Articles of the Day


Glam Claims Confidence On Display Ads—But Cuts Salaries (Just In Case) — Despite months of evidence of display advertising’s increasing vulnerability, female-focused ad network Glam Media continues to claim it has detected no considerable retreat in revenue. The latest claim comes via an internal company memo obtained by Venturebeat that also happens to include news of a switch to “variable pay.” Instead of further layoffs—it cut 14 posts in September as part of what it said was a routine annual review—Glam is cutting salaries across the board with promises to supplement based on revenue. This isn’t the first time Glam implemented this tactic. Earlier this year, the 12-person management team of 12 accepted a temporary 25 percent pay cut. Next year, management will take a 25- to 60 percent cut in compensation. Top sales reps, for example, will now only have about 25 percent of their compensation “fixed.” Before the change, 75 percent was “fixed.” Therefore, sales reps will have to drive more revenue in order to make up the lost compensation.

Barclays Reduces ‘09 Online Ad Forecast To 6 Percent Growth; Total Ad Spend To Fall 10 Percent — Another day, another ad spend downgrade… Online advertising will grow a paltry 6.1 percent to $25.1 billion next year, says Barclays Capital internet analyst Doug Anmuth, in his latest significant downward revision. It was only October when he predicted that web ad dollars would grow 16.9 percent. That was revised down from May’s expectation of 23.4 percent. But as a commenter said on an earlier ad spend outlook, some growth is better than none. Putting things into perspective, the U.S. total ad spending looks to plummet 10 percent to $252.1 billion, Anmuth now says, altering his previous -5.5 percent projection.

Startup Bubble Goes Pop — Last year at this time, news aggregation service Digg hired investment bank Allen & Co. to put itself on the block for an asking price of $300 million. Bloggers predicted that buyers could “easily justify” the price tag for Digg, although no deal ever materialized. BusinessWeek says those were heady days for popular Web 2.0 startups. On Sept. 24 of this year, Highland Capital Partners and three other VC firms invested close to $30 million in the firm. The valuation: $167 million, according to sources close to the deal. Across the board, the value of Web and technology startups is falling. Digg, Facebook, even Twitter, which have built businesses on the back of their popularity, are seeing their once lofty valuations fall back down to earth. “Declining valuations are throwing a wrench into the gears of Silicon Valley’s wealth machine,” says BusinessWeek’s Spencer E. Ante. If the money dries up, startups are forced to shut down.

Casual Gaming Continues Rise — Console games aren’t the only part of the gaming sector having a banner year: The Economist points out that “casual” games, which are played over the Web on a PC or mobile device, are also booming. And while these games may lack the depth of console video games, even the most hardcore gamer would admit that simple puzzle, card and quest games can be just as if not more addictive. Now, thanks to the rise of social networking sites like Facebook and smartphones like Apple’s iPhone, casual gaming is widening its user base. “Social gaming”, or games that can be played between friends on social networks, has become especially popular. Zynga, a developer of such games, has more than doubled its staff since June. Serial entrepreneur Mark Pincus, Zynga’s founder, attributes the success of his company’s games to their social nature. Of course, it doesn’t hurt that the games don’t cost anything, either. Taking a hint from the online gaming model in Asia, Zynga offers its games for free but invites users to pay for optional in-game extras. The startup has had positive cash flow since September 2007.

YouTube: A Money-Maker For Music Labels, But What About Google? — YouTube is driving more than traffic to music labels like Universal Music Group. Rio Caraeff, EVP of UMG’s eLabs, told CNET that YouTube is adding “tens of millions of dollars” to the recording company’s bottom line: “(YouTube) is not like radio, where it’s just promotional … It’s a revenue stream, a commercial business.” The video site shares revenue with record companies like UMG from ads appearing with their music videos, as well as user-generated clips featuring their artists’ tracks. UMG’s eLabs division has brokered such deals with YouTube and others, including MySpace Music, over the past three years, and has made about $100 million dollars off its music videos as a result. By Caraeff’s account, YouTube has been responsible for a large chunk of that (which should make UMG doubly happy, since it, like some other labels, took a small stake in YouTube as part of the content-sharing deal). And while that’s great for the labels, what about Google?

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