Content Matters

I posted recently about submissions for SIIA Previews at the upcoming west coast NetGain conference. The SIIA has just extended the deadline (which was originally this week) to Monday, April 7. 

Full details on the submission process are available on my previous post or at the SIIA Previews website.

If you're an early stage content or technology company seeking exposure to VC firms and/or content industry development executives, this is a great venue.  As I'd previously noted, a number of participants in this year and last year's Previews received funding shortly thereafter.

Google's announcement of the launch of a set of API's to the YouTube platform are big news. In the announcement, YouTube describes itself as "an open, general purpose, video services platform, available for use by just about any third-party website, desktop application, or consumer device."

The new API's enable uploading of videos to YouTube, adding of metadata, retrieval of standard video feeds and of customized queries and software access to customize user functionality. In essence, YouTube is providing website publishers with all the necessary tools to manage and access video content hosted on the YouTube site.  This is a big deal. By providing the infrastructure for free, they create a great incentive for publishers to post content to YouTube.  As TechCrunch points out:

The key here is that the videos themselves are hosted on Youtube’s servers. This brings Google back full circle to the initial strategy for Google Video, which originally required videos to be uploaded directly to Google in order to become indexed.

This is a smart move by Google; YouTube becomes the de-facto home of all things video and positions YouTube to monetize all this video content.

I usually leave the politics off this blog, but occasionally I feel compelled to spew.

I voted for Eliot Spitzer for Governor. He was a fairly effective Attorney General, though he clearly overreached on some issues and has few friends within the Wall Street community. His first year as Governor was clearly rocky and his running feud with Joe Bruno did not serve the state well. It was clear to most that his mistakes were ego-driven. His self-righteous approach made him blind to the fact that his tactics were borderline unethical.

And now the call-girl saga leading to his resignation shows the same arrogance.  A governor who built his reputation on law and order will be held to a higher standard. The resignation was appropriate and necessary. The public does not expect officeholders to be infallible, but we have little tolerance for hypocrisy. Foibles that others can get away with become bigger issues for those who wrap themselves in sanctimonious moral authority. That’s why affairs by a Ted Haggard or David Vitter tend to generate more outrage than those of a Jesse Jackson or Barney Frank.  When you build your public persona around a specific trait, you will be held to a higher standard around that trait. That’s why Barack Obama has to walk gingerly in counter-attacking Hillary and it’s the reason why lobbyist influence in the McCain campaign means more than it does for the other candidates.

Lost in yesterday's announcement of the EU approval of Google's acquisition of DoubleClick was the news that the post-merger integration process will come with something associated with old media mergers: layoffs.

Posted to the official Google Blog were Eric Schmidt's comments:

As with most mergers, there may be reductions in headcount. We expect these to take place in the U.S. and possibly in other regions as well. We know that DoubleClick is built on the strength of its people. For this reason we’ll strive to minimize the impact of this process on all of our clients and employees.

At one level this comes as no surprise. This was not a small bolt-on acquisition. DoubleClick has more than 800 employees and there is bound to be some overlap between the two companies. At the same time, it's another signal that Google is no longer on the same growth curve that it was a few years ago. As they integrate this acquisition and with pressure on their stock price, it will be interesting to see if the Google corporate culture begins to change.

I've previously posted that Previews has been the best part of the SIIA Information Industry Summit the past two years.

Previews showcases emerging content and technology companies, providing a forum to pitch to potential venture investors and content industry development executives.  The 2007 Previews showcased companies like Generate, Near-Time, Pando Networks and iCopyright. This year's Previews featured presentations from ExpoTV, CourtroomConnect, FeeDisclosure and TutorVista. FeeDisclosure was acquired by Bankrate in the weeks that followed the event (rumor was that the deal was accelerated by a question I asked during the Q&A segment) and another company received funding immediately following the event.

Following the success of Previews, the SIIA has decided to integrate a Previews segment into the upcoming NetGain Conference (May 18-20) in San Francisco. They are currently recruiting early stage content and technology companies for the eight coveted slots at this year's event.

Details for applying for consideration are listed below. There's no cost to apply but the deadline is Monday, April 7.

Call for Early-Stage Content & Software Companies

Early-stage, innovative and emerging content, software, and infrastructure companies are invited to apply for the opportunity to be a featured participant at SIIA NetGain: The Convergence of Content and Software, May 18-20, in San Francisco.

If selected, your company will give a five-minute presentation before our audience of industry leaders, which could include your next business partner, customer, investor, or acquirer. 

Complete the submission form in its entirety by Wednesday, March 12, 2008.  Note: there is no fee to submit your application.
All company presentations must be delivered by the company CEO, President or Chairman. All submissions must be made for companies that provide content, software or content/software technology products or services, have received no more than a Series A round of financing, generate no more than $10 million in sales, and have actual customers.

Our committee of industry experts will review all submissions and select semi-finalists. Semi-finalists will be notified by Friday, March 21, 2008.

Each Semi-finalist will make a virtual presentation to our committee, who will select the Presenting Companies and alternates. Presenting Companies will be notified by Friday, March 28, 2008. To participate as a Presenting Company, a fee of $895 must be paid by Friday, April 4, 2008. The fee includes one full conference registration.

Benefits for Semi-finalist Companies:

• Each Semi-finalist Company senior executive will receive guidance from an SIIA Consultant to help in the preparation prior to delivering his/her presentation before our committee
• Each Semi-finalist Company will receive feedback from our committee
• In addition to the above, Each Presenting Company will receive the following benefits:
• An invitation to present a 5-minute company pitch before the SIIA NetGain attendees.
• A temporary exhibit table to network with attendees. (Exhibit table will be provided during the conference break that immediately follows each group of company presentations.)
• Corporate profile and primary contact information in the SIIA NetGain Conference Program.
• Corporate profile and logo listed on the SIIA NetGain conference website.
• One full conference registration to attend SIIA NetGain, which includes the Welcome Reception on Sunday night, May 18; the Codies Showcase & Networking Reception on Monday night, May 19; and the Codies Gala on Tuesday night, May 20.

After reading the above, proceed to the submission form.

Felix Salmon at Portfolio.com has further thoughts on the BreakingViews piece that I posted on yesterday.

Felix takes a less ..umm.. nuanced approach than I did, though we come to the same conclusion.  He opens his post with:

Breakingviews, one of the least web-savvy websites in the world, ran a column by Jeff Segal on Monday about blog valuations.

Ouch.

But, the post deserved such treatment.  Felix references some of the same obvious examples that I had referenced, such as Jason Calacanis' sale of Weblogs, Inc. to AOL to refute the basic premise that blogs aren't viable M&A candidates for media companies. It's hard to imagine that the BreakingViews writer was unaware of those deals.

A key point in Felix' post is the fact that unlike the zero sum game of traditional media properties, in blogs, intelligent competition can lift all boats:

I want other finance blogs to launch, the more the better. And I want them to be written by keener minds than mine. The more that happens, the more traffic I'll get - that's the way the conversation works. Other media don't work like that: if I'm watching ABC, I'm not watching NBC. But blogs are different, and don't operate according to that kind of zero-sum mathematics.

Looking at properties like TechCrunch, PaidContent and even Alacra's own Research Recap, it's pretty evident that the blogging platform is a great platform to launch media properties.  And once those properties develop an audience they are just as attractive (probably more attractive when you figure in cost structure) than the traditional forms of media.

A new post from BreakingViews asks why blogs have not been acquisition targets to-date. While sites like Gawker and the Huffington Post are growing at a great clip and offer high-valued demographics, they've not become M&A targets for traditional media companies. The only significant blog acquisition to date was AOL's purchase of Jason Calacanis' Weblogs, Inc. more than two years ago.

BreakingViews suggests three reasons for this:

1. Difficulty in valuing potential revenues from blogs and a low barrier to entry;
2. The close tie between a blog and its author; and
3. The inconsistent reader patterns that mean this week's blogosphere darling may be next week's old news

The low barrier to entry applies to most publishing businesses, both online and off.  While it may be possible to spend $100 million to launch a new magazine (Conde Nast Portfolio), it's not the recommended approach and most magazines, especially trade mags, are launched with modest budgets.

I agree that with typical blogs it's hard to separate the blog from the blogger.  TechCrunch without Arrington or GigaOM minus Om Malik (for an extended period of time) would likely flounder. But, you could make the same argument about some traditional media properties (until Martha Stewart got released from prison, her media properties drifted). More importantly, that model is changing.  While many blogs remain simply the personal web log of an individual, many new publishing businesses are being built on a blog platform. I'd argue that PaidContent would remain viable were Rafat to step aside just as the HuffPost could continue without Arianna and the Weblogs blogs did fine after Jason stepped down. 

If I were a journalism grad looking to break into publishing today, I'd probably start a blog or join an existing blog rather than navigating the bureaucracy of a traditional publisher.  As more people follow that path, blogs will become a dominant form of content delivery.  So I disagree with the BreakingViews position and think that targeted blog acquisition should be a key strategy element for publishers seeking to expand their online presence.

Blog syndication platform Pluck has been acquired by Demand Media, a domain name acquisition company led by Richard Rosenblatt, former MySpace chairman.

Pluck is best known for its Blogburst syndication network, which syndicates blogs out to mainstream media outlets such as Reuters, USA Today, Rodale, Washington Post and others. Reuters was also an investor in Pluck, investing $7 million in late 2006.

Demand Media is an amalgamation of seemingly unrelated web properties including the Lance Armstrong partnered Livestrong.com, ExpertVillage.com, GardenGuides.com and GameDelight.com.  Demand is also a domain name registrar, focusing on the .tv domain.  Demand Media has raised over $320 million to-date, with their latest round of $100 million last fall.

While terms of the deal were not made public, TechCrunch reports the price tag was $75 million cash and notes that Pluck revenues are about $10 million.

Web analytics provider Compete.com has been acquired by market research firm Taylor Nelson Sofres (TNS).

Compete, with roughly $15 million in revenue in 2007, is smaller than rivals comScore, Quantcast and Alexa, but has been growing at a rapid pace. The Company reported a loss of $4.9 million for 2007. According to TechCrunch, the deal is for $75 million cash with the possibility of an additional $75 million in earnouts.

Compete was founded in 2000 as an Idealab company. The TechCrunch post notes that they've raised $43 million in funding to-date.

UK based TNS is a more traditional market research firm, so the combination of TNS+Compete should provide clients with a picture of user behavior both online and offline. TNS Media Intelligence is the leading ad-spend intelligence service, while their 6th Dimension access panels survey more than 2 million consumers globally.

Via Alley Insider comes this note that Microsoft (NASD:MSFT) is undervaluing Yahoo(NASD:YHOO), at least according to Bear Stearns analyst Bob Peck.
Peck suggests that the offer would value Yahoo at about 15x:

At $2.1-$2.2 billion of EBITDA, Microsoft’s multiple would only be paying 15x for one of the leading Internet properties and online advertising player.

But, as Blodget points out, 15x is only cheap if you think that 2008 is an aberration and that Yahoo will return to strong growth in 2009.

Meanwhile, Kara Swisher at All Things D suggests that Microsoft might come back with a lower offer, especially following Yahoo's weak January results and their newly announced severance plan. Kara suggests that:

If signs of business weakness at Yahoo worsen, several people suggested to me that Microsoft should make a slightly lower offer for Yahoo and promise the difference between its old bid and new one to Yahoo employees as a rich retention plan.

In another twist, the New York Times ran an interesting piece this weekend suggesting that Microsoft should drop its pursuit of Yahoo altogether and go after SAP (NYSE:SAP). In that article, Randall Stross argues that Microsoft should look to increase its strong position in business software by making a bid for SAP, much in the way that Oracle has grown through its acquisitions of BEA, PeopleSoft and i-Flex, among others. The corporate culture and business focus of the two companies are much more closely aligned, reducing risk of the deal.

In a similar vein, RBC Capital Markets analyst Robert Breza writes that Microsoft would be better served going after some higher growth businesses with strong upside:

Salesforce.com (NASD:CRM) at 100 percent premium is $12 billion, Omniture (NASD:OMTR) at 100 percent premium is $3 billion; and that leaves $30 billion to acquire Facebook.