Very interesting post on Valleywag about a “blogging venture capitalist’s foolhardy reliance on dubious Alexa numbers.”
I will spare a certain VC some embarassment, because it’s a large VC, an otherwise nice gentlemen that I was introduced to via a mutual friend… but indeed VCs really need to lay off Alexa.
Here’s just one reason why. By all metrics, our company’s traffic has grown. Every imaginable metric: unique users, pageviews, video streams, data downloaded, repeat users, revenue, profits (remember those?), etc.
But if a VC surfs by our network of sites and only looks at Alexa, they get a very skewed view. I have been reluctant to post this, because it’s freaking vein frankly, but in the context of “a venture capitalist’s foolhardy reliance on dubious Alexa numbers,” it’s fitting:
Look at our 1 year Alexa chart in terms of Reach (a combination of “Pageviews and Rank” we are told by Alexa). What caused that tidal wave in Q4?
Two words: HipMojo. An otherwise insignificant piece of the Mojo Supreme network. Specifically, five posts I made in Q4:
1 :: YouTube is Wildly Profitable
But both are somewhat misleading.
Our company’s main assets are the WatchMojo.com Web TV property, the MetaMojo.com vertical search network and the StreetMojo.com matching community. In other words, if you want a gauge of the value, ask yourself: are uniques, video streams, searches and profiles up?
If they are - and they are - then all is well. Here is the traffic growth according to Google Analytics, for example, in terms of people who type in WatchMojo.com and return to our sites (instead of checking it once and never returning). Our bandwidth bill has doubled every month since January, 2007, so imagine what that says about video streams…
But look and Alexa and ask yourself what gives? Well, that gives is that we also run a network of blogs, and one of them blogs, the one you are reading, has proven a tad too successful for its own good, especially - you guessed it - during a stretch of time in Q4 2006 when the following posts caught the blogosphere buzzing. Since Alexa skews favorably to the blogosphere, naturally, you see a skew.
The point, I swear there is one, is that much like crack cocaine, online audience measurement services are nice to use once in a while in the right context (obligatory disclaimer: I’m kidding of course, I don’t do drugs apart from booze, of course), but when doled out for free and abused, they can wreck lives and make people look life buffoons.
Allright, not sure if that analogy was a wise one. But you get my point: when I meet a would-be investor or buyer and I see that they rely a tad too much on Alexa, I generally fake cardiac arrest and head to the door… hopefully when my VC friend reads this, he’ll lay off Alexa and actually try to understand the business in question’s metrics some more.
Yeah, wishful thinking, I know.
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WatchMojo NewsletterSometime in 1971
Stanford’s Les Earnest creates the “finger” protocol.
December 1977
The finger protocol becomes an official standard.
January 1994
Swarthmore student Justin Hall begins compiling lists of links at his site, links.net, and continues adding to the site for 11 years.
January 1995
Early online diarist Carolyn Burke publishes her first entry for Carolyn’s Diary.
April 1997
Dave Winer launches Scripting News, which he
August 1999
Three friends who founded a San Francisco start-up called Pyra Labs create a tool called Blogger “more or less on a whim.”
January 2001
First crop of blogs nominated for the “Bloggies” award.
October 2001
First version of Movable Type content management software becomes available.
February 2003
Google acquires Pyra and its Blogger software.
May 2003
First official version of WordPress open-source blogging software released for download.
October 2003
Six Apart releases first version of its Typepad blogging service.
January 2004
Boston-based Steve Garfield launches his video blog, considered one of the first such “vlogs.”
October 2005
VeriSign buys Dave Winer’s Weblogs.com. Around the same time, AOL snaps up blog publisher Weblogs Inc.
February 2006
Veteran blogger Jason Kottke abandons his yearlong attempt to live off of micropayments through his blog.
January 2007
Members of the Media Bloggers Association are among the first bloggers to receive press credentials from a federal court.
February 2007
Freelance video blogger Josh Wolf becomes the longest-serving journalist behind bars in U.S. history, on contempt charges.
When Rupert Murdoch wakes up and checks his reports, he feels good about himself, because he owns MySpace, not your space, his space.
Background: MySpace, the Web’s largest social network, has gradually been imposing limits on the software tools that users can embed in their pages, like music and video players that also deliver advertising or enable transactions. The latest victim is Hoooka, which follows a list that includes Revver, Vidilife, and many others.
“We probably should have stopped YouTube,” Michael Barrett, chief revenue officer for Fox Interactive Media, a part of the News Corporation, said in an interview in late February. “YouTube wouldn’t exist if it wasn’t for MySpace. We’ve created companies on our back.” Of course, forget for a second that MySpace built its business off of users’ backs… but who’s keeping tabs. The point is that when Mr. Murdoch woke up and found out that Google bought YouTube for $1.6 billion, heads rolled. Things had to change. Enter this policy.
While I agree with what Fred Wilson says in this New York Times article:
Fred Wilson, a New York-based venture capitalist who invests in social media companies, said the strategy showed that the News Corporation was trying to take advantage of growing interest in widgets while also trying to carefully control what made it onto MySpace.
But that could be a dangerous strategy, Mr. Wilson said.
“Every attempt everyone has ever made to try to dictate what a person’s Internet experience will be has ended up coming up empty,” he said. “You have to accept the fact that you are never going to be the be-all and end-all of everyone’s experience. They are one click away from everyone else on the Web.”
I think that people need to wake up and smell the coffee, or tequila, I guess:
“The reason why I am so bummed out about MySpace now is because recently they have been cutting down our freedom and taking away our rights slowly,” wrote Tila Tequila, a singer who is one of MySpace’s most popular and visible users, in a blog posting over the weekend. “MySpace will now only allow you to use ‘MySpace’ things.”
Ms. Tequila, born Tila Nguyen, has attracted attention by linking to more than 1.7 million friends on her MySpace page. To promote her first album, she recently added to her MySpace page a new music player and music store, called the Hoooka, created by Indie911, a Los Angeles-based start-up company.
People, lay off the crack pipe. It’s not MySpace.org, now is it? Have you heard of News Corp. FOX? Fair and balanced?
Earlier this week, News Corp. announced that it would be launching a MySpace political channel. I am going to guess, just guess, that the views will be as fair and balanced as the propaganda you would find on FOX. And you know what, that’s fine, because News Corp. bought Intermix, kept MySpace, got rid of the non-MySpace assets and they are, as any owner is, allowed to do what they want with it.
When I read:
But Justin Goldberg, chief executive of Indie911, said MySpace’s actions undercut the notion that the social networks’ users have complete creative freedom. “We find it incredibly ironic and frustrating that a company that has built its assets on the back of its users is turning around and telling people they can’t do anything that violates terms of service,” he said.
“Why shouldn’t they call it FoxSpace? Or RupertSpace?” Mr. Goldberg said, referring to the News Corporation’s chief, Rupert Murdoch.
I think, “hmm… he does not need to, it’s already MySpace, no, not your space, his space, as in Rupert’s space, you just happen to rent the space.”
Disclosure: Mr. Murdoch was my one time indirect boss, I was employed by News Corp. for 3 months of magical bliss. We parted ways on seemingly good terms until the spineless hypocrites had their way.
When GoFish bought Bolt for $30M in a stock deal to help Bolt pay for its settlement with Universal Music, I could not help but take notice. Bolt, after all, had been around for some time, generated $7M in annual revenue and had migrated its business model from a publisher of content for teens to a user generated platform for video.
I had no real idea what GoFish was, but seeing them buy Bolt, I took a deeper look. GoFish was publicly traded, worth $100M in market value, and judging by its site, had decent traffic. Decent traffic, it turned out, was a unique user base of 9M, which made it the largest publicly traded company in the video sharing landscape.
A lightbulb went on: unlike venture funded file sharing platforms, GoFish would inevitably turn to monetizing its content, but so long as its content was mainly user generated video, it would not prove successful. This is by no means a knock against GoFish, our distribution partner now, but rather, a fact that advertisers are reluctant to advertise alongside user generated content.
I have pointed to this graph quite a bit and I think it is more and more accurate, as the market evolves and galvanizes:
Once we established contact, we realized that GoFish was seemingly well aware of this and had started to sign partnerships with a number of content producers, notably mainly online-only content producers. In other words, while YouTube was arrogantly trying to dictate the terms and rules of engagement to old media content owners, GoFish was reaching out to content owners to leverage their content through added distribution and share in the proceeds.
For the record, we will also be doing a deal with YouTube inevitably, who does not like the site? But YouTube, like Google, needs a dose of humble pie. I love and respect both Google and YouTube, but come on people, is something like this normal?
It’s a shame, but YouTube has been slow, not just with us, with everyone in the space, and despite being a part of Google, there’s nothing that guarantees that long term, they will remain atop the video space.
They don’t own the content, obviously, so there’s nothing all that defensible about the position, if you really think about it. I do think that the market for new, second-tier file sharing video sites is done and oversaturated, but amongst the companies atop the broad landscape, a lot can change over the next few years. Imagine if slowly but surely, a company like GoFish were to sign 1000 deals with content producers and all you found alternatively on YouTube was the stereotypical user generated clips and notices saying that “this video has been taken down,” where would you go?
Where would you go indeed! I have always maintained my desire and goal to make WatchMojo.com the best TV station on the Web. But like any content producer, added distribution is welcome. You can read more about the partnership here.
To us, the logic is pretty obvious:
We rather keep videos on WatchMojo.com “clean,” ie. no prerolls, and no ads within the video, but on distribution/syndication partner sites like GoFish, it’s a nice hybrid model: we get added distribution, branding, free marketing and we can monetize it through their 9M US uniques and 17M global uniques.
GoFish gets content they would not otherwise get. We have 4,000 videos on our site, we get 200,000+ unique users on our site, we have started to monetize the traffic via good old fashion display banners etc.
When we put our videos on YouTube, it’s only a promotional tool, so we will put a couple of hundred clips. Last year our videos generated 1M streams on WatchMojo.com, but on Google Video and YouTube Video alone, they generated 2M video streams. Now imagine if we had 1000s of videos, and not 100s… we could have generated 3, 4 or 5M streams easily.
If we had a revenue deal in place with YouTube, which we are getting closer to having, we’d have an incentive to do so. GoFish seems to be taking the lead in striking deals, and that is good for the company.
Of course, if I had a market cap of $100M and a trailing 12-month P/S of 2,850, I’d be looking for ways to monetize the traffic as well… the Bolt acquisition was shrewd, as it put the network’s traffic at 9M in the US and 17M globally, and deals like ours will help GoFish monetize the traffic at a faster clip than the market will expect them to. And in investing, it’s always about being ahead of the market’s expectations… so GoFish gets a lot of credit for realizing that.
I’ll keep you informed of the GoFish deal and link the channels as they go live, and I’ll also unveil new partnerships as we complete and announce them.
