Filed under: ONLINE SERVICES/INTERACTIVE MEDIA
ONLINE SERVICES/INTERACTIVE MEDIA
Big media and Internet companies are driving up the valuations of social networks like MySpace and Facebook. “But that does not mean there is a working revenue model,” according to The Economist. Social networking will become “ubiquitous” and may “never make oodles of money.” (Iwantmedia 3/20, http://www.economist.com/business/displaystory.cfm?story_id=10880936 3/19)
When AOL bought Bebo for $850 million last week, CEO Randy Falco and COO Ron Grant believed the social network would help save AOL from its downward spiral. Social networks are where pageviews are generated these days, and AOL’s own attempt to turn AOL Instant Messenger into one (via Aim Pages) was a dud on arrival. Bebo, with 22.9 million unique visitors in February and 10.3 billion pageviews (per comScore), was growing and it was for sale. Even though AOL is trying to transform itself into an advertising network, it makes much higher margins on the ads it places on its own pages. The formula for its business is pretty simple: Unique visitors X page views = advertising inventory. If social networks are the future of the Web, AOL needed to own one. But was Bebo the right one, and did AOL pay too much for it? Those are questions that other AOL executives below Falco and Grant are asking themselves, reports Silicon Alley Insider. (http://www.techcrunch.com/2008/03/20/smelling-trouble-behind-aols-850-million-bebo-deal 3/20)
Facebook has taken steps to limit application spam numerous times in the past. One of the recent steps they took was to specifically limit the number of daily invitations that users could send out to others – going from a hard cap of 20/day to a variable rate that takes into account the rate of declines by recipients. All of these steps are designed to limit the barrage of messages that the average Facebook user gets asking them to add applications. The details of the rules seem fairly trivial, but they have a big impact on the third party developers trying to build a business on Facebook. (http://www.techcrunch.com/2008/03/19/facebook-playing-favorites-with-app-developers 3/19)
In addition to launching subscription-based, kid safe browser Kidzui, Howard Schultz has Starbucks getting into the social networking craze as well. mystarbucks.com is a place where customers can leave their two cents about what they’d like to see changed in their favorite stores. (Cynopsis, 3/20)
3D avatar creator Big Stage is powering a UGV application to promote Sony BMG’s re-release of Michael Jackson’ Thriller. Users can create a photo-realistic avatar of themselves and insert it into the epic Thriller video. Registration is required to play along. (Cynopsis, 3/20)
YouTube co-founder Steve Chen says his video site is not about to help kill off television just yet. “You’re not going to watch a two-hour movie” on a computer screen, he says. Also, YouTube plans to tap into owner Google’s search experience to ensure users find more “customized” content. ((Iwantmedia 3/20, http://www.news.com.au/heraldsun/story/0,21985,23406756-5005961,00.html 3/20)
In lieu of the lack of embedding capabilities for its On Demand player, CBSSports.com users will be able to create NCAA highlight mash-ups choosing from a collection of memorable moments. (Cynopsis, 3/20)
Apple’s iTunes is issuing credits to its Season Pass subscribers for TV episodes unavailable because of the writers’ strike. Subscribers also will get two credits they can use for any iTunes content. (The Hollywood Reporter 3/20)
VC investment in web 2.0 companies reached a record $3.34 billion in 2007 led by Microsoft’s $300 million injection into Facebook, according to a report from Dow Jones VentureSource referenced by RedHerring. In terms of the number of deals, the market is actually cooling off a bit. The number of web 2.0 deals has doubled every year from 2002 to 2006 but only increased by 25% last year to 178. (Cynopsis, 3/20)
Venture capital activity in blogs, social networks and other Web 2.0 companies may be peaking, says a report by Dow Jones VentureSource. The pace of deal flow is slowing. “2008 may be a make-or-break year for many Internet companies with business models relying on advertising.” (Iwantmedia 3/20, http://www.news.com/8301-10784_3-9896632-7.html 3/18)
Federated Media, the advertising network serving hundreds of blogs and other Web sites, is said to be close to raising a $30 million round at a $200 million pre-money valuation. Federated is founded by John Battelle, the founder of Industry Standard and cofounder of Wired magazine. (Iwantmedia 3/20, http://venturebeat.com/2008/03/19/ad-newtork-federated-media-close-to-raising-30m-round-valued-at-200m 3/19)
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