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The Day Abu Dhabi Became an Unlikely Crossroad For Search Wars
At the powerhouse Abu Dhabi Media Summit here at Yas Island in Abu Dhabi, two of the biggest third-party search deals are being negotiated behind the scenes, we have learned. It just so happens that all the players involved were here for the last day or so: Google (NSDQ: GOOG) CEO Eric Schmidt, News Corp (NYSE: NWS) contingent of Rupert Murdoch, James Murdoch and Jon Miller, and AOL (NYSE: AOL) CEO Tim Armstrong.
The public posturing of News Corp-vs-Google and AOL-poaching-execs-from-Google aside, there is a lot at stake here. Between News Corp.‘s MySpace deal and AOL deal, those are the two biggest third-party deals Google has on the search side, and both are being talked about separately by the parties here, a source told us. Also, both AOL and MySpace deals are expiring this year.
The biggest absentee from the conference: Microsoft (NSDQ: MSFT). Early on during the planning of this conference, MSFT CEO Steve Ballmer was supposed to speak but it didn’t come through. One could argue that with the MSFT-Yahoo (NSDQ: YHOO) deal now in implementation stage, it could be that its hands are full with any “smaller” third party search deals, and that both AOL and MySpace deal will probably go to Google again, though on radically different—read reduced—terms than when they were first done.
The MySpace-Google three year deal, done at the height of MySpace’s popularity, is expiring in August, about six months from now, so likely a bit further along in renegotiations, than the AOL-Google deal, which is expiring later in December.
Requests May Signal That FTC Will Block Google's AdMob Purchase
Google’s proposed (and now delayed) acquisition of mobile ad network AdMob appears to be drawing even more regulatory scrutiny from the FTC. Bloomberg cites sources who say that regulators now want “sworn declarations” from Google (NSDQ: GOOG) competitors about the $750 million deal. The key sentence in the Bloomberg report comes from a former FTC general counsel, who says that “agency officials typically collect declarations ‘when they think there is some significant chance’ the agency will ask a court to block a merger, or seek to modify a deal.”
Google announced it was buying AdMob in early November and said at the time it expected the purchase to close within “the next several months.” Soon afterwards, there were reports that the FTC was reviewing the deal, and in December, Google said it had received a “second request” from the FTC—meaning that regulatory officials wanted more information about the buy and that it would therefore not be closing right away.
The consensus was that the deal would close in February—although there have been no updates from either the FTC or Google. Here’s Google statement: “We’re continuing to talk with the FTC and provide the information that they’ve asked for, but we’re not going to discuss the details of that process. We’re confident that they’ll conclude that the rapidly growing mobile advertising space will remain highly competitive after this deal closes.”
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Former RealNetwork's CEO Rob Glaser Says For Now Apple Has Won
In Rob Glaser’s first public appearance since stepping down as CEO of RealNetworks (NSDQ: RNWK), he implored that it is incumbent upon companies to work together in order for the wireless sector to continue its break-neck pace of innovation.
Glaser did not hint at what he might do next, but instead, he stuck to his usual routine of talking fast and making as many points as possible in his time allotted. One theme in particular was exceedingly clear: he believes closed operating systems are a threat to the mobile industry. In the words of Ben Franklin, he said: “We must all hang together, or assuredly we shall all hang separately.”
Glaser, who remains the chairman of Real Networks, said the digital media and wireless industries are at an inflection point, and the greatest opportunity is still in front of us. By 2013, he said the install base of smartphones and so-called “superphones” is expected to exceed the install base of PCs. He provided eight ways a superphone is different than a smartphone, but essentially what you need to know is this: superphones run applications. (His slides are here.)
He said with those “super” abilities, mobile has a great potential, but if Apple (NSDQ: AAPL) gets its way, the wireless industry could end up like the MP3 industry. The other option is for things to go the way of the PC, which he considers more horizontal. “As of today, Apple is the clear winner. It’s incredible what they’ve been able to do in a vertical paradigm,” he said. “But if that’s the way the industry pans out, we’ll have a much slower pace of innovation, and there will be a tremendous loss in value creation. It’s incumbent for those who don’t want that—carriers, handset-makers, etc.—to work together. Otherwise verticals will stand.”
Of course, there’s plenty of challenges in making horizontal work. Verticals, where one company is responsible for making sure that all the services work on the phone, is easier. As an example, Glaser mentioned Google’s Nexus One, which the company is marketing and selling on its own without a ton of help from the handset-maker and no help from the carrier. Glaser said he couldn’t get the phone to work until he realized he was putting the SIM card in backwards. While that’s human error, he said: “The Nexus One Google (NSDQ: GOOG) experiment is a proof point of that….It’s a lot harder to make horizontal easier.”
In light of that, you see a lot of verticals developing in mobile. Microsoft’s Windows Phone 7 will integrate Xbox, Bing and Outlook. Google’s Android does a better job of integrating Gmail, Maps and Search, and Apple is the ultimate example. So, what is the solution to getting horizontal to work in mobile? Glaser suggests that the carriers might be able to play a role, but “it’s not preordained. The PC went horizontal and the MP3 player went vertical. It’s an open question.”
The Mobile Stats That Keep Microsoft's Execs Up At Night
Here’s why Microsoft (NSDQ: MSFT) is launching a “completely new smartphone OS.” The latest smartphone platform market share figures were released today by comScore and Microsoft posted the steepest drop. The new Windows Phone 7 Series—due later this year—can’t come to market soon enough.
Eyeblaster Files For $115 Million IPO—Again
Eyeblaster, which filed for an IPO in October 2008 only to withdraw it three months later citing “market conditions,” is trying to go public again. The online ad campaign management firm notified the SEC today it hopes to raise $115 million by selling stock—the same amount it was hoping to raise one-and-a-half years ago.
Eyeblaster’s main product—MediaMind—is used by ad agencies to manage their digital ad campaigns; the company says it delivered campaigns for 7,500 brand advertisers last year. Some highlights from the company’s S-1 filing, after the jump.
—Financial performance: The recession appears to have taken a big hit on Eyeblaster’s growth. Revenue inched up only two percent to $65.1 million in 2009. By contrast, sales had jumped 43 percent the year before. Net income did however increase to $9.8 million last year, from $6.2 million, in part due to cost-cutting (Eyeblaster says it “focused on cutting costs given the uncertain global economic environment” during the first half of 2009). The company has $15.4 million in cash and cash equivalents.
—Ownership: Eyeblaster had raised about $40 million in funding, including $30 million in a round three years ago. Its main shareholder is Sycamore Technologies Ventures, which owns 33.9 percent of the company. Other big stockholders include Insight Ventures (22.6 percent), CEO Gal Trifon (8.1 percent) and co-founder Osfer Zadikario (6.2 percent).
—Use of funds: The company says it will use the cash for general corporate purposes, as well as possibly to “acquire or invest in companies and technologies”—although it says it has no immediate plans to do so.
—Stock: Underwriters include JP Morgan Securities, Deutsche Bank Securities, Pacific Crest Securities, FBR Capital Markets, ThinkEquity, and Broadpoint Capital.
By our count, this is the seventh digital firm that has filed to go public this year. The others are: GameFly, Vringo, Everyday Health, Motricity, Lulu, and Reply.com.
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FCC Former Chairman Says Agency Lacks Control Over Handset Makers
In an appearance this morning at a Seattle breakfast event, former FCC Chairman Kevin Martin, now a partner at Patton Boggs, was careful not to offer any jabs at the current administration.
Instead, he focused on the current administration’s plans for rolling out a new national broadband plan, scheduled to be unveiled Tuesday. One subject that came up was the fight for open access to wireless networks, a key platform issue of his. In particular, he noted how the government is now more concerned about the obstructionist role that handset makers like Apple (NSDQ: AAPL) or Google (NSDQ: GOOG) play, than it is about the behavior of the wireless networks. But regulators have less control over the former.
Open access is a term Martin knows all about. During his stint as FCC Chairman, he helped push through rules in a spectrum auction that would require the winner—in this case, Verizon Wireless—to ensure open access to its network. While vague, it means that Verizon won’t be able to limit users, devices or applications on the network. However, Verizon has just started to build-out its 4G network, so it’s still unclear how that will be practiced. Martin said.
Martin: “I think what the commission did with the open access piece was an important step…Prior to 2007, there was resistance from the carriers to any kind of open architecture, including the inclusion of WiFi chips in devices, even though today that’s perceived as a helpful thing….But I think we haven’t been able to see the ultimate impact because they [Verizon] are still deploying it, I think it did contribute to the shift of the wireless industry, in general, and ultimately will benefit consumers.”
In one example of how the power over open access has shifted to the handset makers, the FCC opened an inquiry when Google’s voice-over-IP application was blocked from the iPhone. The blocking was initially blamed on AT&T (NYSE: T), but as it turned out, Apple was the one that vetoed it.
The FCC’s “direct authority is less and less the more it gets pushed out from the carriers. It has ways, but I think it’s more difficult…This was an issue when I was there, and there’s a balance between protecting a consumer’s rights and having access to the internet, and recognizing that carriers have to manage their networks…I think that you do need to find the appropriate balances and it gets more difficult the further outside the carrier you get.”
As for the national broadband plan, the commission has hinted at what may be included, but the strategy won’t be fully unveiled until March 16. One of the key issues is providing more spectrum to carriers to provide the fastest mobile broadband services in the world. Martin said that while he was Chairman, they almost tripled the amount of spectrum available for mobile broadband. He said the current administration is looking to double it. Currently, he said that all the U.S. carriers use 450 megahertz of spectrum, and the commission is looking to add an additional 500 MHz.
@ Media Summit: The Medium Isn't The Message; The Brand Is
One of the favorite sports of most media conferences these days involves trotting out Wired editor Chris Anderson’s “freemium” idea—which is predicated on balancing free online and paid premium content—and kicking it to the ground. The topic served as a introduction to discussing the problems associated with paywalls and display advertising for major media brands at one of the afternoon sessions at the Media Summit 2010 conference at the McGraw Hill Building. While the panelists certainly didn’t say they were ready to put paywalls around everything, they are clear in deciding that consumers need to be re-trained a little to appreciate more direct payments for the content they expect for free.
Liberty Carras, SVP of sales for CNNMoney.com, summed up the feeling about the “free meme,” which the media execs has become taken for granted. “Unless the price of creating content becomes free, I don’t see how it can be made free [to consumers]. Whether it’s an event or a TV show or a product that delivers content, there’s value there and people will pay for it. There is a place for content to be free. But it’s not about the medium, it’s about the brand.”
Although it’s an obvious point, the panel’s moderator, Edward Moran, director of Product Innovation, Deloitte Services, noted that that to most people, “free” is really a colloquial way to say “ad-supported.” Of course, while many media companies worry about how erecting paywalls will affect the advertising, the panelists argued that it depends on what the content is and who it’s aimed at.
In response to an audience question about Newsday’s paywall strategy—and how the Cablevision-owned daily saw only 35 paid subscribers sign up for access seemed to suggest failure for the idea. Julie Michalowski, Vice President, Business Development, Conde Nast Consumer Marketing, shot back that the panelists aren’t focusing on paywells, but on “what the brand experience and value is.”
But Alisa Bowen, SVP, Head of Consumer Publishing for Thomson Reuters (NYSE: TRI), quickly interjected to defend the use of paywalls. “Paywalls aren’t right for some. Let’s be clear about that. We’ve experimented with putting up barriers on parts of our website. In one case [she didn’t specify], traffic dropped 70 percent after instituting a paywall. In another case, using the same barrier level, mind you, happened to lead to a traffic rise of 300 percent. The value extraction is very specific to different audiences.”
Bowen also alluded to the Newsday’s claim that the paywall model wasn’t intended to drive online subscriptions, but rather to create more value for Cablevision (NYSE: CVC) customers by offering access to the paper’s website.
—Digital dimes into dollars: After much happy talk about the rosy future of digital media, one audience member challenged the panelists about their sanguine views after so many layoffs and magazine closures. Michalowski was specifically asked about the shuttering of Gourmet and Domino, and she responded by saying that those titles couldn’t sustain themselves, the audience is still there and Conde Nast has been trying to guide them to other online properties. The publisher is also looking for ways to keep those mag brands alive in other ways across other platforms and through commerce.
“In making the match between digital dimes and traditional media’s dollars, we’re in the process of a learning curve,” CNN’s Carras said. “There’s no easy way to do this. We’re making tough choices.”
Brizzly Parent Thing Labs Makes Two Acquisitions
Two small—but noteworthy—acquisitions for Thing Labs, the company behind Facebook and Twitter web client Brizzly: Thing Labs has purchased Wikirank, a tool that let users visualize and compare the most popular topics on Wikipedia, and is also announcing the purchase of Twitter iPhone client Birdfeed.
Thing Labs has added some of its own features to Birdfeed—and is using it to launch a Brizzly app for the iPhone. Wikirank, meanwhile, will be integrated into Thing Labs’ Brizzly Guide, “a new site designed to help navigate what people are talking about on Twitter, Facebook, and other social spaces.” Hot topics—like ‘SXSW’—have their own pages, which feature an explanation of why they are popular, along with some relevant links.
Terms of the acquisitions were not released. Thing Labs was started by Jason Shellen, a former manager of new business development at Google (NSDQ: GOOG), and Chris Wetherell, who—while at Google—started Google Reader. The startup has raised funding from Mike Hirshland of Polaris Venture Partners, Jeff Clavier of SoftTech VC and Michael Jones.
News Corp. Mulling Sale Of Struggling Mobile Content Properties
News Corp. (NYSE: NWS) may shed the ailing Fox Mobile Group, including the Jamba and Jamster brands, to focus on digital properties, like MySpace, reports The Financial Times.
A sale would not be a big surprise. After News Corp. acquired the company in two separate chunks from VeriSign (NSDQ: VRSN) for a total price tag of $381 million, it failed to do much with the asset. Last year, it created the Fox Mobile Group to roll out a new video service for smartphones, which was rumored to be akin to Hulu, but that project has been delayed several times. In addition, the group has been decimated over the past year, by layoffs and a mass executive exodus that led to the departure of the CEO, COO and CMO.
Bankers say Zed, a Madrid-based mobile content company, is the most likely buyer, but others point to Italian mobile media company Buongiorno (BIT: BNG), Dada.net, and Flycell, or even carriers, like Vodafone (NYSE: VOD), Telefonica (NYSE: TEF) and Telecom Italia, as possibilities. In this environment, a sale could be tough. The mobile content industry is not as strong as it once was, and has struggled as consumer tastes have shifted away from ringtones and wallpapers to more sophisticated devices that run applications.
Revenues for News Corp’s ”Other” segment, which includes the Fox Mobile Entertainment, dropped 20 percent to $2.4 billion in the fiscal year ended June 30, 2009, The Financial Times reports. At the same time, operating losses at News Corp’s ”Other” segment widened to $363 million from $84 million in the year-ago period.
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paidContent Quick Hits 03.10.2010
» Why CNN considers Facebook to be more of a threat than other broadcast media orgs. [Mashable]
» MySpace (NYSE: NWS) loses chief architects and a development manager to Gravity, a startup founded by its own alums. [TechCrunch]
» SF Weekly has been ordered to give rival San Francisco Bay Guardian half its ad revenue to help it collect $21 million in damages from illegal price-cutting. [SFGate]
» Sony’s upcoming E6 e-reader will be connected with Barnes & Noble’s e-bookstore. [Top Tech Reviews]
» In honor of today’s news from OK Go, the band talks about secrets of their viral videos. [Gizmodo]
» Pulitzer Prize winner Javier Bauluz previews his next project focused on saving the quality of journalism. [Online Journalism Blog]
» Securities Investor Protection Corp (SIPC) warns against bogus site claiming to help reimburse Madoff victims with money “hidding by Madoff in Malaysia.” (hey, that’s the phony site’s typo, not ours.) [Reuters]
» New survey shows half of social media gamers are willing to engage in alternate payments—like filling out a survey—to earn virtual currency. [Release]
YouTube Brings Ads To Its Mobile Site
Google (NSDQ: GOOG)—which has spent much of the last year talking about how it is making more money off of YouTube—is now beginning to monetize the mobile version of the video site. In a blog post, the company says banner ads—sold on a “full-day basis”—will soon appear on the home, search and browse pages of YouTube when the site is accessed via a mobile phone.
YouTube had started testing ads on the mobile site in August 2008 and YouTube’s Taylor Cascino says those tests showed “strong results related to click-throughs, user experience and brand awareness.”
YouTube says that traffic to its mobile site grew 160 percent over the last year—and says that bringing ads to the mobile site will “immediately provide one of the largest audiences for a mobile ad campaign anywhere on the web.”
As a reader points out, the other metric YouTube provides is less impressive; the company says “tens of millions of videos” are now being viewed on the mobile site each day. When YouTube started testing one-and-a-half years ago, it said users were watching “hundreds of millions” of YouTube videos each month on their phones. Not clear how different those two stats are.
As for the web version, Google said last summer that it was now getting “well over a billion views a day.” Analysts have said that growth—as well as monetization efforts, like the new mobile ads—could lead to YouTube boosting Google’s bottom line for the first time this year.
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Why MySpace Co-Presidents Aren't Worried About Growth
MySpace (NYSE: NWS) pulled up the curtain a little this week, letting in some light on a makeover still very much in progress and marking a debut of sorts for Co-Presidents Mike Jones and Jason Hirschhorn as a team. By walking reporters through their road map, the two hope to move the story from “oh woe is MySpace” to “look at MySpace go.” It isn’t going to be easy and it isn’t going to be fast. MySpace’s problems were legendary before Jones and Hirschhorn arrived last year as part of a turn-around triumvirate—and even more so with the hasty departure of Owen Van Natta, giving the social network the dubious distinction of losing two CEOs in less than a year.
We spoke at length by phone Tuesday. One image to shed: the notion of MySpace as entertainment portal, something Hirschhorn says was poorly communicated by the company. Instead, think of MySpace as a social entertainment experience. “There are other sites on the internet that are big and don’t have permission to be social,” he explains. More from our conversation below:
Hirschhorn, Jones and Van Natta were brought in last spring to replace MySpace’s founding execs CEO Chris DeWolfe and Tom Andersen. The site’s meteoric rise and efforts to maintain, then to regain growth added to a maze of products. Their mission was nothing short of remaking the structure inside and out, stabilizing the business and finding a way to help MySpace fulfill its promise despite being eclipsed as a social network and a business by Facebook. All with an insistent chorus that MySpace’s time has come and gone. Despite the drama around their arrival and Van Nata’s own departure, not to mention all the vignettes in between, Jones and Hirschhorn insist they’ve kept their focus on remaking the site with users in mind. They’ve cut out areas that made no sense to them, things like mom and car verticals, classifieds and jobs, stripping out much of anything that looked like a generic portal. The exception is e-mail, which turns out to be a major connective tissue for MySpace. They’re also increasing the emphasis on “broadcasting”—using MySpace to share and promote creative efforts like music, which gave the site its start, indie films, comedians and more.
What, me worry?: Analysts and other outsiders—even colleagues at News Corp.—may be stressing over growth and revenue. Those aren’t the focus right now, insist Hirschhorn and Jones, at least not the way these others might expect. (“I’m really happy we have so many people concerned about our future,” Jones says wryly.) “The pair wants to keep the core users MySpace already has and increase their engagement, while converting the “hundreds of thousands” signing up now into regular users. By mining MySpace’s rich data, they’ve been able to spot patterns that suggest different ways to accomplish that for different users—and they’ve decided who they don’t need to cater to. The core demographic is 13-34, representing 56 percent of all uniques, according to comScore; the sweet spot is 18-24. Eighty-four percent of all traffic on the site comes from that core.
As for other MySpace users, explains Jones, “In certain cases if a user ages out, that’s ok. I don’t need to go back and get the 45-year-old housewife and the 55-year-old retired gentleman. I’m happy if they use MySpace but that’s not my focus. Part of the strategy is refining the types of users we really want to own and be very ok with users we don’t want to own.” Another part is to wait to go after users who have left or heavily recruit new users until they feel like the user experience has been fixed. “There’ll be a time when we’re ready to do that,” says Jones. “Until then, we’ll go up some users, down some users. Hopefully, by the end of the year we’ll be comfortable enough.”
Not an empty lobby: New users now see an algorithmically generated set of suggestions of musics, apps and video as part of the set-up. The choices they make become part of their new page, itself a recently redesigned experience. “What was happening in the past is we would get you to join and leave you in an empty lobby,” says Hirschhorn, Now, as Jones explains, they use a mix of info provided by the user—for instance, a horoscope app comes up to match your birthday, IP information, the network and, perhaps most important, if they’ve been invited to join, recommendations based on those MySpace users. “We’re abstracting a profile from a cold start.”
The results so far, says Jones: “We’ve been able to reduce the amount of stranded pages from initial sign ups. Out of x number of a hundred users who sign up, we’ll have a greater percentage today than last month who will continue to use MySpace. We’ve done some good jobs plugging the holes in the sieve.” That blend of discovery and personalization is key to the company’s strategy. They want to keep building new experiences for the user that increase their discovery and the chances of being discovered. In this model, the user page is driven as much by what users add themselves as what they do.
As for the money that might come from that blend, says Jones, “As of right now, I’m not worried about a revenue model around it.” That doesn’t mean they’re cavalier about making money. Nada Stiratt, who worked with Hirschhorn at MTV Networks (NYSE: VIA), came on as chief revenue officer late last year. The personalization should improve reach and targeting.
About that road map: Anyone the least bit familiar with how changes were made at MySpace for years might be amused by a product roadmap that extends for months and then some. The products—including exclusive games being announced this week—focus on social graphs, interests, entertainment and pop culture. Some rely heavily on partners, others are home grown. By the end of the year, Hirschhorn says MySpace should look very different. They’re aware that the pace may seem slow to outsiders—after all, they’ve already been at MySpace for nearly a year—but say they their timeline has support from their direct boss, News Corp. Digital head Jon Miller, and from Rupert Murdoch and Chase Carey. News Corp. wanted to see traffic stabilized, which is happening, and they want to see the new products roll out as expected.
The Google (NSDQ: GOOG) deal:The deal with Google that helped News Corp. defend its price tag for MySpace with a $900 million search revenue guarantee goes through Q2 of this year—and the return is running short because the social net failed to meet its performance goals. What next? The first deal was made without much experience to go on. This time, the results and the failures will be factored into what MySpace tries to accomplish, along with the changes in its own makeup and its brand business. Hirschhorn: “Google is up and certainly we expect to have very fruitful talks with Google and other parties. That’s a deal that not only could be renewed, but it;s also something that we’ve learned about how revenue is made on the site could be to another partner or a series of partners, depending on what makes sense for us and another side.” (I don’t get the sense Hirschhorn or anyone else expects as attractive a deal again. If they do, I want to a shot of whatever they’re drinking.)
M&A: The two are open to acquisitions. Hirschhorn: “If we see an acquisition that really makes sense that not only brings a great strategic value to us but talent, we’re absolutely interested and News Corp. has been incredibly supportive of us on that. Are we on a buying binge? That’s not how we look at it.” So far the iLike acquisition appears to be paying off on both those grounds, with the founders and top execs still at MySpace.
On mobile: Nat Brown, a former iLike exec, is now leading the company’s efforts in mobile, which is growing increasingly important, says Hirschhorn. “Mobile is going to be about everything we do. It’s the remote control of the future. I imagine at some point it is going to surpass the engagement we’re getting on PCs on a daily basis.” It already represents 50 percent of MySpace traffic. [Update: MySpace follows up with a clarification, saying that nearly 50 percent of its audience uses mobile MySpace.]
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@ Media Summit: CNN's Klein: Fox News Isn't Our Biggest Competitor—Facebook is
It’s the Bloomberg BusinessWeek Media Summit now, but the two-day conference is still at the McGraw-Hill (NYSE: MHP) Building. CNN President Jon Klein led off in a Q&A with Bloomberg BW Editor Josh Tyrangiel, talking about the magic—and often illusory—word “synergy.” Klein talked about the ties that the Time Inc. (NYSE: TWX) cable news network can work with Time.com increase its traffic through CNN.com, and there are even ties with HBO, which has aired documentaries from host (and Newsweek International Editor) Fareed Zakaria. “A huge reason we’ve doubled our profit over the last four years is because we’ve collaborated with affiliates all over the world.” CNN U.S. will be a primary source of its online video, since some stories that might not work on the cable net could get traction online. But that doesn’t mean that the cable net will be heavy handed in determining what material the site should use. “We’re not force feeding, it’s not creating foie gras and we’re getting better at learning to manage the differences between the cable side and the online side.”
—Friends and competitors: In a conversation about the competition, Tyrangiel asked Klein about the competition against Fox News. Klein rattled off figures that he claimed to show CNN has 10 percent more viewers than Fox News, though he conceded that Fox News viewers tend to watch longer than CNN viewers do. “The competition I’m really afraid of is social nets. We want to be the most trusted source. But on Facebook, people are depending on their friends as news sources. I’m more worried about the 500 million or so people on Facebook versus the 2 million on Fox.” In terms of the cable news wars, though, Klein also pointed out that CNN has just come off its most profitable year.
—Better umbrella: Looking at the cable news landscape, Tyrangiel wondered whether a non-partisan outlet, like CNN positions itself to be, can make it in this polarized atmosphere. Tyrangiel likened the business of 24-hour cable news to running an umbrella store. “You either have to sell the best umbrellas or you have to convince people it’s always raining,” he said to Klein, who responded that he believes CNN can attract the multitudes who want straight news. “The other guys can have the fringes.”
Pic of the Day, From Abu Dhabi Media Summit
The biggest frenemies together: Eric Schmidt, CEO of Google (NSDQ: GOOG) & Maurice Levy of Publicis, one of the largest ad holding companies:
We’ll have the full video of Schmidt’s speech and Q&A from here, later this afternoon. Meanwhile if you want to check out bits from his speech, chk out our Twitter feed at @paidcontent.
EMI Music Swaps Chief For Chairman Allen As Trouble Looms
In 2008, Terra Firma hired the guy who ran the company which makes Cillit Bang and Air Wick to turn EMI Music around. But now the record label finds itself seeking a reported £100 million to avoid breaching banking covenants.
So now executive chairman Elio Leoni-Sceti is on his way out; he’s being replaced by Charles Allen, the former CEO of the UK’s top commercial broadcaster ITV (LSE: ITV), on March 31. Allen has chaired the board since January 2009.
EMI, in its announcement, says Leoni-Sceti, who had been CEO of household goods maker Reckitt Benckiser, “has successfully led EMI Music through the first phase of its operational turnaround” - but there’s no explanation for the change, nor what phase two involves. “My job here is now done and it is time for me to move on,” says Leoni-Sceti, who has the cover interview in Management Today.
Indeed, within EMI Group itself, fortunes are looking up - 2008/09 earnings rose 7.4 percent to £1.56 billion, with recorded music (EMI Music) sales up 4.6 percent and music publishing (EMI Music Publishing) up 14.6 percent). The 2009/10 performance is likely to be better, benefitting from Beatles reissues including that Rock Band game.
But Terra Firma last year wrote off 90 percent of the $4.7 billion it spent on EMI in 2007 - ultimately, the label will be on high alert for yet more, wider changes. If Terra Firma loses control of EMI to its financier Citigroup, the bank may yet decide to break up or sell the label.
Leoni-Sceti undid some of the digital moves put in motion prior to his arrival - EMI hired high-profile Cory Ondrejka (Linden Labs) and Doug Merrill (Google) as digital strategy SVP and digital VP, before he bid them goodbye, wiping out digital as a standalone unit, replacing them instead with eight, more junior marketing execs.
How One Mobile Developer Created Its Own Local Ad Network To Boost Fill Rates
Like many other developers, uLocate works closely with ad networks to monetize WHERE, its free mobile app that is available on a number of carrier networks and Android, iPhone and Palm (NSDQ: PALM).
But WHERE often struggled to keep its fill rates high, and when campaigns ran out, it had to use less desirable banner ads pushing ringtones and wallpapers, said uLocate’s VP of Marketing Dan Gilmartin. Today, the Boston-based company is launching an ad network that it created internally to remedy the problem and has been using since December. The ad network, which it calls the WHERE Ads hyper-local advertising network, is now available outside the company, and is being used by various publishers, including Geocade, Jambase, MocoSpace and Superpages.com.
The problem WHERE is solving is a common one that many mobile application developers and publishers are encountering as they generate audiences and millions of page views faster than brands adopt mobile as a potential advertising platform. Gilmartin said it continues to use Quattro Wireless, which was recently acquired by Apple (NSDQ: AAPL), but new sources of local ads dramatically increased click-through rates and CPMs.
How is WHERE doing it?: Gilmartin was a bit reluctant to give away all of its secrets, but said they are working with about a half a dozen local ad providers that work in other mediums, such as directory services, coupons, event sources, and other aggregation services. They provide local offers and ads that can be matched to users who search in the WHERE app for activities or nearby restaurants.
The reaction: Gilmartin said they were able to start replacing ringtone ads for ads that were relevant based on what a consumer was looking for…if they were searching for a nearby restaurant, an Italian restaurant may have popped up. Customers’ reactions were surprising and thanked WHERE ‘for removing the ads,’ Gilmartin said. “It’s contextually relevant to what the consumer is doing, and it’s locally relevant to where they are, and it’s designed to look good in the app, so it’s not an obnoxious banner.”
How things have changed: He said now instead of getting paid per click, often the ads are paid for based on performance, a person may have to visit to website, a menu, or click to call. Then, when a user clicks, they are redirected to a mobile landing page that Where’s made, and can deliver local information to the consumer.
How it is different: All mobile ad networks aspire to provide local ads in their network, but inventories are often low. Results can also vary based on how locally targeted the ad is—is it based on the person’s country, state, city, or neighborhood level? Obviously, the neighborhood ad will be more relevant, but often time is the hardest one to get.
Viral Video Hitmaker OK Go Does Just That; Parts Ways With EMI
In another bit of EMI news, less vital to the company’s future than today’s latest change at the top, OK Go and Capitol Records have parted ways after nine years through mutual agreement. OK Go asked; EMI agreed. OK Go is best known for its viral videos—and was touted by previous EMI management as an example for the digital age—but that success hasn’t been reflected in sales. According to a source, their latest video (embedded below) had roughly 7 million views last week but they sold only 3,000 units of their new release Of The Blue Colour Of The Sky.
EMI has taken a lot of heat—much of it from the band—for refusing to allow embedding of the band’s videos for the new album, a policy that’s linked to YouTube’s own policy for major label music videos.
OK Go manager Jamie Kitman announced the separation via e-mail to industry observer Bob Lefsetz last night: “we secured ok go’s release from capitol—two weeks before the current video (up to 6.6 million hits in under a week)—came out. we’re living in the future, about 15 minutes earlier than we’d expected, and loving it.”
EMI confirmed with a mutual statement full of fun for reading between the lines:
OK Go singer Damian Kulash: “We’d like to thank the people at EMI Music who have worked so hard on our behalf.” Translation: those of you didn’t do anything for us get nothing.
EMI Music said: “We’ve really enjoyed our relationship with OK Go. They’ve always pushed creative boundaries and have broken new ground, particularly with their videos. We wish them the greatest success for the future.” Translation: Way cool videos without sales to match. Buh bye.
OK Go has set up its own label Paracadute Recording and is taking over the distribution and marketing of the new album. Expect lots of embedding; sample below.
First Look: Bing's UK TV Ads Make A Monkey Out Of Google
This is the TV ad Microsoft (NSDQ: MSFT) hopes will give its search engine a fighting chance against Google.
Made by WPP’s JWT, the “Bing and Decide” campaign will run for three months on UK commercial TV and web.
Microsoft’s press release: “The ads aim to inform the public of Bing’s role in helping searchers make more informed decisions, and contrasts other search products with the simple, integrated and instantaneous answers that Bing produces. Each ad features someone suffering from ‘information overload’, with Bing offered as the cure.”
That’s all well and good but, as we reported Tuesday, Bing’s UK search share of just 3.6 percent is miniscule compared with Google’s 88 percent. Even combined with Yahoo’s 3.9 percent, which Bing is about the overtake, the pair still only get 7.5 percent of UK searches…
Microsoft’s announcement says there has been a “lack of innovation in search engines for over a decade”.
At the same time, Microsoft’s UK chief marketing officer Mike Fischer is leaving the company after a year in the job, Marketing reports. Microsoft would not comment to paidContent:UK.
It’s not the first time a search engine has tried advertising to dent Google (NSDQ: GOOG). In 2007, Ask.com used a guerrilla-style marketing effort to urge London commuters to “stop the online information monopoly” - a campaign aimed at hooking Google users that cast Google as an oppressive regime and the audience as a rebel fighter faction.
“In hindsight, it may have been the wrong approach,” Ask.com’s European MD Cesar Mascaraque told me in 2009. “Maybe trying to compete head-on with Google was not the best investment.” After reintroducing Jeeves in Britain, however, Ask.com has also been catching up Yahoo.
News Corp's Miller: Paywalls And Free Model Can Co-Exist
By Jane Martinson: Jonathan Miller, head of digital media at News Corporation (NYSE: NWS), said today that “dual revenue streams” are likely to co-exist as media organisations try ways of making money online.
Miller claimed the media industry had to return to charging, whether through subscription or some other method. “The choice between paywall or free is not mutually exclusive. They can co-exist based on quality of content and geography,” he sai.
“Dual revenue streams got lost in the early days of the internet,” Miller told delegates at the Abu Dhabi Media Summit.
Miller’s boss Rupert Murdoch, chairman and chief executive of News Corp, has spoken out against content providers that continue to give away media content for free and is planning to start charging for his company’s websites later this year.
Speaking in Abu Dhabi yesterday, Murdoch called on Gulf states to open up their markets to global competition by cutting regulation and ending censorship.
Miller’s fellow panellists today included Tim Armstrong, chairman and chief executive of AOL (NYSE: AOL), the company Miller left after it scrapped its subscription model for a free, ad-supported one.
Armstrong, a former Google (NSDQ: GOOG) executive, said the first wave of internet media companies had been stymied by “problematic plumbing”. AOL had scaled back internationally to fix its own “plumbing”, he added, but intended to return to expansion mode as soon as next year.
The audience was also told that, in an RTL experiment in the Netherlands, 92 percent of people chose to watch six minutes of pre-roll advertising rather than pay €1.20 (£1.09) to watch a video.
Miller is also appearing in a BBC World News debate about paywalls in Abu Dhabi later today along with Chris Ahearn, president of Reuters (NYSE: TRI) Media and Amra Tareen, the founder of All Voices. The session will ask ‘News: who pays in the digital age?’.
Why Newspapers Are In So Much Trouble, According To Google's Chief Economist
Newspapers have blamed Google (NSDQ: GOOG) for their woes, and Google, in turn, has helped remind newspapers that they did a pretty good job of digging their own grave. The latest Googler to weigh in on the business is Chief Economist Hal Varian, in a speech to the FTC today. Below, the big takeaways from Varian’s remarks, which are drawn from a longer post, plus slideshow, on Google’s Public Policy Blog. Spoiler alert: If you had hopes for a print rebound, stop reading now.
—People spend more time brushing their teeth than reading news online: “The average amount of time looking at online news is about 70 seconds a day, while the average amount of time spent reading the physical newspaper is about 25 minutes a day. Not surprisingly, advertisers are willing to pay more for their share of readers’ attention during that 25 minutes of offline reading than during the 70 seconds of online reading. So even though online advertising has grown rapidly in the last five years, it appears that somewhat less than 5% of newspapers’ ad revenue comes from their internet editions, according to the most recent Newspaper Association of America data.”
—‘Special’ sections aren’t special any more: “Traditionally, the ad revenue from ... special sections [like automotive, travel etc.] has been used to cross-subsidize the core news production. Nowadays internet users go directly to websites like Edmunds, Orbitz, Epicurious, and Amazon (NSDQ: AMZN) to look for products and services in specialized areas.”
—One consolation: “There are huge cost savings associated with online news. Roughly 50% of the cost of producing a physical newspaper is in printing and distribution, with only about 15% of total costs being editorial. Newspapers could save a lot of money if the primary access to news was via the internet.”
Varian’s ten-step plan to turn things around: “Experiment, experiment, experiment.”