Silicon Valleywood

This Just In: American Idol May Be Fixed April 30, 2008

Stoopid judges expose Idol as Quiz Show, 21st century edition. Wotta surprise. And who cares? It’s pop entertainment, people.

As Mr. Seacrest anxiously glanced offstage for help, Mr. Jackson, beside Ms. Abdul at the judges’ table, gently prompted her to make comments “just on the first one.” Confused, Ms. Abdul said to Mr. Castro, “I thought you sang twice.” After realizing what had occurred, she then explained that she got her notes mixed up and had meant her comments to be about the next singer, David Cook. But instead of repeating that she thought Mr. Cook had given an uninspired performance, she told him, “You were fantastic.”

AOL 1Q08 Ad Revenue Details April 30, 2008

Some more details on AOL’s ad business after I finally got to listen to Time Warner’s 1Q08 earnings call.

Overall advertising was up 1% to $552 million. That’s down 11% from Q4. Besides screwing up its sales force, management blamed that result on:
– $19M accounting difference a year ago
– Ad.com’s biggest customer, Apollo (aka University of Phoenix) only spent $17M this Q versus $56M a year ago. Apollo generated $250M$215M in revenues for AOL last year.
– It got rid of $10M worth of bounty fees from an unprofitable sponsorship deal with Goldrush
– CPM compression was was “an issue of our own yield management” — ie they sold too much network inventory instead of premium O&O inventory

Display ad sales on AOL’s own properties were down 18% to $191 million. This was blamed mostly on the sales channel conflict between the network ad sales force and the AOL properties sales force, which should be fixed now (though full benefits beyond Q2). Users are flat (relatively good as AOL access business fades) and page views and pages/users were actually up nicely.

Third-party network sales were up 25% to $188 million. If you strip out Apollo and acquisitions, growth was “much higher.”

Global search revenues were up 4%. US search was up in the high single digits. AOL.com search was up 89% but that was offset by the decline in AOL access (client software) searching.

Net domestic ex-TAC ad revenue was down 13% to $292 million. That’s down 18% from Q4.

So, if you’re keeping score, and my calculations are correct, worldwide online ad sales growth for Q1 is looking like this:

Google (ex-TAC)&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp$3.75 billion, up 45%
Yahoo (ex-TAC)&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp$1.1 billion, up 13%
Microsoft (minimal TAC included)&nbsp&nbsp&nbsp$619 million, up 39%
AOL (ex $60M-ish of TAC)&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp$495, down 2%

Time Warner Loves Day and Date VoD April 30, 2008

A tidbit from Time Warner’s earnings call. Warner Bros. et al are very pleased with VoD day and date trials. That is, releasing a movie to VoD at the same time it’s released to DVD. (DVD used to have the earlier release window.) So much so it’s planning to release “essentially all” its titles that way this year.

Time Warner maintains that DVD sell-through is not affected — it even claims sell-through is up a bit because there’s less competition with used rentals. VoD margins for the studio are in the 60-70% range, while DVD rental margins are 20-30%, it says. So, Blockbuster and Netflix are the only victims.

TV Guide Talks Online Video Guide Strategy April 29, 2008

PaidContent is wisely wondering about TVGuide.com’s future if the proposed merger of TV Guide/Gemstar and Macrovision goes through, especially since Macrovision hinted it might unload the magazine. Meanwhile, among other things, TVGuide.com is attempting to establish itself as the guide to (professional) video content online. There’ll be a lot of competition for that role.

Some things TVGuide.com is doing well

– TVGuide.com believes, as I do, that robots alone won’t solve the problem. So it has its spiders and algorithms, but it also has a smallish (10 people) staff of editors doing content as well as promotion.
– TVGuide.com is embracing the notion of online networked media, and pursuing syndication via deals and widgets. It’s also aggregating content on its site
– This might be controversial, but its editor is also its marketing VP. That makes sense to me for online networked media
– They demo’d a feature that made it pretty easy to create a little widget that creates an auto-refresh search. If you wanted to have constantly updated Justin Timberlake video content on your fansite blog, you could do so

Some things that need work

– It only spiders about 65 cable and broadcast sites for its professional content. It covers music videos but doesn’t work with Yahoo, which is the leading site for them. Right this moment, the top video on Yahoo Music (no. 4 on AOL Music) is Mariah Carey’s “Touch My Body.” A Mariah Carey search result for that tune on TVguide takes you to iTunes. YouTube gets you the right video.
– Because it doesn’t have deals with many suppliers, it’s a very inconsistent user experience when you “click thru” on content. Sometimes it plays locally; sometimes it carries you off to a site
– You can embed feeds with one click in MyYahoo and iGoogle. But not in Facebook or MySpace, where people actually use widgets. “Open Social support” — well, that and 5 bucks will get you a cup of coffee at Starbucks
– The advertising syndication strategy is, as we analysts often say, “nascent”
– Notice how I had to give two links for the main site and the online video guide?

Net: strategy on-trend; some execution details TK.

You Only Hurt the Ones You Love, Part XIII April 29, 2008

What’s wrong with this sentence?

The marketing hoax is an attempt by the South Korean electronics company to overcome the commoditization of the television business.

Perhaps this is an attempt at irony; surely it’s not an accurate description of LG’s marketing strategy. LG is trying to combat TV price declines via design — in this case, color. And promoting the idea via gimmicky marketing events, which to judge by the story, were largely successful.

If this is what happens when Murdoch takes over and threatens to fire a lot of editors, then I’m not impressed. C’mon guys, you’re still my favorite newspaper.

Take It Away, Please April 28, 2008

Well, it’s only day one of NPR’s new morning show, The Takeaway, but I’m distinctly underwhelmed. According to coverage in both the Sunday Times and the Journal the new show is an alternative to Morning Edition in major markets like New York and Boston that’s supposed to feel fresher, using live co-anchors. Well, it felt like amateur hour today.

The Takeaway debuted at 6AM in New York with dead air. Former Morning Edition host Bob Edwards, himself booted in a youth movement, was supposed to intro, but WNYC botched the feed. The co-anchors don’t have any chemistry or rhythm yet and constantly talk over each other. An interview with an ambassador from Zimbabwe — these things can always be risky — not only produced the standard non-answers, but the ambassador nipped back at the interviewer and made him look as overmatched as Lesley Stahl trying to smile through her sparring match with Justice Scalia last night on 60 Minutes. Much ballyhooed “interactivity” — it used to be called talk radio, but no listeners were actually on the air — sponsored maybe 5 responses during the 6AM hour.

I’m left with my usual attitude towards live news: it’s way less efficient at delivering the goods than properly edited programming. Case in point, the local 1-sentence weather update on The Takeaway was “temperature, raining,” while it was “temperature, raining, and forecast high temperature” on Morning Edition. Which is semi-live, anyway. I’ll give it a week, but if things don’t look up, I’m switching over to WNYC AM, where Morning Edition is still on at 6.

Suds April 24, 2008

Amusing Journal story about Miller-sponsored Brew Blog that constantly tweaks archrival Anheuser-Busch. Stuffy Anheuser declines to comment, but a beer trade pub is certainly in a snit:

Not so crazy about the blog is (Harry) Schuhmacher, the editor and publisher of Beer Business Daily. Mr. Schuhmacher, who charges $440 a year for his publication, declines to say how many subscribers he has. “I tell Miller you’re subsidizing a free publication, and it hurts the trade press,” he says. “But they don’t care.”…Mr. Schuhmacher adds that he writes fewer positive pieces about Miller than he once did because he knows Brew Blog will always publish the same stories.

Ummm, dunno if I would admit that, Harry. You’re the one that’s supposed to be a real journalist, remember? Not the pajama-clad corporate spy?

DISCLAIMER: I am a former Anheuser-Busch employee. (Summer job as costumed character at Busch Gardens Williamsburg.)

Yahoo 1Q08 Earnings Call Highlights April 22, 2008

Yahoo showed results slightly above consensus, maintained 08 guidance on revenues, and slightly raised them for cash flow. Since everybody blogs earnings calls real-time, I’ll focus on the key highlights and most important “color” comments.

– Advertising revenues for Yahoo’s own sites were up 18% to $966M. They were down 7% from Q4.

– Advertising revenues from its network partners were down 7% to $607M. They were up 9% from Q4. Yahoo blames this on higher rev share fees and pruning out its lousy affiliates.

– Fees revenues were up a whopping 21% to $245M. (down 1% from Q4) No color. This includes portal fees from broadband ISPs from deals that are currently being re-negotiated away from fees toward ad rev-share agreements. For instance, AT&T paid $350M to unwind its contract, but that will be recognized over the 4 year term of the deal.

Total US revenue ex-TAC (minus revenue sharing) was up 17%, but that’s probably buoyed by that fee growth. Int’l was up 7%. Owned & Operated ex-TAC growth was 15%; search O&O was 16% and display O&O was 15%. It feels like Yahoo’s US display ad growth was about 15%. That means that, so far, we’re not seeing the US economy pummel online display advertising revenue. Jupiter projects US display ad growth for 08 to hit 15%.

Ad categories Auto, Pharma, Telco, and CPG remain strong, with double-digit growth. Financial, Travel, Retail remain sluggish. Some of those sectors even showed decline. Of the strong categories, Telco & Tech were strong in display only; Pharma & Auto were strong in both display and search.

Remnant inventory CPMs nearly doubled. Yahoo is running its “non-guaranteed” ad inventory through Right Media’s exchange, and it’s working. Premium inventory prices were up modestly.

Average TAC rates globally remain 78%, and are seeing continued upward pressure from a very competitive environment.

Yahoo removed the 10-cent minimum required bids on select US keywords during the quarter (an auction approach should raise prices overall), but that had no impact on search yield yet. O&O search yield was up 10%, which is down from the 20% rate of the prior quarters, but that’s because of tough comparisons as Panama first rolled out. Not much on the Google test, other than it leaves options open.

Search volume growth was over 10% in the US but less — and under its goal — internationally. Yahoo claimed it saw the most improvements in relevancy in five years.

Yahoo’s revenue per search was up 15% globally. Yahoo figures that, when it started Panama, it had a 90% RPS gap compared with Google. It estimates it has closed that gap by 30 points, but there’s still a 60 to 70% gap to close.

Everybody reiterated the core strategies. They’re all on the same page at least. The objective is to be:

– Web “starting point” for the most users (starting points mean doubling down on home page, search, mail and a few key verticals like Finance, Sports, News; opening them up to third parties; and adding social connections to content but not becoming a social network)
– the must-buy ad inventory for the most advertisers
– a platform for the most developers

Yahoo’s strategy for revenue growth depends on increasing:
– Search volume & yield
– Display volume & yield

Of these, the two yields offer the most promise, says Yahoo, with display volume growth the second most. Yahoo intends to grow display revenues 25% in both 2009 and 2010. That’s way higher than Jupiter’s US growth forecasts of 12% and 11%. Yahoo says it does indeed intend to gain share, but probably thinks our forecast is a shade conservative.

Some Un-Cruddy Digital Stuff April 22, 2008

Of course digital is more than just free stuff. Amazon is the best media store ever. The Internet is the best library ever, and Google is the best index of same. On-demand music services are the best radio ever, and the iPod is the best portable media device ever. Mobile telephony is better than land-locked telephony. Tivo is better than VCRs. YouTube is lots more fun than America’s Funniest Home Videos. Expedia is far superior to your local travel agent. Etc. etc. etc.

More importantly, eBay is the best person-to-person auction and selling machine ever. And it couldn’t be done off-line. It’s not replacing anything, it’s inventing something new.

First AOL, and now Facebook or MySpace, depending on your tastes, are the best community communications platforms ever. And they’re removed from geographic and time constraints, and more or less free of Big Media Control (debatable). And they enable multiple personae, if you should so choose. On the internet, no one knows you’re a dog…

IM is the first real-time text communication vehicle. But even better, it offers presence management and sophisticated contact management, not thay anybody’s done anything interesting with that yet.

The point is, digital works best when it doesn’t merely replace an existing consumer or business service on the cheap, but rather when it creates something new. All I saw in the “cruddy” post were examples of cheap replacements.

Whaddaya, trying to kiss up to the boss?