Bambi Francisco

Who's next after Grouper?

"Prices are insane!"

That's the obvious observation from a buyer who wants to snap up a great property on the cheap, such as those video-sharing sites with a library of mostly music and silly home videos.

This week, Sausalito, Calif.-based Grouper sold to Sony Pictures Entertainment for $65 million in cash. Grouper had signed a term sheet from a venture capital company for $8 million with a pre-money valuation in the $30 million range. But Grouper decided to take the purchase instead.

Grouper is one of the three dozen or so video sites, such as Revver.com, Guba, Instant Media, Veoh Networks, Heavy, Metacafe.com and a host of others that have emerged in the last 18 months or so. All do roughly the same thing, with a twist here and there to provide differentiation. And, Grouper is the second video site to be sold this month. The first was online production company Atom Entertainment which  Viacom purchased for $200 million.

Was Grouper's price cheap, reasonable, or fantastic? It depends on which side of the table you're on. Buyers -- large media companies -- would definitely think Grouper received a "fantastic" price, maybe even "insanely fantastic" because buyers always want to keep prices low. Sellers -- all the video-sharing operators -- wouldn't deny that the price was fantastic, but would try to justify the price as "cheap," given the booming video opportunity.

My take: it was reasonable, and closer to fantastic, than cheap.

For why, go to BF's Net Sense on MarketWatch

Here's my watch list of video sites (source Nielsen//NetRatings)

YouTube and Paris, Take II

Paris Hilton is a great argument that money doesn't buy happiness or talent.

But then again, who needs talent to get an audience? As of nearly 9 a.m. pacific time, Hilton's video was viewed 2,390 times, commented on 456 times and rated 3207 times.  Hilton may not have talent, but YouTube, Fox and Warner Bros. know what she has to bring to the table: Sex and an audience that likes, well, sex. YouTube struck a deal with Time Warner's Warner Bros. to be the online billboard for Hilton's new music album.  Hilton becomes YouTube's first branded channel. Now, YouTube has already allowed users to create their own channels. But user-generated channels are a problem for advertisers. As of today, the most subscribed channel goes to "Geriatric1927," with 22k subscribers and 659k views.

To read the rest of my thoughts about video ads, go to my official blog at: MarketWatch

On another note -- a more cultural one -- when you look at the Hilton video, you just have to  wonder what drives many of us to want recognition. This is what Benedict Carey of the New York Time writes:  "Money and power are handy, but millions of ambitious people are after something other than the corner office or the beach house on St. Bart’s. They want to swivel necks, to light a flare in others’ eyes, to walk into a crowded room and feel the conversation stop." Carey also writes: "People with an overriding desire to be widely known to strangers are different from those who primarily covet wealth and influence. Their fame-seeking behavior appears rooted in a desire for social acceptance, a longing for the existential reassurance promised by wide renown."

Carey goes on to say: "In media-rich urban centers, the drive to stand out tends to be more oriented toward celebrity, and its hold on people appears similar across diverse cultures. Surveys in Chinese and German cities have found that about 30 percent of adults report regularly daydreaming about being famous, and more than 40 percent expect to enjoy some passing dose of fame — their “15 minutes,” in Andy Warhol's famous phrase — at some point in life, according to data analyzed by Dr. Brim. The rates are roughly equivalent to those found in American adults. For teenagers, the rates are higher." Read Carey's article: The fame motive

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Is it privacy or economics?

One of the most intriguing stories about the Internet isn't how much wealth it's created, but rather its impact on society. 

Each day, it seems, we spend more time on the Internet. We search more, share more, participate more and voice our opinions more. We've probably all become aware of how self-absorbed we are and/or how different we are from others, and we're proud of it.

But is there more about ourselves that we don't know? More that the data we leave behind may reveal?

"The Internet has changed everything," said Schmidt, who held a small session Wednesday with a couple dozen journalists after he was interviewed on stage by search guru Danny Sullivan at the Search Engine Strategies conference in San Jose, Calif.  Schmidt went on to describe how the Internet has obviously improved access to information and the empowerment it's given many, including the press, to gather that knowledge. But the "development to me that's most interesting is the social networks as online lifestyles. That's a really new phenomenon," he said. It's a phenomenon on scale with the rapid-fire adoption of instant messaging, he added. "It's [social networks] a big deal."  Indeed, his words are backed by his actions. On Monday, Google announced that it is paying $900 million to be the exclusive search engine of MySpace along with News Corp's other Net properties. What fascinates me about this deal is the potential to take search history data and marry it with personal data, such as what we like and dislike, who we like and dislike, and basically what makes us tick.  "We do not link," said Schmidt, adamantly. "We try to do things with user permission," he added.

Sure, there may be some privacy issues. But is that all? After all, we've become such a transparent society with high expectations about service (and that means better targeted ads).

Maybe I should have asked him, could Google make more money by using search history to serve up display ads on its partner sites?  Based on a simple analysis and example, it appears that perhaps the incremental benefit of using search history for targeted ads may not be worth it. For that analysis, you'll have to read my column. 

Read Net Sense on MarketWatch

Google pays up for next generation

Google's $900 million deal with Fox shows that the search giant is willing to pay a hefty amount for the next generation of Internet addicts who tend to socialize as much as they search.

It's been no secret that News Corp been seeking a search partner for the inquisitive MySpace members, who'd been wont to search on Google after socializing on the virtual site. But as the popular social networking sites' traffic surged, so did its ability to leverage its audience. MySpace generated 23 billion pageviews from 45.7 million unique visitors in June, according to Nielsen//NetRatings. sk.com to see who'd offer up, among other things, the highest guaranteed upfront revenue for the MySpace and Fox digital properties' traffic. News Corp set last Friday as the deadline for bids. No one matched Google's offer, though MSN's was competitive.

Obviously, it turns out Google was the most aggressive and willing to capture this exploding network on the Web.

Here are the takeaways. It's great news for News Corp because it's leveraging its online traffic and, if it meets certain thresholds, will definitely beat advertising forecasts set for its digital properties in '07 and the following years. Also, MySpace gets to keep its members on its site searching, because apparently a good portion of them left to search elsewhere.

It's probably good news for Google, since it won't have to pay that revenue unless certain search and traffic. ich had been providing search queries for MySpace, which recently topped the search engine as the most visited site on the Web, based on pageviews. Obviously, MySpace users like to search. According to HitWise, about 10% of MySpace users left the social network and went to Google to search. That's search traffic that Yahoo, MSN or Ask could have had.

It's terrible news for MSN, which is trying to bolster its ad-search business with AdCenter. What was it thinking? To me, the fact that MySpace chose Google isn't that surprising, since I've been writing about this possibility for some time. Whatwill be pretty intriguing to watch from now until the deal is over, is the extent to which Google personalizes the searches on MySpace personal pages and group pages. Now, personal information and search information may actually merge.

Read the rest of my column on MarketWatch.

Paying up for MySpace

You have to wonder what Microsoft's (msn), Yahoo (yhoo) and InterActiveCorp's (iaci) Ask.com were thinking by letting MySpace go to Google. MSN has enough money and it's trying to validate its own search advertising platform. Yet it wouldn't pay up for MySpace traffic, which tend to go to Google to search.

MySpace had 45 million unique visitors in June, according to Nielsen//NetRatings.  And, about 10% of MySpace traffic leaves MySpace to go to Google, according to HitWise. Clearly, there was an opportunity for the other search engines to capture that search traffic. They let it slip away. Too bad for MSN, Yahoo and Ask.com. Also, Bill Tancer noted a while back that when MySpace had an outage, a lot of its users went to Google. Read Tancer's take.

Btw, if you were reading my MarketWatch blog today, you would have known the MySpace/Google deal was coming. It was posted before the close of the trading day.

Blogs.MarketWatch.com/bambi

Also, watch for my Net Sense column, in which I'll comment about the Google/MySpace and Google/MTV deal. Also, go to MarketWatch Tuesday for my video interview with FIM's Ross Levinsohn.
Watch out for my commentary tomorrow.
   

Video enablers

Only 2% of the total online advertising pie was tied to video ads last year, according to eMarketer, an online marketing research company. That's only expected to rise this year to 2.3%, as online video ads are expected to rise 71% to $385 million while total advertising is expected to rise 34% to $16.7 billion in 2006.  So how will online media and video enablers funnel more dollars into video? For that answer, the best resources are the startups in my opinion. They are definitely redefining the world of video and commercials. I've noted several in my Net Sense column: Vidavee, a Manhattan-based company that's helping marketers place ads - banners, video, etc. -  at points within a video that attract the largest crowds. Gotuit, a startup that lets the audience fine-tune their searches inside a video; Vmix gives users copyrighted material to mash up with their own homegrown movies; One True Media takes makes video editing with its Web-browsing tool and Dave.tv is putting "buy now" buttons on its video-playing technology. Revver is helping amateur producers become stars, such as Fritz and Stephen (check out Eepybird.com).   The makers of the Mentos video made $30,000 so far at a $7.50 cpm.  Other companies mentioned in my Net Sense column are Jumpcut.com, Brightcove, Booyah Networks, and VideoEgg.

To read the whole story, go to my Net Sense column on MarketWatch. Or visit my official blog at blogs.MarketWatch.com/bambi