This one's a surprise. Twitter will have turned a profit in 2009, a BusinessWeek report claims, citing sources. What happened? Search deals with Google and Microsoft brought in a nice chunk of cash for the company, which has raised well over $100 million in venture capital and has a paper valuation floating somewhere around $1 billion.
Considering the company has not yet put forth a long-term revenue strategy, this would be one of those Christmas miracles along the lines of a neurotic mom getting home to her stranded 8-year-old by fortuitously hitching a ride with a polka band fronted by John Candy.
So let's look at the details. Sources told BusinessWeek's Spencer Ante that Twitter's search deals with Google and Microsoft's Bing brought in $15 million and $10 million respectively, and that Twitter has managed to cut some of the high costs related to text-message functionality. (These costs were so exorbitant that Twitter temporarily had to restrict some international SMS codes.) OK, cool. Those numbers are decently plausible, and Twitter's strategic hire of a mobile business-development dude early this year likely had something to do with it. And Ante's article makes it clear that while sources have told him that Twitter will end 2009 on a profitable note, that doesn't mean it's going to be profitable next year.
But there's a difference between being cash-flow positive and being profitable, and it's also not totally clear as to what Twitter's other expenses are, or what they will be next year.
Ante writes:
Now that Twitter has become so popular, it has gained bargaining power with telecom companies and has managed to renegotiate so many deals with carriers that the company pays far less for the services. "Those used to be the biggest line item," says one source. "Generally speaking, those costs have gone away. Now people are the biggest line item."
People. Yes. Like the new office space they just moved into, and their still-expanding payroll, and stuff like that. Also: hardware, and other forms of defensive weaponry against evil whale attacks. The company also sometimes buys stuff, and continues to develop new features--like the current test of "contributors" accounts that it may end up charging for. So even with costs cut via a savvier mobile strategy, there are plenty of other costs that could be escalating simultaneously.
What's good news for Twitter is that getting $25 million out of search deals (if that's indeed true) shows that the company could expand that into a stronger long-term revenue strategy. Critics have been lukewarm on the possibility of Twitter attempting to support itself with advertisements or paid accounts, and nobody's really gone into depth on the question of whether the businesses currently raving about Twitter's power of "conversation" will cough up for more in-depth analytics.
Maybe they read the Yelp review that says Google's headquarters is infested with skunks and raccoons.
Just a few days after reporting that Google was about 80 percent likely to be acquiring business reviews site Yelp for a totally sweet $500 million, TechCrunch has backtracked. Late Sunday, TechCrunch reported that Yelp CEO Jeremy Stoppelman personally walked away from the deal and that company representatives informed Google over the weekend they aren't selling.
That's odd. People seemed to think it was generally a good deal. TechCrunch isn't exactly sure what went wrong but speculates that Yelp may have gotten a better offer for a potential acquisition or strategic partnership that caused it to bail.
What could also have something to do with it: Google does a lot of things very, very well, but one thing it's never nailed is community. (Knol most certainly didn't kill Wikipedia, Orkut was big in Brazil but then faded in the wake of Facebook's growth, and YouTube's commenters seem to come from a very special place somewhere between the sixth and seventh circles of hell.) That's evident from looking at what Yelpers had to say about the potential deal last week. Proudly opinionated and devoted to the Yelp brand, many Yelpers were concerned that a Google buyout would degrade the site's sense of community--something that could, effectively, kill it.
Perhaps Yelp's execs thought the same and figured that strategic partnerships might be a better route for now.
If Google's rumored $500m acquisition of Yelp goes through, the search giant may finally get a solid lock on the "hyperlocal" Web. But it'll also be acquiring a big community site--and those are notoriously hard to wrangle.
Restaurant industry blog Eater might have put it best: "One can only assume that with Google's muscle behind the site, the millions of users who log on to complain about restaurants would be able to say stupid stuff faster, and with more efficiency," editor Amanda Kludt wrote on Friday.
All snark aside, it's the same sort of issue that arose a few years ago amid persistent rumors that Google was going to acquire Digg, another site reliant on heavy participation from a loyal and extremely vocal community. The questions are more or less similar: What would Google change, and how much would they change it? Does Google's massive scope make it untrustworthy?
Yelp's official word: "Yelp is approached frequently by numerous entities to discuss partnerships, investments and more, and the company does not comment on private discussions that may occur."
Truth be told, the state of Yelp's forums on Friday indicated that many were more interested in talking about "Why are NYC apartment brokers such d-bags?" and "The official 'Jersey Shore' on MTV thread" than about whether Yelp might get sucked up by the Google monster. But a few threads did emerge, and the gist seems to be pretty much the same: They better not change too much. And please keep throwing parties.
"I wonder how this will effect Elite parties as well as Yelp Talk?" one Yelper asked in a Bay Area-centric thread about the acquisition. Another said, "So long as it's not Rupert Murdoch buying it." Some Yelpers were optimistic, suggesting that maybe there would be better integration with Google maps or additional technical improvements.
But others were concerned about quality control. "It means more trolls and fake reviews," one Yelper griped.
"Anyone ever look at the comments on YouTube videos?" another asked. "That is what is gonna happen here."
There were a few threats of account deletion, like "If this happens, I'm deleting my profile" and "Yelp is big because of us. Let's demand money or delete our accounts en masse." Generally, those aren't any real indicator of community revolt, but they're a reminder that it's extremely possible for a big buyer of a community site to mess things up big-time. LiveJournal users weren't thrilled about its Six Apart ownership, which ultimately failed. Likewise, when News Corp. acquired social network MySpace, mismanagement and a lack of innovation were likely what led to a drop in traffic and the eventual dominance of Facebook.
Worth a read: Yelpers' reviews of Google HQ in Mountain View, Calif. Choice bits range from "Google has lots of yummy, organic snacks and drinks" to "They have way too many skunks after 7 p.m. nightly and raccoons living on the Google campus."
This post was updated at 10:48 a.m. PT with comment from Yelp.
Onetime social-networking pioneer Friendster unveiled a new design on Thursday, and it's focusing on the demographic that has kept it afloat for the past few years: the Asian youth market. And according to Reuters, Friendster may also be sold to a buyer in Asia by the end of the month for at least $100 million.
Yes, Friendster still exists. The first big social network to take off, it was surpassed by the likes of MySpace and Facebook, and its popularity in much of the world quickly faded. Now, it says it has 75 million registered users (no word on how many are active), and that 90 percent of its traffic comes from the Asia-Pacific region. It started offering translated versions of the site two years ago.
New to the revamped Friendster are a suite of features designed to capitalize on the social-gaming craze: a virtual currency, an array of games, and virtual gifts.
Friendster CEO Richard Kimber confirmed to Reuters that the company was shopping itself to buyers, and that investment bank Morgan Stanley had been hired to handle the sale and that the company is working with "a shortlist" of potential suitors. It won't be the first time it's been looking to sell: CNET reported in 2005 that investment bank Montgomery & Co. had been hired for the same purpose.
Kimber, a former Googler, joined Friendster last year right around the same time that it raised $20 million in venture funding in a round led by IDG Ventures.
What's former MySpace CEO Chris DeWolfe up to these days? He wants to be the next big name in the social-gaming craze, we hear.
In late July, TechCrunch floated a report that DeWolfe was hitting up big private equity outlets to amass cash, at least $100 million, for a new venture that would involve "a roll-up of an Internet industry vertical," but TechCrunch didn't specify what that sector was. Three months prior, DeWolfe had been ousted from the troubled MySpace and replaced by former Facebook executive Owen Van Natta.
Former MySpace CEO Chris DeWolfe
(Credit: Michelle Meyers/CNET)Now, several well-placed sources have told CNET News that DeWolfe intends to make a move in social gaming, a red-hot space currently dominated by the Mark Pincus-headed Zynga, and that his "roll-up" plans involve buying up a number of smaller social gaming companies so that he and Pincus can go directly head-to-head.
Multiple sources have indicated that DeWolfe is working on this new venture with Aber Whitcomb, who left his role as the News Corp.-owned MySpace's chief technology officer in late September.
We don't know what kind of progress DeWolfe, who did not reply to a request for comment, has made in securing that private equity money he was reported to be hunting for this summer. We don't know what the company's name will be--if he's settled on one yet. Nor do we know which smaller companies he wants to agglomerate.
But social games are on the brains of multiple ex-MySpace bigwigs, who were able to witness from the front lines the explosion of the industry when game developers started tapping into the viral channels on big social networks. Another MySpace executive, Jason Oberfest, left the company after just over a year to join social gaming start-up Ngmoco.
One source said that Ngmoco's valuation may already be too high for DeWolfe to consider it for his roll-up plans. Rather, DeWolfe is likely looking at very small gaming companies run by a handful of stellar developers but that lack the legal, business development, and dealmaking resources to make any kind of a dent in the current social-gaming market. He also may be looking at companies that had some initial buzz but have since seen their growth plateau or drop off.
We hear that in the months before DeWolfe's departure from MySpace, there was a lot of talk of gaming as the social site, rapidly losing ground to Facebook, attempted to refocus itself as an entertainment destination. When DeWolfe was in charge, MySpace inked a deal with casual-games maker Oberon to power a gaming platform, but that deal is no longer in place. (We've contacted Oberon for comment.)
Now, under the direction of Van Natta and several former MTV execs like Courtney Holt and Jason Hirschhorn, MySpace's "entertainment" direction is much more focused on music, and gaming has taken a back burner for the time being even though there are some hugely popular games on MySpace's developer platform.
Things couldn't be more different in the social-media industry at large, where gaming is currently front and center. While there was early on a close rivalry between two companies, SGN and Zynga, the far and away leader right now is Zynga--which is pulling in between $100 and $250 million in revenues depending on which industry blog you read, and spends tens of millions of dollars each year just buying up Facebook ads for marketing.
A few companies, like Playfish and Playdom, have also grown big (though still smaller than Zynga), and there are persistent rumors that one of them may be sold to an established gaming-industry player like Electronic Arts.
Most other companies in the space are easily several orders of magnitude smaller. Trying to make inroads when there's already a clear, formidable leader is difficult, and the economic climate means the private equity sector might be skeptical about handing a blank check to someone because he happens to have CEO experience.
What we have heard, though, is that DeWolfe already has someone to model himself on: Rupert Murdoch, the News Corp. CEO whom DeWolfe was reportedly very close to during his tenure at MySpace. With a roll-up of acquisitions, he would plan to do for the gaming industry what Murdoch did for newspapers: pluck them up across the industry, and build an empire.
Ambitious, yes.
We've been hearing a few sneaky tips from folks within earshot of the Boston, Mass., set of "The Social Network," the Columbia Pictures movie about the contested origins of Facebook. This week, the film crew has been on the Charles River working on scenes in which Cameron and Tyler Winklevoss, the identical twins who had a lawsuit against Facebook founder Mark Zuckerberg, are depicted at a Harvard crew practice.
That Boston Globe report about the Harvard heavyweight crew team getting cast in the background? Not quite.
Ivy League athletic restrictions bar current athletes from being film extras, and filming has been an all-day operation while classes are still in session, so an open casting call was held at the new Community Rowing Inc. boathouse on the Charles River in Newton, Mass.--and former Harvard and Northeastern University rowers are among those in front of the cameras. The CRI boathouse, tipsters tell us, has also been the filming HQ for the crew scenes.
The rowers are serving as body doubles for the actors and extras, as well as the actual muscle to power the boats in team scenes. And a few of them indeed have their faces marked up for the CGI superimposing of actor Armie Hammer's visage--he's playing both of the Winklevoss twins.
One thing we've heard is that one of the characters in the scenes is Harry Parker, Harvard's longtime varsity heavyweight crew coach. He's not playing himself, nor does it appear that a well-known actor has been cast to play him (because this would be a great cameo role), but rather a lookalike actor has the role instead.
Most interestingly, a tipster also tells us that while filming of the crew scenes is expected to wrap up this week, that it'll be headed to the iconic Henley Royal Regatta in the U.K. this June. There is indeed a scene in the "Social Network" that takes place at Henley, and it sounds like they're hoping to film it on-site--though we haven't been able to confirm that the formal, buttoned-up annual regatta will allow a movie crew on the grounds.
Other confirmed filming locations for "The Social Network" are Los Angeles and Johns Hopkins University in Maryland, which will be standing in for Harvard's campus. Will the cast, which includes "Zombieland" star Jesse Eisenberg (as Mark Zuckerberg) and pop star Justin Timberlake, actually do any filming in Silicon Valley? No word on that yet.
"The Social Network," directed by David Fincher ("Fight Club"), is based on Ben Mezrich's recent book, "The Accidental Billionaires." Facebook has maintained a stance that it stretches the truth.
The crew of "The Social Network," the David Fincher-directed retelling of Facebook's earliest days, is headed to film in the Boston area soon with a widely reported start date of October 19.
Rumors on Web forums indicate that the Harvard Square neighborhood of Cambridge, Mass.--the eponymous university's epicenter--will be the backdrop for some scenes involving actor Jesse Eisenberg, who plays Facebook founder Mark Zuckerberg. Eisenberg himself has been quoted as saying that the movie will actually be filming on Harvard's campus, something that the university would not confirm.
Facebook was founded in a dorm at Harvard when Zuckerberg was a sophomore there; he later dropped out to run the site full-time. "The Social Network" script was based on writer Ben Mezrich's "The Accidental Billionaires," an unauthorized tale of Facebook's origins that doesn't portray Zuckerberg in the most positive manner.
Boston.com reported Thursday that a Somerville pub called the Thirsty Scholar has confirmed that it'll be used as a filming location, but couldn't confirm what everybody wants to know--whether pop star Justin Timberlake, who plays early Facebook exec Sean Parker, will be on-set.
Here's the catch. I've read the Aaron Sorkin-penned script for "The Social Network"--granted, it's a draft with a May 2009 date on it, so who knows what has changed--and Sean Parker doesn't even appear in any Boston scenes. Sorry, Boston.
Twitter's long-anticipated business plan had better be close on the horizon, because according to the Wall Street Journal, the site has some new investors on board: Mutual fund T. Rowe Price, Insight Venture Partners, and a handful of others have reportedly pumped $100 million into the microblogging phenomenon.
TechCrunch reported last week that Twitter was putting together a round of funding at around a $1 billion valuation. But that report suggested that the company would do so by raising about $50 million--half of what it actually has, per the WSJ, in a deal expected to close Thursday.
Twitter still doesn't make significant revenue. But its founders have said that paid corporate accounts, in the form of a sort of "analytics dashboard," are imminent. Advertising isn't out of the question either, despite what some of the company's executives have said in the past.
The company's initial round of Series B funding last year valued it at about $80 million, but soon added to the round in a deal that upped the valuation well into the hundreds of millions.
News Corp.-owned MySpace is "close to acquiring" social music service iLike, according to TechCrunch.
The price tag is rumored to be in the neighborhood of $20 million. Representatives from iLike were not immediately available for comment.
The report comes within days of iLike launching a music download store--a development first reported by CNET News--with MP3s available from all four major record labels.
The deal, if confirmed as accurate, highlights the often complicated connections in digital media's elite ranks.
iLike, for example, rose to fame through its close ties to Facebook. The iLike application, since re-branded to simply Music, was one of the first big applications to launch on Facebook's platform at its debut. Its ad-supported streaming music service has become one of the most prominent in a packed field--it now has about 50 million users and just launched a suite of iPhone apps. But the streaming music niche has proven difficult to monetize and has left some players in the space reportedly hunting for an exit.
MySpace, meanwhile, has seen stagnant growth as the once-far-smaller Facebook has rapidly overtaken it in the social-networking race, thanks in part to the proliferation of third-party apps like iLike on Facebook's groundbreaking developer platform. As part of an executive restructuring earlier this year, MySpace installed former Facebook chief operating officer Owen Van Natta as its CEO, replacing co-founder Chris DeWolfe.
Attempting to refocus and return to its roots as a hub for music and pop culture, MySpace launched its own streaming music service, called MySpace Music, and hired MTV veteran Courtney Holt to run the division. MySpace Music, a joint venture with the record labels, does not operate its own download store but instead directs users to Amazon MP3 downloads through affiliate links. But MySpace Music hasn't received thoroughly positive reviews from the record labels hoping to profit from it.
Disclosure: CNET News is part of CBS Interactive, which also publishes Last.fm, a competitor to iLike.
Updated at 7:38 a.m. PDT with additional details and background.
Is this Facebook's big assault on Twitter?
(Credit: Screenshot by Jason Baptiste)Facebook, it appears, was not about to let Google get this week's award for shadowy new projects. On Tuesday night, a number of users--including Mashable blogger Ben Parr--received notifications that they were beta testers for something called "Facebook Lite."
The notifications, as well as the site hosted on the subdomain lite.facebook.com, disappeared within minutes. It seems to have been rolled out prematurely by mistake.
"Last night, the test was temporarily exposed to a larger set of users by mistake," an e-mailed statement from Facebook representative Brandee Barker read. "We have not opened up access to lite.facebook.com to all users at this time. People who are not part of the test and are trying to access 'Lite' will be directed to Facebook.com as usual.
From what it looks like, Facebook Lite is a simpler version of the site and pares down profiles to basic information and a stream of status updates. The easy conclusion is that this would make Facebook's service look a whole lot like Twitter. And given the fact that Facebook had attempted to acquire Twitter, got snubbed, and then acquired the significantly smaller real-time streaming site FriendFeed this week, a Twitter-like service would be rife with implications.
Here's Facebook's official explanation: "We are currently testing a simplified alternative to Facebook.com that loads a specific set of features quickly and efficiently. Similar to the Facebook experience you get on your mobile phones, Facebook 'Lite' is a fast-loading, simplified version of Facebook that enables people to make comments, accept friend requests, write on people's walls, and look at photos and status updates."
Blogger Jason Baptiste managed to get screenshots.
The obvious guess is that this is yet another attempt on Facebook's part to stay abreast of Twitter in the race to own the "real-time streaming Web." There are, potentially, other reasons for launching a simplified site:
• For use on slower connections.
• For stripped-down computers in developing markets, where the 250,000,000-member Facebook wants to make inroads.
• As a more "portable" profile that could potentially tie into Facebook's aim of being all over the Web rather than a destination site.
Facebook hinted that the "developing markets" answer could be an accurate one. "We are currently testing Facebook Lite in countries where we are seeing lots of new users coming to Facebook for the first time and are looking to start off with a more simple experience," the statement from Facebook explained.
Got any guesses, speculation, or conspiracy theories? Comments are welcome.
This post was updated at 7:46 a.m. PT.
