Tuesday, August 28, 2007

In Online World, Pocket Change Is Not Easily Spent

SAN FRANCISCO, Aug. 26 — The idea of micropayments — charging Web
users tiny amounts of money for single pieces of online content — was
essentially put to sleep toward the end of the dot-com boom. In
December 2000, Clay Shirky, an adjunct professor in New York University’s
interactive telecommunications program, wrote a manifesto that people
still cite whenever someone suggests resurrecting the idea.
Micropayments will never work, he wrote, mainly because “users hate

But wait. Amid the disdain, and without many
people noticing, micropayments have arrived — just not in the way they
were originally envisioned. The 99 cents you pay for a song on iTunes
is a micropayment. So are the tiny amounts that some operators of small
Web sites earn whenever someone clicks on the ads on their pages. Some
stock-photography companies sell pictures for as little as $1 each.

Article Link

Monetizing YouTube - What About Micropayment Downloads?

Could micropayments be the key to monetizing YouTube? The New York Times has an interesting article
today about the history and future of micropayments. "In December 2000,
Clay Shirky, an adjunct professor in New York University’s
interactive telecommunications program, wrote a manifesto that people
still cite whenever someone suggests resurrecting the idea," writes the
Times. "Micropayments will never work, he wrote, mainly because 'users hate them.'"

But, says the paper, micropayments are here, just not in the form we
initially thought. Dot-com flameouts like BitPass, DigiCash, and
Peppercoin all tried various methods of micropayments with the hope
that content publishers would be able to charge a few cents to a few
dollars for articles, reports, images, and other downloads. For the
consumer, most of these schemes worked like a prepaid calling card --
load money into your account and buy stuff with credits.

wait. Amid the disdain, and without many people noticing, micropayments
have arrived -- just not in the way they were originally envisioned.
The 99 cents you pay for a song on iTunes is a micropayment. So are the
tiny amounts that some operators of small Web sites earn whenever
someone clicks on the ads on their pages. Some stock-photography
companies sell pictures for as little as $1 each."

Certainly, it is far too early to judge YouTube's just launched video overlay ads, but early user reviews are mixed, at best. Morgan Stanley's Mary Meeker estimates (after some revised math) that YouTube's ads will pull in between $75 and $189 million gross revenue per year -- which, with the astronomical cost of streaming video, won't really cut it.

So what about charging small amounts for high quality, downloadable
versions of commercial content on YouTube as a way to bring in money?
Sure, Google already tried that with Google Video, and shut that service down
citing an "effort to improve all Google services." But Apple has had a
lot of success selling TV shows and movies (they sold a million of them
in the first 20 days, and move tens of millions of video downloads per
year through iTunes), so the model is sustainable.

YouTube is already the web's most recognizable video brand, and Google could take pains not to repeat the mistakes they made
when launching the Google Video Store a year and half ago. This also
seems like a good opportunity to tie in another Google service,
Checkout, and put some heat on PayPal, which has become the web's most
successful micropayment processor (though it is also used for

YouTube could further offer a way for user generated content
creators to monetize content other than ads. While it's unlikely that
people would pay for single episodes of Lonelygirl15, die-hard fans of
the web show might pay a nominal fee for high quality, DVD-burnable
downloads of the entire series. Similarly, NBC has had great success
with their YouTube channel showing clips of Saturday Night Live
(including owning the 5th most watched all time), and they could use that popularity to sell DVDs like "The Best of Chris Farley" in a YouTube download store.

The biggest hurdle to a download store would be DRM. Apple has had
some success convincing music labels to sell songs sans-DRM, but their
video downloads are annoyingly locked into iTunes (I'm still sore I
can't burn my 2006 Fiesta Bowl download to DVD). Any download service
that can figure out how to convince the studios to do away with DRM --
or at least make it a whole lot less intrusive -- will be an instant
hit with users.

Article Link

Sunday, August 26, 2007

The Facebook economy

Four ways to make money

1: Sell ads

The play

about any Facebook app can get into the ad game, but only those with
the biggest audiences will earn serious money. Several easy-to-use ad
networks are already delivering the ads for a cut of overall sales.(See
"Tools," below.)

The front-runners

Graffiti (5.9 million users). This highly viral drawing tool spread quickly because of its simplicity and originality.

iLike (5.4 million users). Users can set up their music and video libraries in mere minutes.

The Simpsons Photos, Quotes, and Trivia (60,000 users). Pearls of wisdom from the first family of Springfield.

The payoff

currently generate less than $1 for every 1,000 pageviews. But that
amount will likely increase as demographic targeting becomes more
refined and the ad models move from simply racking up pageviews to
measuring users' engagement.

Tricks of the trade

Establish your base. Hold off on serving ads until you have at least
10,000 users. Bombarding users with too much advertising can scare them
away and hurt your growth in the long run.

2. Test different ad
networks. Putting up ads is a simple cut-and-paste operation, so you
can afford to be choosy and pick the network that gives you the best

3. Don't clutter up app pages. "This is definitely a
challenge for developers," says Mark Kantor, one of three developers
behind Graffiti. "The most important thing is to preserve user

4. Renegotiate as you grow. Demand a bigger cut of
the revenue share as your traffic jumps. Says Kantor, "It might be
better to go with a small ad network if you think you'll stand out."


Dozens of ad networks are cropping up to serve the Facebook developers. Here are a few.

Lookery (lookery.com). This new Facebook-specific ad network aims to
offer developers demographic profiles of their user bases. More
targeted advertising could soon fetch a higher price.

Userplane (userplane.com). AOL-owned Userplane pays per minute of
exposure rather than just per pageview, so it's good for applications
like games that keep users highly engaged.

3. Google AdSense. Not new, but many developers consider it the best means of supplying relevant ads.

2: Attract sponsors

The play

are already sponsoring apps. Besides being widely used, your
application needs to offer companies a natural way to interact with
their customers.

The front-runners

Likeness (2.9
million users). Offers quizzes that generate top-10 lists - an ideal
branding vehicle - and matches them with those of friends with similar

FoodFight (2 million users). Virtual lunch money
buys you food to throw at friends. Next up on its menu: chicken wings
from a major food chain.

HotLists (1.6 million users). This app
lets users define their personas by posting brands' logos, cleverly
dubbed "stylepix," on their profiles.

The payoff

direct relationships with brands takes more time and effort, but it
means higher-quality advertising and more control over how your users
interact with it. Expect to earn multiple-dollar CPMs instead of the
pocket change you'd get from the ad networks.

Tricks of the trade

Don't pitch big brands without big numbers. You'll need a large traffic
base - at least a few million users - before top brands will pay

2. Know who's looking at your pages and why. Analyze
your user demographics so you can pitch your audience effectively to
sponsors.(See "Tools," below.)

3. Let your users do the work. Incorporate brands that your users identify with, and they'll willingly spread the word.

4. Don't overdo it. Too much brand presence will scare away Facebook's sometimes advertising-averse audience.


Where to find help analyzing your traffic and users.

Google Analytics. Embedding Analytics into your apps is easy, and it
churns out useful stats about where users are coming from.

2. Gigya (gigya.com). This startup tracks metrics like app stickiness and user adoption rates.

Appaholic (appaholic.com). This site tracks traffic growth by the hour,
day, or week - critical when launching a new ad campaign.

3: Sell services

The play

apps become more about utility and less about fun, opportunities will
arise to sell digital services of lasting value to users. Eventually,
they'll make purchases without leaving their profiles.

The front-runners

(43,000 users). Offered by Box.net, this online file-storage service
turns a Facebook profile into a repository for members' digital media.

(206,000 users). A Facebook version of Photoshop.(Hello, Adobe?) Basic
tools are free; advanced features are offered for an additional fee.

The payoff

you're selling a real service, then you can have your cake and eat it
too- try selling subscriptions and ads to double-dip on your traffic.

Tricks of the trade

Start with a free version. And make switching to a paid offering an
easy process. Don't force users to leave Facebook to sign up.

Set logical limits. Decide carefully what you'll give for free and what
you won't. And even the freebies must be valuable enough for customers
to be willing to spend their time.

3. Research your price
points. Box.net already had storage plans for businesses and
professionals. But when it moved onto Facebook, the company rethought
its pricing models and created a $25-per-year plan that's comparable to
the cost of an external flash drive - the way most college students
store important files.

4. Be tactful and timely. Box.net alerts
its users when they're nearing their file or storage size limits,
politely reminding them about its for-pay premium service.


Where to find a platform to process payments.

1. PayPal. A starter plan will cost you 2.9 percent plus 30 cents per transaction.

2. Google Checkout. The standard processing fee is 2 percent plus 20 cents per transaction.

3. Facebook. The company is rumored to be launching its own payment platform soon.

4: Sell products

The play

Facebook increasingly becomes the center of people's digital lives,
it's also becoming a venue for selling things - digital and otherwise -
to its fast-growing audience.

The front-runners

Amazing Giftbox (127,000 users). Sends virtual Amazon merchandise.

Band Tracker (29,000 users). Searches upcoming concerts and links to ticket vendors.

Visual CD Rack (20,000 users). Lets users browse and buy music from a virtual CD rack.

The payoff

developers are going the affiliate route, offering product wish lists
and then sending users to sites like Amazon.com or iTunes. Others,
however, are directly selling such items as ringtones and T-shirts.

Tricks of the trade

Be a middleman. iLike makes its music-sampling apps simple and hands
off sales to iTunes or Amazon via affiliate partnerships. Those
directly selling hard goods need to prepare for the complexity of
payment and delivery.

2. Keep it simple. Facebook has not yet
become a place where people are likely to buy, say, a digital camera.
But users are starting to purchase items that don't break the bank and
extend Facebook's utility. XLR8 Mobile, for instance, is looking to
sell ringtones and wallpaper on Facebook via custom storefront widgets.
"We don't want to bring people to the store," says XLR8 Mobile CEO
Perry Tell. "We prefer to bring the store to the people."

Give it away. Going viral is always the goal. One great way to get
there is by offering free samples. Whether it's a digital download of a
song or the image of an item, give your customers a taste of what
they'll get before asking them to commit.

4. Don't rule out the
odd. "Sometimes wacky, unusual, off-the-beaten-path stuff sells huge,"
Tell says. "Everyone is looking for the next Crazy Frog, so you must be
willing to try lots of things."


Clearspring Technologies. This analytics service tracks exactly who's
downloading an app and what they're buying through it. It also suggests
when to double down on an item or sales approach that is working or,
conversely, kill off those that aren't.

2. Garage Sale. Developers can use this Facebook shopping cart system run by Buy.com, which takes a 5 percent cut of sales.

3. Facebook Marketplace. The largest classified-ads community on the network, it's a good place to monitor buying trends.

Article Link

Friday, August 17, 2007

TripAdvisor Acquires Facebook App Where I’ve Been For $3 Million

TripAdvisor has acquired Facebook Application “Where I’ve Been” for a reported $3 million.whereivebeen.png

Where I’ve Been allows users to share where they have been in the
world from their Facebook profiles and has approximately 2.3 million

Inside Facebook notes that the $3 million purchase price values Where I’ve Been users at around $1.30 each.

The purchase is the first major seven figure acquisition for a
dedicated Facebook only application. Where I’ve Been was recently
included on the TechCrunch interns list of favorite Facebook apps.

Article Link

Thursday, August 16, 2007

Extending Microsoft Money - The Web Needs an Alternative to Paypal

last100 has an interesting post on Microsoft Points,
a kind of virtual currency for the Xbox Live Marketplace and the Zune
Marketplace. In a lot of ways, Microsoft Points act just like real
money and functions in a similar way to Paypal.
Mack D. Male wrote that "if you see a movie you want to buy on Xbox
Live, you just need to make sure you have enough points available in
your account. The main difference, of course, is that you don’t
“purchase” money, but you do purchase Microsoft Points."

Mack says that "Microsoft Points can be purchased online using a
credit card, or from a participating retail location in the form of a
Microsoft Points Card. As with airtime minutes on your mobile phone,
you purchase allotments of points at once, ranging from 400 to 5000
points. The price varies all around the world, but in the United States
80 Microsoft Points is equal to $1. If you live in a country with
government sales tax, you’ll pay that on top of the price of the

big question is can Microsoft Points be extended and used across
Windows Live in the near future, as an equivalent to the likes of
eBay's Paypal or Google Checkout? Microsoft blogger Robert McLaws wrote about this idea back in January, and speculated that it might be called Windows Live Payments. This was based on a Bill Gates comment in February, in which Gates hinted that that online micropayments is an area Microsoft will pursue.

As last100 noted, almost all of the major forces in the digital living room have a payments system of some sort. Sony has the PlayStation Network Card, Nintendo has Wii Points, Google has Checkout, and Amazon recently launched FPS.
Sony and Nintendo’s systems are virtual currencies, whereas Google and
Amazon’s are payment services. Microsoft could be the first company to
offer both by opening up Microsoft Points to the world.

Probably the first thing that comes to mind when considering such a
system across Windows Live is: look what happened to Passport.
Microsoft's 90's identity system was a failure, with consumers
ultimately not trusting Microsoft to manage their online identities. So
if users don't trust Microsoft with their ID, what chance they will
trust Microsoft with their money?

We want a Paypal competitor

But I think the micropayments infrastructure is due for a shake-up.
Paypal has gotten almost arrogant of late, with their ridiculously high
fees and honey-catching account structure (tip: don't sign up for a
"premium" account, you end up paying much more in fees than a simple
"personal" account). Google Checkout so far has little to offer
ordinary consumers, so right now Paypal enjoys a virtual monopoly. So I
for one would welcome a Windows Live Payments system. OK, this goes
beyond a virtual currency - which Microsoft Points is right now - but
the opportunity is there to extend into micropayments.

What do you think, will Microsoft Points be used in Windows Live services to enable a micropayments system? Would you use it?

Article Link

Wednesday, August 15, 2007

New Study Shows that Online Creativity and E-learning Popular with Kids

A new study released today
by the National School Boards Association shows that 96 percent of
students with online access use social networking technologies -
defined as as chatting, text messaging, blogging, and visiting online
communities such as Facebook, MySpace, and Webkinz. 81 percent say they
have visited a social networking Web site within the past three months
and 71 percent say they use social networking tools at least weekly.
The report also claims that one of the most common topics of
conversation on the social networking scene is education.
Nearly 60 percent of online students report discussing
education-related topics such as college or college planning, learning
outside of school, and careers. And 50 percent of online students say
they talk specifically about schoolwork.

The study also shows that students are engaging in creative activities
on social networking internet sites; including writing, art, and
contributing to collaborative online projects "whether or not these
activities are related to schoolwork". Almost half of students (49
percent) say that they have uploaded pictures they have made or photos
they have taken, and more than one in five students (22 percent) report
that they have uploaded video they have created. Those figures are "at
some point". The weekly figures are shown in the graph below and
suggest that it's probably 1/4 or less of students who do creative
activities online at least once a week.

To use the television metric, teens who use social networking sites
spend about 9 hours a week online compared to 10 hours a week watching

And here's one for the 'nerds' of a previous generation:
nonconformists, defined as "students who step outside of online safety
and behavior rules", are said to be "on the cutting edge" of social
networking, with online behaviors and skills that indicate leadership
their peers. They are the heaviest users of social networks. The study
states that one in five (22 percent) of all students surveyed, and
about one in three teens (31 percent), are nonconformists. 50 percent
of nonconformists are producers and 38 percent are editors of online
content, compared to just 21 percent and 16 percent, respectively, of
other students.

Interestingly, the NSBA report contrasts a little with another recent report, by Online Publishers Association (OPA), that suggests Internet users are spending more time looking at content and less time
communicating with others. According to Nielsen/Net Rating statistics
released by OSA, from January to May 2007, about 47 percent of users'
time was spent looking at content and 33 percent spent on communicating
- a trend attributed to an increase of online video and search usage.
Although, that report doesn't account for IM as communication - which seems a bit behind the times.


What the NSBA data shows - see the report
for the full details - is that US teens and tweens are not "passive
couch potatoes online", as the report put it. This generation is very
participative and creative online. Or at least growing more creative as
time goes on and the Internet becomes more pervasive.

The report, “Creating & Connecting: Research and Guidelines on
Online Social and Educational Networking,” is based on three surveys:
an online survey of nearly 1,300 9- to 17-year-olds, an online survey
of more than 1,000 parents, and telephone interviews with 250 school
districts leaders who make decisions on Internet policy. The study was
carried out with support from Microsoft, News Corporation, and Verizon.

College Students - Stats

College Students Wield Connections, Concern and Consumer Clout

Alloy sent over the summary of their latest College Explorer research,
which shows how much college students have changed in the past four
years (they are way more wired). I'm pulling out the key stats below:

They are totally wired

- Close to all students (93%) report owning a cell phone (up 15 points from four years ago)

- Digital camera ownership has just about doubled since 2003. Today,
64% of students report owning one and 16% cite intention to purchase
this year

- In 2003, 17% of students owned MP3 players - and the iPod was not
yet a staple - today more than half (58%) own one [my BusinessWeek
Online piece on Apple should be running tomorrow btw]

- About one-third (28.9%) of campuses now offer blanket wireless
coverage and almost two-thirds claim to have a wireless strategy plan
in place (this has doubled from four years ago)

- Down with desktops: there was a 21 point increase of laptop ownership in the last two years alone (63% today vs. 42% in 2005

More students = more money to spend (or more debt to rack up)

- A 14% increase (from 2003) as 13.3 million students head back to
campus with $198 Billion in consumer spending power (up 31% from 2003)

- Three-quarters of students now report employment during the year

- 56% of college students are female, about 1.1 million more than reported in ’03

They're influencers

- 27% choose to stay in touch with friends via social networking
site over face-to-face communication, at 11%, or over phone, with 23%

- More than half (54%) of college students (ages 18-30) visit a social networking site in a typical day

- 25% actually claim they have “never” visited a user-generated site

- 66% of students are learning about brands, products and services from their friends

- 61% report being influenced by word of mouth WOM (up 48% from 2004)

- Students cite they are most likely to look to friends for advice for movies (60%) and electronics (48%)

- More than half of students claim they played the deciding role in
recent decision to buy a computer (57%), a digital camera (57%), or a
cell phone/PDA (66%)

Some of them want to make a difference

- 35% of students reporting they feel that people their age have the
greatest ability to impact positive world change and up from last year

- 37% cite they are more likely to purchase brands that are socially and environmentally responsible (33% in 2006)cc

Tuesday, August 14, 2007

34 More Ways to Build Your Own Social Network

A few weeks ago we posted 9 Ways to Build Your Own Social Network,
a review of several hosted, do-it-yourself white label social
networking solutions. Conspicuously missing from that round-up were
many additional companies that specialize in the creation of social
networks. These companies were intentionally overlooked in the first
post because we wanted to focus on self-service websites. In this
second post, we cover these remaining companies, all of which offer
either made-to-order solutions or downloadable software.

When reviewing Ning, KickApps,
et al., I was able to test the products first-hand by creating social
networks from scratch and for free using online wizards and tools.
Testing this second post’s solutions was more difficult because
they all require the formation of business relationships and/or local
installation and configuration. But we were able to test many of the
launched social networks that actually use these solutions, and we also
interviewed several of the companies.

Detailed information about the companies is presented in the interactive chart to the right, which features additional information in popups and the ability to select only particular companies for comparison.

The following companies are included in the chart: Affinity Circles, AlstraSoft, Blogtronix, Boonex, Broadband Mechanics, Converdge, Crowd Factory, DZOIC, GoLightly, introNetworks, Kwiqq, Leverage, Lithium, LiveWorld, Neighborhood America, Omnifuse, Pringo, Prospero, SelectMinds, Small World Labs, Social Platform, Sparta Social Networks, Telligent, ThePort, VMIX Media, Web Crossing, Web Scribble Solutions, and Webligo.

Not included are Dave Networks, Five Across (absorbed by Cisco), PHPizabi, Pluck, and Village Engine because they did not respond to our inquiries. phpFox responded but opted not to fill out our questionnaire.

Your initial reaction may be “wow, this market sure looks
overcrowded.” In the longer run, competitive pricing may force
many of these companies to drop out of the business. However, I was
surprised to hear several of them say that current demand for social
networking services is overwhelmingly high. One of the representatives
I spoke with half-kiddingly said that he did not actually want
TechCrunch coverage of his company because he already has to turn down
multiple project requests per week. It will be interesting to see over
the next few years whether this demand further intensifies as potential
customers realize the value of niche social networks, or whether it
slackens as people get over the hype surrounding this aspect of Web 2.0.

Many of these companies are targeting large, well-established
organizations with deep pockets. Scan the chart and you will see
big-name media companies, educational institutions, and corporations
such as Reuters, Campbells Soup, Harvard Business School, Citrix, Oracle, HP, Microsoft, Fortune, Cingular, Comcast, Land Rover, American Express, ABC News, ESPN, and HotMomsClub.com (okay, so they’re not all big names).

The companies in this round-up have some advantages over those in
the first round-up when it comes to providing for well-established
organizations. First, these companies can protect and enhance their
clients’ brands by delivering highly-tailored social network
components that integrate seamlessly into existing websites. This is
especially true for the subset of social networking companies that
provide made-to-order solutions rather than downloadable packages.
However, even downloadable software can (at least theoretically) be
retooled by the clients’ developers to match an existing look and

Secondly, many of these companies provide greater ownership of
social network data and/or software. While a groupie running a Smashing
Pumpkins fan network on Ning does not care that the network’s
data is locked up in Ning’s system, Wells Fargo and Ernst &
Young prefer to keep their communication systems much closer to the
vest. Corporations often need to know that their data is safe and
trackable for both dependability and legal reasons. Social network
ownership is often ensured by putting the software and data management
entirely on the client’s servers, or as is the case with
Blogtronix, delivering the hardware and software together as an
appliance, if demanded. However, even the hosted solutions among these
companies eagerly emphasize that they respect their clients’
ultimate ownership of data on their servers.

Thirdly, several of these companies claim to develop closer,
longer-lasting relationships with their clients. They provide
information sessions at the beginning of their relationships,
collaborate during the design process, and may even help market the
social networks and provide ongoing content moderation support.

Fourthly, these companies can be very flexible when it comes to how
much of the work their clients want to take on themselves. While they
all provide complete social networking packages, many also support the
widgetization of their features so clients can embed social networking
functionality in regular pages. Some, such as Crowd Factory, also allow
for the client to take complete responsibility for front-end
programming and use an API to plug into a full-service back-end.

While all of these companies provide social networking
functionality, they differentiate themselves in several ways.
AlstraSoft, Blogtronix, Boonex, Broadband Mechanics, DZOIC, phpFox,
PHPizabi, Telligent, Web Scribble Solutions, and Webligo form the
minority that provide non-hosted solutions (although Blogtronix and
Broadband Mechanics provide software as a service, or SaaS, solutions
as well, and others might be willing to locally install their
traditionally hosted platforms).

Some of them, such as Crowd Factory, Prospero, and Neighborhood
America concentrate on serving media companies. Affinity Circles
provides job-oriented social networking solutions for alumni networks
and trade associations. SelectMinds exclusively builds private networks
for the employees of corporations. And Kwiqq aims to become a
long-standing technology partner with the companies it serves.

A few provide unique features not found in your average social
network. Leverage and introNetworks both have strikingly similar
visualization features that enable network members to easily locate
other members who share their backgrounds and interests. DZOIC’s
Handshakes Professional product allows members to save their searches
and get notified when new members match search criteria. ThePort, which
has been around since 1999 and focuses on creating niche communities,
differentiates itself by integrating its social networks with its own
news aggregation and start page services.

Speaking of older companies, the players in this market also vary
significantly in age (at least when considered in light of other Web
2.0 companies). The oldest of the group, Web Crossing, was founded in
1986, and others were originally born as Web 1.0 companies: LiveWorld
in 1996, and Neighborhood America and Sparta Social Networks in 1999,
for example. As representatives for Prospero (founded in 2000) attest,
these older companies have needed to changed their focus in the last
couple of years to accommodate a new preference for “me”
technologies over “we” technologies. However, these
companies also claim that their experience, business relationships, and
internal structure have prepared them well for this transition and
equipped them to deliver mature products.

Check out the chart
for more detailed information about these companies. If you have
personally dealt with any of these companies, please share your
experience in the comments below.

Saturday, August 11, 2007

Sell Your Digital Wares Through Edgeio Paid Content

Classified listings service Edgeio now lets you sell content through your listings. The new type of listing
called “Paid content” consists of the same listing Edgeio already
hosts, but comes with an embedded digital locker. Through the locker,
users can securely sell text, file downloads, and streaming media
through a widget hosted by Edgeio.

It seems a good fit for selling podcasts or research reports.
Affiliates can also grab the widget code to sell your product on their
own sites as well for a revenue share determined by the content owner.
Michael Arrington, the editor of this blog, is a founder and investor
in the company.

Digital lockers are nothing new. E-Junkie, Payloadz, Tradebit, and Bitpass (shutdown)
have done it for a while. However, Edgeio has the added advantage of
leveraging the paid listings through their existing listings network
and providing a very straightforward product.

edgeioIt’s pretty simple to get started. You sign up to create a listing
like any other through the “Paid Content” link. Next, select your
content type, price (currency), affiliate percentage, and coupon code.
Finally, Edgeio lets you make a teaser “preview” for the content to
give buyers an idea about what they’re purchasing. Once completed, you
get some embed code and the listing is placed in Edgeio’s index, linked
to the page where the widget is embedded.

An example of one of the widget embeds is included below. The other
version of the widget initially shows visitors a teaser, until the
content is purchased and unlocked. Use the coupon code “vgforfree” to
unlock the content. To purchase the content, you need to sign into your
Edgeio account and to pay by credit card or PayPal. The content is then
unlocked for your Edgeio account.

Edgeio splits revenue from sales through the widget 80/20 in favor
of the content creator. The creator can then split that 80% for sales
through affiliates at any percentage they like.

Article Link

Thursday, August 9, 2007

Wednesday, August 8, 2007

Big Media Is Buying, Hearst goes Kaboodle

First it was News Corp., then CondeNast and CBS Interactive. Now
Hearst Corp. and Forbes have joined the Web 2.0 party, snapping up tiny
start-ups, and trying to capture the ongoing online shift of both
audiences and advertising dollars.

Earlier today, Venturebeat reported that Forbes was buying Clipmarks, a social bookmarking and clipping service based in New York. Now The Wall Street Journal
is reporting that Hearst has snapped up Kaboodle, another bookmarking
service that allows online shoppers to clip and save information, for
an undisclosed amount.

According to our sources went for
somewhere around $40 million. Manish Chandra, founder and CEO of the
18-month old start-up based in Santa Clara, Calif., declined to comment
on specific terms of the deal.

When I asked him why he decided to sell the company, he candidly
replied, that “the stakes are getting higher, and others [competitors]
are raising a ton of money.” What do that say, any exit is a good exit.

The company had about 2.2 million unique visitors in June 2007, having grown 20 fold since its launch. It had raised about $5 million in venture capital, and was in the process of raising another round when the exit opportunity emerged.

Chandra said that since a large percentage of Kaboodle users are
women, and the site has an e-commerce/shopping component, it fit nicely
with the larger goals of Hearst. He also added that the deal doesn’t
impact its deals with Conde Nast properties.

There is an interesting pattern in some of the buys by big media
corporations. They are not just buying pure-content, but instead seem
to be interested in content-enhancing tools that rely on communities
than individual content creators. Newroo, Photobucket, Reddit, Last.fm,
Clipmarks and now Kaboodle fit that profile.

This is a strategy not without risk. Big media companies have to
leave the acquired-and-their communities alone. Back in June 2007, Liz wrote about this trend of big media companies leaving the “kids” alone.

Acquirers, despite their enormous and asymmetrical
audience, money, and power compared to their purchases, seem like
awkward first-time parents afraid of hurting a baby. They are more than
conscious of their status as old farts swooping in and quickly turning
cool to lame.

From a Silicon Valley perspective, emergence of buyers outside of
the G-Y-M (Google, Yahoo, Microsoft) triumvirate is a good thing. Sure
it rules out billion dollar exits, but it ensures that there are more
buyers with cash.

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Tuesday, August 7, 2007

Leveraging Facebook To Compete With eBay Won’t Work

Buy.com made a splash tonight with their announcement of a new Facebook application called Garage Sale.

Facebook users can use the application to sell thing directly to
others via their Facebook profile. Buy.com charges a flat 5% commission
on completed sales (the seller will also have to pay Paypal or other
payment fees. The application says “thanks to Garage Sale, Facebook
users don’t have to leave their profile page to advertise and sell
personal goods.”

There are other Facebook applications doing nearly the exact same thing. Mosoma, for example, is one that I tested a couple of weeks ago. It also allows users to sell items on their Facebook profile.

There is an argument that a closed network is a better way to sell
items because the people who view the listing know you and, presumably,
trust you. That gets you over a big hurdle - eBay’s feedback system
provides information on the buyer and seller which helps them get
comfortable transacting. Without that feedback system to encourage
sales, it’s important that something else takes its place. In the case
of Garage Sale and Mosoma, user familiarity is the key.

But in practice this doesn’t work so well. Sellers are looking for a
big base of buyers to sell into to leverage the network effect. eBay
obviously does an excellent job of this. Otherwise there is no reason
they would command a long term leadership position with their high
fees. Buyers and sellers put up with the fees because it is the place
to go to conduct p2p transactions. The network effect perpetuates their
success and newcomers have a very difficult time gaining market share.

With Garage Sale and Mosoma, sellers can’t access this large pool of
buyers because only their friends will see the listings. And sellers
who are looking for a specific item are still likely to hop on over to
eBay and do a quick search. They’ll only buy from friends if they
serendipitously happen to catch site of an item in a friend’s news feed
that they were already looking for.

Microsoft experimented in this area in late 2005/early 2006 with their Live Expo product. Originally Expo was a way to buy and sell items to your MSN IM buddies, or coworkers at a company,
which is very similar to the Facebook experiments now being conducted.
But over time they seem to have expanded Expo to become a more generic
listing service. People want deep listings when they are looking for

Closed networks work for some things, but they don’t seem to work
for trading physical goods. My bet is that Garage Sale and Mosoma fall
short of expectations, and that eBay is looking on with, at best,
bemused interest.

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