Dec. 22, '04] PaidContent.org News Day: More On Slate Sale; eHarmony Gets $110 Million From VCs; Not The End Of Free

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Rafat Ali


PaidContent.org Newswire: [Dec. 22,2004]

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And I thought yesterday's issue was full. -- Staci D. Kramer, Executive Editor

HEADLINES
------------------------------------------------------------
-- Slate Sale: Audio: Cliff Sloan, WPNI
-- Slate Sale: Interview: Scott Moore, Microsoft
-- More On WaPo Purchase Of Slate
-- Myers: Online Spending Will Jump 30% in '05
-- Not The End Of Free After All
-- eHarmony Nabs $110 Million In VC Funds
-- Loudeye Raises $25.2 Million By Selling Equity
-- Fastclick Files For IPO
-- HMV, Microsoft Team Up For Digital Music Service
-- BlingTones Announces First Wireless Music Label
-- From MoCoNews: Revenue Assurance for Mobile Content
-- Buzz Machine Tops Sorgatz's List For Blog Of The Year
-- eBay Exec Arrested in India Allowed Out On Bail
-- Industry Moves: ECNext Inc. Promotes Pamela Springer To President, CEO

Slate Sale: Audio: Cliff Sloan, WPNI: In theory, Slate, which stuck out like the proverbial sore thumb at tech powerhouse Microsoft,is a natural fit for the Washington Post Company -- a premium property that adds dimension in content and ad avails to a choked inventory. As the new publisher of Slate effective sometime in mid-January,Cliff Sloan will be responsible for translating that theory into reality. Currently VP-business development and general copunsel for WPNI,Sloan will keep those titles and responsibilities but,as he told Executive Editor Staci D. Kramer by phone after the sale was announced,Slate will be at the top of the list.
The 17-minute interview audio can be downloaded as an .mp3(16.7 megs) and in Ogg Vorbis (3.5 megs). Here are some excerpts:
-- "Day one,the Slate user won't notice anything different about the site."
-- Sloan says Slate,which tried,then pulled back from a subscription model,will remain open access but won't rule going to registration like WashingtonPost.com in the future. "We certainly aren't contemplating any changes in Slate on the horizon. We want to keep it as an open site and we want to further improve the impressive audience." But,he adds,"Issues like that are always open."
-- "We're going to be very closely integrated on the business side; on the journalism side,completely independent."
-- The WPNI sales team will sell all three sites (washingtonpost.com,Slate and Newsweek.com) but advertisers will be able to buy just one or a mix.
-- "There can be a fallacy in looking at web sites in isolation from the broader media world,whether in terms of isolation on the journalistic side or on the business side. Slate is not just a great online magazine -- which it is -- it's a great magazine. Period. And we see Slate not just as a very attractive online only business -- which it is -- but as an attractive media opportunity."
-- Down the line the three sites may find ways to share their editorial but there are no plans for a common site or common front page that would pool all three. [Dec.22: Link] | Advertising |Biz/Fin |Magazines |Microsoft |Newspapers | [by staci]

-- Slate Sale: Interview: Scott Moore, Microsoft: Scott Moore, general manager of MSN Network Experience and former publisher of Slate, compares selling the online magazine to the Washington Post Company to watching a daughter go down the aisle to marry a handsome man – a burst of joy for the future and a dash of sorrow for the separation about to begin.
As he headed from Redmond into Seattle after the sale was announced, Moore spoke with Executive Editor Staci D. Kramer about the reasons for selling Slate and about MSN's future. No audio because of a recording glitch but here are a few of the highlights:
-- Moore dismisses the notion that the sale of Slate means Microsoft-NBC joint venture MSNBC.com and MSNBC is next. "I think that's a misperception. MSNBC is a very different animal than Slate, a huge interest category, a general news offering. Slate is a bit of a niche publication notwithstanding a monthly audience of 5 million."
-- Beyond that, Moore says MSN continues "to be committed to online content building." In fact, the portal is in the process of expanding its original content, starting with health and travel. MSN Money, being rebranded with CNBC Money content.
-- For Microsoft, says Moore, the goal in selling Slate wasn't merely to find a buyer -- it was to find the right buyer. The Washington Post Company, already working with Slate sibling MSNBC.com and rumored to be the most likely candidate, was an early favorite. "We thought it was a company that would maintain Slate's high-quality and journalistic standards and would appreciate the quality of the Slate brand."
-- MSN tried selling Slate a number of ways but never quite cracked the nut; it was just too different from its other content channels. Says Moore, "Slate is a tricky ad sale no matter how you slice it. it's a provocative publication, one that appeals to a desirable demographic but one reachable through other means besides Slate."
-- Moore sees a possibility for some organic growth but says the site has hovered pretty consistently between four and five million uniques a month.
-- As for maintaining its current editorial mentality – the one that scares off some advertisers, Moore says, "It better not change. I'll be seriously disappointed if Slate loses its edge." [Dec.22: Link] | Advertising |Biz/Fin |Magazines |Microsoft |Newspapers | [by staci]

-- More On WaPo Purchase Of Slate: Based on my most conservative estimate, Microsoft isn't close to being made whole when it comes to selling Slate. I'm hearing Slate sold for somewhere in the $15-20 million range -- just half or slightly less than half of the estimated $40 million-plus Microsoft put into it over its eight-and-a-half-year lifetime. That's pretty small compared to the per-annum burn rate for other Internet efforts or the amounts Microsoft has sunk into failed projects.
But Slate is far from a failure. It's a survivor that made it through the lean years thanks to a supportive parent and a lean mentality. It cost Microsoft a small bundle but it has either operated in the black or broken even in recent times -- and the media brand created from scratch brought its parent a kind of cachet and a lot of publicity. It gave the MSN portal sorely needed content in its early days and will continue to contribute to higher-end demographics under a multi-year distribution agreement.
-- Staci D. Kramer [Dec.21: Link] | Microsoft | [by staci]

-- Myers: Online Spending Will Jump 30% in '05: Ad maven Jack Myers predicts 30 percent growth for 2005, likening current online ad sales to "the late 1990s when the industry was emerging from a virtually non-existent base and was gaining legitimacy." (His forecasts are based on proprietary analysis of the Myers Advertising Confidence Index survey of ad executives.) In his final Jack Myers Reports of 2004, Myers writes:
"after several years of testing, most major national advertisers are now shifting budgets from website development, research & development, and IT infrastructure into marketing budgets targeted to online media, including search engine and behavioral targeting. Search engine growth will slow slightly to 25 to 30 percent, but even traditional banner and pop-up ads will experience 20 to 25 percent increases."
-- Popularly branded online content will generate the greatest share of online revenue growth in 2005.
-- the continued increase in broadband penetration will help provide up to a 40-percent boost in online video advertising and content sponsorships.
-- Yahoo, AOL and MSN will benefit from a significant share of these more targeted broadband revenues, but their "traditional" online advertising will be under 20 percent.
-- Advertisers will shift more funds to established media sites.
The numbers sound impressive but, as the detailed chart accompanying the report illustrates, the percentages are huge because online has so far to go. In 2004, Myers estimates that online advertising grew 25 percent but accounted for only 4.3 percent of the ad spending pie. For 2005, he projects 30 percent growth for 5.3 percent of the total. [Dec.22: Link] | Advertising | [by staci]

-- Not The End Of Free After All: So much for the death of free content. The Online Journal's Carl Bialik writes of ways that free content has taken root or is increasing buoyed by the surge in online advertising and by evolving strategies. "End of Free" blogger Oliver Travers tells Bialik, "Free is certainly making a huge comeback these last 12 to 18 months."
Bialik notes that a number of news organizations were pushing the "end of free" message in the post-bubble-burst era. In a nice touch, he includes the Journal, which ran two special reports in early 2002 "casting doubt on the business plans of ad-supported Web sites, with one lead article headlined 'No More Free Lunch' and another stating, 'The Web as store is a hit. The Web as billboard is a flop.'
So much for sweeping prognostication. Today, free content is often mixed with paid content in some way. For instance, the link to this story is free, part of the Journal's effort to draw in new readers by offering a public link that might get a lot of blog play. The Journal is about to be joined in the Dow Jones family by CBS Marketwatch, a mostly free service that also sells subscriptions to newsletters and data.
Some people believe strongly that all of it should be free; others are still into putting up walls. It doesn't have to be either or and, in many cases, it shouldn't be. Exclusive clubs create buzz. Exclusive sites don't. There's nothing wrong with mixing free content -- which of course isn't free to produce -- and some premium content available only to subscribers. [Dec.22: Link] | Broadband | [by staci]

-- eHarmony Nabs $110 Million In VC Funds: Two Silicon Valley VC firms -- Sequoia Capital and Technology Crossover Ventures -- are banking $110 million on online matchmaker eHarmony's future in one of the four largest VC deals of the year. (TCV was involved in the TechTarget funding we reported on yesterday.) This is a real head scratcher. As Jupiter Research analyst Nate Elliott told the Mercury News, "That's a shocking amount of money to give to this company. ... They're doing well by all accounts, but they don't own the market by any stretch." In context, the entire online personals category is estimated to be about $450 million a year.
That market has been showing signs of slowing -- online personals spending had a growth rate of 4 percent for 2Q04 second quarter, compared to 60 percent in 2Q03 and 376 percent in 2Q04, the Merc reports using data from the Online Publishers Association and ComScore Networks.
But eHarmony claims to be profitable with almost 5.8 million registered users with sales in November up 264 percent from lastr year same time.
Related -- TechTarget's Acquisition Piggy Bank Just Got Fatter [Dec.22: Link] | Biz/Fin | [by staci]

-- Loudeye Raises $25.2 Million By Selling Equity: Loudeye has agreed to sell "certain insitutional investors" 16.8 million shares of common stock together with stock warrants covering approximately 5.0 million shares for $25.2 million toward working capital and the all-inclusive "general corporate purposes." [Dec.22: Link] | Biz/Fin | [by staci]

-- Fastclick Files For IPO: Online advertising and services company Fastclick filed with the SEC today for an IPO that could raise as much as $92 million for "general corporate purposes." The company reported $3.3 million in net income on $39 million for the first nine months of the year. Reuters reports that Credit Suisse First Boston and Citigroup would be the lead underwriters. The NASDAQ symbol would be FSTC. [Dec.22: Link] | Biz/Fin | [by staci]

-- HMV, Microsoft Team Up For Digital Music Service: HMV will invest around £10 million ($19.2 million)in a digital music service based on Microsoft software and slated to launch in the second half of 2005. (Press release.)Microsoft will develop a customized all-in-one "digital jukebox" based on WMA that mixes library management, downloads and listening. HMV will sell compatible portable players in its network of 200 stores; a la competitor Virgin's Virgin Digital, the software will be available online and in the store.
In the HMV press release, a Microsoft exec refers to the project as "leading edge" but from here it looks like HMV is reserving its seats at the party a tad late with Virgin's service well underway, although still in beta, and Tesco's holiday push for its own Tesco Downloads service.
Related -- Virgin Digital Goes Retail [Dec.22: Link] | E-commerce |Micropayments |Microsoft |Music | [by staci]

-- BlingTones Announces First Wireless Music Label: Actually, BlingTones, the hip-hop ringtones division of Lagardere Active, announced it was forming the "first wireless record label" but I'm having trouble wrapping my mind around the idea of a wireless record. Time to leave the old terminology behind.
The label has signed some high-profile hip-hop producer/artists to create 30-second pieces of new music that will be available only theough BlingTones. Among those who've signed on: Q-Tip, Rockwilder (Missy Elliot, Jay-Z, DMX), Denuan Porter (50 Cent, Eminem), Salaam Remi (Nas), Hi-Tek (Talib Kweli, Snoop Dogg).
BlingTones has carriage deals with Sprint, Cingular/ATTW, Nextel, and Boost Mobile.
BlingTones is also launching BlingPix -- exclusive screen savers/wallpaper with urban themes.: next up: signing comedians to create original content for ringtones and ringbacks.(You wouldn't be able to play the Chris Rock version in public.) [Dec.22: Link] | Music | [by staci]

-- From MoCoNews: Revenue Assurance for Mobile Content : MoCoNews colleague James Pearce pulls important points out of a look at mobile content revenue by Billing World & OSS Today. Among them:
"If subscribers purchase content, how long do they own it? And, as subscribers change their handsets, how do you migrate the content from one handset to another? What are the digital rights to the content in this instance?" [Dec.22: Link] | Wireless | [by staci]

-- Buzz Machine Tops Sorgatz's List For Blog Of The Year: "For being a spokesman against cultural censorship, Buzz Machine is my blog of the year." Sure, it's just one among many such lists or #1 claims but Rex Sorgatz does it so well. (This is where I should mention that paidContent is #15 on the list of 26 "for scouring a wide range of topics between business and technology." Thanks, Rex.)Of course, this is the same guy who predicted President Howard Dean when he put the Dean campaign blog at the top of last year's list.
He kicks off the list with a forceful argument about why 2004 was not "the year of the blog" -- "this was the year blogs grew up."
I've been avoiding Time magazine's version naming Powerline as number one, not because I disagree with the choice -- which I do -- but because it's only available online to subscribers. I think Time's strategy of making its archives and much of its magazine content available free to subscribers but not to everyone else makes business sense. But even though I'm a Time subscriber (we still get all three newsweeklies)and can access it myself, I think Time is making a mind-numbing mistake when it runs a high-profile story about blogging and walls it off -- I'd have no problem if Time made it available to subs first for a limited time. This was not a major subscription opportunity -- it was a major marketing test and Time is failing.
Time gets points for putting the whole archive online (even though I can't produce a complete list of my own Time contributions); demerits for a Pyrrhic policy. [Dec.22: Link] | Nanopublishing | [by staci]

-- eBay Exec Arrested in India Allowed Out On Bail: Avnish Bajaj, the Indian-born American who founded and sold to eBay the division he now runs, has been released on bail but the furor isn't close to dying down. Bajaj heads Baazee.com, the Indian auction site where a video clip of two minors having oral sex was offered for sale. News about the clip and the minors' behavior has created a social storm within India. The arrest -- using an ambiguous law for an item that wasn't actually on the site and a listing that was removed quickly -- made it international and the province of diplomats. eBay execs are threatening to reconsider doing business in India and other companies are spooked. [Dec.21: Link] | E-commerce | [by staci]

-- Industry Moves: ECNext Inc. Promotes Pamela Springer To President, CEO : ECNext Inc., which provides marketing, sales and distribution for online commercial content, promoted Springer to president from VP-sales suceeding Chris Skudder. Columbus Business First reports that the promotion actually was made Dec. 6 even though it was announced today. No press release on Skudder's departure.just announced it today.
Springer joined the company in March 2003 and is credited with increasing the customer sales base by more than 150 percent per quarter for the past six consecutive quarters. [Dec.21: Link] | E-commerce |Industry Moves |Micropayments | [by staci]

-------------------------------------------------------------
Classified Listings
The Digital Media Jobs Blog, covering, what else, jobs in the digital media sector
-- Audible, Online Editorial Director
-- m-Qube, Executive Producer - Online Merchanding Superstar
-- m-Qube, Sales Operations Manager - Mobile Content/Apps.
-- NewsBank, Online Marketing Manager
-- NPR, Director, Digital Media
-- Microsoft, Senior Product Planner, New Consumer Products:
-- Warner Bros. Online Inc., VP -- Wireless
-- Audible, Director of Marketing/Customer Aquisition
-- NPR Online, Marketing, Analyst
-- IDT, Content Architect
-- BroadBand HR Consulting: Mobile Content Business Alliance Developer
-- <
>edweek.org, Executive Producer
-- FOLIOfn, VP Marketing -- Online Brokerage
-- Boonty, Video Game Scout
-- Tribune, Knight Ridder Washington Operation: GM, Tech Manager, Sales Manager

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Classified Jobs

The Digital Media Jobs Blog, covering, what else, jobs in the digital media sector
-- Audible, Online Editorial Director
-- m-Qube, Executive Producer - Online Merchanding Superstar
-- m-Qube, Sales Operations Manager - Mobile Content/Apps.
-- NewsBank, Online Marketing Manager
-- NPR, Director, Digital Media
-- Microsoft, Senior Product Planner, New Consumer Products:
-- Warner Bros. Online Inc., VP -- Wireless
-- Audible, Director of Marketing/Customer Aquisition
-- NPR Online, Marketing, Analyst
-- IDT, Content Architect
-- BroadBand HR Consulting: Mobile Content Business Alliance Developer
-- <
>edweek.org, Executive Producer
-- FOLIOfn, VP Marketing -- Online Brokerage
-- Boonty, Video Game Scout
-- Tribune, Knight Ridder Washington Operation: GM, Tech Manager, Sales Manager

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-- Microsoft Sells Slate To Washington Post
-- What Diller Puts Together He Can -- And Will -- Tear Asunder
-- TechTarget's Acquisition Piggy Bank Just Got Fatter
-- BBCi Drops Sites, Cuts Budget Again
-- California Decides Newspaper Vs. Web Is Distinction Without A Difference
-- Musiwave Signs With All Four Global Music Companies To Deliver Mobile Downloads
-- Snocap's Shawn Fanning Disputes Contention That People Won't Pay For Content
-- Subscription Services Are Better Business Than Downloads
-- Gaming Google AdWords
-- 'Content value is exploding in electronic form'
-- The Many Faces of Google
--------------

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