Articles of the Week


YouTube’s Plan To Gain The Upper Hand With Music Labels — Record labels like Universal Music Group are using YouTube to rake in millions of dollars from their music videos, and yesterday we raised the question of whether Google was making much money from these deals. Well, sources tell MediaMemo’s Peter Kafka that the answer is a big, fat no. In fact, the music clips are costing Google (NSDQ: GOOG) money, even though YouTube is running ads on them. But that is about to change, Kafka says. Currently, YouTube pays the labels either a per-stream fee or a portion of the ad revenue (if there’s an ad on the video) every time a user clicks on one of their music clips; but since YouTube hasn’t saturated the site with ads (yet), most of the time it’s stuck with the per-stream fee. YouTube is in the midst of negotiating new deals with the labels (UMG, EMI, Sony (NYSE: SNE) and Warner Music Group) on very different terms, and Kafka’s sources say the new terms will not add nearly as much cash to the labels’ coffers. The current deals expire over the course of 2009.  

Newspapers Suddenly Adapt To Social Media; Nearly 60 Percent Offer User-Gen Content — Newspapers’ tough times appear to have spurred the industry to adopt the kind of social media habits that have led so many readers away from the traditional news format. In The Bivings Group’s annual look at how newspapers use the internet, the researcher found that 58 percent of dailies offered some form of user-generated content this past year. That’s more than double the 24 percent of papers that had user-gen features in 2007. Other finding’s from Bivings’ report (PDF): The number of papers who opened up stories to user comments also more than doubled in the last year to 75 percent in 2007 versus just 33 percent the year before.

Facebook Continues Torrid Growth — Facebook is growing faster than ever, especially overseas. Active users on the social network have hit 140 million, according to new data released by the company this week. That total is up from the 130 million Facebook reached earlier this month, putting its current growth rate at more than 600,000 users a day, by the estimation of Inside Facebook blogger Justin Smith. It crossed 100 million users in August. Most of that growth–about 70%–continues to be outside the U.S. Inside Facebook pointed out that growth has been especially explosive in Italy, where users have jumped from 572,000 in July to 4.9 million now.  

Warner Pulls Videos From YouTube As Contract Talks Break Down — In another setback for Google’s popular video sharing site, Warner Music Group over the weekend ordered YouTube to remove all music videos by its artists after contractual negotiations broke down. According to Reuters, Warner’s decision could affect hundreds of thousands of video clips. Talks broke down early Saturday because Warner wanted a bigger share of ad revenues. “We simply cannot accept terms that fail to appropriately and fairly compensate recording artists, songwriters, labels and publishers for the value they provide,” Warner said in a statement. According to comScore, YouTube had more than 100 million viewers in the U.S. in October, making it the most popular destination for online video by a massive margin. Warner became the first major media company to negotiate a deal with YouTube in 2006. As part of that deal, Warner, Universal Music Group and Sony Music each took small stakes in the online video giant prior to Google’s acquisition in 2006, profiting from its close.

NeoEdge Takes On comScore — NeoEdge Networks will announce today a service to collect survey data to support some of the advertising technologies and online games it develops and supports. The NeoEdge survey, dubbed “NeoMom,” takes on comScore and focuses on females ages 25 and 54. The survey topics are geared toward consumer products. Gathering survey data for the first report begins in January.  

Redstone Gets Reprieve To Restructure $800 Million In Debt — No financial Armageddon today for Sumner Redstone, who gets an indefinite reprieve on either paying—not gonna happen—or restructuring some $800 million in debt coming due for National Amusements. The total debt is about $1.6 billion. Redstone owns 80 percent of the company, which owns movie theaters and controls Viacom (NYSE: VIA) and CBS (NYSE: CBS). (Redstone is chairman of both media company boards.) The reason for the extension: National Amusements is gaining time to finesse a plan that’s already been presented to creditors, it’s current on payments and the deadline was more of a target than anything.  

Study: Almost 10% On Social Networks Via Mobile — The proportion of U.S. mobile subscribers who access social networks on their cell phones nearly tripled to almost 10% over a year ago, according to a consumer study by The Kelsey Group and ConStat spotlighted Monday by eMarketer. Specifically, 9.6% of mobile users were connecting to a social network as of October 2008, compared to 3.4% in September 2007. The rapid growth is due in part to the small base of people who are social networking on mobile. 

Fanscape Projects 15% Revenue Increase In ’09 — At best, next year represents uncertainty for most advertising and agencies. Social-centric media shops, however, continue to wax optimistic over their prospects for growth. Take Los Angeles-based Fanscape, a digital-engagement marketing agency that works with clients to better understand and influence niche audiences online. “The jury’s still out, but I believe that revenue is going to grow by 15% next year,” said Terry Dry, president and co-founder of Fanscape. 

Warner Overplays YouTube Hand — CNet’s Greg Sandoval claims that it was YouTube that actually began removing Warner Music Group’s videos from its site after Warner came to Google with an “11th-hour demand” for better financial terms. Warner over the weekend said that it began asking that YouTube remove its videos after talks to renegotiate its licensing deal broke down, but two sources close to the situation claim that YouTube actually walked away from the deal first. According to the sources, managers at YouTube considered Warner’s demand, only to begin pulling Warner music videos as its answer. YouTube also first notified the public of the split by posting a note on its blog. Warner responded by saying the music labels were building a YouTube competitor, and that YouTube didn’t drive much revenue for them, anyway, and that Warner’s departure was a bad sign for the Google video site.

Friendfinder Networks files to go public, may make acquisitions — Friendfinder Networks, the Boca Raton, Florida-based social networking company, has filed for an initial public offering and anticipates USD 460m in proceeds. The Internet-based company said in an S-1 filing on 23 December 2008 with the US Securities and Exchange Commission that Renaissance Capital is the underwriter. “To access technologies and provide products that are necessary for us to remain competitive, we may make future acquisitions and investments and may enter into strategic partnerships with other companies. Such investments may require a commitment of significant capital and human and other resources,” stated the company in its SEC filing. Source: mergermarket.

WaPo Digital-Print Integration: The Fast Track — Reading through some clips in the wake of the news that Jim Brady is leaving WashingtonPost.com, I was struck by the rapid shift from separate but cooperating news operations to Russian nesting dolls following Katharine Weymouth’s promotion to Washington Post (NYSE: WPO) publisher and CEO of the Media Group: Feb. 7, 2008: From the Washington Post: “Washington Post Media is designed to forge a closer relationship between the business functions of The Post newspaper and washingtonpost.com, while maintaining separate newsrooms and editorial decision-making.” 

Online Display Ad Spending Dips 6% Through Q3 — A 27% plunge in spending by financial services marketers led to an overall 6% drop in the online display ad market in the first nine months of 2008, compared to the same period a year ago. The percentage declines in both instances mirrored results from the first six months of the year, according to data released by Nielsen Online. Other sectors downsizing display ad budgets included Web media, down 15% to $1.1 billion; travel, falling 7% to $304 million; and retail goods and services, slipping 4% to $833 million. The declines were offset partly by surging ad dollars in the automotive and entertainment categories, which jumped 32% and 29%, respectively. The continued growth in auto advertising online contrasts sharply with the 8% spending fall-off in the category offline. 

Ad-Revenue Sharing Model For Publishers Emerges In 2009 — Advertising networks will begin sharing ad revenue with publishers in 2009. Attributor, which published a study on the ad-serving market this week, will soon offer a service that lets customers monetize content. Rich Pearson, VP of marketing at Attributor, said the Redwood City, Calif. company will rely on technology to automate the process. “We are working with Politico, but it hasn’t been formally launched,” he said. Last week, Reuters–a division of global information company Thomson Reuters–said it will incorporate government and political news from Politico, a unit of Capital News, into its newswire service in a revenue-sharing deal. The group will allow Politico to sell online advertising on their sites. Ad code attached to the media content will determine the revenue-sharing agreement.  

Google, Microsoft, Yahoo Rattle SEO In 2009 — Rival search engines and marketers will continue to fret over Google’s market gains regardless of how the “large actor” acts. Microsoft will “dance and flounder” until cutting a deal with Yahoo toward the end of 2009. The Sunnyvale, Calif. company will need to first find a CEO–which Danny Sullivan, Search Engine Land founder, predicts could happen by February. Whether Yahoo cuts a deal with Microsoft or breaks off and sells the search business remains up in the air. “Yahoo’s CEO will first need to learn the landscape, rather than immediately cut a deal with Microsoft,” Sullivan said. “If a deal happens, it will need to go through a review, which would take two months. By this time you’re in the middle of 2009.” Aside from who’s doing what at search engines, tech-related trends will move beyond Web search results and page content, and into video SEO, local search engine rankings and analytics. Marketers will look for ways to dominate local search results based on demographics. Perhaps local listings will appear at the top, video in the middle and blog search results on the bottom, all on one page. 

NYT Online Ad Revenues Decline In November — It appears that even online advertising–long a growth engine–has started sputtering for the beleaguered New York Times Co. The company said Wednesday that Internet ad revenues across its Internet properties dropped 3.8% in November, compared to a 4.6% gain in October. It marks the first monthly decline in online ad revenue the Times Co. has reported to date. 

MySpace’s Berman: More Ad Products To Come — MySpace has introduced a flurry of new applications and services as it transforms into an advertising-supported social portal, chasing the big bucks spent on Yahoo and Google’s YouTube. It is aggressively leveraging its 75 million active monthly users, each with about 111 friends and spending an average four hours monthly in ways that Madison Avenue and Hollywood cannot ignore. When you can claim nearly 12% of all Internet minutes in the U.S., people will listen. Jeff Berman, MySpace president of sales and marketing, discussed future plans with MediaPost. 

Liberty Media Could Sell Shares Of IAC/InterActiveCorp Until April 2010 — IAC/InterActiveCorp. (NASDAQ:IACI), the New York Internet company, could have Liberty Media (NASDAQ:LINTA) sell shares until April of 2010, reported the Wall Street Journal. The unsourced report in the Heard on the Street column, said the rate at which Liberty Media is going in selling shares of IAC, the company could continue stock sales until April of 2010. According to the report, to avoid the pain of Liberty Media slowly selling its stake IAC could issue a dividend or a buyback of shares. IAC has a market capitalization of USD 2.2bn. Source: mergermarket.

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