www.dpingram.com

Rachel Rosmarin, 06.29.06, 12:00 PM ET - If you haven’t yet directed your Web browser to MySpace.com or a site of its ilk, you’re late to a very crowded party. More than 70 million Americans visited a social networking site in April, according to Nielsen NetRatings–that’s nearly half of the U.S. Internet audience.

These sites, which consist of blank profile canvases that users personalize and then share with friends and strangers, are poised to carry the tech sector through a sustained boom. There’s money and eyeballs coming at these sites from all directions, but because there isn’t much money flowing back out again, some wonder whether we’re in for another bubble.

Both big corporations and tiny startups are trying to capitalize on the social networking trend, but neither camp has demonstrated a surefire business model.Click here to see how MySpace stacks up to other social networking sites.
http://www.forbes.com/2006/06/22/cx_rr_0622socialnetworkslide.html?thisSpeed=35000′,800,600

In order to make their community sites pay off big, major Internet companies like Google (nasdaq: GOOG - news - people ) and Yahoo! (nasdaq: YHOO - news - people ) need to strike a profitable balance between subscriptions and advertising. Each one of them has a blogging-style offering, but none of them stand out like News Corp.’s (nyse: NWS - news - people ) MySpace. But even MySpace remains an unproven $580 million investment by for Rupert Murdoch. In order to make his money back quickly, the News Corp. chief executive may have to hook up with Google or Yahoo! for advertising inventory that he can present to MySpace’s 51 million monthly visitors.

Tiny companies in the social-networking business face a different business challenge than their established counterparts: Survive the first couple years on venture funding, then sell out to a bigger player. The VCs are game–more than $824 million has been funneled into social networking companies since 2001, according to Dow Jones’ VentureOne. Of that, $255 million was invested in the first half of 2006 alone.

MySpace worked this system expertly, and now Facebook seems primed for a buyout. After several rounds of funding worth $38.3 million, on June 20 advertising conglomerate Interpublic Group (nyse: IPG - news - people ) purchased a 0.5% stake in the company for an undisclosed amount, but simultaneously bought $10 million worth of ads on the site. Were that an actual equity purchase, Facebook would be worth $2 billion. In reality, the site is valued at far less than that–likely around $600 million.

Upstart or corporate powerhouse alike, the biggest risk to all social-networking players is the flighty, unpredictable behavior of Internet users. Nobody can quite tell how long each affair is expected to last. A very short history tells us that if there isn’t enough happening at a site to keep visitors entertained, even a hugely popular site like Friendster–which skyrocketed to more than a million visitors per month during the fall of 2003–can lose steam quickly.

In an attempt to keep visitors hanging around, many of these companies are bringing entertainment, such as videos, music clips, blogs, and instant messaging into their sites. This has created a burgeoning secondary economy of shareable content providers like YouTube, which powers videos, and PhotoBucket, which hosts images.

So far, the visitors are staying put, and more are on the way. The top ten social-networking sites, including MySpace, Blogger and Classmates.com, grew 47 between last April and now, according to Nielsen NetRatings.

But some are already beginning to sense a social-networking site backlash. Internet artist and blogger Sean Bonner has created anti-social networking gag site Isolatr. Catchy Web 2.0 tagline: “Helping you find where other people aren’t.”Click here to see how MySpace stacks up to other social networking sites.

OA: http://www.forbes.com/technology/2006/06/29/myspace-network-facebook_cx_rr_0629socialnetwork.html

One year after landmark Grokster decision, file-sharing continues to grow, By John Boudreau
A year after the Supreme Court’s landmark Grokster decision — which set out to curb online theft of music and movies — illegal-file sharing is as popular as ever even as Silicon Valley technologists and Hollywood moguls continue their awkward embrace. The court’s unanimous decision that Internet file-sharing services can be sued if they encourage people to use their sophisticated software to steal copyrighted material was hailed as a victory by the entertainment world. But the ruling, which also detailed protections for technology companies, hasn’t stopped the lawsuits and acrimony between the two sides. The Recording Industry Association of America (RIAA) continues to file lawsuits against tech companies. And in just the last year, the association has filed some 6,000 suits against individuals it says are stealing material.

But changes are occurring, if for no other reason than the entertainment world needs the new distribution channels Silicon Valley can provide, while technology companies depend on content from rock stars and Hollywood to attract audiences.

“There are some people inside of record labels who admit that they are not doing the right thing in certain cases. There is some resistance” to the digital era, said Ali Aydar, the first employee of Napster, the pioneering peer-to-peer music sharing network that eventually went bankrupt after battling the record industry. (A different incarnation of the formerly Redwood City-based Napster was launched in 2003 as a music subscription service.)
Aydar now works with Napster’s co-founder Shawn Fanning at Snocap, a San Francisco company that has developed a technology to make file-sharing legal.

“But if you are able to show them how you can make them money, increase their exposure and respect their copyrights, then it’s really a no brainer,” he added.

Steve Jobs helped lead the way in showing a successful model of selling digital music through Apple Computer’s popular iTunes online store, then sealing deals with entertainment companies to offer up TV shows. Hollywood has started to offer video through its own online sites. And the industry has even found a common cause with file-sharing technology: In the spring, Warner Bros. agreed to offer video through BitTorrent, the San Francisco-based peer-to-peer technology company whose software code has been used by pirates to illegally trade movies and music. “It was never BitTorrent’s intent to circumvent copyrights,” said Ashwin Navin, president of BitTorrent. “That made us a partner, rather than an enemy.”

These early deals with Internet companies do not mean the entertainment industry has abandoned using its courtroom muscle as a weapon. Other file-sharing services have shut down since the Supreme Court’s MGM vs. Grokster ruling. And the recording industry recently filed a lawsuit against XM Satellite Radio over its new device that allows people to store music. Peer-to-peer file-sharing companies are not “consuming all the digital oxygen in the marketplace,” said Mitch Bainwol, chief executive of the RIAA, whose members saw CD sales plummet 30 percent after Napster’s 1999 launch. “The legal marketplace is getting some traction, and that is a basis for our hope in the future.”

Technologists, though, don’t see dragging file-sharing companies into court as the answer.“Shutting down peer-two-peer networks was like taking a half-course of antibiotics every six months,” said Tom McInerney, co-founder of Guba.com, a video site that just announced an agreement with Warner Bros. to distribute TV shows and movies. “It just led to the evolution of more decentralized networks that are more efficient and more difficult to shut down.”

Meanwhile, file-sharing, most of which is illegal, continues to grow. Nearly 10 million users worldwide simultaneously clicked into peer-to-peer technology last month — 12 percent more than May, 2005, according to BigChampagne, a Los Angeles research firm that monitors file-sharing. “The social networking aspect of the Internet is continuing to blossom and no landmark court decision or watershed event changes that,” BigChampagne Chief Executive Eric Garland said.

Michael Weiss, chief executive of StreamCast, which makes Morpheus software and was a Grokster co-defendant, believes the two worlds can work together and create business models. Weiss pointed to a 2005 survey by U.K. research company, the Leading Question, which found people who illegally download music are voracious consumers of digital media — so much so they are apt to spend more than four times more on legal downloads than those who never engage in piracy. After years of legal skirmishes, StreamCast and the entertainment industry will be back in court next week, though Weiss said he is “cautiously optimistic” the two sides will eventually find common ground. “Everyone in the peer-to-peer space and in the entertainment industry would like to find that magic solution,” Weiss said. He added, “It’s a shame we have to go through all this pain and suffering to get there.”

http://www.mercurynews.com/mld/mercurynews/news/14908474.htm

Money in shared content
Jun 28, 2006By: Neale AndersonWireless Asia

“I feel pressure, you feel pressure.” This declaration by “Bus Uncle”, an irate senior citizen caught on camera in Hong Kong and posted on YouTube, could also apply to media owners. They have been largely caught unaware by the growth of such sites as Flickr, YouTube, OhMyNews and MySpace. Their growth stems from both better broadband availability and the increased scope for tribalism, identity expression and personalization that user-generated content provides. Paul Saffo of the the marvellously titled Institute of the Future notes that this could herald in a Cambrian explosion of creativity: a flowering of expressive diversity on the scale of the eponymous proliferation of biological species 530 million years ago. So what does this trend mean for wireless carriers?

Opportunity for operatorsWe believe UGC over mobile will take two principle forms. Firstly, consumers will increasingly maintain connectivity with their Web community or blog readership using their mobile phone. This is happening now: CyWorld customers in Korea control the settings and appearance of their avatar via their mobile phones, and bloggers post “facerolls” to their blog using camera-phones. Yet there is also scope for the operator to manage, host and police user-generated content, providing the community and search structure required to make it appealing. The most successful example so far has been developed by 3 UK, with its See Me TV service. Users pay [b]50 pence to post a video[/b], and viewer [b]downloads are charged at 10 pence each[/b], of which [b]1 pence is returned to the originator of the content[/b].
See Me TV has been popular: “3″ has recorded an average of one million downloads per month, paying out a total of 10,000 pounds to creators of the content and recording a tidy gross margin of 90%. And of course there are few other parties in the value chain to take a cut. Compare this with the model for music downloads, where the online store, the artist, the record label, the copyright royalty holder can all legitimately claim a slice.

Yet much of the value of user-generated content stems from the extent to which like-minded souls can access the material and form communities. YouTube, with six million viewers watching in excess of 40 million videos per day, has the critical mass to do this, and users have self-segmented to incredible degrees.

To take one example, an early band of foot fetishists has split into those who prefer tickling, different types of toe, or simply the pure aesthetics of the shape of the foot. No mobile operator has the user-base to promote this level of self-selection in the long-tail of consumer preference. However, it is easier for some operators than others: 3 UK has a strong appeal to the 16- to 30-year-old segment, and thus a wider base of users to whom See Me TV would appeal.

UGC does have implications for the shape and feel of the operator’s portal. We expect it to become more of a stock-exchange as opposed to a shopping mall. UGC will primarily be organized (as online) by tag and by viewing popularity, and the role of the operator will be minimal. Potentially, media owners and aggregators are sidelined, and the operator reduced to the bit-pipe provider. However, such services are a useful adjunct to a high-profile licensed media model that is taking time and money to build.

This said, YouTube was created by the two founders after noticing how difficult it was to share videos on mobile phones at a dinner party. Much of the opportunity with user-generated content depends on making it as easy as possible to share and view the content that users increasingly want to view.

Neale Anderson is a senior analyst with Ovum Asia Pacific

OA: http://www.telecomasia.net/telecomasia/article/articleDetail.jsp?id=340470

Gold Rush On in Viral Video - New Firms Empower Amateurs to Make Money From Works

By Daisy Whitney

Revver, an online video service that shares ad revenue with would-be Internet auteurs, plans to emerge from its nine-month beta test early next month, and with that official launch will come a new user interface and new features for advertisers and creators who use the service. The company is taking the wraps off its business at just the right time. Revver is part of the rush by companies to give viral videographers and online TV craftsmen ways to make money with their creations. A successful business model could fuel a second explosion of user-generated video and more professionally shaped work, creating a cottage industry of content creators whose clips will challenge the content of traditional TV networks.Hoping to capitalize on the zeitgeist of online television, viral video and user-generated content, new firms such as Revver and ViTrue, along with existing players such as Brightcove and Maven Networks, are purveying tools for content providers, advertisers and consumers to participate in this new video era in a more structured fashion. They offer the framework to build a business around these new online phenomena.

For instance, Revver offers software that inserts an ad at the end of a video, enabling the content creator to split ad dollars 50/50 with Revver. ViTrue provides the technological tools for advertisers that allow users to create ads. Brightcove plans to extend its role as a technological platform for online TV to also act as a broker between online TV networks and big-name advertisers. What these firms share philosophically is the desire to link the little guy with bigger advertisers.While Revver doesn’t officially launch its service until July, it has been in beta tests for nearly a year and has already made a name for itself as the technology behind “The Extreme Diet Coke and Mentos Experiment,” a three-minute viral video that became an online sensation earlier this month. Because the content creators “Revverized” the video, as of early last week they had earned more $20,000 in ad dollars, representing half of the total take the video had generated from ads, including one for “Dave Chappelle’s Block Party” DVD release. The video has been viewed more than 3 million times.

Revver’s software lets video creators track their videos across the Internet, whether on MySpace, blogs, social networking sites, via e-mail or on Revver, said Steven Starr, Revver’s founder and CEO. “Revver’s [software] allows for dynamic ad insertion, so where the video is being viewed we are serving up an ad after the video is seen,” he said.

Ads Without the Selling

The benefit for the content creators, who in many cases are average Joes and Jills shooting video in their garage, is that Revver sells the ads. Those folks aren’t likely to get past the door if they go knocking at a Procter & Gamble. So Revver does the knocking, striking deals with advertisers to mix and match them with content creators. So far Revver has made deals with movie studios, computer companies, record labels and other advertisers. Revver also works directly with advertisers and through third-party “ad networks” that strike umbrella deals with advertisers to buy online ads. For instance, Revver has partnered with Warner Home Video to create an online video contest for the recent DVD release of “Kiss Kiss, Bang Bang.”

Brightcove, whose technology supports Internet TV, plans this summer to roll out the first phase of its own ad network, which will connect its small and large online video programmers with brand-name advertisers.”We are hoping to play an active role in facilitating the brokering of brand marketers with these programmers because [some] don’t have the scale to be talking to major brands,” said Jeremy Allaire, CEO of Brightcove. Already, Brightcove has had early success as an ad agent, having connected Sony BMG’s online music site, powered by Brightcove, with advertisers Hewlett-Packard and DreamWorks.

Maven Networks, an online video publishing system, added capabilities this spring to link its content partners, such as Sony Pictures and 20th Century Fox, with existing online ad networks, such as Lightning Cast and DoubleClick. The new entrants will face competition from existing online ad networks with a few years under their belts. For instance, Broadband Enterprises has been operating for more than two years and matches more than 500 Web sites, such as Lycos and iFilm, with more than 100 brand-name advertisers.But media agencies say they’re interested in the business that new middlemen such as Revver and Brightcove and more established players such as Broadband Enterprises bring to the table. The newer folks are even more precision-tuned on monetizing the long tail of content.

“I don’t care if it’s coming from a network or from the Origami Network,” said T.S. Kelly, VP and director of research and insight for Media Contacts, the interactive arm of media agency MPG. “I don’t want to show live human sacrifices brought to you by Kraft. But I don’t care where the content is if I can target my audience and if there is accountability behind it.”

Working directly with advertisers is ViTrue, founded in May to offer tools that let advertisers create forums for user-generated ads. Starting this week, ViTrue will kick off a partnership with Moe’s Southwest Grill, a 300-restaurant burrito chain, to launch an online community that allows Moe’s consumers to create and upload their own video ads. The community will vote on the ads, and the winner receives free burritos for life. In addition, Moe’s will consider the best spots for its TV campaign, said Reggie Bradford, founder and CEO of ViTrue.

Cost-Effective Model

That places ViTrue in the same camp thematically with a Revver or Brightcove, because ViTrue is aiming to provide a cost-effective infrastructure to link brands with millions of consumers. The ViTrue model also gives the brand more control, letting the genie out only to an appropriate level when it comes to viral marketing. “This is a place where consumers can come and start to participate in developing advertising campaigns for brands they are passionate about,” Mr. Bradford said. “It’s not just a Web site where you share videos of guys lighting farts.

There is a higher level of engagement here.”Indeed, viral video may demarcate along higher-quality, more finely crafted video and the more amateur creations.Stephen Voltz, one of the creators of the Diet Coke-and-Mentos fountains, said he and his partner opted for Revver because of the content protection and the chance to get paid. They also discouraged viral video submitters from posting the video on Google or YouTube. They spent eight months crafting their carbonated concoction.”Our example has sort of proved you don’t need to go to YouTube and Google,” he said. “Every time it’s viewed on YouTube, we don’t get money.”

http://www.tvweek.com/article.cms?articleId=30078

It used to be that there was this top down content pyramid in operation (operated by traditional media and the big online players), where the quantity and quality of news / content was controlled by relatively fewer organisations. This is changing rapidly, becoming flatter and more diverse (we’re not really interested in the why’s right now), which can either be seen as an opportunity or a threat. Organisations that embrace this change are going to benefit (think Murdoch buying MySpace), so the question then becomes how one capitalises on the opportunity…

Let’s look at some of the key strategic issues to consider.

Diversify your content delivery channels to provide choice to the user…

As we become a society increasingly inundated with information overload, the sheer amount of information that is available to consume is overwhelming and it doesn’t look like it’s going to be getting easier anytime soon. Many people are starting to move away from the method of browsing multiple content streams to get their content / information fix for the day, to aggregating content in a way which makes sense to them (think Sky+ and RSS).

As a business, are you offering multiple channels for users to consume your content, and then tracking the effectiveness of each one so that you can make informed decisions regarding the use, consumption and growth of your content in the future?

Understand which side of the content platform you’re on…

Are you going to be offering content, or do you provide a place for user to generate their own content (buzzword alert: user generated content) and then share it? Either way, because there is this shift away from massive monolithic portals offering anything to everyone, to niched choice driven content, it’s vital that you understand what you’re offering and how it’s delivered. Very few people are doing both well at the same time, so unless you can innovate in that space, it’s probably wiser to start off doing one first, rather than both.

Monitor what people are saying about you and your offering so you see the wood for the trees…

As a business it’s becoming increasingly important to stay abreast of what people are saying about you, and not only through the regular trade press channels, but also online. Are you listening to what people are saying online as well as in the traditional press? Do you have radars set up that listen for your brand and the key players in your organisation?

The crowds are wiser than you are…

Offering compelling content, or allowing people to manage their own content, is a better value proposition for the user when they are able to interact and converse with other users. Allowing interaction creates an arena where anyone can add their 2 pence – if something is grossly wrong, incorrect or undesirable, the chances are higher that users will pick up on this and make it known to you. Are you giving people the opportunity to interact with you not only via telephone but also via the web, mobile and TV? Are you taking the time and making the effort to understand what content people are consuming and how? Most importantly, when you do have data from your users, are you acting on it?

Extracting value is paramount if you’re going to survive…

The next generation of the web is still primarily about page views (and more recently, RSS impressions), except that this time around, the internet has aged somewhat and the sheer choice anyone has means that it’s probably harder to make a good ROI than it was pre-2000. .The problem is that as any kind of content publisher, you have to make ROI. This ROI is usually generated when you provide some sort of payoff for the consumer, either because you’re providing them something that they use on a regular basis, or they’re learning something from you that they wouldn’t otherwise be able to. This value has to be real, otherwise users will go elsewhere, and all your hard work will be for nought.

Moving forward…

Now the focus is on content niches and owning people’s data, in return for which you own their eyeballs for a short amount of time. As a business, are you offering content that is different, niched, useful, provocative and relevant to your consumers? If you’re not, then you’re probably already losing ground to those that are, but more importantly it’s going to be harder to regain that ground in the future. The consensus seems to be that there are many opportunities to be capitalised on; where vertical niches seem to make the most sense from a content provision and delivery point of view. If you extrapolate that further, operationally the two key ingredients to achieving that elusive ROI are being able to execute on opportunities quickly, and being agile enough to react to what your users are saying.

http://www.e-consultancy.com/news-blog/361261/web-2-0-is-changing-the-content-battlefield.html