infocomm 9/1/06 infocomm 9/1/06

The Bottom Line on Baseline

The acquisition this week of Baseline StudioSystems by The New York Times Company is eye-catching for its cash purchase price, reportedly at close to six time revenues. But the deal looks very much like a starry-eyed gamble by The New York Times.

Baseline StudioSystems, despite its focus on the entertainment business, is very much a B2B data provider. Baseline concerns itself with the business of entertainment, providing deep detail on credits, representation and intellectual property to entertainment industry professionals. It sells online access to this content to the trade on both a subscription and a la carte business.

Recently, Baseline has begun licensing portions of its database to consumer portal sites to help them build traffic around its entertainment content. For those sites willing to buy content that can be given away in order to build traffic, Baseline represents a good licensing option.

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In waltzes the New York Times, still fresh from buying About.com for a hefty premium, and snaps up Baseline. Clearly, The Times wants to be a major online player, and is willing to write big checks to get there. The difference of course is that About.com is an advertising-based B2C operation, a model the Times knows well. But Baseline is a subscription-based B2B business, a model the Times knows ... not at all.

From published statements, it would seem the strategy of the Times is to leverage the Baseline database to build a major B2C entertainment destination. Since this destination will be data-driven, it will quickly bump heads with Internet Movie Database, a unit of Amazon.com, that has spent the last ten years becoming a major B2C entertainment destination. Of course, Baseline is currently licensing its content to other sites that have ambitions to become significant providers of B2C entertainment information, so the Times will also quickly find itself competing with its own customers.

We've been staunch advocates of B2B data publishers jumping on B2C cross-over markets where they exist. But the Times is jumping into a business it barely knows, in a highly competitive market, and hoping it will all work out without killing the golden goose in the process. Perhaps I am not giving Times management enough credit, but success here won’t come easily.

infocomm 9/1/06 infocomm 9/1/06

Isn't It Ironic?

I just read Michael Wolff's new article in Vanity Fair about the current travails of the New York Times. In this piece, one of his most trenchant essays in quite some time [a Michael Wolff tip -- if the article contains the word "mogul," it's not worth reading], he manages to brilliantly summarize the concern that's been nagging at me for several years now:

"...the Internet, once thought of as the ideal vehicle for reaching a targeted audience, is turning into a high-volume business, super-mass-media, dependent on cheap advertising. Success demands vast numbers: tens of millions or hundreds of millions of habituated users."

That, in a nutshell, is where things are going wrong, badly wrong. We are measuring success by the amount of traffic we get. It's the simple explanation for the recent spate of high-priced acquisitions of online propeties, among which was the acquisition of About.com by the New York Times. Wolff's blistering assessment of About.com:

"About.com may actually establish the baseline for the lowest level of information available on the Web (which is saying a lot): a multi-million-page mishmash of superficial, often out-of-date, dumb, frequently wrong info bits, a place you never go by choice, but only because a search engine has been "optimized" (that is, tricked) to send you there."

I don't know if About.com is as bad as Wolff represents, because I never go there except by accident, which of course only serves to buttress Wolff's point.

We're increasingly focused on site traffic, even though deep down we all know that traffic is not the same as audience, just as clicks are not the same as leads. Too many of us are giving away our best content, paying good money for contextual ads to drive traffic to pump up our counts, and paying talented programmers to game the search engines to improve search results rankings, even at the risk of looking stupid or misrepresenting what we do or sell. Overstated? Type "raw sewage" into Google and look at the eBay ad. And why did Google just do a $900 million deal with MySpace? In essence, to buy traffic. Yes, even Google is now effectively buying traffic.

Okay, in many cases there is an economic basis for all this. Attract enough traffic online, and you can sell a lot of advertising. But to a worrying extent, the companies buying the ads are trying to drive traffic to their own sites to sell advertising to companies trying to drive traffic to their own sites ... you get the point.

The secret to long-term online success (and survival) is not getting sucked into the easy money, perpetual motion machine that online marketing is becoming. Real value, real audiences and real leads will prevail, and those of us offering them will be insulated when the web traffic music finally stops, and there are far more participants than chairs. The long-term game is to get the right traffic, not the most traffic.

Want to read this Michael Wolff article? No need to subscribe, trek to the newsstand or even pay. Vanity Fair has thoughtfully posted it online for free, and I bet I know why: they want the traffic.

infocomm 8/18/06 infocomm 8/18/06

Is More Better?

That, in a nutshell, is where things are going wrong, badly wrong. We are measuring success by the amount of traffic we get. It's the simple explanation for the recent spate of high-priced acquisitions of online properties, among which was the acquisition of About.com by the New York Times. Wolff's blistering assessment of About.com:

I don't know if About.com is as bad as Wolff represents, because I never go there except by accident, which of course only serves to buttress Wolff's point.

Want to read this Michael Wolff article? No need to subscribe, trek to the newsstand or even pay. Vanity Fair has thoughtfully posted it online for free, and I bet I know why: they want the traffic.

infocomm 8/10/06 infocomm 8/10/06

Fortresses of Solitude

According to American Business Media, there is a powerful coalition of environmental and consumer interests coming together to introduce "do not mail" legislation in the next session of Congress. Could it happen? Nobody knows for sure, but if it does, "do not mail" will come together with "do not call" and the murky set of rules that effectively create a "do not fax" environment. Add into the mix technology like voicemail and aggressive spam filters and as a society we'll be well on our way to seeing the elimination of all unsolicited outside contact. It is arguably desirable for consumers to be able to choose to make their homes into their own fortresses of solitude, but the implications for business-to-business marketing are much more profound.

As businesses, this legislative trend, coupled with our own aggressive adoption of technology to filter email, is severely limiting what we see and hear and in many cases we are throwing the baby out with the bathwater.

Case in point: we get a number of opt-in sign-ups to this newsletters every week. We add these folks to our list and like clockwork half of them come back with the message "this message was blocked by our spam filter." We used to try to contact these people to alert them to the problem, but it's a big effort and expense for us, and in many cases these people tell us there is nothing they can do because they don't control what gets filtered out. It's a perfect lose-lose outcome, and it's getting worse every day.

Even more importantly, as this trend towards rigorous screening accelerates, we hurt ourselves in another way because as a side-effect of all this, we are creating a more complex, if not downright hostile marketing and sales environment that makes it harder and more expensive for all of us to do business.

So where are things headed? In the short-term, it's a boon for trade show producers, and publishers with magazines and websites that carry advertising that generates inbound inquiries (provided these prospects can get past your defenses). It also partially explains the boom in any and all forms of lead generation. But longer term, things have to significantly change.

Just as we tell our advertisers that "just one sale can pay for your entire advertising program," we as organizations need to appreciate that just one good unsolicited contact can make up for an awful lot of unwanted contacts, and we need to be mindful that corporate fortresses of solitude are a luxury none of us can afford.

infocomm 8/10/06 infocomm 8/10/06

Picks, Pans and Passes

Since there were so many interesting developments this week, we thought we'd
summarize some of them and grade them as either a "pick" (thumbs up), "pan" (thumbs down) and "pass" (it is what it is):

Someone at the Associated Press is one step closer to sainthood for signing an agreement with Google whereby Google will not only pay for AP content, but limit the way it uses it as well. Admittedly, there is precedent for Google licensing some limited amounts of content it couldn't easily spider, but this AP deal goes to the heart of Google's core business practices, and should help create some much-needed space between the terms "fair use" and "free use." This deal's a pick.

InfoUSA announces it is going to acquire Opinion Research Corporation, a major market research organization. It characterizes the deal as "compelling" and "strategic," but is short on specifics other than extolling putative cross-selling opportunities. The backdrop to this deal is an ongoing, public feud with a major shareholder over financial performance and management issues, and a recently negotiated standstill agreement with the company's founder who makes periodic noises about taking the company private. Who says it's dull in Omaha? Is this acquisition a good deal for infoUSA? Possibly. Is it a compelling and strategic deal? Sorry, no, and on that point we rate this one a pan.

Major League Baseball got shaken out of its fantasy world by a federal judge who told the organization that, no, it did not have the right to prohibit others from using the names and performance statistics of major league baseball players. Apparently, the Major League Baseball Players Association struck out on this case by not properly taking into account such inconveniences as the first amendment and the Supreme Court's decision in Feist. When data ownership claims move into the realm of silliness, they hurt even those seeking more modest protections for their data, which is why we rate this decision a pick.

TheStreet.com announced the acquisition of Weiss Ratings from Weiss Group Inc. Weiss Ratings, a 2004 Models of Excellence award winner, provides performance ratings on over 16,000 mutual funds and 6,000 stocks. It also rates the financial strength of more than 13,000 financial institutions. Weiss did a remarkable job building a ratings business from scratch, against a pack of strong and established competitors, but with the buzz from its often-controversial ratings starting to fade, it needed a second act to maintain visibility. What better partner than TheStreet.com, no stranger to using controversy to get attention, with a huge base of loyal investors, and a need to differentiate itself from other consumer investment sites. Now here is "compelling" and here is "strategic." This one's a pick.

Google's recently released white paper designed to smack down growing claims of click fraud qualifies as a white paper largely because it can be easily printed on white paper. With its j'accuse tone, it was designed to shoot down the methodologies of several click fraud detection services. Yet to make its case, Google repeatedly relies on such compelling proof statements as "their records don't match ours" and "yes it was fraud, but we didn't charge the advertiser for it." In response to one case where the same person appeared to visit an advertiser's site three time in the course of ten minutes, Google simply informs us that this is normal comparison shopping behavior. Well, with that kind of documentation, we know we will all be sleeping more easily. Despite making some valid points, you would think a huge corporation with so much at stake could have done a better job than this, which is why we rate it a pass.