Content Matters

The  Association of American Publishers has launched a pseudo-grass roots organization called PRISM (Partnership for Research Integrity in Science and Medicine) in an effort to thwart  the free-access  efforts such as Public Library of Science.

Wired refers to PRISM as an astroturf group; they are pretending to be grass-roots, when in actuality, it seems just a front for the bunch of old-school scientific journal publishers who don't know how to remain competitive in the new content market. 

While some of the journal publishers, most notably Nature, have proven adept at navigating the new world of content, too many of the scientific publishers and aggregators have dug in their heels in an effort to keep the old system in place.  That system, using the research community for peer review, with all the revenues going to the journals, might have made sense when there were no alternative models, but clearly make little sense today.

It seems evident that the journal publishers are going to take the RIAA approach, hoping to use litigation and legislative lobbying, to try to protect their model.  That's a shame and in the long run seems unlikely to succeed.  It's ironic that these publishers of scientific journals seem to have missed the key element of Darwinism: Evolve or Perish.

John Blossom has many more details on this latest effort.

Led by Thomson’s $17.1 billion acquisition of Reuters, content industry M&A hit $33.1 billion in the second quarter, according to Whitestone Communications’ quarterly “Who’s Buying Whom”.  That’s the highest quarterly figure since the first quarter of 2000, which featured the $164 billion AOL – Time-Warner deal. 
In addition to the Thomson-Reuters deal, the quarter was pumped up by the $7.75 billion sale of Thomson Learning to private equity firms Apax Partners and OMERS Capital Partners; and Google’s $3.1 billion acquisition of internet advertising engine DoubleClick.

Other large deals for the quarter included Primedia’s divestiture of its Enthusiast Magazine division to Source Interlink for a surprisingly high $1.2 billion, Informa Group’s $992 million acquisition of market research provider Datamonitor, CBS purchase of internet music suggestion engine Last.fm for $280 million and Experian’s $240 million acquisition of web analytics provider Hitwise.

While the dollar value of deals surged in the quarter, the number of transactions dropped from 144 to 134 as compared to the same quarter in 2006.

Whitestone Communications President Baran Rosen projects a slowdown in the deal pace during the second half of the year, due to market conditions and to allow the major strategic investors like Thomson and News Corp to absorb the deals they have recently completed.

The markets have been so active that it is likely that buyers need time to pause and digest what they have. Also, the end-of-July pullback in the stock market and tightening of credit may lead to a slower deal pace through the end of the year.

Reuters has acquired analyst rating firm StarMine.  StarMine was founded in 1998 in an effort to apply quantitative approaches in the rating of sell-side analysts.  Previously, analyst ratings were based largely on beauty contests such as the Institutional Investor all star analyst list.

StarMine applications can be used by buy-side firms to assess street research and by sell-side firms to assess their own analysts' performance.  They have also developed analytic applications to help predict estimate revisions and to analyze earnings quality.

StarMine investors include Instinet, Hummer Winblad and American City Ventures.

Marlin & Associates advised StarMine in the deal.

With a measured approach, akin to the way it first introduced advertising on its search engine, Google is now introducing advertising on YouTube.

The new format is a semi-transparent overlay at the bottom of the screen, the same positioning news shows use for their scroll.  The ad appears 15 seconds into the video, an approach that takes into account the way users often sample a few seconds of video before deciding whether to watch the whole thing.  The typical ad will last about 10 seconds; if a user clicks on the ad, it will pause the YouTube video, show the ad in its entirety, then continue with the remainder of the YouTube video.

Google’s approach is smart.  They avoided the use of pre-roll ads, which users find almost universally annoying and instead adopted an approach that was first introduced by video ad network VideoEgg last year.  Initially, ads will be limited to content from Google content partners and will not appear on user-generated or user-uploaded video.  Ads will be sold on a PPM basis (initially $20 per thousand displays, according to the New York Times), although the model could easily be adapted to a PPC approach in the future.  It will be interesting to see how advertisers make their overlays compelling to drive click-throughs in that format.

Video is emerging as a key content delivery platform.  For now, it’s use is largely in the b2c space, but b2b video has begun to trickle out as well.  As an advertising model develops, video will take hold in the consumer and select business markets.

Social networking applications are proliferating.  In addition to the major players like Facebook, MySpace and LinkedIn, there are numerous apps with social network components such as Twitter, Bebo, Plaxo, Spock, Digg, Pownce, Flickr, Zooomr and more. 

The barrier to adoption for many of these is the effort required to get your data into a new social network.  Today, my LinkedIn network is larger than my Facebook network.  That's due in part to the fact that many of my "real" network contacts have yet to adopt Facebook, but it's also because I haven't done a good enough job of inviting all of my LinkedIn contacts to connect in Facebook.

Over time, I expect users will participate in multiple social networking applications, each providing different functionality.  But the thought of maintaining friend lists on numerous sites is at best, daunting.  Instead, users will want to maintain one list of contacts, then assign those relationships to the appropriate networks.

Brad Fitzgerald (founder of LiveJournal) and David Recordon have just posted a detailed plan and proposal to address this in their post, Thoughts on the Social Graph.  They propose an open source application to build and maintain your "social graph", which may then be accessible within various social networking applications.  This would allow application developers to focus their energy on their applications and not worry about which platforms to support.

The proposed plan has three primary goals:

1. Make the social graph a community asset (i.e. no company is the social graph owner)
2. API's should be developed to ease application development
3. End-users who join a new service can tap into their social graph and decide whether to include their existing relationships in the new application

Brad and David have already done much of the prototyping.  The hard part will be gaining the support of the existing social network providers, who are likely to want to wall in the social graphs their users have created on their platforms.  However, as others have pointed out recently, creation of a new walled garden will not be what wins the social networking race.

Well, it's not exactly open source, but there are a few signs of cracks emerging in the walled garden.

Dave Winer noted today that Facebook now has a few RSS feeds that allow you to move content outside of the Facebook platform.  You can view notifications outside their wall, as well as Friend Status updates.

TechCrunch picked up the Winer post and adds some further context.

Facebook would be smart to create more RSS feeds.  If they make their platform truly open, users will clearly put their data there, further establishing them as the key platform.  I realize there's an innate urge to not want users to take data outside of your platform, but in the long run it will benefit them.

There have been numerous anecdotal stories about companies or individuals editing their Wikipedia listings, typically in hopes of removing negative information.  In other cases, such as that of a campaign manager of a Georgia Gubernatorial candidate, the effort was to disparage a competitor.

Of course, in virtually all cases, other Wikipedia users will quickly notice the vandalism and restore the original page.  But that doesn't keep people from trying.

Now, there's an easy way to identify potential whitewashing.  CalTech student Virgil Griffith has created the Wikipedia Scanner.  The application cross-references listings with the IP address of those who make the edits.

In this Wired article, they describe how it has uncovered cases such as voting machine manufacturer Diebold trying to delete numerous paragraphs about their CEO's relationship to President Bush and WalMart's editing text about its wage policies.  Some of the cases seem more innocuous, albeit strange, such as some user at the CIA changing the lyrics of a song on the show Buffy the Vampire Slayer (you'd think they have more important things to focus on).

By making the database publicly available, Griffith is encouraging users to do their own searches and reveal potential whitewashing efforts.  Or, just click on some of the examples on the Wikipedia Scanner page.  The results are interesting.  For example, while the NY Times has 1,285 edits, as compared to just 102 for the Fox News Channel, most of the Times entries are focused on external news topics, while most of the Fox News edits are to their own staff, such as Brit Hume and Chris Wallace or to their nemesis, Keith Olbermann of MSNBC.

Via PaidContent comes news that Classmates.com, an early player in the social networking space, plans a spinout from parent United Online Media and has filed for an IPO.

Classmates, described to me once as "proof that there are lots of married people who never got over their highschool sweetheart", had revenue of more than $139 million in 2006, though has yet to turn a profit.  The new company, Classmates Media, will consist of Classmates.com and the MyPoints.com loyalty marketing division, and will trade on NASDAQ under the ticker CLAS.  UNTD will retain a majority stake in the Company.  Meanwhile, Steven McArthur, formerly president of North American operations for Expedia, has been named President of Classmates.com.

Going forward, Classmates, which has 2.7 million paid subscribers, will have difficulty competing against the larger free social networking applications like Facebook and MySpace.  Then again, the market for tracking down your ex-girlfriend or boyfriend may be larger than I suspect.

Lead generation website CreditCards.com has filed to go public in an initial public offering to raise $115 million.

The CreditCards.com portal serves as a destination site for those seeking to compare credit cards offers.  The site generates revenues through acting as a lead generation service for issuers of credit cards and their marketing agents.  The Company generated revenues of more than $27m for the first half of 2007, up from $18.7 million for the same period a year earlier.

The Company was created last year by Elisabeth DeMarse with funding from Austin Ventures.  DeMarse, of course, previously led the growth of Bankrate.com from $15m to $36m in revenues and also served in leadership roles at Hoovers and Bloomberg, among others.

The Company indicates that it plans to use funds from the IPO to service debt, currently $154.8 million and for other expenses.

While the timing might seem unusual in light of the current credit squeeze, what the past has shown us is that, regardless of market or economic conditions, consumers are always looking at ways to manage their debt.  And with tighter markets, credit card issuers will be willing to pay a premium to generate more leads and fund growth.

Credit Suisse Securities will be the lead underwriter on the IPO, with participation by Citigroup and Thomas Weisel Partners.

People search engine Spock.com has opened up their beta to the public.

I previously described Spock as "ZoomInfo meets LinkedIn".  At its most basic, Spock is a vertical search engine focused on people.

Spock leverages existing social networks to build its database.  When you first register, it invites you to upload your address book from Plaxo, LinkedIn, Gmail, Yahoo or AOL.  This helps them quickly develop a current database of people.

Spock automatically tags each entry, leveraging keywords which show up in your data.  Spock leverages crowdsourcing to improve its tags - users can vote tags up and down based upon relevance. 

While social networks like LinkedIn and Facebook have garnered much of the recent attention, often you just need to find somebody - either by name, by company or job function.  Vertical search engines like Spock and ZoomInfo are incredibly useful for this task.  While you may not spend hours on Spock, adding apps and posting your favorites, it's likely you'll visit frequently when prospecting or recruiting.

Note: Spock.com apparently received more traffic than it expected today, on its first day of the open beta.  So, if performance seems sluggish, give them a couple of days to get things worked out.

The Times has decided to stop charging a fee for its TimesSelect product.

TimesSelect, which includes the Times Columnists and OpEd pieces, is free to print subscribers and costs $95 per year for others.  There are approximately 220,000 paid TimesSelect subscribers, representing roughly $21 million in annual revenue.  It also provides a perceived benefit to print subscribers.

While I don't know if the Times will recoup that revenue simply from serving ads on the OpEd pages, this is clearly the right thing to do.  Putting a wall up around Times columnists simply resulted in reducing the influence of the Times editorial page.  In addition to limiting access for direct browsers, it also dramatically reduced the "pass-along" potential of Times content.  Once the walls are down, I'd expect their editorial columns to often be at the top of the "most emailed" lists and also receive numerous links from bloggers, Facebook pages and more.

Interestingly, the Wall Street Journal had always taken the opposite tack.  While the Journal placed a paid wall around its news content, it left its editorial page open for everyone to read.  While its not yet clear whether Murdoch will make the entire Journal free of charge (there are many compelling arguments that it will be profitable to do so), you can be sure that he will continue to make the Editorial Page content freely available.   Murdoch clearly sees the value of its influence.

As we move towards the 2008 presidential elections, I think that the public will be well-served by having open access to editorials by both the Times and the Journal. 

Thirty years ago today, August 3, 1977, Radio Shack introduced the TRS 80 personal computer.

The "Trash 80" as it was affectionately referred to was not the first personal computer.  But it was the first affordable PC that was a complete unit.  IBM had a PC available with a $50k price tag.  And hobbyists had adopted the Altair 8800, but without a keyboard or monitor, the Altair was a kit designed for the tinkerer.

But the TRS-80 was a complete PC, with keyboard, monitor, CPU, memory and a programming language.  The "professional" version came complete with 48k of RAM for a $2,500 price tag, while an entry level version for just $599 included a whopping 4k of RAM.  There was no hard drive; files were stored on audio cassettes.  Along with the Apple IIe and the Commodore, the TRS-80 made personal computing accessible to a wide market.  Pre-launch, Radio Shack was concerned about whether they'd actually be able to sell the 3,000 units they had built.  In fact, the 3,000 units were chosen because Radio Shack had 3,000 retail outlets and they figured they could use them for accounting purposes within each store if they didn't sell.

The first PC I ever used was a TRS-80.  My senior year of high school (1980), the school decided that computer science was not a fad, but an actual course of study.  That year, I took a Fortran course (using punch cards) and a Basic course on the TRS-80.  Our teacher was taking a course at the local college, staying about two weeks ahead of us.  We didn't do any fancy programming; as I recall, my final project was creation of a Blackjack game.  But the TRS-80 gave many of us our first realization that computing was accessible.

Plaxo, makers of the widely used address book maintenance app of the same name, is about to enter the social networking market.

According to VentureBeat, the Company on Monday plans to announce an open social network called Pulse.  The new Pulse application will allow users to view their contacts according to categories such as business, friends and family members.  VentureBeat has more screen shots here.

Robert Scoble met with Plaxo marketing head John McCrea earlier this week.  McCrea explained that Plaxo’s new social network will be completely open.  In other words, if I post some new content on my “Pulse page”, it will be available to everyone, not just those with a Pulse account.  That seems like a direct shot across the bow to Facebook, where you have to be a member to access other pages.

Plaxo also plans to leverage the “friends” categories described above to allow you to manage access to different information.  This is a current weakness of Facebook which I’ve described previously.  There’s no way for me to segment my Facebook data, indicating this section is for business colleagues and that section is for personal friends.

So, will Pulse be the Facebook-killer?  I doubt it. 

Plaxo does have some advantages; they have a user base of 15 million and the new features directly address the challenges Facebook will have in moving to the business community.  But, people view Plaxo as a tool, not a platform.  They may have 15 million users, but none are “active” users.  It’s just a tool that runs in the background for most.  The early adopters, whom Pulse needs to attract in order to gain viability, are now focusing on Facebook.  I’d be surprised to see them switch their focus to Pulse unless it quickly develops a large base of users.  Facebook was able to leverage colleges, then high schools, to grow virally.  A disparate base of business users of Plaxo are unlikely to come together as a critical mass.

That being said, I'll certainly be watching them this Monday.  And my guess is the folks at Facebook will too.

Earlier this week, Internet pioneer Susan Strausberg stepped down as Chairman and CEO of EDGAR Online.

Strausberg, a visionary who had led EDGAR Online since its launch twelve years ago, was well-liked and admired in the content industry.  Susan was early to see the opportunity to leverage the then-nascent web for delivery of content.  Along with husband Marc, Strausberg helped steer the Company through evolving business models and the turbulent dot-com collapse.  Through effective licensing deals, EDGAR Online quickly developed a strong brand in consumer finance.  They later adapted their offerings to the institutional market, and were leaders in embracing and advancing the XBRL markup language.

Strausberg will be replaced as CEO by Philip Moyer, whom she had brought into the Company just a few months ago.  Moyer, with no previous experience in the content industry, spent 15 years at Microsoft, where he had begun as a systems engineer.  His most recent role at Microsoft was as General Manager for the Professional Services industry.  Just prior to joining EDGAR, Moyer served as Entrepreneur in Residence for Safeguard Scientific.  It will be interesting to see in what direction he takes the Company, as the content business is a very different place than packaged software.

There are few dot-com CEO’s who have been able to navigate the peaks and valleys of the past decade successfully.  Susan’s stepping down signals the end of an era in some ways.  I wish her well in whatever she chooses to tackle next.

As content providers, we all invest quite a bit of effort in search engine optimization, to ensure that our pages get the highest positioning within organic search results.  In the business market (and most others), the bulk of that effort is focused on Google.  And, as you see increases in pages crawled and indexed, it drives visitors, page views and clicks.

But what goes up can also come down.  And dependence upon organic Google results leaves businesses vulnerable to changes outside their control.  That happened to many sites last year, when Google rolled out its Big Daddy data center changes.  And now, it's happened to Answers.com, where a change in Google search algorithm has apparently reduced traffic by 28%.  While there's no such thing as a good time to see your traffic drop by a quarter, the timing is particularly poor for Answers.com, who are in the midst of raising capital for their proposed acquisition of Dictionary.com.  A drop in the Answers.com stock price (the stock is down about 12% as I write this) will make the additional offering that much more difficult.

Following yesterday's announcement my thoughts began drifting towards the bizarre (Would Factiva have to be renamed Opinioniva?  Would they rename the financial index the Rupert Industrial Average?). 

To ground myself, I thought that it would be useful to read others’ thoughts on the deal.

Ken Doctor had some interesting thoughts on lessons learned and about what comes next for newspaper companies.  He points out that the two-class wall is a hurdle, not a true wall and that there are no suitable white knights waiting on the sidelines. 

Former Merrill Lynch analyst Lauren Rich Fine posits that the Bancrofts really had no choice.  There are no other offers, the outlook for the industry remains challenged, and maybe more to the point, there will be lawsuits if they vote down the deal.
As for other newspaper companies, she suggests that “the industry probably should be private as the returns are no longer attracting capital.”

Meanwhile, Fred Wilson sees this as an opportunity to tear down the subscription wall around the WSJ.  Rupert Murdoch should make the WSJ as free to use online as Google is. And he should do that the first day he owns the paper.
He points out that the Journal is not nearly the force in the online world that it is offline and the main reason is that you have to pay for it.  Opening up the Journal would bring it to a much wider audience and would also encourage bloggers and websites to interact with its content.  According to Fred, if the WSJ went free online, got its content into the dicussion broadly, got indexed highly in Google, and fully participated in the web in all respects, it could easily see 10mm uniques per month and 100mm pageviews within a year (which might generate as much as $100mm in revenues). That should be the goal, not to remain a niche player in online finance.

Leadership Directories has launched a new application, which provides visual maps of relationships between executives and political leaders.  The new application, Leadership Networks, allows users to uncover links between people, through board memberships, executive positions and more.

The visualization used is impressive.  Just a few years ago, this type of visualization was only available in “fat client” (installed software) applications, so the fast performance on a web application is notable.

As social networking applications such as LinkedIn and Facebook take hold, users are more comfortable with the concept of these “six degree” linkages.  Similar applications from Boardex, Alacra and the newly launched LexisNexis ExecRelate have leveraged corporate and nonprofit board membership to display these links for business development.  Leadership brings this capability to the government affairs market, where “who you know” has always been the measure of influence.  While lobbyists will adopt this tool to better leverage their spheres of influence, I’m hopeful that the media will also use it to shine light on the well-worn, but dimly lit paths between K Street and the Capitol.