MOUNTAIN VIEW, Calif.--Reality check: half of the social media start-ups at Tuesday's Under the Radar Conference won't exist next year.
That was the dour prediction of an advertising executive after a day of start-up presentations from a tongue-twisting list of tech companies--including Verismo, Mytopia, Loud3R, Jacked, Sometrics and PutPlace.
Not that the start-up pitches were boring or hard to swallow. It's just that similar to the dot-com heyday (and eventual bust), the success of many social media companies is tied to online advertising spending. And guess what, after nearly 10 years of hand-wringing over Internet advertising models, traditional brands are still not spending the many millions of dollars online that they regularly do on TV commercials.
Even more relevant to social media is that traditional advertisers are especially cautious when it comes to the idea that their brand logo might appear next to an image of a marijuana leaf posted by a 16-year-old. Never mind that Facebook's audience rivals that of some television networks.
"Take a look at history, and the way Web 1.0 worked...publishers didn't make it until the ad dollars started to scale. The same mistakes are being made in the social media space today," said Jeff Stiers, senior vice president of business growth for JWT, a major traditional advertising agency that was founded in 1864.
His skepticism--and hope for Internet advertising--was matched by other ad executives on the panel, which included Tom Bedecarre, CEO of digital advertising agency AKQA, and Chris Colborn, executive vice president of its rival R/GA. Internet companies must take the hand of traditional advertisers to get them to spend online, the executives said. But they agreed that there's continued uncertainty in interactive advertising and reluctance on the part of big advertisers.
Like with Web 1.0 companies, one of the biggest problems social media companies have in the market is that they're technology driven, the executives said. Tech companies often fail to hire media-savvy executives at the top who can sell brand advertising.
Another Web 1.0-like problem: many social media start-ups are marketing the idea that they have tons of data on people's demographics and preferences. The start-ups believe that that data will lure brand managers seeking to reach new customers. Not true, executives said.
"I can't imagine a large agency giving a rat about a small firm's data. Advertisers are looking for aggregation of data...and someone at a very high level to give an overview (of what it means)," said Bedecarre.
One member of the audience, an executive from news site Topix, asked the panelists when a major advertiser would announce plans to spend $20 million sponsoring AOL or Facebook. Bedecarre answered that that kind of deal doesn't translate on Facebook because brands are too used to ads that broadcast to, instead of engage, audiences. They're still not willing to spend many millions of dollars on major Web sites, he said.
"It hasn't happened yet because big advertisers and agencies haven't let go of advertisements. They like to buy lots of ads," he said, referring to commercials.
#####MOUNTAIN VIEW, Calif.--News aggregation, licensing rights, and user-generated content. Every publisher has grappled with one or all of these issues as they've built online operations in the age of social media.
They're also potentially ripe markets for innovation. Or at least that's the hope of four Web publishing start-ups that presented business models here Tuesday at the Under the Radar Conference, a one-day confab on social media.
Four companies--AudioMicro, GumGum, Keibi, and Loud3r--delivered a six-minute elevator pitch to an audience of executives and three judges. Judges included Charlene Li, vice president at Forrester Research; Rob Hayes, partner at First Round Capital; and Jason Oberfest, vice president of business development at MySpace.
Here are the online publishing hopefuls:
AudioMicro
What it does: licenses music or soundtracks for $1. Launched last week, the company hosts a marketplace for independent artists to upload and license their music for $1. People who've produced a YouTube video, for example, could license an audio track from AudioMicro's collection of artists to sync the music with their video. Or movie studios could use the site to find music and offset production costs, according to founder Ryan Born. "We crowd-source content from unknown artists around the world and sell it for a dollar," Born said during his elevator pitch.
But First Round Capital's Rob Hayes pointed out that the company has a chicken-and-egg problem. It needs artists to attract major licensors, and it needs major licensors to attract artists.
AudioMicro, based in Los Angeles, is looking to raise a series A round of funding to grow fast and market itself.
(Credit:
GumGum)
GumGum
What it does: Flexible licensing of photos, text, and video over the Internet. GumGum, which was founded in February, has created a marketplace for content--audio, pictures, articles, and video--that publishers can license per use, or for a share of advertising revenue. (Independent content creators post their material on GumGum, which is based in Santa Monica, Calif.) "We aggregate, post, and distribute content via widgets," according to the founders.
Gawker, for example, can pick up a cut of code for a photo on GumGum and paste it to its site, then pay a set price each time that photo is viewed from its site. Or it could allow GumGum to wrap an ad around the photo and collect 20 percent of the revenue. Gawker is an early public customer.
The challenge? Adoption.
Keibi
What it does: Technology for moderating user-generated content on sites like MySpace and Facebook. The two-year-old company is trying to solve one of the biggest problems that social networks face--how to make major brands comfortable with advertising near potentially questionable content posted by members of these networks. Keibi's answer is to sell an enterprise software platform that helps social networks moderate photos, text, images, or video before they're posted to a site.
Jason Oberfest (of MySpace) and one of the judges asked how well it integrates with social networks' existing software infrastructure. Paul Remer, CEO of Keibi, said that it has a plug-in and is working with companies like Salesforce.com on integrating its technology.
Keibi charges customers between $2,000 and $20,000 a month to use its software-as-a-service platform. So far, the company has raised $6 million; and it's in the process of raising a series B round of financing, Remer said.
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Loud3R)
Loud3r
What it does: news sites for sneaker heads, dog lovers, and martial arts geeks. And that's just a drop in the bucket. Loud3r develops technology to scour the Web for specialized news and social content, and then aggregates that material into a branded Web site. It owns 25 different sites--New3R (for gadgets and technology), Glaci3r (environment), and Putt3r (for golf)--but it plans to have at least 250 by the end of 2009. The company plans to make money by selling brand advertising around its targeted topics, and license its technology to third parties for five figures monthly.
"The Internet is a noisy place. Loud3r is the solution for the noise," said Lowell Goss, founder and CEO.
Still, the judges were skeptical about whether the Web needs another news aggregator. One judge asked specifically if Loud3r is late to the party. Lowell's answer: "Google wasn't the first search engine."
Harman Kardon AVR 354
While most audio manufacturers trot out a new line of AV receivers every year, Harman Kardon generally sits out of the "feature war" and lets its models stay in the product line longer. That's why it's a big deal that the company has announced three new receivers, bringing many cutting-edge features that were previously missing from the company's lineup. As always, these new receivers have Harman's typically refined look, and now that some of the models include updated features--like high-resolution audio decoding, a high-def graphical user interface, and video upconversion--you won't have to settle for beauty without brains. Let's take an in-depth look at the new line.
Harman Kardon 154
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Harman Kardon)
Key features of the Harman Kardon 154:
I'd bet the average person under 30 hasn't purchased a serious home stereo system in the last five years.
And it's not because they don't like music. Quite the opposite, actually. The popularity of online streaming music sites, rise of music blogs, and skyrocketing digital music sales from places like iTunes, Wal-Mart.com, and Amazon.com show that young people are voracious music consumers.
But are they true audiophiles? No, at least not in the way people who came of age trying to find the perfect sound on Pink Floyd's Dark Side of the Moon were. They'd buy high-fidelity speakers and systems that play back music in a quality as close to the original performance as possible.
And why not? If you think about it, the equipment that has traditionally defined the audiophile is antithetical to the way we experience music today. Speakers are clunky and immobile, and expensive shelf systems don't play easily swappable digital files. Instead, stereo shopping nowadays often means picking up an iPod and a speaker dock. The combination is cheaper, mobile, convenient, and, for better or worse, cool.
The effect is that it's slowly killing an industry.
Home audio sales have been in decline for the past half decade, and have drooped even lower in recent years. Home CD player sales totaled $36.2 million last year, but that's 35 percent below 2005 sales figures. Home speaker sales are down 2 percent, but home shelf systems sales are down 40 percent in the same time period, according to data gathered by the NPD Group.
"Before, people would listen to music through their stereo system, or 10, 15 years ago over their home theater system; that doesn't happen anymore," said Steve Guttenberg, who writes The Audiophiliac for the CNET Blog Network. "People have sort of moved away from that sort of mindset. It doesn't happen except for audiophiles."
While it's unclear if it was the cause or simply a response to a new generation's needs, the runaway success of the iPod played an important role in this change. The iPod either tapped into our desire to listen to music on the go--and bring the entirety of our music library with us--or told us that's what we should want.
In the face of slowing sales and brand awareness, the industry has responded by consolidating many of the original home audio brands and manufacturers.
Electronics companies like JVC and Kenwood, known for their audio equipment, said last week they had officially set up shop together after what seemed like a yearlong dance. They will fold the brands into one company, JVC Kenwood Holdings, in hopes of reducing costs and scaling their distribution in the already crowded Japanese consumer electronics market.
But those two are not alone in their plight. Last month it was revealed that D&M Holdings, known for audio brands like Denon, Marantz, McIntosh, Snell Acoustics, and Boston Acoustics is up for sale, and that Harman International, which already operates dozens of brands, is interested, along with JVC Kenwood, in snapping it up.
Little brand awareness
The problem is that the awareness of audio equipment beyond the iPod and its ilk is disappearing, according to Guttenberg.
"If I stopped people on the street and asked them to name (an audio) company other than Bose, 80 or 90 percent wouldn't have a clue," he said.
Companies like McIntosh, the original high-end audio company, catered specifically to audiophiles. Begun in 1949 in Binghamton, N.Y., it still builds its speakers by hand, just as it always has. If any of its products were ever in need of repair, the company would take it back and fix it, not just replace it. The products were made to last for decades, not just the length of a one-year warranty.
The brand is now on the block, its personalized service, handcrafted products, and attention to detail no longer as relevant to the majority of music consumers.
Music today is a commodity--ripped for free track by track, or bought for 99 cents and eventually added to a vast digital library, either destined to become a favorite, or more likely forgotten for good after a couple of listens. Today's music players are regarded the same way--mostly as disposable. Either the player will work for two or three years before sputtering and dying, or a newer, faster, smaller, better player that has far more cachet will be released in six months."I often wonder about the 30-year-old iPod," Guttenberg mused. "Will someone still use an iPod in 30 years," like audiophiles do high-end speakers?
The answer is, of course, not a chance.
Back in the day, we built great cars and the best TVs. And our advanced engineering was the envy of the world.
That was a long time ago. Today "world-class" design and manufacturing is mostly sent off-shore to Europe and Asia. American companies market and distribute products made somewhere else. According to American Economic Alert, the U.S. has imported $250 billion worth of goods and services more than we exported so far this year.
(Credit:
Audio Research)
High-end audio is one area where made in America products are still truly world class. While the major brands like Audio Research, Ayre, Cardas, Conrad-Johnson, McIntosh, Thiel, and Wilson Audio are only known here by audiophiles, these brands are major players in the global audiophile market. And with the U.S. dollar at record lows, exports sales are healthier than ever.
Audio Research reports strong sales surges in Italy, France, and the U.K. Russia has just recently become a major market for Audio Research's vacuum tube electronics. The company is still selling mostly two channel audio components; home theater products aren't a big part of their growth over the last few years. In the U.S., you can buy an Audio Research VSi 55 tube integrated amplifier for $3,495.
Thiel Audio, based in Lexington, Ky., is enjoying robust sales. "Our export business doubled in 2007, and is now about 40% of our gross revenues. The biggest increase has come from Europe. Fortunately for us, our domestic business is up, too, though not as much as foreign sales," said Kathy Gornik, Thiel's president . I reviewed Thiel's least-expensive speaker, the SCS4 in the May issue of Home Theater magazine.
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Cardas)
Cardas Audio, maker of high-end speaker and interconnect cables, has also noted that Russia is coming on strong. George Cardas, the company's CEO, said, "I have always found (that) overseas sales surge with a drop in the dollar. Distributors hold orders until the right moment and even increase orders if the drop is substantial." Interesting.
Steve Silberman of Ayre Acoustics, based in Boulder, Colo., chimed in too. "Export has been off the charts this year, mainly in Asia, though Europe has been growing steadily too," he said. "What's been the real surprise is that the U.S. saw growth in the first quarter on par with export growth." Ayre electronics have been part of my reference system for years.
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Ayre)
Wilson Audio, the Ferrari of American speaker manufacturers, is also doing well: "Our sales are up in all international markets. This is especially true of Europe, where we have benefited most from the weak dollar. Of course, it is a complex issue with several factors, only one of which is the weak dollar. For example, the Hong Kong dollar is tied to the U.S. dollar, and so in that market we don't directly benefit from the weak dollar. We are doing extremely well in Asia for an entirely different set of reasons, unrelated to the dollar."
Of course, all of these American made-products are far more expensive in other countries than they are here.
Victor and Kenwood said Monday that they plan to become one company by October 1 this year.
The two Japanese audio equipment makers will combine to form JVC Kenwood Holdings, which will be based in Yokohama, near Tokyo. Victor, a subsidiary of electronics giant Matsushita, is best known for its JVC brand. Under the agreement, Kenwood Chairman Haruho Kawahara will become the holding company's chairman, while Victor President Kunihiko Sato will become the new company's president.
It came in fits and starts, but the two have finally settled on a merger agreement. It was first discussed last year, and since then the two have agreed to develop future car and home audio systems together.
The new business will focus on car electronics, home electronics, and professional wireless systems, and will also explore new product segments. The two companies are combining in hopes of reducing costs and scaling their distribution in the already-crowded Japanese consumer electronics market. For the same reason, Victor said last month it would no longer make flat-panel TVs for the Japanese market.
Tivoli unveiled its NetWorks Go Wi-Fi radio in 2007, but it was subsequently delayed its release.
(Credit: dvice.com)In June 2007, Tivoli Audio unveiled two Wi-Fi radios at a Manhattan event: the Tivoli Audio NetWorks tabletop radio and the portable NetWorks Go (pictured above). Both models were said to offer identical functionality: the capability to tune in any MP3, WMA, or RealAudio Internet radio station, network audio sources (PC-based digital music collections), and standard over-the-air FM radio. And it wasn't just vaporware, either: company founder and CEO Tom DeVesto used the prototype to quickly pull up two distant stations based on requests from the audience. Unfortunately, neither product was released. The fall 2007 release window came and went, and it wasn't until February that a brief notice on Tivoli's Web site officially rescheduled the release date to June 2008.
However, it looks as if later this week we'll be getting updates on these products. ... Read more
Sony wasn't kidding when it said the next PS3 system update was coming in mid-April. Just in time to take the edge off tax day, the version 2.30 of the PlayStation 3 system software is now available for download. As revealed last week, the software update adds DTS Master Audio decoding (to deliver the best audio from compatible Blu-ray movies), as well as a major overhaul of the interface for the PlayStation Store (as explained in the Sony video walkthrough shown above).
The question is: what do you think? Does the DTS upgrade make the PS3 an even better Blu-ray player? Does the PlayStation Store makeover finally put Sony's online offerings on par with Xbox Live? Is all of this irrelevant compared with the forthcoming releases of Grand Theft Auto IV and Metal Gear Solid 4? Let us know what you think.
(Credit:
CNET)
Sony has announced the details on the next PS3 firmware update--version 2.30, coming mid-April--and the big news for home theater fans is that the PS3 is getting onboard DTS-HD High Resolution and DTS-HD Master Audio decoding for Blu-ray movies. Home theater fans have long lamented that the PS3 could not decode the new DTS soundtracks at their highest resolution, especially since movie studios like Fox have opted for DTS-HD Master Audio on many Blu-ray releases. Without getting too technical, DTS-HD Master Audio offers 7-channels of lossless audio at 96K sampling frequency and 24-bit depths--which means that the sound sent to your receiver should be identical to the studio master.
While some sticklers will point out that the PS3 can't output Dolby TrueHD and DTS-HD Master Audio in bitstream format, it's definitely a non-issue. Decoding the audio at the source is actually better than having the ability to bitstream high-resolution soundtracks, since it means even people with older HDMI-capable receivers can enjoy the high quality audio. Sure, your receiver won't light up the pretty DTS-HD Master Audio logo, but who cares--you still get the same great sound.
We have ranked the PS3 as the best Blu-ray player for quite some time, and this only sweetens the deal. Almost all of our major complaints have been addressed, except for the fact that it still doesn't work nicely with a universal remote. Some diehard home theater fans will cringe at the idea of using a game console as their main disc player, but they should get over their hang-up as the PS3 is currently the best Blu-ray has to offer and it also happens to be the cheapest. And you can play high-def games and stream music, movies and photos.
The new firmware will also include a much-needed overhaul to the PlayStation Store. The official PlayStation Blog posted a walkthrough of the new store, and we have to admit it looks pretty good. Check it below.
Sony might be gaining share in the LCD TV market, but the overall television segment of Sony Electronics is still losing money.
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Target)
On Tuesday, Sony announced a change to top management intended to reverse its sagging TV profits. The head of Sony's audio business, Hiroshi Yoshioka, has been tapped to replace Takashi Fukuda, who has run the TV business, the Wall Street Journal reported. The change takes affect Tuesday.
Though Sony has aggressively stepped up its TV shipments recently--it shipped the most LCD TVs worldwide for the last quarter of 2007--profits are a different story. The company said earlier this year it did not expect to post a profit for the fiscal year that ended Monday.
Sony's TV unit has struggled over the last year, but its electronic business has improved overall. The head of its U.S. electronics business, Stan Glasgow, said last month that the holiday sales period in late 2007 was the company's best ever.
Many of the top-tier TV manufacturers were caught off-guard by upstart LCD TV brands like Vizio and Westinghouse, which quickly drove down the costs of LCD sets in 2007 by selling through club stores like Costco and Sam's Club.
In response, Sony, which has traditionally branded itself as a high-end electronics seller, began cautiously testing out LCD models made specifically for discount retailers Wal-Mart Stores and Target last summer. The lower-priced and more basic-featured models were a smashing success, according to Glasgow, and Sony has increased the number of models it offers through both retail outlets.
