Benjamin Kuo’s Blog

I was browsing the Los Angeles Times’ interview with Demand Media’s Richard Rosenblatt today, and was amused to read this snippet from their article:

Outside Santa Monica’s dot-com circuit, the name Richard Rosenblatt doesn’t mean much. He’s one of those guys who buys and sells empty websites.

We ran an interview with Richard back in February of 2007, and have followed the company since day one, and it’s been interesting to me to observe what I call the “IAC” effect going on with Internet companies, particularly here in Southern California. IAC/InterActiveCorp — the media conglomerate headed by Barry Diller — owns a huge number of businesses sites everyone knows, such as Ticketmaster, Match.com, Evite.com, AskJeeves, Shoebuy.com, LendingTree, etc. However, for most people IAC doesn’t mean much without attaching “Barry Diller’s” next to the name.

The problem is, the firm has so broad of a business, and so many brands, no one associates it with any particular brand. That’s the problem that Rosenblatt’s Demand Media, plus a number of other firms here like Internet Brands, Move.com, Oversee.net, etc. face. They have become multiple-brand companies — where they own many, many businesses, dozens if not hundreds of domain names.

There’s no problem with that — all of these companies seem to be building huge, profitable businesses– but it means that the recognition of these companies is less than you might expect for the magnitude of the businesses they run. While you might see tons of coverage and attention given both in the traditional press as well as blogs on such things like Facebook, Twitter, Tesla Motors, etc. and other Silicon Valley media darlings, folks like Richard Rosenblatt and other very successful technology companies here in Southern California have real business models, revenues, and profits and are quietly laughing their way to the bank.

The Los Angeles Times said yesterday that it is cutting 250 people, including 150 news staff, and is reducing news pages as it attempts to cut costs. Times Editor Russ Stanton put it best:

Thanks to the Internet, we have more readers for our great journalism than at any time in our history. But also thanks to the Internet, our advertisers have more choices, and we have less money.

I’m one of the few folks who actually enjoys the “dead tree” version of the news, whether that is the Los Angeles Times or our other local papers, and it’s unfortunate that the current news business is facing such a crisis. We are entering a time where the vast resources available to the formerly powerful newspapers — including very dedicated reporters willing to work on very tough stories, global reach, and dollars to invest in stories — will no longer be contributing to the quality of coverage.  While those of us online serve a niche, there’s always been value in the deep digging, and impartial analysis that the traditional news media has offered. While blogging and online media has its place, it’s often conflicted, biased, and for the most part is far more opinionated than impartial.  The billion dollar question, of course, is how to fund the level of coverage traditional journalism has provided in the day and age of the Internet. It seems, the LA Times — and the rest of the industry — has yet to figure that out.

One of the great things about covering Southern California’s technology industry, is it’s refreshing not to be stuck in what feels like an echo chamber in the national technology news sector. One thing I notice about the many technology news blogs covering Silicon Valley or the technology industry in general, is that there are some companies which so dominate coverage that–if your goal is to cover the big national technology news–you can’t avoid investing resources and time on them. Those kinds of things would be things like the new iPhone or anything Apple, Facebook funding, swirling rumors around Google and/or Yahoo, etc.  Sure, these are important stories, and those news/blog sites trying to cater an international/global/national audience have to invest lots of time and effort on them. But, on a local level — i.e. in terms of its effect on Southern California — a lot of the hype around these really have only peripheral effect on our technology industry.

I’ve noticed an alarming trend (at least to me) lately, which is the number of folks who have been approaching me offering “pay for play” on their startups or events.  Pay-for-play — for those not familiar with it — is the use of either advertising dollars or outright payments to get positive writeups or mentions of your company.

I’ve always strived to conform to what has been a fairly pure, ethical position in journalism, which is to avoid all conflicts of interests, and where you can’t to declare conflicts of interest in any stories or blog posts.

However, I’ve been alarmed to hear from lots of folks proposing some kind of pay-for-play for coverage over the last few months. We always say no, of course–because we do not, and will not–provide positive coverage for companies because they’ve advertised with us, because they’re a sponsor, or for any other reason involving favorable finances. Instead, we try to provide fair, balanced coverage of companies on their own merits.

I’m not sure why I’ve seen this shift lately–perhaps, more companies who are desperate for getting some kind of attention or press–but it seems like some of this is connected to the give and take you see between blogs (”you link to me, I’ll link to you”). It also might be because the majority of blogs do not have a Chinese wall between the editorial and publishing side (including us). Or maybe, it’s just a general decline in what is considered good ethics (case in point: rampant copying of MP3s and trading of online video). In any case, I’ve been a bit alarmed by the number of times this has come up, and frankly, surprised by what — at least a few years ago — was considered a big no-no — being almost a routine occurrence nowadays. I don’t know if this is because there are blogs, video podcasts, or others who are now regularly taking payola for coverage, or if it’s just a general degradation in ethical standards.

Is this the new reality of media today? Or am I just old fashioned and out of touch (this coming from someone who doesn’t copy and trade MP3s but actually pays for his music…)?

I got this very amusing email from the San Jose Mercury News today, promoting their new “e-Edition” (demo here) — an online version of their “dead tree” newspaper — complete with paper layout, photos, advertisements, frozen as they were in the print edition. I seriously wonder how a paper — which lives in the ultra-competitive Silicon Valley market — believes it can actually get subscribers to pay $15 for a five week subscription to this product? Essentially, their “e-Edition” is a horribly crippled version of their (much more functional) free web site. Instead, the “e-Edition” takes all of the horrible parts of paper (i.e., jumps after the first paragraph of every story, no hyperlinks, etc.) and crams them into a web browser.

Special Announcement

Today, we are announcing the launch of the Mercury News e-Edition. The e-Edition is not just a website. It’s every story, picture, and ad exactly as it appears on every page. And, you’ll be able to do things you can’t do with the print edition, such as:
• Get Silicon Valley news by viewing our four daily editions
• View our free 30-day archive to view news you’ve missed
• Get print content NOT available on MercuryNews.com
• Search the Mercury News with advanced search tools
• Enlarge the type for easier reading

The essential problem with this product is it takes lots of the design elements from paper — which are essentially user interface elements (UI) for a piece of paper — and just slams that into the web, without regard to WHY those exist. For example, the whole idea of jumps (which in newspapers lead you to other pages where a story continues, ie. “see page 2A”) is a fundamental limitation due to wanting to place as many top stories onto the front page of the paper so people will pick up and read the paper.  That’s why newspapers often print two different editions of the front page — one for home readers, and one specifically designed to put all the important stories above the fold in news racks. The “e-Edition” in the Mercury News even preserves those “jumps” in the text when you click on a story, requiring you to click (yet again) to get to the rest of the story.

Other navigational nightmares include preserving the inside/outside stories in the paper — the way that newspapers typically bury stories within inner pages if they can’t justify the space on the front page. So you have to browse the entire paper to pick up the one or two articles in the middle you might find interesting. On the web, it’s typically shown as a side story or in a list of headlines of inside stories — which is easier to skim.

I could see a third-rate, rural paper doing an announcement for something like this, but the San Jose Mercury News?

The Los Angeles times just posted a piece speculating that more Web start-ups are on the rocks as investors are becoming more cautious.

The problem is, it’s very difficult to figure out if a company is having problems raising cash because the economy, or because investors are just not interested in their company. It’s much like the argument on Ivy League college graduates: does going to an Ivy League school make you smarter, or is being smart make it more likely you’ll go to an Ivy League school?

Is your company having funding because investors are pulling back on their investments, or are you having problems with funding because investors aren’t interested in your company to begin with?

Like many publicly traded companies who often use a “bad economy” as a convenient blame for a bad quarter–even though it was due to a management screwup– you’ll hear some venture investors tell you they’re just passing on your company because of the economy — “not your company, it’s nothing personal.” Just like they’ll also use the excuse that you’ve “got a great company, but it just doesn’t fit our profile,” or “this is a great idea, and we’ll get back to you.” It just goes with the territory — more startups fail to find funding than startups who do.

Does that mean there’s no impact of the economy on startups? No. There will be, and there will be harsh impact on some startups. But, unfortunately, so many companies — on a normal, even ultra bubbly day — can’t find funding, you can’t call a technology downturn using how many companies fail to find venture funding.

Here’s a great summary of why mainstream media is having so many problems, from an article today in the San Francisco Chronicle:

Mainstream media as a whole, the report found, isn’t losing its audience. It just doesn’t know how to get its new online customers - or anyone else who is reading what they’re producing through online aggregators - to pay.

Actually, in my opinion, it’s also getting all of those offline advertisers (everything from “Bob’s Pet Shop” to Walmart) to spend on online advertising. Unfortunately (for mainstream media) the technical know-how and acceptance of online advertising as a way to drum up customers is dismal. I’m constantly amazed at what kind of rates local businesses are willing to pay for not-so-effective, local paper ads; but, how little they will pay for online, if they’ll even put ads there.  Anyone who doubts this should call up their local newspaper and ask for rates for a single full page or half page ad, and then compare those rates and reach with placing a banner ad or Google Adwords advertising. The problem is, rates for online advertising are way, way, way cheaper and usually performance (PPC) driven. For some businesses, you can get away with spending what you normally might for a week’s worth of local newspaper advertising to cover you for a year. That’s a lot of lost revenue to mainstream media.

Southern California appears to be the new frontier — or at least the newest center of attention — for high tech and digital media startups. In the last week, there’s been widespread coverage — in both new media and (countless) blog sites, as well as major news outlets like the Wall Street Journal, New York Times, and others — on a number of stories ranging from the Velocity Interactive’s new media studio Generate, to the acquisition of Pluck by Richard Rosenblatt’s Demand Media, to new startups in the region.

It’s interesting to see the momentum (at least in terms of coverage) firms here in Southern California are getting recently, which is a huge contrast to the level of attention we normally get in the course of business. I’d hesitate to say we haven’t seen this level of fascination with companies here since the Dot Com boom (and unfortunately, bust).

There’s a fascinating article this morning from the Wall Street Journal, reporting that NBC is shipping its writing work overseas to writers unaffiliated with the Writers Guild of America. It looks like Hollywood is yet another industry (on top of software, radiology, and investment banking) which is looking — in thanks to the WGA strike — at offshore outsourcing.

For anyone interested in a detailed, play-by-play of the WGA strike, Los Angeles attorney Jonathan Handel has a well thought out, detailed analysis of the day to day developments in his blog.

For an otherwise, sort half-vacation day that Monday was, nothing topped the strange saga of the case of the cloned press release. Basically, a press release(credited to a new firm “HD AmeriTV”) showed up on one of the marginal “free PR release” services, and was picked up by a bunch of venture capital blogs. However, quite a few of them noticed that the PR was almost a word-for-word copy of a release from Joost a few months back announcing their $45M funding.

Followers of Southern California’s high tech market might recall back to August 2000, when a faked press release took an astronomical amount of market cap from Emulex (for awhile — it recovered when the hoax was uncovered, but left a landscape littered with battered investors). That release went out on Internet Wire (which subsequently had to rename itself Marketwire to escape the stigma attached to the fact that one of its employees was the instigator of the fake release).

Astute observers on the art of “vetting a press release” might notice:

1) The release did not come out of any of the major press wires. Most of those wires charge a pretty hefty fee for posting a release, which has the side-effect of weeding out most of the scams and junk. The service in question lets anyone register and create an account, for free, and send out whatever release they want.

2) The release did not carry any contact information from the company. (no contact name, no phone number, no email address, or web address).

3) The release did not have any PR firm representation. Usually, a company which is raising $45M would tend to have professional representation, from a well-known firm.

Anyway, it was something interesting to spice up a Monday in the blog press world.