Content Matters

The Wall Street Journal is reporting that the "Denver Trust" has changed their minds and decided to vote for News Corp's $60 per share offer for Dow Jones.

Reports indicate that the Trust, which had been holding out for preferred terms, was swayed to accept the terms once the Dow Jones board decided to create a fund to pay the legal and banking expenses incurred by the Bancrofts.  My guess is that seeing the stock slide back to $52 yesterday with no better offer forthcoming also influenced their decision.  Had the deal collapsed, the stock would likely trade back down to the $30s and the family would be left with nothing but infighting and ugly lawsuits.

According to the Journal, the votes from at least part of the Denver Trust will provide at least 38% of the family's shares in favor of the deal, which when combined with public shares, should be enough to push Murdoch over the top.

UPDATE: It looks as though Murdoch is getting confident.  Here's a sneak preview of tomorrow's WSJ Front page :)

According to MarketWatch, the Bancroft Family have voted just 28% of the family shares in favor of the News Corp acquisition, short of the 30% threshold required to make the deal work.

Recent comments have Murdoch standing firm on his $60 per share offer, so it looks as though the deal may fall apart.

While this may provide a reprieve in terms of editorial integrity, it won't be all wine & roses at Dow Jones.  The offer has served as a wake-up call for the Company and we can expect to see belt tightening in the months to come.

Via the Newstex blog comes word that Sun has announced their earnings via RSS and the Internet 10 minutes before sending the press release out via PR Newswire.

While that may not sound significant on the surface, it's a major shift in how companies have been taught to comply with Reg FD.  This could begin to strike a major blow to the role that PR Newswire and BusinessWire have served as the intermediaries between companies and their audiences.  RSS enables companies to push content out to users directly, without the need for a middleman.

Clearly the news suits Newstex well.  Newstex, through its RSS aggregation service, can deliver corporate RSS feeds directly, while also providing feeds from PR Newswire and Businesswire.

The full details are available on the Newstex blog and that of Sun CEO Jonathan Schwartz.

The M&A business in the content industry has been booming in recent years, due in large part to the private equity market.  Private equity firms have found the sector attractive, due to technology drivers and low infrastructure costs.  According to DeSilva & Phillips, the 2006 total of 151 acquisitions with a value of $20.5 billion dwarfed the activity of the prior five years.

But will recent turmoil in the credit markets slow private equity investments?

A typical private equity investment is 50% funded by investment capital and 50% with debt.  The availability of cheap, easy credit has fueled private equity investments in recent years.  As debt becomes more expensive, the cost of doing these deals will be driven higher.

At the same time, some of the strategic investors may be sitting on the sidelines for unrelated reasons.  Reliable acquirers such as Thomson and Reuters may become net sellers rather than buyers, as they navigate regulatory approval of their own merger, while Dow Jones seems unlikely to make any big moves until their situation is settled.

So, does this mean an end to content industry M&A?  Hardly.  There’s still a lot of money sitting on the sidelines looking for deals.  Strong companies with solid growth will continue to see many suitors, albeit perhaps at not such frothy multiples, and most likely after a brief cooling off period.  But old-line companies with stagnant top lines will not garner the attention they’ve become used to, as the strip & flip model is not supported by the current economics.

Speaking at O'Reilly's Open Source Convention on Friday, Jimmy Wales provided details on Wikia's plans to enter the search market.

Wales stated that "Internet search is broken".  His biggest complaint is the closed, proprietary nature of the Google algorithms.  Wikia has recently acquired the Grub web crawler technology from Look Smart and plans to combine that with open source search technologies Lucene and Nutch to develop a new open source search engine platform.  Grub is a distributed platform, which can leverage the idle computing power of all those who run it, in order to generate the search index.  In this manner, Wikia can, theoretically, develop a massive search application without the hardware requirements of Google.

Wikia states four guiding principles on its web site:

1. Transparency: Openness in how the systems and algorithms operate, both in the form of open source licenses and open content + APIs.
2. Community: Everyone is able to contribute in some way (as individuals or entire organizations), strong social and community focus.
3. Quality: Significantly improve the relevancy and accuracy of search results and the searching experience.
4. Privacy: Must be protected, do not store or transmit any identifying data.

Wales envisions Wikia to leverage a human-assisted approach, much like Jason Calacanis' recent launch Mahalo, although it sounds like Wikia will use humans in a more limited capacity, for disambiguation of terms.  Jason's initial thoughts on Jimmy's entry into the human-assist search field can be found on his blog.

Never one to shy away from bold statements, Wales suggests that this open source search approach could "shift the power of balance from the search companies back to the publishers".

In my opinion, it's unlikely that anyone will knock Google off its perch in the near-term.  At the same time, the search experience, which had improved dramatically from 1995 - 2002 or so has really stagnated during the past five years, and you could argue that it's gotten worse due to shopping and spam sites and SEO.  New approaches, like those of Wiki and Mahalo, are certainly worth our support and attention.

When the annals of Internet history are written, somewhere just below the pets.com sock puppet will sit the $7.5 million purchase of the business.com domain name, by Earthlink founder Sky Dayton and then Disney Internet head Jake Winebaum.  At the time, it was decried as clear evidence of the bubble.

Now, nearly eight years later, yellow page publisher RH Donnelley has acquired Business.com for $345 million.  According to PaidContent, other bidders included the NY Times, Interactive Corp, Dow Jones and News Corp.

The acquisition brings more than just the domain name this time.  Business.com has evolved into a b2b directory,  vertical search engine and ppc ad network.  The Donnelley press release projects business.com revenue of $50m for 2007.

While it seems pricey, the move makes sense for Donnelley.  It and other yellow page providers have failed to demonstrate the ability to generate significant online revenues.  Their extensive sales force, accustomed to selling simple bold listings and display advertising to small retailers, are ill-equipped to sell PPC or PPA models.  While this acquisition will hardly be enough to fix their business, it will bring new thinking, as Jake Winebaum will be CEO of the online business.

Alacra reached its eleventh anniversary this summer, and celebrated this week in typical Alacra fashion.

Eleven years is a long-time in the life of a startup.  A typical startup fails to survive 2-3 years.  Those that make it to that level often take the quick payout in the form of an acquisition, long before the company establishes itself and sees its vision through.  I'm appreciative of the Alacra management and board, whose patience have enabled the Company to grow steadily over the years.

   

AOL has announced the acquisition of Tacoda, the behavioral ad network.

Tacoda has been an early leader in serving up relevant ads based upon a user's habits.  For example, someone who has recently been researching automobiles might see a car ad pop up on their screen, regardless of what site they are visiting.

The Tacoda acquisition is the latest in a string of ad network deals.  Google kicked it off by acquiring DoubleClick, while Yahoo responded by snagging Right Media, while Microsoft nabbed aQuantive.  Just a few weeks ago, Yahoo announced the release of SmartAds, which target users based upon a combination of behavioral, demographic and geographic attributes.  These efforts might have convinced Tacoda that going it along might no longer be an option.

According to John Battelle's Searchblog, the deal is rumored to be for $275 million.

UPDATE: Brad Burnham, of Union Square Ventures (an early investor in Tacoda) has posted his thoughts on the Tacoda deal. 

Can business users get value from Facebook?

That's a question that I've seen & heard from a number of sources in recent weeks.  As Fred Wilson twittered this morning, its the same question he had about LinkedIn in the early days, but now gets value from it. 

So, what does Facebook have to do to create value for business users?  Here are a few thoughts:

First, it needs to provide the tools to support business relationships.  Today, the only business relationship they support is "worked together" (or I guess "hooked up" may apply to the workplace, but I'm not going to go there).  Business relationships can be much more complex.  We should be able to reflect relationships like client:vendor, investor:portfolio company, biz dev partners and more.

Next, Facebook should allow its users to set a sharing threshold of "friendship".  There may be details that I'd share with "friends" but not with business colleagues.  I'd like the ability, when I add a friend, to categorize them as a friend, a colleague or an acquaintance.  Then, when I add apps to my profile, I'd like to flag them to whether they'll be shared with each category of friends.  That helps me separate business apps from personal apps, while still keeping them all in one place.

Once a framework like this is put in place, it will support business applications.  It would be simple, for example, to provide "degree of separation" relationships like LinkedIn offers. 

So, why do we need to build that in Facebook, if LinkedIn already offers it?

Facebook provides things that LinkedIn cannot easily match.  With the open platform, it's reasonable to expect industry-specific networking applications to emerge.  There are attributes of relationships which differ from industry to industry.  For example, a lobbyist might want to have a party attached to each of her contacts.  Horizontal apps could also be easily built for recruitment, reference checking, business development and more.

As a platform, Facebook is well-suited to replace the "home pages" most people use today such as my.yahoo.  I can pop an RSS reader into Facebook, so I can read all of my RSS feeds off that page.  I can integrate a calendar and address book (which should be able to synch with my corporate (Exchange) files and my Blackberry.  I can also access it from a mobile device, without having to fumble through sites that don't work well on the mobile. 

So, eight weeks after the platform was announced, it's clear that Facebook has not yet transformed itself into a business networking application.  But with a few enhancements to the core platform, and a bunch of creative developers using the platform, I'd bet it's there by next spring or summer.

Ross Mayfield posts on his blog that Socialtext is seeking to hire a new CEO (or, CEO 2.0, as he calls it).  Mayfield intends to stay on as Chairman and President.

It's an open call and Ross has posted details on his blog.  If you're a driven business leader with experience in the software market, you might want to check it out.