Word on the street is that two of Revver’s co-founders have left the company.
Steven Starr will remain CEO, but co-founders Ian Clarke and Oliver Luckett and other members of the staff will depart (though apparently some will have consulting roles).
In a sign of the times, they are being replaced by offline/traditional media folk:
It appears that the company is gearing up for a change in direction, because it has also brought in new executives from the media, marketing, and advertising worlds. In an official statement to AdAge, Revver maintained the “personnel changes are intended to advance the company’s infrastructure and bolster its marketing and advertising efforts in 2007.”
I do not know the two blokes who are leaving, and I sure do not want to say anything about those who are arriving. I wish that Ian Clarke and Oliver Luckett are off to greener pastures and hope that this was not a result of VCs pushing them out. After all:
Revver has raised about $13 million from Comcast Interactive Capital, Turner Broadcasting, Draper Fisher Jurvetson, Bessemer Venture Partners, Draper Richards, and William Randolph Hearst III.
You thought Hearst Numero Uno was a tough sell? All I know is this:
- for all of the hype that permeates online video, it’s a bloody hard business to operate in.
- after YouTube was bought out by Google, everyone else who got funded by VCs in the file sharing space died a little, and many will die in 2007.
Or, rather merge, if egos allow. These firms have a lot of money secured but burn plenty each month, problem: little revenue.
Remember a long ago time when this happened? Hmm… ask Prince.
The problem is that online video is a young business, online advertising will make it a $3B industry in 2010 but as of now it’s still small. And, you can’t trust projections anyway. Any company that has $13M in financing (incidentally, the same amount YouTube got from Sequoia) will have financial backers that expect large payouts, soon.
Problem for those VCs who followed Sequoia’s YouTube investment, Sequoia had secured YouTube’s exit before Chad Hurley, Jawed Karim and Steve Chen even got the first check. Sequoia would ensure that it would hedge its holdings in Google and that it would get its YouTube money back by making one buy the other. Yes, we’re conspiracy theory lovers.
Other VCs followed like sheep. And when Google bought YouTube, Google became #1 in search and video. See a problem?
The other YouTube clones now trade at discounts, not at premiums. And, VCs won’t write more checks for 99.9% of the YouTube clones. If they did, Metacafe would not be selling to… whoever, it would raise more money. And that might have even been PR to get people excited.
As such, we respectfully disagree with Mashable’s Pete Cashmore when he states:
their value has almost certainly increased following YouTube’s acquisition.
Why, because of the “greater fool theory?”
While Mr. Cashmore is right to state that Revver could have added more content, the truth is that YouTube won the game by cheating and ripping off content. It’s that simple. I love YouTube and admire the founders and all, but I also liked Napster but knew it was not exactly right and legit.
Where we somewhat disagree is the conventional wisdom surrounding the aura of Web 2.0 community features, Cashmore continues:
in particular, they could have added comments to help build a community around the clips.
Well, we’re not sure if in 1, 3 or 10 years people will look back at the entire “comment” madness and think it was cool. Go to YouTube and listen to, for example, Thin Lizzy’s version of Whiskey in the Jar vs. Metallica’s version of Whiskey in the Jar. Every single comment is on how Metallica sux or Thin Lizzy is weak. 80% of comments are, frankly, useless and devoid of value. Don’t take it from me, this was why Robert Scoble said he does not use Digg because “You go to Digg and get a hundred comments showing how juvenile some of the commentors are.” All right, that one is a paraphrase. Here is what he said:
The comments there are a good example of why I don’t get much value from Digg. Too much noise and very little knowledge.
But, in our blurry Web 2.0 drunken stage, we think Comments are cool, way cool. Yeah so was that stupid sock.
The concept of commenting is great. Its practice is awful. The sense of community is essential, but so is content, and Revver failed to get content. It also failed thus far with Commerce. The third C in the Content, Commerce and Community trifecta of online success. We do however think that the new management that got parachuted today will help.
Back to this move: Revver and other such companies have been funded with ease when YouTube was growing fast and a sought-after takeover target. But I do not think many VCs will want to fund them further. Will online video burst the bubble? Maybe.
Rather, file sharing sites will pop. And content owners like WatchMojo.com will probably pull content from most of the file sharing sites. Just last month Current TV pulled its content from Yahoo! video. Our videos have been seen 1M times on YouTube, Google Video etc., but guess what, branding does not pay the bills. All I know is that our bills are nowhere near where the file sharing sites’ are, yet we have a clear path to revenues and profits. When you publish content, it’s as easy as 1, 2, 3.
When you offer a platform for others to share content, you get press and one out of a million makes a billion, but by and large you also set yourself up for a massive burn rate.
If this was not the case, why the sudden exit of Revver’s two co-founders.
I am biased: I produce video, I produce the content. User generated or amateur video will only take you so far. After a while, the people who are attributing all of that content feel like they are being exploited.
As NewTeeVee mentions, Revver plays up the “we pay producers” angle but few actually make any money. That’s not a good thing for PR, or for business… According to Ad Age:
A quick check with a popular content provider who regularly posts videos with Revver said it was difficult to make too much money from Revver and that a producer would generally need to distribute videos somewhere else to really make it pay. A quick check on Revver over the last month reveals ads for Palm’s Treo, Warner Bros., Turner’s GameTap site and a site called Videomaker.com.
If the guys who were pushed out from, I mean “left Revver voluntarily” are reading this, please drop me a line. It’s not you, it’s them. If you doubt me, the news came from Edelman while CEO Starr was on vacation. According to Ad Age:
Mr. Starr is on vacation and was unavailable to talk about the changes but the company released a statement through its public relations firm, Edelman, explaining that the “personnel changes are intended to advance the company’s infrastructure and bolster its marketing and advertising efforts in 2007…
Wow! ‘Nuff said. Back to work. We actually have to create content and sell ads. Gee, think of that!
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WatchMojo NewsletterCall it a game of Clue, digital style:
According to PricewaterhouseCoopers, global advertising will increase to US$521 billion in 2010 (up from US$385 billion in 2005).
Earlier today, when Publicis announced its acquisition of Digitas, its CEO Maurice Levy said: “this operation will constitute a powerful growth engine for all of Publicis Groupe in a context in which digital and interactive marketing and communications should represent more than 10% of all worldwide investment by 2010.”
If PWC and Levy are right, the global Web advertising business will represent 10% of $521B, or $52.1B.
Still with me?
But PWC itself expects Asian advertising alone to be a $110B market in 2010?
We know that the US is set to fall between $25B and $32B according to eMarketer and Morgan Stanley…
This is awkward. Either Levy is underestimating Web advertising or PWC is overestimating Asia’s ad market. In fact, by “digital and interactive marketing and communications” he is including PR.
Anyone care to chime in?
Interesting round of discussion going on over Google’s “actual” search engine market share on Techmeme.
Fitting, since Nielsen Net Ratings came out with its November numbers:
Google - 49%
Yahoo! - 24.3%
MSN - 8.2%
AOL - 6.2%
Ask - 2.6%
MyWay - 2.3%
Dogpile - 1%
Earthlink + BellSouth + Comcast - 1%
Of note, MSN’s share fell 12%. Ask grew 33% but is still tiny. Google and Yahoo! grew 33 and 27% respectively.
These are for US only, so there were 6.2B searches in the USA during November.
Of note, as of August 2006, the Internet user population was 207 million in the US, so roughly, each user conducts 30 searches per month, or one per day.
Man, I am a freaking outlier.
Hmm… sometimes I think it’s crazy to have launched MetaMojo.com, but then again, vertical search is supposed to “take off in 2007.”
“We have been seeking to make an important strategic acquisition which could really boost our presence in the digital marketplace,” said Maurice Levy, chief executive of Publicis, when announcing that his company bought interactive agency Digitas.And this one “”allows us to immediately attain our goal of being one step closer to the future.”Further, “this operation will constitute a powerful growth engine for all of Publicis Groupe in a context in which digital and interactive marketing and communications should represent more than 10% of all worldwide investment by 2010,” he added.
Answer: Global advertising will increase at a 6.2% CAGR during the forecast period, to US$521 billion in 2010 from US$385 billion in 2005, according to PricewaterhouseCoopers, they would know, because they have 4 names.
Ad Age puts together a list of 10 acquisitions from 2006. I am not sure if its simply largest media deals as per transaction value, or the biggest deals based on a random, intangible reason, I wish they would clarify it.
Check out our List of Ten Best Acquisitions of All Time here.
Anyway, as a media and M&A follower, a few things are worth noting:
The list starts off with “Bubble? What bubble? Check Out a Few of the Year’s Major Media Transactions,” call us crazy but apart from the #1 deal Google/YouTube for $1.65B, all the deals range from $200-400m all the way down to $25M, not exactly bubbalese now.
Back in Web 1994-2000, random companies like MySimon would get gobbled up by CNET for $700M; BlueMountain.com - a freaking e-card company and not an actual mountain - was bought for $780M in 1999 by Excite @ Home… which begs a mention of that disastrous, epic deal between Excite and @Home where @Home bought Excite for $6.7B folks; great in theory, horrible execution and worst timing. And while we’re at it: GeoCities by Yahoo! for $3.56B anyone? That’s a bubble, and while we’re blowing bubbles, what about Broadcast.com being bought by, yep, Yahoo! again for $5.2B.
All to say, the deals this year helped major technology and media companies with strong income statements and balance sheets get a foothold or accelerate their online strategy:
1 - Google buys YouTube: Google’s stock market cap rose by $10B in the days leading up to the deal. Google Video was nice and all, but YouTube is wasn’t. Today Google is the #1 in video, as it is in search. Read on our Google/YouTube/Sequoia conspiracy here.
2 - MSFT buys Massive: Between XBOX and Massive and AdCenter, MSFT can start to talk about a market leadership position in video games, in-game advertising and online advertising; ok, the last one not yet. But Massive was a wise investment for MSFT, who sits on $40B in cash and whose stock has wabbled since 2000. Is MSFT getting back its mojo? Find out here.
3 - Viacom buys Atom Films: Viacom last year bought iFilm for $49M and we’ve learned from insiders, bureaucracy killed iFilm’s potential. When Jon Stewart told off the Crossfire folks, people rushed to iFilm, not YouTube. But, Viacom is a big old media company and its integration killed iFilm’s real potential. But for $49M it was a steal, judging by hindsight. Atom gives Viacom a play in animated films and what not, the price seems expensive, but multiples for online video rose quite a bit from 2004 to 2006, and as such, the price was somewhat normal. Mainly, Viacom being a publicly traded company whose stock has languished, its management knew it needed to do something in the space after it lost MySpace to News Corp. and YouTube to Google. Read more for our thoughts on Viacom’s management shuffle here.
4 - Google buys dMarc: Google has to do a lot to diversify. With $10B in the bank and a market cap of $150M, paying $100M to enter the radio ad business is not a bad move at all. Radio is out of style, so it’s the best time to invest. Our thoughts on rumors Google might buy Clear Channel, click here.
5 - Viacom buys XFire: This was one of the best deals of the year, we give Viacom credit for buying XFire before the price got out of hands. Virtual/multiplayer gaming will give them enormous opportunities in years to come.
6 - Comcast buys Platform: This one was simple: Comcast used Platform as a client. Instead of paying it forever, it actually bought it and Comcast is now better positioned for online video.
7 - Sony buys Grouper: This one could go down as a Napster/Bertelsmann deal. Grouper was sued by Universal Music Group. But Sony has become MSFT, the big corporation that can’t get it right. PS3 got nailed in the press and came out 6 months later than expected, its digital music strategy leaves the Walkman euphoric crowd gasping for air…
8 - Google buys Jotspot: as a stand alone deal, one wonders if this is really necessary, given that Google bought Blogger and then saw Wordpress take off. Of course, Wikis will only rise in prominence, especially when bundled in vertical niches. But, when lumped into Google’s productivity suite featuring Spreadsheets, Word etc., it makes a lot of sense. Read more on Google’s ambitions against MSFT and Standard Oil here.
9 - Animal Planet buys Petfinder: what is up with pets?
10 - Conde Nast buys Wired: A great offline publisher buys a great online brand.
The one missing: Conde Nast buys Reddit, which might mark the gateway to the future of online publishing for traditional magazine companies. Read more on why we love that deal here.
Of all companies mentioned, I own Yahoo! stock.
Hmm… Viacom’s Chairman, Sumner Redstone essentially fired Tom Freston because Freston missed out on MySpace. Technically, News Corp.’s Chairman Rupert Murdoch gave the green light to his lieutenant Ross Levinsohn to spend what it took in the last 24 hours, whereas Redstone, we figure, kept Freston on a leash. Nonetheless, Redstone canned Freston. That says more about Redstone, we believe, than Freston.
Now that we’ve pissed off both octogenarian billionaires (technically, we doubt Mr. Murdoch even knows us), it’s interesting to note that according to Broadcasting & Cable, Viacom has decided to balk at the YouTube rival:
The idea was to create a rival to YouTube–recently purchased by Google for $1.65 billion–that could potentially feature both prominent television programming from the participating companies as well as user-generated content, thus pulling ad dollars and traction away from YouTube.
But any potential arrangement seemed tricky from the outset due to differing agendas from the potential participants. For example, News Corp.’s My Space and Viacom’s MTV Networks online properties are in direct competition.
According to reports, Disney was not part of the talks.
Hmm… sounds awfully similar to the rationale we outlined here. The reason why this never materialized is the very same reason why YouTube was allowed to piggyback on others’ content and scale so quickly, somewhat illegally, mind you…
Readwriteweb.com lists its 2007’s web predictions, though by the looks of it, they cover everything. I guess they like to hedge themselves.
Here’s some of the things we outlined back in October for what to expect in 2007 (and 2008).
Of note, nice to see they are bullish on vertical search and Internet-based TV, two things we have invested in quite a bit and positioned well for in 2007.
A few things to comment on:
- Internet TV: it will be crunch time for the networks to establish footholds online. We’re talking “put your best stuff online or don’t bother.” That means “don’t bother with lame promos, that won’t fly,” put the stuff that kids upload onto YouTube and send around. No one takes a promo of The Office for example and sends it to 10 friends, but they will take a segment of SNL they found to be funny, for example.
As a producer of video Web and Wireless content, it’s not in my interest to say this. It is in my interest for the networks and offline video content producers to remain on the sideline… but the truth is that if the networks don’t move fast, what happened to magazines and newspapers in the 1994-2003 era will happen to the TV companies in 2006-10: they will regret not embracing the Web and unleashing their content.
- RSS: I am not sure RSS will go mainstream “in a big way.” It will become more commonplace, and the RSS term might not even be considered because many websites embed it in the way they disseminate info, but the “big way” is a couple of years away.
- Search advertising: we cannot wait for Yahoo! and MSN Ad Center to take off, Google has helped marketing so much, but competition is good.
- When it comes to advertising and the CPM, CPC or CPA… I think it is important to break up the market into sub-sectors. In other words: advertisers have different objectives and each metric is used differently by various advertisers.
I don’t think yet that CPA (Cost per Action, whereby advertiser pays when a consumer makes a pre-determined action) will take off in 2007. The reason is that publishers are getting some leverage once again in terms of real estate and marketers do see a limited number of venues to get decent traffic.
We’re not saying that CPA will not become more commonplace at some point, but I think in 2007 CPC (Cost per Click, whereby advertiser pays when a consumer clicks on an ad) will level off as marketers develop better techniques and realize that not all traffic is valuable to them.
Lastly, I don’t see CPM (Cost per Thousands of Ad Impressions, whereby advertiser pays when an ad is displayed) will go anywhere because advertisers will be sending more and more money to the Web, driving prices up.
UPDATE: Nice to see we make 3 of the top 5 things MSFT’s Don Dodge says to look out for next year: online video/TV, vertical search and video search, blogs.
Booyah.
Disclaimer: I own Yahoo! shares
