Exactly a month ago we published this press release to recap Q1, and in it mentioned that we had 1,300 clips up on YouTube. Today we added our 1,500th clip.
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WatchMojo NewsletterIn my mind, print media will have to be free. I covered the reasons last year here. It’s thus interesting to read this: Newspapers likely to be free in the future: survey.
The report, conducted by Zogby International for the World Editors Forum and Reuters, revealed that newspaper editors were still optimistic about the future of their publications but believed they would have to adapt further for the digital age.
Some 86 percent of respondents believed newsrooms should become more integrated with digital services as two in three believe the most common form of news consumption will be via electronic media such as online or mobiles within a decade.
“For these editors the future is self-evident and our survey shows that they see the writing on the newsroom wall,” said pollster John Zogby.
“The evolution of the 4th Estate is no longer questions of if, when or how. Editors now know the solution: Innovate. Integrate. Or perish.”
According to the survey, 56 percent of respondents believed that the majority of news, be it via print or online, would be free in the future.
That was up from 48 percent who answered yes a year ago.
read more here on our piece from last year and examine why online video remains print media’s best bet for growth here and here. First link is meatier, second link outlines / summarizes the key rationale.
Hearing about Metacafe’s founders leaving and Google’s CEO Eric Schmidt admitting that it does not know how to make money off YouTube, I realized how random success is, in business in general and online video in particular.
I like to think that as a content producer, we have a business model that makes sense, and the signs are that indeed, it does make sense. But to be perfectly truthful, I wonder if this was exactly what I envisioned in January 2006 when we launched WatchMojo.com and while the broad strategy is the same, I’d be lying if I said everything has gone according to plan.
What is more impressive is that apart from YouTube, online video is a cemetery of VCs attempts to profit from online video but persistently missing the target. Revver and Grouper (renamed Crackle) are the other two notable exits: Revver was a bit of a disaster for the VCs, who invested $13M but got $4M out. It’s now part of Brad Universe’s Live Universe. Grouper sold to SONY for $65M. It is trying different things, starting with a rename to Crackle. That is in the aggregation/distribution space, the CDN, CMS and hardware segments will fare off pretty bad, I think, because many companies were just way too early and got costs ahead of themselves: look at Akimbo, who after $47M of funding is more clueless than ever. Do we need more boxes people?
Of course, the video landscape is very broad, let’s look at YouTube peers alone (we syndicate our clips to all of these players so we want them to do well in the trenches, but some of these companies will ultimately be left for dead in the trenches by those holding the purses):
Metacafe launched as early as 2003, two full years before YouTube, but it fails to gain traction. Metacafe oddly enough continues to focus on oddball and goofy UGC… even though everyone has left that ship, including two of the company’s three founders.
Vimeo made the classic textbook mistake of going niche and highfalutin. Vimeo was founded by Connected Ventures, the guys behind CollegeHumor.com, who incidentally also launched CampusHook.com before Facebook/MySpace but failed to focus on that. If you think about it that way, CampusHook.com was a MySpace for the Facebook crowd, and Vimeo could have been YouTube. Ultimately, Connected Ventures sold 51% to IAC for $10M, valuing the whole shebang at $20M. Not too shabby, but not FU money, either.
Revver interestingly had the pay model down early on, but thy totally mishandled the method by going CPC. Performance based advertising methods don’t work with video.
If you want the bong-in-hand reason, it’s simple: search captures intent whereas entertainment captures interest. Interest is for branding advertisers, search for performance based one.
If you want the consumer behavior reason, it’s simple: when you read an article, your hands are on the mouse, trigger happy to click on a link, any link. When you watch a video, you lean back… lean back… and your hands are off the mouse.
Revver even has the best URL taxonomy, who, for example, would think that this URL
http://www.youtube.com/watch?v=VQM0OTVcPlw
is better than this URL?
http://revver.com/video/853637/travel-guide-finlands-wilderness/
Yeah, pretty odd. Mind you, YouTube’s SEO mojo has little to do with its URLs and more with the fact that it had all of the videos in the world that you could ask for.
YouTube proved that the saying “it’s easier to ask for forgiveness than it is to ask for permission” is deadly accurate.
Break.com is already an asset of Lions Gate. They own a right to buy the company outright, which makes them a bit of a moot player in this rundown.
Veoh’s got the big name media backer: Michael Eisner. Heck, it even has the media and entertainment-oriented venture capital group, Spark Capital. Yet as much as I like Veoh and praise its recent growth, Veoh, I doubt, will exit via a grand slam sale.
There’s also Daily Motion. Daily Motion is also one of those sites that changes tactics and strategy, and I would too, if I had a decent sized audience and lots of content, even though a lot of the content is questionable in quality or too racy for advertisers to like. I can see a media company like Lagardere buying Daily Motion… not because they have to or need to, but because big companies do that: they make big random bets that leave many to scratch their heads but at least shift the focus away from not doing enough to trying to make sense of why they are doing to what they are doing. Mind you, maybe Vivendi will buy them. Why do I think a French company will buy Daily Motion, frankly, because I can see strings being pulled to get some VCs some liquidity.
The video market is odd, I tell you. A lot of sites have decent traffic but they have no clue what to do with it or how to make money. The only way, it seems, is raising more money to lock in a valuation. Then again, with Metacafe asking the two founders to leave and only giving them $5M for their 5% stake, that means even internally, the Board does not see much value in the company, which is a bad message to send out.
When YouTube got bought out by Google, Guba’s CEO all but tossed in the towel. The game was over, he argued. He left Guba shortly thereafter.
I think if you are an independent player in the aggregation/syndication space, you have to start looking for dance partners, and you have to do that soon.
Thankfully, MySpace TV is a unit of Fox Interactive Media and News Corp., so it can adopt a long-term strategy in building an entertainment hub.
Hulu is another News Corp. joint… a joint venture with NBC Universal. I think I know what Hulu’s purpose and raison d’etre is. That is coming in a separate post.
There are new players coming in this space, the How To space is crowded… that requires a stand alone piece, too.
This begs the question: in one year’s time, who will remain standing when video advertising starts to scale and marketers continue to flock to quality content and the audience/eyeball is valuable in itself argument fizzles alongside the soaring cost of serving and hosting crappy videos and undesirable content?
Ah Playboy. First, let’s examine the stats, from Paid Content:
Playboy Enterprises reported a Q1 net loss of $3.1 million, or $0.09 per basic and diluted share, compared to net income of $5.1 million last year. Revenues were also down, dropping 8 percent to $78.5 million.
(…)
Even online revenues, typically a bright spot for most publishers, performed poorly, falling 3 percent to $15.2 million, as gains in e-commerce, advertising and mobile revenues could not offset lower pay site revenues.
That’s pathetic. Playboy has wonderful advertiser relationships but it will continue to underperform in online ad revenues so long as it keeps a paid site model strategy. Given the nudity factor, they have no choice. This is why I never, ever understood why Playboy did not buy my old company AskMen.
AskMen was a free, ad-supported site that otherwise matched the content quite well. I wrote a lot of content in lifestyle, entertainment and business, but the site’s core categories were dating and sexuality.
So apart from having no nudity, it was pretty much in the same vein with regards to producing lad mag content interested in T&A.
AskMen was a carbon copy of Maxim, but while Maxim made every wrong move imaginable initially, it eventually decided to give online a go. Of course, by the time they tried to correct the ship, it was too late. But Maxim could at least say “we’ll compete with AskMen and put in resources in a free site”, Playboy, by remaining a largely paid site, seems to have dropped the ball altogether when it comes to the digital opportunity.
Had Playboy bought AskMen, then it could have embraced a dual strategy for the ages:
- keep the more risque and admittedly adult stuff behind paid walls at Playboy.com, generating consistent subscription revenues.
- maintain a less risque and free, ad-supported site at AskMen.co, to generate advertising revenue.
Incidentally, AskMen was third in the 18-24 age segment, following IGN and Gamespy, both owned by IGN Entertainment.
There’s a reason why traditional media is lagging online, they a) don’t get it or b) are too slow.
IGN, founded by Mark Jung, got the importance of locking up the men’s 18-24 demo. So unlike Playboy that thought it was too good for us at AskMen, IGN engaged us and sought to acquire us.
Incidentally, my CEO at AskMen was low-balled by IGN CEO Mark Jung and we ultimately accepted the $13.5M deal, which is peanuts when you realize that in the men’s lifestyle space, AskMen at one time had more reach than Maxim, Esquire, GQ and Playboy combined!
In a financial engineering case study I will never forget: IGN paid a whopping 12x EBITDA (yet itself sold IGN for 40 times EBITDA to News Corp. just six months later)…
So bottom line: Playboy could have had AskMen for a mere $15M. By my estimates, leveraging the IGN/Fox Interactive Media world class sales machine, AskMen today makes $10M-$20M per annum. That might not be enormous to News Corp. who is gunning for $1B in annual revenues from digital assets, but if you are Playboy and 2007 financials are as follows:
- total revenues are $350M,
- EBITDA of $20M
- but you have a market cap of $250M…
You have to wonder how many other balls they have dropped.
Fantastic brand, fantastic company… not sure they have a place in the 21st century. After all, you might have noticed, there’s no shortage of eye candy online.
