Content Matters

The 50 Content Companies that Matter: Facebook

As social networks take hold, the site that gets the most attention (and the most traffic) is MySpace.  For the business community, however, the social networking site to watch is Facebook.

Facebook, founded in 2004 by Harvard sophomore Mark Zuckerberg and a few classmates, was initially oriented towards college students.  The basic premise was to automate the printed "facebooks" or  directories used by all students.  Last year Facebook opened up its network to non-students.  You can join a network for your company or simply for a city or geographic area.

Recently, Facebook became an open platform, allowing applications to be created to add functionality to your Facebook page.  Applications for Facebook today include a Flickr interface, a last.fm widget and Flixster, for movie reviews.  Rather than simply allowing embedded scripts (in the way that a blog or MySpace permits), Facebook has provided an open API, which should enable more sophisticated applications than typical script-based widgets could support.

Facebook today has more than 21 million registered users and is the 17th most visited site in the world (according to Alexa).  While that number is impressive, what's even more impressive is that more than 90% of those users are "active" users who visit Facebook at least once per month and 60% login on a daily basis.  For comparison, LinkedIn reports that roughly a third of its 10 million users log on at least once per quarter.  Even more compelling is that the 21 million users currently generate more than 1.5 billion page views per month.  That translates to more than 2,300 page views per month per registered user.  Meanwhile, more than eight million photos are uploaded to Facebook each day.  Talk about sticky!!

Facebook seems well-positioned to transition from the college market to a broad and diverse user base.  As more plugins are added, the service will increase its utility and provide compelling reasons for business professionals and others to join.  A more diversified user base will also give Facebook greater staying power, while MySpace faces the risk of the fickle teen market falling in love with a new entry.

Today there are only a handful of business-oriented applications for Facebook, but that should change, particularly with their opening up the platform.  Traditional content providers should certainly be exploring ways to integrate with the Facebook platform.  To-date, the only one who's done that is Forbes, but I'd expect others to follow soon.  Facebook also needs to tweak their app to recognize the needs of business users.  Today, linking to friends is very school-oriented and doesn't support relationships like client-vendor, business partners, etc.  Even the concept of "friend" doesn't really capture typical business relationships.  Those are pretty easy changes for Facebook to make though.

It was well-reported that Yahoo last year attempted to acquire Facebook for $1 - $1.6 billion.  Every few weeks the rumors of a Yahoo acquisition heat up again.  But in the meantime, Facebook has demonstrated spectacular growth and a strong vision.  If Yahoo does succeed with an offer, you can be sure it will be for more than $1.6 billion.

Social networking is still in its infancy and the current applications have yet to deliver strong value for the business community.  But that's beginning to change.   And Facebook seems well positioned to become the leader in social networking for business.  And they are clearly one of the Fifty Content Companies that Matter.

You can visit my Facebook page here.

The 50 Content Companies that Matter: Federated Media Publishing

It’s obvious that blogs have secured a substantial position in the content space.  In many instances, blogs are taking readers away from traditional content sources, whether its TechCrunch pulling readers that might have gone to CNET, or any number of political blogs pulling readers from the traditional newsweeklies.

But, even as blogs assume dominant market positions and mindspace, few of them are profitable enough to enable their authors to blog full-time.  PPC advertising with ad networks like Google Adsense might generate a few hundred dollars a month for a blog with strong readership, but that’s about it.  At the same time, few blogs can justify the expense of hiring a full-time ad sales executive.

Federated Media Publishing was launched in 2006 by John Battelle to address this issue.  FM Publishing has assembled a network of blogs for which they sell advertising.  During their first year, 2006, Federated Media had revenues of $4.5 million; for 2007, they are predicting revenues of $30M with several million in net income.  Blogs in the FM Publishing network include tech blogs such as BoingBoing and business blogs like Tom Evslin's Fractals of Change and Fred Wilson's A VC.

Federated Media’s approach is not the first effort in this area.  Other blog networks, such as Nick Denton’s Gawker Media or Jason Calacanis’ Weblogs, Inc., acquired last year by AOL, provide similar advertising leverage, but use a different model.  The Weblogs model built up a set of more than 90 blogs, then paid authors to write for them (typically $300-1,000 per month), with the revenues all going to Weblogs.  Gawker employs a similar model for the consumer space, led by titles such as Gizmodo and Beltway gossip blog Wonkette.

Battelle, who authors his own SearchBlog, was an early blogging success story.  With Federated Media Publishing, he has successfully bridged the Web 2.0 world with traditional media.  While Web 2.0 is all about self-service, widgets and plugins, it’s clear that traditional sales can easily outperform ad networks, provided you have enough ad inventory to sell.  The biggest challenge facing FM Publishing will be whether there are enough properties that remain in the midrange – i.e. large enough to generate substantial advertising revenues, but not large enough to make it worth hiring your own sales force.

Through this aggregated network of blogs, Federated Media Publishing is delivering large publisher results while allowing independent bloggers to remain independent.

The 50 Content Companies that Matter: TechCrunch

Where do technology professionals turn for the latest information about Web 2.0 applications?

Traditionally, that role has been filled by trade publications like InfoWorld and, once-upon-a-time, PC Magazine.  But in the Internet age, they’ve largely become irrelevant for the professional market.  CNET seemed to hold that mantle for a while, but they’ve struggled to balance between software applications and personal technology and have been in a downward spiral this year.

For those involved in application development for the web, the place to turn for relevant, updated information is Michael Arrington’s TechCrunch blog.  Initially begun as a hobby, the blog today serves up more than a million page views per month and has more than 140,000 subscribers to its RSS feed.  According to a Wall Street Journal interview of Arrington, the site today generates more than $120k per month from a combination of advertising, on-line job postings, sponsorships and hosting parties.  That’s all with a staff of three.  TechCrunch leverages John Battelle’s Federated Media ("FM") to secure advertisers, so the only staff they need is editorial, resulting in a minimalist cost structure.

TechCrunch has also caused a phenomena often referred to as the TechCrunch Effect.  Sites profiled on TechCrunch see a significant and immediate increase in traffic, often seeing 5-10% of the TechCrunch audience visit or register within a 24-hour period.  Looking at their impact through another lens, Metrics 2.0 suggests that Web 2.0 applications profiled on TechCrunch will receive roughly $1 Billion in venture funds in 2006.  As of early November, 62 such startups have received more than $855M (though Limelight Networks alone accounts for $130M of that).

I’ll leave it to Brad Feld and others to debate whether the TechCrunch effect is good or bad (as in Geoffrey Moore’s Crossing the Chasm, these early adopters may not be the customer base you should target your application to), but it’s clear that TechCrunch is having a huge impact.

Will CNET concede their spot to TechCrunch?  Not without a fight.  CNET has just launched a new blog site, Webware, led by editor Rafe Needleman, who will also tap four other CNET writers and editors.  The site is not as focused as TechCrunch, but is sure to improve over time.  In the meantime, TechCrunch has shown that a nimble blog can secure a dominant position in a competitive market.  And for that, TechCrunch is clearly one of the fifty content companies that matter.

The 50 Content Companies that Matter: OReilly Media

 

The list of visionaries who truly understand the value of content in the web environment is pretty short.  The list of those who apply that knowledge in their core business is even shorter.  Near the top of that list is Tim O'Reilly, founder and CEO of O'Reilly Media.

O'Reilly is best known for their books.  Look on the bookshelf of any developer or IT professional, and you're sure to see a bunch of O'Reilly books -they're the ones with the sketches of animals on the cover.  In fact, many users know them by their animals - ask any Perl programmer for their copy of the "Camel Book" and they'll know you're referring to O'Reilly's Programming Perl.

So, what makes this book publisher a visionary?

To start, O'Reilly published its first  book on the web, the "Whole Internet User's Guide and Catalog" in 1992.  At the time, there were fewer than 200 websites out there.  O'Reilly launched the Global Network Navigator ("GNN"), later sold to AOL, in 1993 - the first portal and first  advertising supported website.

More recently, O'Reilly has been credited with naming "Web 2.0" and hosts an annual Web 2.0 conference.  But where O'Reilly really shows its merit is in its online versions of its products.  O'Reilly, in conjunction with Pearson and with technology from Bureau van Dijk, launched Safari Books Online in 2001.  Safari Books is a subscription service where users can rent a bookshelf where they can access a set number of books online from among the more than 3,000 in the library.  Just recently, O'Reilly has launched a new "bookshelf-free" version called Safari Library, where users can access an unlimited number of books for $39.99 per month.

O'Reilly has added SafariU, where they allow educators to compile custom textbooks from individual chapters of books in the O'Reilly library.

Another new feature from O'Reilly is Rough Cuts.  Rough Cuts are preliminary versions of books, made available electronically as they are still being written, generally 2-6 months before publication.  Users can purchase online-only versions (with PDF updates of each revision) or can pre-purchase the print copy, accessing it electronically until the printed version is shipped.  With a nod to Web 2.0, O'Reilly encourages users to submit comments and feedback about the content in their Rough Cuts books, by placing a "notes" widget on the top of each page. For developers working with bleeding edge technologies, Rough Cuts provides early access and an interactive experience.

O'Reilly Media continues to push the envelope in making content available to users in multiple formats and platforms.  Tim O'Reilly's O'Reilly Radar blog is must reading for anyone in the content or technology space.  As one of the few visionaries to "walk the walk", O'Reilly are clearly one of the fifty content companies that matter.

The 50 Content Companies that Matter: the New York Times

Few industries have been impacted by the Internet more than newspapers.  Circulation has declined, while help-wanted and other classified advertising has been displaced by web-based solutions.  At the same time, investors, disappointed by earnings, have stormed the boardroom, pushing for divestitures or more.

According to Freedonia Research, circulation of daily newspapers dropped about 0.8% per year during the ten year period from 1994-2004, despite population increases during this period.

Throughout this storm, a few newspaper companies have not only weathered these changes, but embraced them.  At the top of that list sits the New York Times. 

The Times entered the Internet market in 1995, through its investment in CareerPath.com, along with KnightRidder, Times Mirror, the Washington Post and Tribune Company.  A few months later, its Boston Globe division launched boston.com, with the New York Times on the Web launched in early 1996.  In 1999, the Times created New York Times Digital, a dedicated operating unit to focus on the growth of its web properties.

Last year, the Times acquired About.com from Primedia for $410M.  In hindsight, the deal looks like a bargain, as About.com revenues and EBITDA have continued their rapid ascent.  With EBITDA of about $15M for the first 6 months of 2006, the purchase price is only about 14x expected 2006 earnings.

Today, the New York Times on the web is the number one news site on the Internet, with 74 million unique visitors a month.  That’s more than double that of CNN and more than fifty times the readership of the print edition.  More than one in ten internet users worldwide visit the NYTimes.com site.  As a whole, NY Times Internet properties offer more than a billion page views per month.  Internet revenues remain modest, however. The Times Q2 2006 Internet revenues of $66m were only 7.7% of their overall revenue for the quarter, but that is up from $49M (5.8%) a year ago. 

Revenues include about $9M from the TimesSelect program, begun last November.  While it’s fair to debate whether closing off the Times editorial page to non-subscribers makes long-term sense (IMO the negatives to doing so outweigh the positives), the combination of nytimes.com, TimesSelect and About.com gives the Times a diverse set of properties catering to paid subscribers, registered users and open visitors.

Most importantly, the New York Times has grown its brand and expanded its reach dramatically in the Internet age.  While other newspapers face uncertain futures, the Times has established its position as the premier source of news for English-speaking readers worldwide. 

That positioning, leveraging their reputation built over the past 100 years, means the Times is well-positioned for growth regardless of where technology might take them.  The Times’ ability to balance their growth and traditional markets clearly makes them one of the 50 Content Companies that Matter.

The 50 Content Companies that Matter: Midpoint review

It's been nearly a year since I began the "50 Content Companies that Matter" series with a post on Google.  With 25 companies on the list, I'm halfway to my goal of fifty.  I thought it would be a good time to assess the list, reader feedback and what I've learned in the process.

In terms of feedback, it's been interesting.  Most of the comments have been positive, though there have been a few minor quibbles with my choices.  Others have proposed possible additions (often their own company), mostly smaller companies looking to break through.  Most comments have come via email, with only a handful of people commenting directly on the blog.  I hope this changes, as the comments themselves are quite interesting and I'd like to share them.

From the time I began the list, my goal was to recognize innovation in the content industry or among technologies which can be used in the content industry.  Not surprisingly, most of the innovation tends to be coming from the smaller companies, rather than the established players.  A few of you have pointed this out in your comments, asking why I've ignored some of the largest players in the content market.  While I have posted on a number of traditional content providers (recent posts on Nature and Morningstar, as well as earlier profiles of Zagat and Consumer Reports), much of the innovation has been coming from content companies without the long legacy.  That being said, there are a number of traditional publishers who are doing interesting things and you can expect to see some posts on them in the weeks to come.

On the other end of the spectrum, I've looked at a number of startups with compelling offerings, but who just don't seem qualified for the list.  In my definition, a "company that matters" is one which we'd miss if they were gone.  There are a number of companies vying for position in the social software market, but I'm not sure that any of them have established that type of position yet.  That's why a few months ago I began a second list, of Emerging Content Technologies.  This list is focused on technologies that should have an impact, whether or not the specific company profiled ends up as the market leader.  A good example of that is the hosted wiki space, where Jotspot, SocialText, Wetpaint and others are vying for position.  I can't tell you which of those companies will be the eventual winner, but I can tell you that departments and project teams are quickly adopting wikis to improve project communications.  While the Emerging Content Technologies list focuses on the bleeding edge, in each post I include my thoughts on how traditional content providers might apply that technology in a mainstream business. 

Another question I've been asked (really) is "why 50"?  In hindsight, I think 50 was a pretty good number to use.  Keeping the list to a "top 10" would have excluded many, many companies who are developing provocative content solutions.  At the other end of the spectrum, if I had aimed for "100", I'd find myself scraping the barrel towards the end.  Originally, I thought that I could complete the 50 in a year.  One per week would have done the trick.  Instead, it looks as though it will take 18-24 months.  Thankfully, my commuter train from the burbs gives me some quiet time in the morning for writing.

The experience of developing this list has been fantastic.  It forces me to continually assess what others in this industry are doing, something that's not so easy to do when we're all facing deadlines. 

What do you think about the list so far?  Please post your comments or email them to me, along with any suggestions for future additions to the list. 

The 50 Content Companies that Matter: Craigslist

When you look at the disruptive Internet companies, those that have changed the way that people do business, the first ones that jump to mind are giants like eBay, Google, Yahoo, Monster and Travelocity.  These companies are all generating huge revenues and have transformed their industries.

But one of the most disruptive Internet companies of the past few years is one whose revenues are barely a fraction of those:  Craigslist.  In just a few short years, Craigslist has dramatically changed the way that people buy local products and services, find jobs, apartments or even dates, despite revenues estimated in the low eight figures.

Not long ago, classified advertising was the cash cow of the newspaper industry.  Whether you were looking for a job, an apartment or a used car, the newspaper was the first place most would turn.  When’s the last time you turned to a newspaper classified for anything? 

While it’s hard to pull out classified revenues from newspaper financials, one San Francisco Chronicle survey done in late 2004 estimated that Craigslist had cost Bay Area newspapers more than $50M per year in recruitment ads alone.  Nationally, the impact today must be in the billion-dollar range.

Craigslist started as an email list in 1995 by developer Craig Newmark, who shared the list among his friends in the Bay Area.  That grew virally, and today, Craigslist offers local listings in 190 cities in 35 countries around the globe, with more to come.  Craigslist serves up more than 4 billion page views per month, making it the 7th most visited English language site in the world.  It receives more than 9 million classified ads and 400,000 job listings each month.  Yet the Company employs only 22 people.

Today, whether you’re looking to hire an intern, buy a used car, rent an apartment or find an 80 year-old victrola, the first place you will look is probably Craigslist.

Initially, all the listings on Craigslist were free.  Even now, Craigslist charges only for certain categories like recruitment ads, and then only a modest fee to discourage spamming the list.  While Craigslist operates as a for-profit company, they clearly are leaving a lot of revenue on the table.  That comes from the philosophy of founder Craig Newmark, who preaches restoring a human voice to the Internet and providing an alternative to big media.

If Craiglist were to begin charging for more of their classifieds, they could easily turn into a $300-500 million company practically overnight.  In the meantime, they have developed a loyal customer base of 10 million users.  Having completely transformed the $20 Billion classifieds business, Craigslist is clearly one of the 50 Content Companies that Matter.

The 50 Content Companies that Matter: TripAdvisor

Since the early days of the Web, travel has been one of the fastest growing segments on the Internet.  So much so that it has changed the business model of the airlines and nearly decimated the travel agent industry.

While much of the attention has been on the transactional sites that book travel, there have been many other pockets of innovation in this space.  One of the most innovative has been TripAdvisor, a subsidiary of Expedia which was spun off last year from Interactive Corp (IAC).  Expedia itself has always been a technology leader, perhaps due to its origins within Microsoft.  TripAdvisor was acquired by IAC/Interactive (which then owned Expedia) in the spring of 2004, and is a lead generation site for the travel industry. 

TripAdvisor brings together two of my favorite themes in the content industry – lead generation and reviews and ratings.  TripAdvisor provides users with travel information and recommendations for hotel accommodations, restaurants and activities on various destinations.  The most valuable part of the TripAdvisor content are the ratings.  I find their hotel ratings invaluable as a means of finding quality hotels at a reasonable price.

TripAdvisor has recently taken another step up the user-generated content chain, launching wiki-based content branded as TripAdvisor Inside.  These special content sections, each focused on a city or state (see example for Inside Palo Alto), are collaborative, user-created editorial pages with sections for history, things to do, dining scene and more.  With its recent launch, the content right now is a bit sparse (only nine restaurants in Palo Alto) but that’s sure to grow in time.

 

Just last week, TripAdvisor launched what they call goLists, where users can contribute lists of places to go, things to see, sample itineraries, etc.  Similar in concept to an Amazon Favorites List, this is another example of leveraging the community to create valuable content.

TripAdvisor has done a terrific job in building valuable content, which in turn generates significant leads for their travel partners.  Their star ratings and reviews have created a barrier to entry for new competitors, and their new wiki pages show that they understand how to leverage their community to develop more compelling content.  In creating a balance that addresses the needs of their advertisers and users, while continuing to embrace new technologies, TripAdvisor is clearly one of the 50 Content Companies that Matter.

The 50 Content Companies that Matter: Topix

There are many news aggregators in the market today.  Most of them add value to the news content by tagging and organizing it for their markets.  While most have adopted some level of automation, they still rely heavily on editorial expertise to ensure accuracy.

Topix.net is a news aggregator which relies solely on automated indexing to create a comprehensive taxonomy to drive relevancy.  Founded in 2002 with a mission of helping users quickly and easily find targeted news on the Internet, Topix.net today categorizes news from more than 10,000 sources into over 300,000 specific topics in near real-time.

The founders at Topix.net came out of the Netscape-driven Open Directory Project, an editorially-driven project to categorize sites on the Internet.  According to co-founder and CEO Rich Skrenta, their experience with tends of thousands of volunteer editors made him “decide to avoid editors in Topix.net and stick to algorithms”.

Early on, one of their key issues was resolving how to serve relevant contextual advertising on a news site.  While Google AdSense typically serves relevant advertising to static web pages, the results for news were less relevant and often embarrassing.  In one of the more notorious examples, the New York Post published an article about a murder where the victim’s body parts were found in a suitcase.  Adjacent to the article was an AdSense ad touting luggage (for those "do-it yourself-ers", I guess).

To combat that, the technology team at Topix.net developed a set of algorithms and a knowledgebase that could better understand what a news story was about and serve up more relevant ads.  The knowledgebase is focused on key topical areas, such as geographical map data, lists of movies, CDs and entertainers, and more.  The Topix.net algorithms leverage the information in the knowledgebase to classify each news article to the correct topic.

Today, Topix.net gets more than 3 million unique visitors per month.  They estimate that to be about half of their readership, as 50% comes through the sites of partners AOL, Yahoo, CitySearch, Ask.com and others.  Topix revenue is largely driven through serving AdSense ads on their pages.

Last year, 75% of Topix.net was purchased by Gannett, Tribune and Knight-Ridder (now McClatchy).  That investment assigned a healthy valuation of $64M to Topix.net; not bad for a company with estimated revenues of $1M.

Just last week, Topix.net announced the launch of its publisher platform, a revenue-share model targeted towards small-to-medium news providers.  They are also extending the invitation to bloggers a la Pluck's Blogburst.

Topix.net has done an amazing job of leveraging technology and domain expertise to create a fully automated system for categorizing news and serving relevant ads.  Publishers often view editorial’s role in categorization as simply checking or verifying automated results.  Topix.net has demonstrated that a more effective use of this domain knowledge is to use it in the development of a knowledge base and set of algorithms that can automate the labor-intensive tasks.  And for that, they are clearly one of the 50 Content Companies that Matter.

The 50 Content Companies that Matter: Nature

For various reasons, much of my focus tends to be in the area of business information.  But while the corporate and financial markets often drive innovation in the business info segment, there is quite a bit of innovation in the STM market as well.

Recently, a lot of that innovation seems to be coming from the team at scientific journal Nature.  Nature is part of the Nature Publishing Group (“NPG”), a division of Macmillan Publishers Ltd.  While many of the companies profiled on this blog are early stage, Nature dates back to 1869.  With 400 employees, NPG publishes sixteen journals and four clinical practice titles.

Recently, the New Technology Team at NPG launched Connotea, a social bookmarking site for the scientific community.  Connotea is loosely based on del.icio.us, though they have integrated functionality specific to the scientific community.  For example, bibliographic information from a number of content sources (Nature, Pubmed, Science, Amazon and others) is automatically fetched when these pages are saved to the site.  Connotea also supports the RIS file format, favored by many information professionals, so that users can upload entire collections of references.

Connotea also includes a wiki-based set of Community Pages, which allow users to write and edit content about the Connotea service.  I first found out about Connotea a few weeks ago, when I noticed a number of visitors to Content Matters coming from a link on the Connotea site (in response to a post I did on the Nature vs. Britannica “feud”).

But, Connotea is hardly the only forward-thinking solution from Nature.  They have been early adopters of RSS and podcasting, and have even launched a mashup of Avian flu reports with Google Earth.  A number of Nature writers and management have blogs, as does even the CEO of parent company Macmillan.

Nature has also taken some steps towards support of the Open Access movement.  For those unfamiliar with Open Access, there has been a major movement to get scientific journals to allow their writers to submit their manuscripts to public archives.  Since much of the scientific research done today leverages public funding, the OA community argues that the resulting scientific findings should be shared with the wider scientific community.  Public Library of Science, another of the “50 Content Companies that Matter” has been a leader in this space.  While Nature has not fully embraced OA (it has proposed authors only release their content following a six-month embargo), they have been more supportive of it than many of their peer journal publishers.

In a market where a few large companies control access to much of the critical information, Nature is a shining star for their flexibility, their willingness to test new technologies and their efforts to keep the “community” in scientific community.  Nature and NPG are clearly one of the 50 Content Companies that Matter.