SocialTimes.com

Bebo Expands Media Operations, Launches Web Series

Posted: 20 Aug 2008 03:54 PM CDT

Bebo Logo If you have been paying attention to the activities among social networks over the past year, you would have noticed that Bebo is one of the few networks that realizes it’s a media company. While MySpace has announced a music service and imeem has expanded their dominance in social music, Bebo has been focusing on distributing original content. Today Bebo announced the launch of Model.Live. This new show is sponsored by Express and will air on Vogue.TV and Bebo.

The show will reveal “the truth about how professional models live.” I’m sure it will be thrilling! If you are running a social network and don’t think that you are in the media business, you are probably fooling yourself. Mark Zuckerberg is known for positioning Facebook as a technology company but as Kara Swisher said in her interview with Mark and Sheryl Sandberg, Kara kept trying to push Mark into admitting Facebook’s a media company.

As expected, Mark didn’t relent but it is clear that social networks have become an alternative to other media channels such as television. While you can argue that both television and social networks can be used in conjunction, I see them as an alternative because its rare to see a television show leverage a social network to complement itself. Users spend a significant amount of time consuming content on the sites and hence, they are media companies.

The job of social networks is to help people connect and ultimately to provide engaging content (which is typically created by the users). Nobody ever said that the content can’t be original, “high quality” content. Do you see social networks as media companies? What opportunities do you see for original content on social networks?

The Social Web Economy: Investors

Posted: 20 Aug 2008 12:21 PM CDT

This is a continuation in the series on “The Social Web Economy“

These are the wealthy people in the social web economy. They have a lot of cash on hand from either creating their own companies (or being part of a successful start-up) previously or they were fortunate enough (or not fortunate depending on how you look at it) to become a partner at a venture capital firm. No matter how they reached wealth, they now have access to a substantial amount of money that they like to invest in the five types of companies in the social web economy.

They are looking for a substantial exit down the road through acquisition or public offering that will help make their pockets fatter. In the case of venture capitalists this also means making their investors’ pockets fatter. The investors are necessary though for the most part because they not only bring money with them, they bring experience and they bring valuable connections that can make or break a company.

Whether you like them or not, investors are a critical component of any economy and there is no exception in the social web economy. Investing is also an extremely competitive "business". While some invest based on referrals, there are other investors that are actively seeking new investments on a regular basis. In the social web economy, attracting the top teams to invest in is an extremely competitive process.

Most of the investments go to an elite group of investors but fortunately for the other investors, not all investments go to the top investment groups. In the current environment there has been far fewer exits than there has been investments. Obviously, exists are alway fewer than the total number of investments but exits have been significantly infrequent in the recent past.

In fact during the second quarter of 2008, for the first time in 30 years, no venture-backed companies went public. This could be a bad sign for things to come but it also may just be an indicator of a poor economic environment. Fortunately for investors acquisitions have provided an equally sufficient exit opportunity. Recently, acquisitions have served as the primary source of exits in the social web economy. As such, IPOs may not be the best indicator for the investment environment.

Whether or not exits or taking place, investors are the primary driver behind growth of the social web economy because they are providing the majority of the cash flow. Hopefully we will begin to see an increase in cash flow from venture-backed companies but for now, this group continues to be the source for growth. That's why the social web economy needs investors!

Next Post: “The Social Web Economy: Analysts & Journalists”

Lotame Grabs $13 Million, Generates Revenue!

Posted: 20 Aug 2008 09:21 AM CDT

Yesterday Lotame, a social network advertising platform, announced that they raised $13 million primarily from Emergence Capital Partners. One thing that I like about this company is that they generate revenue! Yes, unlike many companies in the social web economy, Lotame already generates revenue. While they haven’t stated the amount, there’s a good chance that it’s relatively significant.

A couple months ago Lotame announced that they now reached 52 million users with a U.S. reach greater than Facebook. Who are the people that they are reaching exactly? Well, Lotame helps other social networks monetize their inventory. Companies like Flixster, Fotolog, Paltalk, Meez and a few other less-known social networks are using the company for filling their advertisements.

This isn’t always the best strategy for many of these companies as Ted Rheingold, founder of Dogster & Catster, highlighted in the comments yesterday afternoon. Ted states:

The fastest way to turn that new spending into your social sites revenue is to immediately take your ad sales inside, get direct ad buys and cut off the networks and the brokers. Yes, it costs something to build a sales team, but all the money that social sites lose by getting basement inventories when they could be getting 10x CPMs if they managed their own inventory and sales process astounds me. Why are PopSugar, Slide, RockYou all building their own sales teams? Because they’ve realized how much they are giving up letting someone else own their inventory.

Ted makes a great point. By giving inventory to another company, product companies reduce the potential for their total revenue generated by giving away a cut. While hiring your own sales team can be costly, it has become a necessity as I pointed out yesterday morning. While companies can always go and hire their own sales staff, there’s no doubt that advertising networks will continue to stick around.

Some companies simply find it easier to outsource their sales team! Lotame is exactly that: the outsourced sales team for social networks.