soon. One more deal to add to the list: Time Warner to buy Quigo. Added to the bottom of the list, under ad networks.
According to The Jordan Edmiston Group Inc.’s October 2007 Client Briefing report, the number of deals through the first three quarters of 2007 exceeded full year 2006 figures: 637 transactions with $95B in value thus far. Do the math and that is $150M per deal, quite rich.
As such, publishing our list in November 2007 is a bold and potentially premature thing to do. Regardless, why wait?
What started off as a Top 10 list turned into a Top 27 list: then it got out of hand because we were comparing apples with oranges. We’re at over 30 M&A deals in web-oriented sectors that stood out.
The deals are not listed by size or order of magnitude, just a combination of value, strategic fits and long term potential. Others made the list due to the storylines, frankly, or because they took a while and garnered the media’s attention.
At least one, you’ll see which one, has yet to be finalized, but we expect that it will.
Enjoy, feel free to add, criticize, re-order etc. Surely we’re missing some major ones… some time in December, using emails, comments, suggestions and votes I’ll probably publish a top 10 list of 2007 acquisitions…
ONLINE/OFFLINE PRODUCTIVITY SUITES & COLLABORATION TOOLS
- Yahoo! acquires Zimbra for $350M
Yahoo!’s email service remains the most popular in the world, but when it comes to online meets offline office suites, it was sorely lacking, in particular due to Google’s encroachment onto Microsoft’s terrain against the backdrop of Yahoo!’s dead silence on the front. But, in one move, Yahoo! staked its claim to the party.
- Google acquires Postini for $625M
Google is trying to dethrone Microsoft’s grip on productivity suites while Microsoft is trying to encroach on online advertising. Google has bought Writely, launched a spreadsheet program and while these initiatives and acquisitions have gotten the vocal minority excited, they have failed to win the hearts and minds of corporate IT decision makers.
While we doubt one decision alone will make a change, the acquisition of Postini - makers of corporate email security tools and anti-spam software - could technically make a difference over time. Let’s face it, Gmail is indeed pretty cool, but corporations won’t be caught dead using it. Maybe by meshing Postini with Gmail, offices worldwide will stand up and take notice.
- Facebook acquires Parakey
In 2007, Facebook grew synonymous with hype. Anything the company touched, or sought to touch, quickly turned to gold. Mind you, the company’s torrid growth rate was nothing short of breath taking. But when Facebook announced that it had acq-hired Parakey, a yet-to-launch web operating system developed by Firefox co-founders Blake Ross and Joe Hewitt for an undisclosed price, people noticed because this meant that Facebook had MSFT in its cross hairs. Over time, MSFT made a $240M investment in Facebook, creating an alliance between the two firms, and suggesting that Google, and not Microsoft, was Facebook’s true nemesis.
See HipMojo.com’s post on the deal here.
- Cisco buys Webex for $3.2B
Webex was the first stock I bought, and the reason was simple: companies spend so much money on travel and phone calls are not always easy. Webex was a simple way to bridge the gap between people who needed to at least be on the same page when it came to sales calls and phone meetings etc. Webex who for the large part of the 21st centuy traded slightly above $1B in market cap ended up fetching quite a premium from Webex, selling for a whopping $3.2B.
See HipMojo.com’s post on the deal here.
PUBLISHING
- Answers.com acquires Lexico for $100M
Answers.com, whose parent GuruNet Corporation paid $57,000 for the URL moniker, turned around and paid $100M for the parent corporation of Dictionary.com and Thesarus.com, fitting for a company who bills its Answers.com site as the world’s largest Encyclodictionalmanacapedia.
Of course, Answers.com got far more than two sexy URLs, Lexico did decent revenue and earnings, too. But any way you dice it, the deal was rich, translating to:
- 35 times earnings
- 15 times revenues
- $9 per unique
See HipMojo.com’s post on the deal here.
- Discovery Holdings acquires How Stuff Works for $250M
How Stuff Works has been around for what seems to be forever. It raised $50M for expansion this year and many expected the company to be the one signing the checks, but by year’s end, the company’s interest in all things video led to its sale to Discovery Holdings for a whopping $250M.
See HipMojo.com’s post on the deal here and here.
- CBS acquires Wallstrip
On the one hand, as a fellow video producer at WatchMojo.com myself, I was happy to see Howard Lindzon’s Wallstrip exit successfully to CBS: it showed that one can create something of value in video content and, in all honesty, it created a floor price and a comparable… But, by the same token, I think Wallstrip sold too soon and for too little (nothing against CBS).
Ultimately, in the year when marketers spoke loudly against user generated content, it created a first example that professional made video could represent a valuable business if done right. If I dare say so, we’re now going to show just how much a video content creation and syndication business can scale and grow if you stick to your guns… but that’s for a separate post.
- Hearst acquires UGO for $100M
Men don’t read magazines. They’re watching less and less TV. Where are they? Apparently, online and playing video games. If that hypothesis and premise is true, then Hearst made a much needed investment to get into a video game publishing network targeting men, that of UGO. Incidentally, when Viacom and News Corp. vied for IGN Entertainment [disclaimer: my one-time employer after it bought the company where I was a partner], Hearst balked at the price tag, which hit $650M. But two years after that deal, the trend lines were clear: Hearst needed to get serious about reaching men online and the $100M acquisition of UGO was to serve as the spring board. UGO had raised $90M since its inception.
See HipMojo.com’s post on the deal here.
- CBS acquires Max Preps for $43M
High school athletics is a hot sector. High school sports are a key part of local content and local advertising has always been a huge market, and one that is up for grabs, particularly as newspapers see ad dollars flow to the Web. More importantly, high schoolers don’t spend as much time watching TV (not suggesting that all high school sports fans are actually high schoolers, of course). Combine these trends and you see why CBS’ acquisition of Max Preps was a smart one. After the deal, Max Preps was rolled into CBS’ College Sports Television (CSTV) and its network of websites. It’s always very important to hook consumers early on, and there ain’t a better time frankly than before the college years.
- Yahoo! acquires Rivals.com for $100M
$100M for a sports site geared towards college sports seems like a lot, for sure, especially when the previous year, News Corp. bought Scout for $60M and CBS bought Max Preps for $43M.
But when you consider that said company has raised $75M in venture funding and run by CEO Shannon Terry who made the list of SBJ’s Top 20 in Online Sports, you know the deal’s final price will get high.
Ultimately, by making the deal, Yahoo! leveraged its massive audience to become a main player in sports, rivaling FOXSports.com, SI.com and ESPN.com. Mainly, by holding out and seeing CBS and News Corp. buy Max Preps and Scout respectively, Yahoo! not only saw a floor being created for Rivals.com but also had to pay a premium to ensure that the company not fall in another media company’s hands.
See HipMojo.com’s post on the deal here.
- News Corp. acquires Dow Jones for $5B
I know what you’re thinking, did he fire six shots or only five, “Dow Jones is not online. I mean, it’s flagship product, the Wall Street Journal is not even free!”
My friends, Wall Street Journal has the single most successful subscription business and gets 10m unique users per month. For decades, lest centuries, media moguls and tycoons have pushed the mantra of synergies. Rupert Murdoch in one single transaction:
- acquires one of the two assets he’s always fancied (WSJ, other being the Financial Times),
- he gets the best springboard for his new Fox Business Channel,
- acquires 10M uniques on WSJ.com, or 17M in all if you include Marketwatch and Barron’s,
- has the right, but not the obligation, to open up WSJ.com and make it into the most valuable place advertisers can reach the world’s wealthiest and most influential readers.
If you consider all of the variables, that’s one helluva deal.
SOCIAL MEDIA
- American Greetings acquires Webshots for $45M
Forget the fact that Webshots remains a strong brand that just a few years ago was bought by CNET for $70M, but Webshots is actually very complementary with American Greetings’ business. Photosharing has become a huge market, and while in CNET’s hands Webshots needed to be a leader in its space, under a company like American Greetings, it need not be. Moreover, while in the hands of CNET Webshots needed to generate sizable ad revenues (given how many pageviews it generates), in American Greetings’ hands, it need not. In other words, American Greetings is buying a large online property that is very strategic to its core business at a discount. That’s a great deal.
- CBS acquires Last.fm for $280M
Extra! Extra! Read all about it: CBS’ (and traditional media in general) core businesses are shrinking. CBS is the world’s largest TV company in terms of ratings, the largest outdoor company and second largest radio company. But like TV (and print), traditional radio is shrinking, so CBS made the prescient move to buy Last.fm. Similar to Pandora, Last.fm allows users to find new music based on their tastes and the overall community’s listening patterns. Was Last.fm the absolute best and biggest site out there? Probably not, but when you are CBS, you cannot pull a Bertelsmann and invest in a Napster-esque company that has burned more bridges than [won’t go there but insert anything you wish here].
See HipMojo.com’s post on the deal here.
- Cisco acquires Tribe
Cisco is no stranger to acquisitions, of course, but it usually acq-hires teams of engineers or technology. But by buying Tribe, one of the earlier social networking sites, did Cisco signal a shift away from Sun Microsystems’ mantra that “the network is the computer” to social networking is the Web? Perhaps, time will tell.
Ultimately, it’s a tacit admission that the web will become central to, well, everything.
See HipMojo.com’s post on the deal here.
- Nokia acquires Twango for $96.8M
Twango combines online storage with social networking, allowing users to organize and share photos, videos and other personal media.
Twango was founded in 2004 by former Microsoft employees and has around 10 employees. The deal is estimated to be just under $100 million, $96.8 to be precise. That’s right, it weighed in at $10M/employee. Twango is a small step in the seamless transferring of files from handsets to PCs. The fact that Nokia made the acquisition suggests that Finland’s most valuable company should not be seen as a telecommunications hardware company alone.
- News Corp.’s Fox Interactive Media/MySpace acquires Photobucket for $250M
Photobucket’s acquisition by MySpace makes the list mainly because the storyline behind it was pretty soap opera-ish. Photobucket builds business - according to MySpace and FIM executives - a la YouTube by leveraging MySpace’s audience and community, then adds insult to injury by trying to run ads in their slides.
Then Photobucket’s M&A advisors Lehman Bros. whisper their asking price: $300-400M. A lot of people scratch their heads. Of course, fearing a repeat of YouTube, where a company grew thanks to MySpace but sold to someone else, News Corp. blows a gasket and its MySpace site blocks Photobucket.
Suddenly, value of widget-driven businesses and Photobucket in particular plummets. Back channel diplomacy ensues, coup de theatre follows in the shape, form and fashion of a $250M buyout by News Corp.
In fact, the rumor of an impending deal broke out in early May, and the deal was formally announced on May 30th.
See HipMojo.com’s post on the deal here.
- Hi-Media acquires Fotolog for $90M
When European online marketing juggernaut Hi-Media announced its acquisition of Fotolog, eyebrows were raised. On the WTF? side of the argument were those who said: “using Fotolog’s forecasted 2007 revenue of$2.3M, a net-of-transaction fee sale of $90M implies a pretty rich 39 prices-to-earnings ratio. That’s rich. But, the counter-argument was that Hi-Media was acquiring a community of image-crazed users for 1/3 of what News Corp. paid for Photobucket; yes, call it the reverse fool theory. With $15M in financing, a $90M payout was part of the lure, turned out that the institutional shareholders of Fotolog decided to hold on to their stock holdings of Hi-Media. It should be noted, that just before the acquisition, Fotolog had signed a $75M advertising deal with Google, over 36 months, or roughly $2M per month.
See HipMojo.com’s post on the deal here.
- MSNBC.com buys NewsVine
What does this mean for Digg? We don’t know, but last year, the leader in social bookmarking and news, Digg, supposedly asked for $150M from News Corp. Rupert Murdoch balked, launched MySpace News. I’m not sure how well MySpace News is doing, I suspect Digg is doing quite well, but the fact remains, I doubt Digg will get $150M (then again, a sucker is born every second) because Stumble Upon’s $75M price tag and NewsVine’s price tag imply a lower value for Digg.
Of course, this is a post on NewsVine, not Digg. I can’t understand really the logic and prevailing wisdom to sell NewsVine, a company who had raised less than $2M in financing and who was riding high as America is about to enter an election season and NewsVine’s core focus seems to be political… but, I digress. On MSNBC.com’s part, this marked the NBC/MSFT joint venture’s first acquisition, ever.
E-COMMERCE
- Hearst acquires Kaboodle for $40M
Hearst bought a handful of companies this year: UGO for $100M, which was pricey but not very expensive for a company that raised $90M of funding since inception. But given Hearst’s traditional business focus in magazine, the deal for Kaboodle is intriguing because it allows fashion and retail advertisers - two of Hearst’s main clients - to tippy-toe online and connect branding with purchasing. If Hearst can pull this off, the combination can become powerful, and valuable. Will they? Big old media doesn’t have the best track record, admittedly, so time will tell.
See HipMojo.com’s post on the deal here.
- eBay acquires Stubhub for $310M
eBay = auctions, Stubhub = scalping. It didn’t take the MBAs very long to see fits. Speaking of graduate degrees, founders Jeff Fluhr and Eric Baker owned roughly 35% of the company and with $15M in funding over the years, they managed to build a controversial but successful company that did $100M in sales and $10M in EBITDA. The company’s backers included Allen & Co, Blue Water Capital, Pequot Ventures and Staenberg Venture Partners.
SEARCH, NAVIGATION & DIRECTORIES
- R.H. Donnelly acquires Business.com for $345M
When word got out that Business.com might be selling for over $300M, the natural reaction was to think “the bubble is back”. After all, just a few years ago, founders Sky Dayton and Jake Winebaum acquired the URL for $7.5M from Marc Ostrovsky. At the time, even I thought “will they ever generate $7.5M in revenues off the site, over the course of its lifetime”? Of course, when Dayton and Winebaum bought the URL, Google had yet to create the keyword ecosystem that today underwrites much of online advertising. While critics maintained that by 2007, Business.com was little more than a directory of resold Google text ads, R.H. Donnelly saw salvation for their shrinking print directories and agreed to acquire the firm for $345M.
See HipMojo.com’s posts on the deal before it happened here and afterwards here.
- eBay acquires Stumble Upon for $75M
Stumble Upon’s 2.3 million users and 5 million daily recommendations caught the attention of AOL, Google and eBay, and ultimately, after valuations ranged from $40-75M for a few months, eBay walked away the winner. When the rumor popped up and few understood the logic, though technically, like eBay’s Skype acquisition, the prevailing wisdom of the leading auction community to acquire a leader in “stumbling navigation” makes sense. Of course, that’s what was said about Skype too, and this year eBay wrote down a chunk of that acquisition, even though the fit was even stronger there. Stumble Upon raised less than $2M, which means that founders Garrett Camp, Geoff Smith, Justin LaFrance and Eric Boyd walked away with a nice payday each. Lesson for entrepreneurs: success did not come over night, the site was founded in 2000!
See HipMojo.com’s post on the deal here and here.
- Microsoft acquires Medstory
For all of the talk about vertical search engines being the next great thing, very few case studies proved to be profitable exits. Then came along Medstory and the battle for health information, which led Microsoft to acquire vertical search player Medstory as Google, Yahoo! and Microsoft all vied for search market share and to become the gateway to users’ health information online.
COMMUNICATIONS, WIRELESS VOICE SERVICES
- Google acquires Grand Central for $45M
Let’s face it, financially, Google remains a on-trick pony with 99.9% of its revenues coming from paid search ads and the two related products: Ad Sense and Ad Words. But Google’s product assortment has grown very attractive, from GMail, to Maps, Google Earth, YouTube and soon Doubleclick, Google is certainly laying down the foundation to become a diversified new media and technology company. In that vein, the acquisition of Grand Central to arm users with one number on any platform is consistent with Google’s global and multi-platform ambitions. In fact, at $45M, the deal was cheap and provided good value to Mountain View.
- Microsoft acquires TellMe for $800M
TellMe is “a leading provider of voice services for everyday life, including nationwide directory assistance, enterprise customer service and voice-enabled mobile search.” If the price tag weren’t so darn high, it would surely be higher on this list. Regardless, this catapults MSFT into voice services and voice-enabled mobile search, which a few short years from now will actually help it quite a bit against the #1 and #2 in search, Google and Yahoo!, respectively. While $800M is a large price, if it can execute on that alone, the deal can be a enormous coup for Redmond.
MOBILE AD NETWORKS
- AOL acquires Third Screen Media
Indeed, to quote the Wall Street Journal’s Kara Swisher, new CEO Randy Falco has been busy torching AOL’s Dulles, Virginia’s HQ, but while he’s been doing that, he’s also been making some bets on the next growth area: wireless. In 2007, AOL bought Third Screen Media, a mobile advertising network and ad-serving management platform provider. Will this be a repeat of Advertising.com’s $435M which today drives most of AOL’s top line? Who knows. I doubt it, wireless is way too embryonic, today. But one day, when cars fly and everyone has a pony, wireless entertainment and mobile advertising shall inherit the earth. Time will tell if Randy Falco will be ruling the fiefdom when that happens.
- Nokia acquires Enpocket
In the emerging mobile content and advertising market, Nokia hopes to expand its footprint beyond hardware. To achieve its goal the handset manufacturer agreed to acquire Enpocket to build its advertising platform.
Though Nokia has a content and advertising presence in Europe, its wanted to expand there and elsewhere, including the U.S., through internal development and acquisition. The Enpocket acquisition follows Nokia’s buy of social media sharing service Twango, as well as internal moves toward content publishing.
Enpocket has customers in the US, Asia, and Europe, including Vodafone, Telefonica, British Telecom, and Sprint. It delivers advertising across a variety of mobile formats, including SMS, MMS, mobile Internet, and video. Its customers include both carriers and the companies with which they do business, most notably Pepsico.
In some ways, this deal was in the same vein as Microsoft’s acquisition of European mobile ad firm ScreenTonic with the intention of integrating its capabilities into adCenter: “We want to deliver a platform that helps advertisers buy across all digital mediums,” said Joe Doran, GM of Microsoft’s digital advertising solutions. “As we build out the breadth of our platform, we are continuing to invest against that vision.”
- Nokia acquires Navteq for $8.1 Billion
Nokia is the world’s largest manufacturer of cell phones. Nokia owns this market, basically, and any acquisition it makes is bound to have ripple effects. NAVTEQ is a leading provider of comprehensive digital map information for automotive navigation systems, mobile navigation devices, Internet-based mapping applications, and government and business solutions. NAVTEQ also owns Traffic.com, a web and interactive service that provides traffic information and content to consumers. The Chicago-based company was founded in 1985, generated 2006 revenues of $582 million and has approximately 3,000 employees located in 168 offices in 30 countries. Incidentally, “Internet and wireless” make up only 5% of Navteq’s revenues, compared with 25% from mobile devices and a whopping 62% from in-dash navigation systems.
Translation? Lots of upside in Web and mobile revenues and the creation of a very powerful wireless and local ad network, perhaps?
AD NETWORKS
- AOL acquires Tacoda for $275M
One of the bigger and hyped phenomenon (fairly or unfairly) of web advertising remains is behavioral targeting (BT). Rightfully, to better optimize inventory and users, and to make the promise of web advertising a reality, BT has a role to play. But AOL’s acquisition of BT also demonstrated BT’s inherent limitations: few sites want to partner with BT firms, they want to own the data and underlying IP. Will it be an Advertising.com type of payoff? Time will tell, but Tacoda within AOL is worth far more than outside, in that sense, this deal made sense…
See HipMojo.com’s post on the deal here.
- Google acquires Feedburner for $100M
Google paid $100M for a company with $10M in revenue. Regardless of the financial merits of the deal, the fact is that had Google sought to emulate Feedburner (even had Feedburner not existed), the media companies that partner with Feedburner would not have allowed Google to access such private and valuable data. In other words, Google bought something that was worth many times more to Mountain View as in a year where it had become more and more enemy than friend.
See HipMojo.com’s post on the deal here, Google Buys Feedburner and Encroaches on Organic Ad Results.
- Yahoo! acquires Blue Lithium for $300M
Blue Lithium’s focus on introducing large, sexy brands to the virtues of advertising networks is legendary. Before more and more larg, Fortune 500-type marketers embraced running online ads - let alone using ad networks - Blue Lithium stood out of the clutter with a product and service that appealed to both sides of the online advertising ecosystem. Once upon a time, Blue Lithium’s management even talked of its advantages and strengths over online ad champion Google, but then lo and behold, Yahoo! acquires Blue Lithium for $300M to maximize the monetization of its ad inventory and to bolster its online advertising network both outside Yahoo!’s burgeoning media properties.
Given that the next wave of growth in online advertising will be display / banner ads (after video) and that will come from Fortune 500 marketers, this is a move that can pay off considerable dividends to Yahoo!
See HipMojo.com’s post on the deal here and here.
- Google acquires Doubleclick for $3.1B
Technically, this deal has yet to go through. But we added it onto this list because it shows that Google is completing its arsenal of web tools. Starting off with search, then video (YouTube), then email/newsletter (Feedburner) and now display/banners (Doubleclick), Google has the potential to circle the loop of online advertising.
We’ve covered this deal ad nauseum, so we’ll simply link back and leave you with this quote from one of our posts:
“When a lot of people said Google just hit a home run in online advertising by buying DCLK, they were wrong because saying DCLK is an online advertising play is akin to saying MSFT is strong with ad agencies because ad agencies use powerpoint in their client pitches. DCLK sold all of its media assets to L90/MaxOnline when ad rates were low and no one really paid CPM rates, and got into software only”
But, that notwithstanding, Google buying Doubleclick is a key deal because it bolsters Google’s online advertising software suite, which in itself helps it attack MSFT on many more fronts.
See HipMojo.com’s post on the deal here:
- Google Buys Doubleclick for $3.1 Billion; Blocks MSFT Acquisition
- Questions in Wake of DCLK/GOOG Deal; MSFT/YHOO Repercussions?
- Two Variables in DCLK/GOOG Deal: Dart for Publishers/Advertisers; All Cash Deal
- Why GOOG’s DCLK Makes Little Sense (To Me)
- DCLK Winners: Hellman & Friedman; Losers? DCLK’s Shareholders?
- aQuantive Under Spotlight
- Yahoo! acquires Right Media for $750M
Technically, Yahoo! paid $45M for 20% of Right Media first, then less than a year later, it paid $680M for the 80% it did not own. Right Media was unique in that it worked with other ad networks to allow publishers to create an auction process for a publisher’s long tail inventory. On a property like Yahoo! alone, with billions upon billions of remnant, unsold ad inventory, such a platform can be worth billions each year.
And, as Yahoo! develops its network online (away from Yahoo!-owned sites), Yahoo! liked what it saw enough to justify pushing up the price of the asset four times in less than a year.
See HipMojo.com’s post on the deal here.
- WPP acquires 24/7 Realmedia for $649M
WPP is one of the largest agencies in the world, a marketing behemoth with huge ambitions in digital advertising. It got one step closer to that when it bought 24/7 Realmedia, getting an advertising network, an email newsletter business, search marketing tools and much more. With its extensive advertiser relationships, WPP is sure to get enough bang out of its $649M bucks.
See HipMojo.com’s post on the deal here.
- Microsoft acquires aQuantive for $6 Billion
Microsoft generates very little from advertising. In the future, all advertising will be planned, bought and managed on digital platforms. And digital advertising will be larger than all offline advertising. Furthermore, targeted/tracked (web) advertising will command a considerable premium to non-targeted and untracked advertising. As such, for MSFT to win aQuantive - the crown jewel in the sector - it had to pay a commanding premium.
Like it or not, the market determines how much an asset is worth, which in turn is a function of demand and supply. aQuantive had a range of suitors, and the company that wanted it most ended up paying for it. MSFT’s acquisition of aQuantive can be a game-changer for MSFT if it does not botch it up.
See HipMojo.com’s post on the deal here.
- Time Warner acquires Quigo for $340M
Quigo, which signed a deal with Time Warner’s magazine division, Time Inc, and has more than 500 publisher relationships, is an Internet ad-targeting company that lets advertisers buy sponsored listings, much like Google’s AdSense, based on keywords or subjects.
AOL in September restructured its advertising business, consolidating ad network Advertising.com; Tacoda, which targets users based on their habits; wireless ad network Third Screen Media; video ads company Lightningcast; and ADTECH, a global ad-serving company, into one division.
What did you think of the list? Corrections, suggestions, comments etc., add to comments or email me at ash@mojosupreme.com.
Less than 48 hours ago, I laughed-out-loud when I read that Bay Partners would be setting up a separate fund to invest in Facebook Application Developments (which incidentally spells fad, but that’s really just a coincidence). Don’t get me wrong, I am extremely bullish on Facebook (Facebook 100M users, a matter of when, not if) and if I were a part of the company I could envision a dozen ways to create an Ad Sense-esque revenue stream… but the fact remains, Facebook Apps is no brass ring for third parties. I’ve written on this here: Facebook OS: Be careful what you ask for.
In fact, by now it’s quite obvious that this is Facebook’s way to not only drum up excitement amongst developers but mainly a way to try to find that diamond in the rough product or application that it can then either develop itself, partner up with or outright acquire in the hopes of it becoming what Ad Sense was to Google: a $10B annual revenue stream within 4 years of launch.
Today Facebook’s own VCs, namely Accel Partners, Greylock and Meritech, got into the fun, stating that they too, had Facebook Apps monies to dole out. While at face value this seems like even more folly, this really shows three things:
1- Facebook, despite being the hottest privately held company out there in the consumer web space, is probably finding it hard to find a million dollar hit, so it’s hoping that someone else will (which is brilliant, frankly).
2- Facebook’s VCs are willing to finance that one-in-a-million product because like all case studies, it is easier to innovate such a product outside a rapidly growing but already quite large enterprise.
More importantly, or cunningly, while I’m still not convinced of the merits thereof for Bay Partners to back such ventures, it’s intuitive for Facebook’s VCs. After all, if any one application works, they will succeed both on their Facebook investment and their application one. Think of how Sequoia won when Google bought YouTube. Common area: Sequoia backed both and by selling YouTube to Google it got an exit in the former in an otherwise murky legal situation and strengthened the latter… See my take on the so-called Sequoia/YouTube/Google conspiracy theory here and the missing piece in Google’s puzzle here after it bought YouTube, Doubleclick and Feedburner.
3- Sadly or thankfully, depending on who you ask, the days of good old fashion business development seem to be gone. Nowadays, the extent of bizdev - what built Web 1.0, basically - is an RSS feed or an API. This is good in a few ways, but frankly, it’s a lazy and generally fruitless road that has hitherto failed to yield any home runs. I’m not talking HRs by Web 2.0 standards, I’m talking real stand-alone successful and profitable businesses. I’m not a ludite: APIs, RSS etc., greatly help some things scale, but devoid of a comprehensive plan to implement any initiatives, most of the so-called innovation will never bear fruit.
Ultimately, Facebook, whose talent is largely a product of Web 2.0, probably shuns the merits of “bizdev” deals and wants a turnkey solution to scale its revenues. This is a bold and daring strategy, will it succeed? We shall see. Note that even Google’s Ad Sense, which generates so much of Mountain View’s profits were negotiated by business development types who actually sent emails and called small, medium and large publishers… Remember, the meek shall inherit the earth, after all.
This is a key nuance in Facebook vs. Google’s modus operandi. Google did not invent Ad Sense, methinks that Facebook is hoping its strategy will prove to find something similar.
Google, after all, first bought Applied Semantics to get into the contextual ad market and then Sprinks to consolidate the segment… (see our Top 10 Web M&A of all time). It did not invent anything (let alone the fact that the underlying pay per click model was pioneered by GoTo and even my first web employer Mamma too was doing this in 2000, before Google was a toddler).
In other words, Facebook knows that its user and pageview growth is nothing short than breathtaking, but until it files for an IPO and opens its kimono to the investing community, like Google, it too needs a billion dollar baby… and as a former ad sales executive, looking at their current advertising, I can see that Facebook as a multi-billion dollar going concern is still largely a concept and not a reality.
If the VCs backing this puppy want to see their own investment follow the mythical hockey stick curve, then it is not crazy to dole out relatively small sums to outsiders who want to realize the next case of the innovator’s dilemma.
Related:
- Facebook: IPO vs. M&A.
- Facebook’s 2008 to do list: File for an IPO.
- Should MSFT Turn its Attention to Facebook?
- Peter Thiel: Facebook is Worth $8B.
- Murdoch: “MySpace worth $6B”, if so, then break up FIM!
- Facebook to be worth $2.35B by 2010.
It’s official, check out Feedburner’s blog here and Google’s post here.
By buying Feedburner, Google is doing many things:
- it is acquiring the leading RSS network,
- it is adding that much more value to Google Analytics, formerly Urchin,
- it is allowing Ad Sense to move into RSS ads,
- it is moving away from its promise not to encroach on organic results.
Increasingly: Feedburner’s web pages are listed high in the search engine results pages (SERPs).
By buying YouTube - which rightfully - pops up high in SERPs’ top page, Google pushed its way onto organic results. This might seem unimportant, but when Google introduced “Tips” (essentially its answer to Yahoo!’s shortcuts), the vocal minority amongst bloggers and industry types was “google was being evil,” which was a retarded argument for Google is a for profit corporation and it will pursue what is best for it.
By buying Feedburner - at 10 times revenue - Google is doing many things, one of which is moving slowly inside the organic results.
And, on a side note, if some of the conspiracy theorists are right, then Sequoia-backed Mahalo.com will also start to appear in the first page of Google’s rankings, and when Sequoia pulls another “YouTube sells to Google” type of deal, Google will have a third listing that will have a propensity to pop up at the top of the charts.
Chicago-based Feedburner just got sold to Google for $100M, Tech Crunch is reporting. The rumor began last week, but TC now says it’s official, as the two companies are in a binding term sheet.
FB raised $10M from Portage (Series A), Mobius and Union Square Ventures in Series B (speaking of which, if this news is indeed 100% right, then Fred Wilson had two exits in one week - three days in fact - one from CBS and one from Google, not bad at all). Anyway, FB is reported to do $10M in revenues, so this one weighs in at 10x revenues. To put things into perspective, GOOG paid 10x revenues for DCLK and MSFT paid 15x revenues for AQNT.
These are relevant, since FB is an ad network too.
FeedBurner is the leading provider of media distribution and audience engagement services for blogs and RSS feeds. Our Web-based tools help bloggers, podcasters and commercial publishers promote, deliver and profit from their content on the Web.
FeedBurner also offers the largest feed and blog advertising network that brings together an unprecedented caliber of content aggregated from the world’s most recognized media companies (e.g. Wall Street Journal Online, Wired News, Ziff Davis), A-list bloggers and blog networks and individual publishers from around the world.
FB is a great company. We’ll be rolling out a range of FB products when WatchMojo.com relaunches on a new CMS / redesign in the next 1-2 weeks. But I don’t think this was an ad play, it was a publishing tool play. Apparently/of course, we’re not the first ones to point that out, something that Valleywag echoed earlier.
I’m also adding as an update, something a Tech Crunch commentor noted: at 422,717 publishers means Google is paying $237 per publisher, naturally some are bigger than others, but that is a good deal given that Google is master of monetization.
And via this deal: Google just added another dimension to how it organizes, monitors and basically controls the Web’s traffic. This is a plus for many, many, many sites that use FB, don’t get me wrong. Google runs FB links via GMail, for example.
Google has a horrible integration record with a lot of deals (dMarc, Dodgeball) and a few hits (YouTube, Analytics). That’s important, because FB is awfully akin to Analytics in that it’s a publisher tool. And since it already seems to index FB, integration should be a breeze.
I do see two issues though:
1. Feedburner is increasingly popping up as a search result high on Google. Google will now effectively be sending traffic, lots of it, to its own pages (indirectly). People cried foul when Google began to link as “shortcuts” links to Google Video, Maps, etc., which are actually a nice addition to search results. It killed those critics by launching Universal Search last week… mind you. But in this case, Feedburner will be in the organic results. I know, Google is already doing this with YouTube having so many top results for video-related queries, but Google being an impartial referrer of traffic is pretty much a thing of the past. Google is buying up a lot of these services that fetch top clicks. Someone should note that.
2. This will scare away many media companies from using FB.
The problem, of course, is that FB is a lot more than Analytics, and a lot of major media companies use it, it seems… and I just don’t see them using it once it’s in Google’s hands. Here are some of the blog networks that use it:
Will many of these defect? No. But judging by the leading brands, who are already being decimated by Google, will they really use something that will give Google way too much data on what is read, what is not, etc.?
What do you think? Does FB as part of Google scare away media companies to use it?
Just a week ago, we published our Top 10 Storylines of 2006. We were going to avoid the Top 10 Trends or Predictions of 2007 and instead do something else (we still will do that, expect it on January 1st).
But then Pete Cashmore of Mashable.com challenged us to suggest some predictions for 2007, you know our saying: “Ash and you shall receive” (though we already somewhat covered this back in October here):
To see our trends, scroll down to after the Indented portion (for an imagination run wild scroll down to #6 - 6 - ACQUISITIONS & MANAGEMENT SHUFFLE, or course, take the scenic route).
Our philosophy for trendspotting is:
It’s important to note that every year, something that is adopted by early adopters online in the previous year takes off with mainstream masses the ensuing year; while something that was already very much in vogue with mainstream audiences the previous year takes off and crystalizes.
A look back at history reveals a familiar pattern:
We’ll start from 2004. After all, 2003 can be viewed as the turning point and renaissance of the Web.
2001 was the abyss, no doubt. In 2002, things began to stabilize, and 2003 marked the turnaround. This was confirmed and highlighted with Google’s IPO in 2004, which left no doubt that the Web had shaken its hangover off and would go on to become a viable medium, and a very viable one at that.
In 2004, blogs were the buzz word (even though these were around for years). The macro-level phenomena to draw blogs into the pop culture lexicon were clearly the escalation of troubles in Iraq (and the mainstream media’s reluctance to cover them) as well as the Presidential Elections. For example, as the mainstream media sugarcoated Iraq, bloggers covered the facts as they were, or rather, as they viewed it.
In 2005, it was social networks that became hot while blogs became more and more mainstream. Think of how many more people started blogging in 2005. The reason why social networking took off, frankly, had to do both with demographics and technology. Social networks like Tribe, Friendster and MySpace had been around before 2005 of course. Demographically, the so-called trend-setting 16-17 year old crowd had entered high school at a time when the Web was part of the curriculum and de rigueur in classrooms. Technologically, broadband had taken off, camcorders and cell phones made digital media commonplace; the two were a match made in heaven and social networks like MySpace took off.
2006 will surely go down as the year of online video, partially due to broadband becoming prevalent in more than 50% of homes and the falling price of hosting. Similarly, the adoption of social networks became very commonplace. Today, for example, it was noted that the average age of someone with a profile on MySpace was much older than expected: over 50% are 35 and older, up from under 40% last year. I know, not exactly fossile-status, mind you, but you get the point. In the meantime, every one now has a blog, even the President of Iran… (he’s even set up with RSS feed and all!)
But of course, that was October, 2006, before YouTube sold to Google, before Yahoo! announced its shake-up. All right, not mich of a shakeup, but you know what I mean.
So if:
2004 marked Blogs
2005 marked Social Networks
2006 marked Video
Then 2007 will see the following:
1 - VIDEO
a) FLIGHT TO QUALITY IN CONTENT
As a result of a regression to the mean, users will demand some more quality in the video found online. We’ve gone a bit too far to one end of the spectrum in terms of, well, having too much crap online. Folks, America’s Funniest Home Videos was one (albeit popular) show, but it was not the only show, on for 24/7, and one that spawned stars.
Yet, somehow every media company wants to make funny home videos the cornerstone of their digital video strategy. It’s lame, it’s enough. Move on.
For the love of all things holy, the folks at WatchMojo.com seem to put more time, energy and effort in the Web TV strategy that some major media companies do and let’s face it, that ain’t right.
b) CONSOLIDATION IN TECHNOLOGY
Way too many platforms, way too many formats etc., as an industry we need a sweeping determination of standards (imagine where online advertising would be if there was no standard ad sizes!)
We also will see a lot of companies merge due to a shortage of talent at the top (you simply can’t take an old media executive and parachute him at a Guba, for example, it will not succeed… but take Revver and Guba, and you might have a match of senior management strengths, of course, there is ego matters, but that’s not our problem) or technology and content (say Revver has the “business model” but lacks content, and Metacafe has boatloads of content but no model - I have no idea if they do, just using as example), these could merge and will have to because…
The bottom line is that for most online video sites that are merely technology platforms, VCs will simply not fund more money. The technology alone is not impenetrable. The audience is fickle. Heavy.com is a video site that just raised more money, but it’s a content aggregation and publishing site.
Read: Online Video: It was the best of time, It was the worst of times | Tough Times Ahead After GooTube Deal.
2 - PERSONALIZATION
For a few years now, we’ve seen developers, programmers, engineers, des
ers (can you tell I don’t know who does what - I’m kidding, well…) create fantastic tools, features and applications that streamline and faciliate the content creation and aggregation process. Blogging software is just one example.
We’ve seen publishers - old and new - increasingly harness and master these tools to better manage and distribute content.
We’ve also seen individual users pull up a seat at the big boys’ table and create compelling content. Rafat Ali has more influence that most if not all writers at the New York Times to web audiences, mind you. Along with the regression to the mean, these two will converge. But you get our point.
Lower along the totem pole, some of the content is crap, some of it is ok, some of it is wonderful (like my nugget of wisdom says: “there’s hot girls in all countries!”).
Point is, people who want content will be able to pick and choose what they want (through RSS, newsletters, etc.) and people who create content can push it out by customizing what and how they produce content. Think My.Yahoo on a large scale.
The main challenge we face now is noise - pure and simple. Too many blogs all blogging about the same thing to get linked, too many image-sharing sites, too many video file-sharing sites… but this will start to “clean up” in 2007 and become a reality in 2008. One reason why to follow below.
3 - INTERMEDIATION
When Bear Stearns Cable and Satellite analyst Spencer Wang published: “Why Aggregation & Context and Not (Necessarily) Content are King in Entertainment,” he was not saying anything new to legions of web-wannabe-analysts (the WWA baby!). And yes, yours truly is definitely included amongst the WWA.
Content has evolved online, we won’t see new portals per se, but we will see vertical portals, or countless niche sites, some of which produce niche, contextual content along verticals and others who do not create any content but simply aggregate it.
As a direct result of intermediation and personalization, a lot of people will drop Digging (I’m using the term here for what Digg represents: the good, bad and ugly of Web 2.0 and not only contributors to Digg) and the like and start doing similar things for themselves.
We have a social bookmarking tool ready and go that cost very little to create. There’s nothing defensible about that, and the system to duplicate it is somewhat easy.
As per Digg’s users: people are inherently greedy. Remember: “Greed is good…” and people will realize that toiling away to generate content for Digg while a select few laugh all the way to the bank is not a fair system, especially when the community is asked to clean up spammers and Digg gamers and the CEO says “what problem?”
Being a top Digger does not get you laid after all, getting paid does.
Combine that with the fact that a lot of these diggers will hit puberty and they realize that they’d rather own a tiny space online instead of, well, you know what: nothing of Digg.
Social media will not disappear, but it will change. People will take ownership back. I edited a few posts to Wikipedia about two topics I know more of than the average person: Def Leppard and Alexander the Great (did I just admit that?). Yet the Wikimafia deleted it. So I built two sites to showcase my interest in Def Leppard and Alexander the Great.
4 - THE RETURN OF EMAIL
It won’t make large waves, but with CAN-SPAM having cleaned up the spam situation, and with more and more people signing up to feeds and what not, we see email marketing making a slow but sure return to the landscape in 2007.
5 - VERTICAL RISING
The rise of vertical communities will continue. You will have large vertical sites, you will have people maintaining tiny vertical sites. The point is, this is something that started in 2004 and 2005, rose to prominence thanks to things like Mr. Wang’s study and will only accelerate in 2007 and beyond.
6 - ACQUISITIONS & MANAGEMENT SHUFFLE
CNET for sale? Perhaps. With Shelby Bonnie gone - nothing against Mr. Ashe - we see CNET being acquired. We also think it’s possible that CNET makes one or two small, somewhat medium-sized deals to bolster itself for an acquisition.
Yahoo! and AOL? We think Google will block that like the tease they are. Read more on that here.
MSFT won’t make a huge acquisition. It’s not in their culture. But we do see it buying an online ad company like Blue Lithium, aQuantive or Valueclick. Read our analysis here.
But eBay will probably make a major move, maybe even with InterActive Corp. Together, they’ll have more bargaining power with advertisers, since both are traditionally weak there and mainly e-Commerce powerhouses. With e-Commerce gaining prominence, this will position them for growth over time.
Barry Diller will be needed as Meg Whitman will leave eBay. Where to? Keep reading.
Peter Levinsohn - who replaced Ross Levinsohn - will prove to be great in many ways but in the end Mr. Murdoch will begin to ask for immediate returns (as in, in addition to Google’s $900 million deal, which we think they overpaid for in a defensive move against Yahoo! and MSN) and a series of events will mark changes atop FIM.
While we put MySpace atop our Top 10 Best Web Acquisitions of All Time, in 2007 Mr. Murdoch will ask for more tangible results. After all, News Corp.’s stock rose 30% in 2006 due to the giddiness over MySpace, so investors will ask to see financial results from FIM in 2007. Disney too rose 30% but it was powered on financial metrics, hence why we made Disney the media stock of 2007.
What are these events?
Rupert Murdoch is clever and wise and for a few years will not not tinker with MySpace. But in May 2007, it will be two years and Mr. Murdoch will get impatient.
He’ll push Levinsohn to make changes at MySpace, who will in turn push Chris DeWolfe and Tom Anderson (MySpace founders) for changes. DeWolfe and Anderson will push back and grumblings from these two about their discontent over the Intermix deal, where they feel they got jipped.
To quiet the potential mutiny, Murdoch will side with the MySpace guys, which in turn makes the job impossible for Levinsohn. News Corp. will begin to tweak with MySpace in subtle ways. Ultimately, by mid-year, Murdoch openly asks why not enough Fortune 500 advertisers are on the site “with the most pageviews” and as a result, will push to clean the site. The result: the users will migrate elsewhere… adding to the rise of the verticals.
After MySpace fails with advertisers, Rupert Murdoch will turn to eBay’s Meg Whitman and lure her to run FIM/MySpace. Between her experiences at Disney and eBay, Mr. Murdoch views her as perfect for the new and improved e-Commerce fueled MySpace. Peter Levinsohn will focus on other areas of FIM, notably, IGN’s Digital Distribution platform.
Over time, IGN will look like the crown jewel as more and more media companies slowly but surely move to embrace IGN’s digital distribution platform. IGN’s in-game advertising continues to grow as video game companies hire IGN to plug away advertisers in their games. Meanwhile, IGN’s media properties continue to grow. Rumors begin to swirl that IGN is worth $6 billion (investors and analysts wonder where they have heard this before) and Mr. Murdoch is planning an IPO while Mark Jung, who has been sitting idle since leaving the firm, is rumored to have Great Hill Partners finance a potential buyout.
CBS Digital and the NYT will get into a slugfest over Rafat Ali of PaidContent.org. In the end, Ali prefers to walk to the beat of his own drums and Paidcontent.org remains independent. Neither company makes a deal. Quincy Smith wonders what his next career move will be when he sees few news takeover targets that will move the needle. He joins Montgomery Securities.
Viacom’s Philip Dauman will go insane and pull 3 deals: one for less than $200 million in Q1, but the Street will say it’s not enough, so he’ll pull a $500 million and one massive one for $1 billion by year’s end.
Facebook will not sell. That ship has sailed. Of course, never say never, this could be the massive $1B+ deal Viacom finally pulls but we doubt it. Investor Peter Thiel’s mega successful hedge fund is making so much money that the notion of a modest Facebook exit of $1B is not worth his time. Zuckerberg graces cover after cover, while the MySpace guys’ jealousy raise to the point of rage.
Disney will grow organically online, we called it the stock of 2007 in media and it will simply look internally and test the waters by adding content from Disney, ABC and ESPN online. It’s squeaky clean image will help it with F500 advertisers online.
Disney will be even more successful in 2007 than in 2006.
7 - OLD MEDIA TO TAKE ON OLD, NEW MEDIA; RESURGE
After many failed attemtps, old media wake up and realize that Google is worth much more than they are combined and they try to collude to take on Google. They continue to think defensively and ask Google to cease indexing their sites, Google refuses; things get ugly and they ask all video file sharing sites to take down videos. Google pays off one media company to play one against the others.
The charade ends when Google buys a media company: either a newspaper company, a magazine company or a radio company. The notion of a fat, juicy premium from Google makes the more diversified media companies calm down.
However, no offensive gameplan: no successor to Napster or AllofMP3, no successor to or YouTube Killer.
All right, so they won’t ask Google not to index their content. But it would be a pretty amazing showdown.
The Street wonders where Yahoo!’s Terry Semel will fare… more on this below.
2006 marked a year when many old media companies fared well: Disney, News Corp, Time Warner and even Clear Channel did well. We expect this to continue as many shed underperforming assets and expect more from faster growing divisions.
Which leads us to…
8 - OUTDOOR TAKES OFF
Clear Channel begins to integrate Wifi billboards, Viacom (or is it CBS Outdoors now?) enables digital outdoor signs to allow for audio and video ads, time-targeted and weather-targeted ads.
9 - SATELLITE RADIO CRASHES
Crash is too strong of a word, but we don’t see satellite radio getting stronger. For more details, click here. Sirius’ Mel Karmazin resigns… and joins Yahoo! as CEO. Terry Semel hands off the baton, looking like a genius and joins an old media company’s board.
10 - WIRELESS HYPE
We’re big believers in wireless, who isn’t. But it’s still 75% hype and 25% substance. There will be some common sense injected in this market: companies raising $100 million in financing? Give me a break.
So, there you have it.
DISCLOSURE: I think all disclosures are in there. Please note that as a writer and entrepreneur, some of these “so-called” trends I believe in so much that I am also trying to capitalize on. It’s not the other way around.
Otherwise, of the companies mentioned above I only own shares in Yahoo!
In the spirit of how I was asked to pontificate on the matter, let’s go with Podtech’s John Furrier (podcasting/entrepreneurship), Henry “Da Bull” Blodget (the analyst), Howard Lindzon (the investor/entrepreneur), Nitin (Software/search), Emergic (Global perspective) and Marshall Kirkpatrick (formerly of Tech Crunch and who joined a new video startup recently).
From one of the better sources of information, The Guardian. Enjoy.
2006 was another exciting year on the Web. With the world Internet penetration reaching 16%, led by the Chinese, Indian and South American markets, the Web is definitely about to undergo another period of radical change and innovation.
With that in mind, we bring you the top 10 newsworthy storylines of 2006.
Bear in mind that somewhat fittingly, we’re delivering this list in text and video format for your reading and viewing please.
For the text list, do nothing. Just keep reading, to see the video format, click here.
10. SATELLITE RADIO GROUNDED? (see video)
Yes, we know. Terrestrial radio sucks. Mel Karmazin moved from Viacom to Sirius. And yes, Howard Stern followed. But, who cares. Who do you know that actually owns a satellite radio? I don’t. Not when you have Web radio anyway. Web radio is this year’s satellite radio. Last year satellite radio was on such lists. But something went wrong, very wrong.
First off, as bad as plain old radio might be, it didn’t go out of business altogether. In fact, radio giant Clear Channel Communications Inc. has a market cap of over $17 billion. That’s approximately double the market cap of Sirius and XM combined. Clear Channel’s stock has outperformed the shares of both satellite radio companies over the last two years by a wide margin.
And the nature of competition changed. Enter Apple, podcasts and even, Nokia. In fact, we think that companies with outdoor assets (Clear Channel for example) can Wifi-enable billboards and beam their signals to listeners and totally redefine the radio market.
The iPod was launched in 2001 and sold 70 million units in five years. Nokia Corporation thinks it will sell 80 million music phones this year. These devices are obviously delivery mechanisms and platforms for whatever radio is, becomes and competes with.
It’s not like people are not excited about radio, it’s just that the excitement has shifted: over the past five years, Apple Computer Inc.’s stock has risen from about $11 to $91.
One thing that keeps their stocks, well, on the ground is the heavy debt burden: XM and Sirius have balance sheets with over $1 billion in debt and they’re losing money to this day in 2006 off quarterly revenues of some $200 million.
Oh, I know what you are thinking, they are building market share, right. Well, let’s examine the tale of the tape:
XM finished the third quarter with more than 7.2 million subscribers. Sirius has more than 5 million subscribers.
More importantly, both companies are reducing targets. That’s weak. Sirius cut its subscriber goal for the year and now say it expects to end 2006 with 5.9 million to 6.1 million subscribers, down from its previous estimate of 6.3 million. XM has cut its subscriber goal at least twice this year. It expects to end the year with 7.7 million to 7.9 million subscribers.
Come on? It’s so weak that some are calling for a merger. Problem. Who buys who?
XM’s enterprise value smaller than Sirius’ even though XM has a larger subscriber base. What does that say? One word: hype. Another word: flash.
Two wrongs don’t make a right. Besides, the FCC will probably not allow it, it sold two licenses to XM and Sirius to ensure competition. If it views satellite radio as one entity taking on terrestrial radio and Web radio, then it says a lot about the future of satellite radio, which held so much promise recently.
And… with Democrats in office, we don’t think that a one company market is realistic.
Lastly, the fact is that the companies’ technologies are somewhat different: they use different codecs.
So where does this lead Mel Karmazin? Who knows, Yahoo! maybe? I hear they need a good salesman.
9. VIDEO GAME MARKET ENTERS A NEW PHASE OF COMPETITION (see video)
2006 marked the year that the Consoles Wars entered a whole new phase of competition: Wii vs. Ps3 vs. XBOX 360, with the latter coming out in 2005 and enjoying a one year advantage over the PS3, which missed its spring 2006 release date and had to take on Nintendo’s Wii in November, which at $250 is half the price of the PS3.
What happened? According to market researcher NPD:
In the end: Sony Corp. sold 197,000 PlayStation 3 consoles in the U.S. during November, missing its goal for initial shipments by half after parts shortages slowed production
Nintendo Co.’s Wii, which also was introduced last month, sold 476,000 units.
The Microsoft Corp. Xbox 360, on the market for the past year, sold 511,000 machines.
In November 2006, to pre-empt Sony’s PS3 release, MSFT converted its XBOX 360 into an actual entertainment system. Microsoft’s vice president of entertainment and devices division (which oversees Xbox), Peter Moore, forecasts 13-15 million Xbox 360s by end the end of 2007, considering the news todat that just one year after the November 22, 2005 launch of the XBOX 360, MSFT will be unleashing over 1,000 hours of programming and getting TV content to an audience that has in the past few years avoided television for video gaming, this is an interesting development. We’re talking content from Ultimate Fighting Championship, CBS, Viacom, WB and many others.
While analysts and gamers alike were busy talking about who won and who lost between the three, the mainstream media covered the sheer madness surrounding the release, reiterating once again that the video game industry deserves its place at the main table.
Video games will never be the same.
8. VERTICAL: CONTEXT IS KING (see video)
As the leaders galvanize their positions and the Web becomes more mature in general, it’s only normal that there is a movement to develop and aggregate content along vertical, niche or contextual lines. Recently, Spencer Wang, Bear Stearns Entertainment & Cable/Satellite TV Analyst unveiled a report called Why Aggregation & Context and Not (Necessarily) Content are King in Entertainment highlighted these trends quite well.
This is really not all that different than ABC, NBC and CBS making room for the cable stations as TV evolved.
Call it deportalization, call it maturing, whatever you call it, we expect this trend to accelerate in next year as even the major portals launch vertical niche properties.
7. NET NEUTRALITY (see video)
In 2006 a controversy erupted in the United States regarding the extent to which network neutrality should apply to the regulation of the Internet. The companies that provide the backbone on the Web sought to offer end users a better quality of service for their own service offerings or to services who pay the providers. However, five attempts by supporters to get bills with network neutrality provisions passed by Congress were defeated.
What’s the definition? Taken literally from Wikipedia:
Network neutrality is a general principle of Internet carrier regulation requiring networks to satisfy all application needs equally. For example, a perfectly neutral network would not give better service to some web sites than others, and it is argued that it would likewise not favor web-surfing or blogging over online gaming or Voice over IP.
Tim Berners-Lee defines it so as to allow connection to the Internet at various service levels and defines it as: “If I pay to connect to the net with a given quality of service, and you pay to connect to the net with the same or higher quality of service, then you and I can communicate across the net, with that quality of service.”We are not sure if this will ever pass, especially now that companies like Google – who oppose the bill – have established lobbyists on Capitol Hill.
6. OLD MEDIA MALAISE (see video)
We’re not usually ones to cast old media as the troubled folk that some other new media sources do. Traditional networks, newspaper, radio magazines are powerhouses with strong balance sheet and stronger income statements.
But there has been a sense this year that so-called old media views the web as an integral and important part of their business.
This has been highlighted by management shuffle with musical chairs at:
- Time Warner AOL fired Jon Miller and replaced him with NBC ad exec Randy Falco.
- CBS Digital brought in M&A dealmaker Quincy Smith
- News Corp.’s FIM’s CEO Ross Levinsohn resigns and is replaced by cousin Peter.
- Viacom gets rid of Tom Freston and brings in Philippe Dauman, a lawyer with dealmaking expertise.
Old Media also embraced many open networks to get their content out to the masses.
Viacom struck a deal with Google. YouTube signed a deal with most media companies. Of course, Universal Music Group sued MySpace, but hey, at least they’re talking. Jokes aside, Bit Torrent too signed a deal with the labels.
All small and not so small steps bridging the gap between online and offline.
5. INTERNET GAMBLING TAKES A HIT (see video)
Like porn, gambling is one of those industries that lies beneath the surface, in the underbelly of the Web.
But much like porn, it is one of the most successful and lucrative ones.
When some politicians began to circulate the Internet Gambling Prohibition Act, a lot of people thought it would not pass. The measure was sent to President George W. Bush to sign into law, and sign it he did.
When President Bush, the House of Representatives and Senate passed the Internet Gambling Prohibition Act, they approved a bill that made it illegal for banks and credit-card companies to make payments to online gambling sites, effectively squeezing out an industry from the landscape.
The result: the stock market capitalization of the major gambling companies tumbled by $6.5 billion.
Britain’s PartyGaming Plc, operator of leading Internet poker site PartyPoker.com, and rivals Sportingbet and 888 Plc pulled out of the United States, their biggest source of revenue.
“This development is a significant setback for our company, our shareholders, our players and our industry,” PartyGaming Chief Executive Mitch Garber said.
“We believe that this will have a very material impact on the long-term prospects of online gambling, and in particular poker,” said analyst Julian Easthope at UBS. “This will lead to a rapid decline in the use of online poker sites.”
Whether or not these laws would be reversed or not will have a major, major implication.
One side factor is that we expect Fantasy gaming to pick up the slack in terms of presence and mindshare online, though clearly, for obvious reasons, that is a very different and smaller ballgame.
4. MICROSOFT GETS BACK ITS MOJO (see video)
The launch of Microsoft Corp.’s Windows Vista will generate 100,000 new jobs and $70 billion in revenue to U.S. companies in the information technology industry during 2007, according to a report from research firm IDC.
Windows Vista will be installed on more than 90 million computers worldwide in its first year of shipment, according to IDC analyst John Gantz in a report. He said about 35 million units would be installed in the United States, driving nearly $4 billion in revenue to Microsoft.
Industry estimates for the Microsoft’s fiscal 2007 total revenue are around $50 billion.
“In the scheme of total IT spending” Vista revenue “will be small - about 1% of total IT spending in the US in 2007 and less than 4% of total spending on software, Gantz said.
Vista’s business versions entered the market on Nov. 30. The consumer version debut is scheduled for Jan. 30. Windows runs on about 90% of computers worldwide and is one of the two products (the other being Office) that make up about 90% of the company’s overall earnings. The last Windows update was in 2001 with Windows XP.
The report says that for every $1 of revenue that Microsoft earns from Vista, the technology “ecosystem” will reap $18. Microsoft’s partners are expected
In November as well, to pre-empt Sony’s PS3 release, MSFT converted its XBOX 360 into an actual entertainment system Microsoft’s vice president of entertainment and devices division (which oversees Xbox), Peter Moore, forecasts 13-15 million Xbox 360s by end the end of 2007, considering the news todat that just one year after the November 22, 2005 launch of the XBOX 360, MSFT will be unleashing over 1,000 hours of programming and getting TV content to an audience that has in the past few years avoided television for video gaming, this is an interesting development. We’re talking content from Ultimate Fighting Championship, CBS, Viacom, WB and many others.
Microsoft’s much ballyhooed music player, Zune, was unveiled to a lukewarm reception. But with sales of 1 million units projected by June, there’s a lot of upside for Redmond in music.
MSN Search? Well, sitting in third spot behind Google and Yahoo!, let’s just say that Microsoft has nowhere to go but up.
Best stat of all: in the past 12 months, Microsoft technically beat Google in terms of stock market return.
3. GOOGLE DOMINANCE (see video)
We’ve written plenty on Google. While Google’s stock did not have the torrid growth of previous years, its business model strengthened as it gained traction.
Highlights include Google entering Partnerships with Sun that suggest an Operating System might materialize sooner than later.
Google acquired numerous companies to develop an online productivity suite: online word processor Writely, a spreadsheet company and Wiki Jotspot. When it added bells and whistles in its Gmail email service – like the ability to open and save documents from Microsoft in Google’s productivity system – it what was the clearest signal yet that Google was planning an assault on Microsoft’s core business, as Microsoft staged a strike on Google’s search business with the launch (or is it a relaunch) of MSN Search.
If there was any doubt of Google’s supremacy online, it was made clear when in the third quarter, Google accounted for 25% of all US Ad Dollars spent online. Yep, that stat is correct. Google owns web search and web advertising.
To ensure that it could benefit from up and coming advertising trends such as video, Google went out and purchased YouTube for a whopping $1.65 billion.
We still maintain that this deal was done before Steve Chen and Chad Hurley got a check from Sequoia, for our conspiracy theory, click here.
Google is also positioning itself for the wireless web and in fact to circumvent any spillover results of Net Neutrality becoming law. It has purchased tremendous amounts of dark fiber and rumors have circulated that Google might even make a run for a company like Level 3. Of course, these are merely rumors.
Google’s data mining ambitions continued to cause some to worry about Google’s long term plans. The company, quite simply, has more information on more people in more countries, than any other company at any point in history. And being in the information age, that is a cause for concern. Ironically, Google never had a registration service until a few years ago, but being able to track IPs and what not, it did not even that per se.
While we doubt Google can realistically overtake Microsoft in terms of market capitalization, it is feasible if many trends hold up. We also do not think that Google will be the first/only company to boast a market capitalization of a trillion dollars.
But we do know that Google is well on pace to be the Standard Oil and Microsoft of the 21st century.
We’re just not sure if that is a good or bad thing in the information age.
So we have covered #10 to #3, #2 and #1 have a lot to do with the “little guy” taking control of the helms due to major trends with media and technology. (see video)
- Broadband now reaches over 50% of households.
- US is no longer the sole engine of Web growth.
- Total web internet population just over 17%, at just over 1 billion people.
- Cheaper hardware.
- Technology companies opening up their Open APIs.
- Free publishing tools such as blogging software have enabled millions of new properties to launch and scale, thanks to RSS and other media sharing tools and applications.
- Podcasting, which earned the Word of the Year in 2005 by New Oxford American Dictionary continued to gain traction, though it remains a very small sector.
- Venture capitalists getting back into the game.
The Web 2.0 hype died down, but that was more of a matter of semantics than anything else. What it represented only got stronger.
So, without further ado, the top two trends and storylines of 2006 are:
2. EXPLOSION OF SOCIAL MEDIA (see video)
The term social media was first coined back in 2004. Chris Shipley (Co-founder and Global Research Director for Guidewire Group) used the term in the months leading up to The BlogOn 2004 conference in July 2004.
Social media can take many different forms, including text, images, audio, and video.
Social media can include podcasts, videoblogging, photoblogging, blogging, wikis, mailing lists, bulletin boards, message boards, social bookmarking, multiple player gaming, social networks and viral video.
Social media, for the purposes of this article, is broken up into:
- Social news: digg vs. netscape
- Social bookmarking tools:
- Social networking: myspace, facebook, etc.
Our reasoning is that social bookmarking tools enable the sharing of media (what makes it social), whereas social networking tends to personal and entertainment oriented, social news is community oriented and generally informative.
Mainly, this is where we see the trends diverging in 2007. The model is too nascent to decree a final breakdown frankly.
By 2005, MySpace had galvanizes its leadership role and others began to develop niches. We no longer heard of new social networking sites replacing MySpace, but rather, competing with them.
What does the future hold for social media? Well, that’s up to you to decide, really.
1. ONLINE VIDEO (see video)
The trends that we highlighted above caused web video to simply explode. It was a matter of time really, but many of the people who expected web and video to mesh so well in the late 1990s were simply ahead of their time.
YouTube, a company that launched a mere 19 months ago scaled rapidly to now serve up 100 million daily video streams.
This year, Google ponied up $1.65 billion to acquire it. This was not a great thing for second tier video sites, many of whom will have a hard time gaining traction now that GooTube will consolidate the file sharing video space.
The online video industry is still largely nascent: 27 online video companies secured $126.7 million in financing in 2003, 23 secured $121 million in 2004, and 37 companies secured $160.7 million in financing in 2005 (Thomson Financial).
However, in 2005, the entire U.S. venture capital industry invested $20 billion in 3,000 new companies, so only 5.3% of that was invested in online video.
Most of these funded companies are video technology and distribution companies, very few are content companies.
Regardless, from the amateur filmmaker, to the funny home video sitting in one’s library, to libraries of film studios, the Web created an entirely new demand and market for them all.
Ten spammers account for 80% of spam being sent out. A few years ago, Bill Gates called for the end of spam, saying that his company would aggressively go out to destroy spam. I am not sure MSFT has played a major role in the improvement of the spam situation, but the fact remains that things are much better than a mere two years ago, when my day would start off with the deleting of 2,000 spam emails to retrieve the dozen or so emails that were legit. Of those, half were intended for me directly, the others were mailing lists I was actually subscribed to.
Between CAN-SPAM and anti-spam software, things have improved… thankfully, but the forces of evil remain at large. The Axis of Evil resides here.
PLAY
