virtualeconomics

AOL's big bet that advertisers will get a bit (but not a lot) smarter

So AOL buys HuffPo for $315m, valuing (as Chris Tolles points out) their 26m ComScore users at $12 each. We're not (yet) in the Broadcast.com league but it's still an excitingly bubbly valuation at ten times 2010 revenues, five times even management's own 2011 revenue forecast and god knows what multiple of the presumably nominal profitability they claim the site achieved in the fifth year since it launched.

AOL is betting the farm on monetising professionally-created content via display advertising. That's a big bet, but of course for AOL it's not a new one - acquiring HuffPo is simply a continuation of the strategy that AOL has been pursuing since it parted company with Time Warner. Engadget, Politics Daily, Techcrunch and especially Patch are all long bets on paying writers and then serving display ads over the results, and if that's the strategy this is a smart push for more of the same.

Yahoo arrives 24 hours late to its own wake

Update: 24 hours after the news broke that it was shutting Delicious, Yahoo announces a plan to sell it instead. Three things wrong here. First, managing a public company really takes a bit more than just swaying in the wind of popular opinion. If you decide to close a business unit you should have a reason, not just fold when people tell you it's a bad idea. Second...24 hours? From what was once a web-publishing and news company? Hollow laughter. And third - selling it still leaves Yahoo without a strategy. Combining Yahoo Local with Flickr, Delicious and Upcoming would have made a great (world class) local news and content destination and potentially given Yahoo's disparate properties some overall purpose and direction. Now they'll maybe have a second-rate local news site and the same old portfolio of unconnected web properties, minus some of the better bits. This story looks like it's pretty much over. Bye Yahoo.   

More about Facebook Messenger and the online display market

Yesterday Facebook announced the launch of its newest don't-call-it-email service, Facebook Messages, and I speculated that this is a move designed to capture more (a lot more) of the valuable online display ad market.

There's two big questions to ask about the new Messenger. One, how does Facebook make money? Two, how does Messenger help them make more? And (ok, there's three really) how does this particular move by Facebook fit into their broader commercial strategy?

Facebook gets ready to mop up the rest of the display ad market

Facebook just announced a new messaging system that isn't quite email or IM but something inbetween. There's plenty of coverage of the press conference out there so here's my first thought for now - this is about the display advertising market.

Facebook already serves 25% of US online display ads. Commercially, that puts it in direct competition with the two gorillas in that space - MSN and Yahoo. Both of the incumbents have a lot of advantages selling online display inventory - a mix of premium content with huge quantities of cheap network inventory, their own third-party ad network, behavioural targeting data and tech plus the best buyer relationships in the business. But those fortunes were founded on - and still rest on - the mass inventory that comes from running the world's two biggest webmail services.

The question to ask about Fmail is not about the tech or the user experience but about the money, the money, the money. FB, that is already taking over the display ad space, just announced a product that could cripple the foundations of its two main competitors. That's what Fmail is really about.

(This post was written on a phone and has subsequently had the links added.)

Delicious falls all the way back down to web1.0

In a fit of 2004 web2.0 nostalgia I thought I'd try to reactivate my delicious account today. Password didn't work, so I asked for a new one. Delicious sent me a link to generate a new one, but the link didn't work in Rockmelt (ergo Chrome) or Firefox, so I emailed support to ask what was going on. At this point the response gets kind of weird: "We have noticed this type of behavior with certain browsers, and we are currently investigating the cause. As a work around, please try using another browser to request another password reset email and reset your password." Well...ok, but since I've already tried Firefox and Chrome does that mean the only browser Delicious password resets work in is Internet Explorer? The support email did include an invitation to "Upgrade (very sic) to a Safer Version of Internet Explorer 8" so probably that's what they think we should be using. And to think it was once cool...