NEW YORK--Barry Diller doesn't want to predict the future.
"I'm not a great predictor of these things," the IAC/InterActiveCorp CEO said onstage at his Wednesday keynote for the Advertising 2.0 conference, when interviewer and BusinessWeek reporter Jon Fine asked him when he thought the depressing economic news would finally end. (His personal belief is that it won't get much worse.) "Not that, by the way, anybody's predictions are worth very much to anybody." And he was particularly wary of commenting on the macro economy. "Oh, you certainly don't want to hear from me on that," Diller said. "You've heard from every baboon in the world on the macro economy."
IAC's Barry Diller
Advertising 2.0 was co-hosted by IAC and held in the digital conglomerate's airy, glass-walled headquarters along the West Side Highway in Manhattan's Chelsea neighborhood. The building, designed by architect Frank Gehry, opened in 2007. Less than a year later, Diller announced plans to split the sprawling IAC into five separate publicly traded businesses. The slimmed-down company now focuses primarily on online media brands like Citysearch, Match.com, Evite, and Ask.
"What we thought was that agglomeration, putting disparate assets together was fine in the great building stage...where we started about 12 years ago," Diller said. "We built up a fairly large number of disparate businesses. All of them had some form of interactivity, but they were all from selling mortgages to dating...It wasn't giving investors or commentators or anyone else a clear picture of what the company was."
Then there was a battle for board control with shareholder John Malone of Liberty Media. The two now have a "good relationship," Diller said.
While much of the "new IAC" relies on advertising revenue, Diller declared at the conference that strictly relying on advertising as a business model is not sustainable. "I absolutely believe that the Internet is passing from its free phase into a paid system," he predicted (though, keep in mind, Diller did say he doesn't like to predict). "Inevitably, I promise you, it will be paid. Not every single thing, but everything of any value. Again, take commodity away from it."
The wealth of free content on the Internet was a matter of short-sightedness, Diller explained. In his opinion, it came out of the fear of piracy.
"People were so frightened of not being dinosaurs, and baring their heads, and not having what happened to the music industry happen to them, they just slapped everything up on the Internet for free," he said. "That's an accidental historical moment that will absolutely be corrected."
Diller doesn't believe that the poor economy will make it more difficult to get people to pay for things online. One of his subscription-based businesses, dating site Match.com, is doing very well right now: "It would not shock any of you that I think that of the things that, actually, people will do when enduring a storm, financial disaster, or otherwise, is want to hook up in one way or another with other people," Diller said.
Why is he such a believer in the triumph of paid content? Look at the iPhone, Diller told the audience, and the wild success of its App Store.
"The iPhone is a great example of what's going to happen," he pointed out. ""One of the greatest barriers to buying things is the steps that it takes, and we all know the difference when you go to Amazon and you just push your little thing and it's bought, paid for, delivered, billed, et cetera., instantly, and how much that has enabled or how much that has made the difference between just browsing and buying...that little thing, that in fact you scroll it, you do it, it comes, everything else is taken care of, is the answer to what's going to happen on the Internet when, in fact, we get the applicability of that broadly."
He acknowledged that media outlets' readership rates may drop, but that their profits will stabilize once again.
Another thing that Diller was willing to predict? His own demise. Sort of. Interestingly enough, he said he's of the belief that a modern media company is unlikely to outlast its original founder successfully.
"News Corp. makes sense because News Corp. is the absolute extension, to the fingertips, of one person," he said, referring of course to Rupert Murdoch. "I think (in) every case other than that, is that once that original founder has gone, for whatever reason, then the truth is it should all be taken apart because they make no sense. You can't replace with a suit somebody who's built the thing up and understands all of its bits and pieces in the rhythm of their heartbeat."
Interviewer Jon Fine wanted to know if that would be IAC's fate, too.
"I think that's true," Diller said.
MySpace started off as a hub for indie bands to connect with their fans. Now, with a new partnership with the IAC/InterActiveCorp-owned Citysearch, it's hoping to do the same for the likes of bars, clubs, and restaurants.
Called "MySpace Local," the new section on the News Corp.-owned MySpace will be rooted in existing listings from Citysearch (restricted to major U.S. cities) that are souped up with social features like the ones that you might see on a band or celebrity's MySpace page (photos, videos, comments, and the like). It's launching with just "restaurants," "bars," and "nightlife" categories, but will eventually expand--and it'll only be available to a select number of users this week before rolling out to the rest of MySpace's U.S. users.
"We're using the tools of new media to make the discovery as social and therefore as relevant as possible," said Jeff Berman, president of sales and marketing at MySpace, in a conference call on Tuesday. "The first thing you will see are ratings and reviews from your actual friends. When a reviewer is anonymous or unknown, it's hard to say whether you should care what they think."
Eventually, MySpace Local will highlight reviews from celebrities, "influencers," and power users with "street cred." There will also be new features like menus and possibly an online reservation tool.
This move will put MySpace in competition with fast-growing reviews site Yelp, which has been dealing with image and credibility issues recently but which has nevertheless been catching up to Citysearch in reach.
It'll also present more opportunities for local advertising. The social network has been courting small advertisers with a program called MyAds. But there will be big brand advertisers on MySpace Local, too, with Outback Steakhouse and Coors signing on for the launch.
Citysearch, which recently overhauled its site, also syndicates some of its content to AOL.
Berman said that research showed about 50 percent of active Citysearch users have MySpace profiles that they check at least once a month. "There is healthy overlap, but there is also a healthy new audience to be reached," he said.
This post was expanded at 10:54 a.m. PDT.
236.com, a comedy site developed as a joint venture between liberal news site The Huffington Post and Barry Diller's IAC/InterActiveCorp, will be a joint venture no more. The site will become a Huffington Post subsidiary and is slated to be re-branded as "Huffington Post Comedy." Financial terms were not disclosed.
"After a successful first year as a standalone comedy site we are excited to bring 236 into The Huffington Post as we launch our comedy vertical," Huffington Post co-founder and namesake Arianna Huffington said in a release Tuesday. "We look forward to creating a section that serves not only as a one-stop-shop for humor with a satirical take on the news but a spirited community for all comedy lovers."
Reports surfaced in December that IAC was looking to spin off some of its smaller properties, 236.com possibly among them.
Though it began as a political news site, the Huffington Post has gradually expanded into other news and lifestyle areas to broaden its coverage. The "Comedy" section created from 236.com will join sections like entertainment, media, and "green" news.
The Huffington Post closed a $25 million funding round in December.
A report on PaidContent suggests that InterActiveCorp, the media conglomerate owned by Barry Diller, may be looking to sell off some of its smaller ad-supported content properties--effectively, tossing assets overboard to lighten the load during rough financial seas.
According to PaidContent, IAC may be "dissolving" its "programming" group, a set of ad-supported content businesses that includes CollegeHumor, 236.com (a joint venture with The Huffington Post), Very Short List, and the brand-new The Daily Beast. The restructuring reportedly involves the departure of Nick Lehman, chief operating officer of the programming group.
A CollegeHumor executive told CNET News in an e-mail that the comedy site would not be sold. IAC took a majority stake in its parent company, Connected Ventures, which also owns BustedTees and Vimeo, two years ago.
More likely? News comedy site 236 may become wholly owned by The Huffington Post, which just raised $25 million in funding. Very Short List, an e-mail newsletter, may also be up for sale.
IAC underwent a five-way split earlier this year as Diller, convinced that the unfocused nature of the conglomerate was keeping share prices down, spun off properties such as Ticketmaster and LendingTree in order to focus on online media businesses.
Citysearch is still ahead, butupstart rival Yelp is catching up. Good thing Citysearch has brought in some much-needed new social features.
(Credit: Compete.com)Citysearch, the online business directory owned by Barry Diller's IAC/InterActiveCorp, has gotten a full makeover. It's available now at beta.citysearch.com--there's a more streamlined and Ajax-y interface, but a few important features have been tweaked as well. According to company representatives, this is about a year and a half in the making.
First of all, instead of focusing on a select number of metro areas, Citysearch has expanded to a whopping 75,000 towns and neighborhoods, meaning that you can narrow down your focus to New York's East Village or Los Angeles' Culver City. Additionally, there's Facebook Connect integration, meaning that you can see what your Facebook friends have recommended or reviewed on Citysearch. Also on the social side of things, reviewing businesses on Citysearch is easier and more up-front. Previously, there had been more attention on editorial reviews as opposed to user reviews.
And Facebook approves, apparently. "At Facebook, we've found that remarkable things happen when you get trust, user control and identity right--people share more information, and become more open and connected," Facebook communications czar Elliot Schrage said in a joint release. "Citysearch's innovative new site shows how Facebook Connect can help information flow faster through a site while creating a filter for users to engage with localized content through the lens of their friends, family and colleagues."
That's a big deal for Citysearch: fast-growing start-up Yelp has started to gain some market share in the "user-generated reviews" department. According to traffic firm Compete.com, Yelp is still smaller but catching up. (Citysearch, for that matter, syndicates some of its content to big portals like AOL.)
Finally, Citysearch has launched a mobile site compatible with a number of different browsers and handsets--yes, including Apple's iPhone.
InterActiveCorp, the sprawling conglomerate of brands helmed by media titan Barry Diller, is formally splitting into five separate companies Thursday. And it hopes to do so quietly.
The story is familiar by now: Diller, determined to solidify himself as capable of mastering both old and new media, has long insisted that a lack of confidence on Wall Street has suppressed IAC's stock price. So last November, Diller made the big announcement that IAC would be slimming down to a core of ad- and subscription-supported Internet media brands such as Ask.com, Match.com, Bloglines, Citysearch, Vimeo, and Evite.
IAC Chairman and CEO Barry Diller
(Credit: Dan Farber)The rest of its brands would be spun off, grouped into one of four publicly traded companies: ticketing company Ticketmaster, travel company Interval Leisure, retailer HSN (the Home Shopping Network and catalog company Cornerstone), and Tree.com (the set of real-estate and lending brands that encompasses the troubled LendingTree).
This has been talked up as an almost spiritual renewal for IAC, which simultaneously weathered a bitter proxy battle with powerful shareholder John Malone of Liberty Media. With that over, and the blueprints laid for the split, Diller festooned the June cover of Portfolio, with the magazine proclaiming a "ninth life" for the former Hollywood mogul. But Diller's renaissance may be coming at an awkward time, as the outlook for the online-ad industry--the foundation for the new IAC--is not exactly certain.
Market research firm eMarketer has reduced its estimates for online-ad spending in the past few months--twice. Fox Interactive Media, the digital subsidiary of News Corp., missed its annual revenue goal this spring. Even this year's Olympics are evidence that online advertising is a tough market, even without economic woes taken into account: just look at NBC's reluctance to stream some of the more "blockbuster" events live.
Online advertising is a relatively nascent sector of an industry that is starting to see the effects of a rough economy. That could be part of the reasoning behind why IAC's five-way split and subsequent refocus on online ads are being treated internally as business protocol rather than a ribbon-cutting spectacle.
There will be a press release but no major fanfare, an IAC representative told CNET News on Monday. There also won't be any disruption over at IAC's gleaming glass headquarters on Manhattan's West Side, as no one is getting relocated. Of the brands to be spun off, only the Los Angeles-based Ticketmaster actually has employees in the New York flagship office, and they will remain there even after the split.
That's not to say that it's a bad move on the part of IAC's board. The Malone spat aside, splitting up IAC was a decision met with nods of approval, with the harshest criticism often being that Diller shouldn't have gotten himself into such a pickle in the first place. (In 2006, New York Times columnist Nicholas D. Kristof dedicated an op-ed to him, entitled "America's Laziest Man?" for taking home a fat salary while IAC's stock languished.)
On a general level, the split will make IAC and its perception on the Street less of a mess: nobody's going to argue that it's not a true Internet media company now.
More specifically, IAC is shedding some properties that were threatening to stall, if not sink, the company's progress. LendingTree was pummeled by the subprime mortgage crisis. A $300 million writedown on Cornerstone Brands was the main culprit in IAC's second-quarter losses this year. Ticketmaster continues to perform well, but with the loss of its biggest promoter, Live Nation, the future might not be quite as bright.
However, IAC won't be permanently severing its ties with these companies, thanks to a recently announced ad network that will handle inventory for Ticketmaster, LendingTree, and HSN, as well as the company internally known as "New IAC." This means that Diller, who will remain a shareholder in all five post-split corporations, might not be fully unloading his company's problems.
IAC executives have been encouraging shareholders to look toward the company's future for months now, and with losses from the soon-to-be-gone brands set aside, IAC actually beat Wall Street's estimates for its second-quarter earnings. But on Thursday, when they're dealing with the revamped IAC hands-on for the first time, many of the old issues won't be gone. It's simply a difficult time to be in the business of online media.
IAC is no exception. Despite starting to inch up in the wake of Diller's November announcement, the company's stock has now resumed the general downturn it's been on since a high point in 2003, and there's little certainty as to what it might do on Thursday.
The company still has the task of building new properties such as FiLife and RushmoreDrive. Other brands could use some resuscitation too: Evite finally has some plucky competitors, Match.com by no means has a lock on the online-dating industry, and the IAC split won't change the fact that Ask.com still has to compete with Google. Compete.com says traffic has been tepid at CollegeHumor, the fratty entertainment site in which IAC bought a majority stake in 2006, giving Diller a legitimate shot at 21st-century youth savviness (though, to be fair, traffic has been on the rise at sister site Vimeo since early this year).
The company should nevertheless be optimistic, of course, especially considering that the Malone saga could've taken a turn for the worse and doomed the split in the first place. It's already weathered a few tough skirmishes.
With some major money losers cast off, IAC will have more financial and human resources to devote to the remaining brands, and less head shaking from Wall Street about what, exactly, the company does.
To use a nautical metaphor--yacht aficionado Diller is a fan of those--IAC has upgraded to a more streamlined fleet of ships. That, unfortunately, doesn't get rid of the thunderheads.
A class action lawsuit filed earlier this week targets Facebook and eight of the participants in Beacon, its ill-fated advertising product that shared information about third-party site activity with the social network. The set of 20 plaintiffs, mostly residents of Texas, filed the suit in the U.S. District Court for the Northern District of California on Tuesday. Named as defendants are Facebook, as well as current or former Beacon participants Blockbuster, Fandango (owned by Comcast), Overstock.com, STA Travel, Zappos, Hotwire (owned by IAC/InterActiveCorp), and GameFly.
A Facebook representative told CNET News on Thursday that the company had not yet actually been served with the lawsuit, and that its legal team consequently did not have a formal statement at the time. STA Travel, Gamefly, and Overstock all declined to comment; none of the other defendants could be immediately reached.
"Until we're served, we're not being sued, so we don't have any comment," Overstock general counsel Mark Griffin told CNET News.
Beacon gained almost immediate notoriety when Facebook unveiled it as part of its Facebook Ads announcement last fall. Privacy advocates, most notably liberal activist group MoveOn.org, lambasted the program for not allowing users to disable it easily. Facebook has since modified the program and the controversy has wound down. But in the lawsuit, the plaintiffs point to the window of time before Facebook instituted the new controls--between November 7 and December 5 of last year--and claims that the social network still has access to a large amount of user data that was gathered in that period.
"If the user was not a member (of Facebook), Facebook still obtained the notification from the Facebook Beacon Activated Affiliate," the filing for Lane et al v. Facebook, Inc. read. "Information regarding user activities was sent in real time to a third party Web site--one which was not open or active in the user's browser, and one which, in many cases, the user may never even have visited or heard of."
There's one odd law that may make the plaintiffs' case stronger: the Video Privacy Protection Act of 1988. The law was passed amid the fracas surrounding Robert Bork's controversial nomination to the U.S. Supreme Court, when a journalist obtained Bork's movie rental record from a local video store and published it.
That's why there's already been a suit involving Beacon that specifically targeted Blockbuster for participating in such a program: a Texas woman filed suit against Blockbuster in April, claiming that the VPPA bars it from Beacon. Facebook was not named as a defendant in that suit, and though the plaintiff sought class action status for her case, she does not appear to have any involvement in this week's suit.
The defendants named in the suit don't encompass all of Facebook's original Beacon partners, but several of them could tie into VPPA protections: GameFly rents video games, Fandango sells movie tickets, Hotwire and STA deal with travel bookings, and Zappos and Overstock are both online retailers with a large scope (Overstock sells DVDs, for example). The suit also names the California Computer Crime Law and the Electronic Communications Privacy Act as grounds for the suit.
One of the plaintiffs, Sean Lane of Waltham, Mass., was immortalized in a Washington Post story about Beacon: He's the guy who bought his wife a diamond ring on Overstock.com, only to have her spot the purchase in a Facebook news feed, spoiling the surprise.
Guess he's still irritated.
Looks like some big-media deal-making went into this one.
Photobucket, the photo-sharing site that was acquired by News Corp.'s Fox Interactive Media last year, has announced the launch of an iPhone application (download), just like everybody else.
Users can browse their Photobucket albums, as well as upload images from the iPhone to the service with a single click. The application costs $4.99.
But Photobucket had a more interesting announcement on Thursday, namely a multiyear partnership with Ask.com, the search engine owned by new-media conglomerate InterActiveCorp.
Through the deal, Photobucket will use exclusively Ask.com search for its photo, video, and Web searches, and some of Ask.com's text and display ads will be shown on Photobucket. No financial specifics were mentioned.
"Photobucket has one of the largest online audiences, and now Ask.com provides these consumers with the answers to the questions they ask every day," said Andrew Moers, general manager of partnerships for Ask, the No. 4 player in search. "This alliance furthers our strategy to bring Ask.com to consumers worldwide through a broad range of Internet access points."
Photobucket sister company MySpace, meanwhile, has its search (and many of its ads) handled by Google. But on that note, Google has provided ad technology to Ask.com since the dinosaur days of 2004.
InterActiveCorp mogul Barry Diller may be getting rid of brands like Ticketmaster, LendingTree, and HSN, but he still wants to sell ads on them.
The sprawling media company announced Monday that it will launch an ad network to handle inventory across all its brands, such as Evite and Citysearch, as well as the ones that Diller and his executive team are opting to spin off into separate publicly traded companies.
"Maybe we're not brothers and sisters, but we're cousins," IAC Advertising Solutions president Rich Stalzer told AdAge about the companies it will spin off. The AdAge article also reported that IAC currently serves only a small percentage of its own ad inventory, outsourcing the rest.
IAC's new ad strategy focuses on targeting consumers in nine "cubes": youth (18 to 34 years old), men, women, "affluents," parents, active shoppers, active travelers, homeowners, and sports fans. More cubes are on the way. But of particular priority to IAC is the "affluents" niche, which can draw in far higher click-through rates because of those consumers' likelihood to spend larger amounts of money.
For once, IAC's arguably scattershot and unfocused array of retail and media brands could be helping it move forward.
That's because there are many ways that IAC could identify Web users as "affluents" (or anything else, for that matter) through the sheer variety of properties the conglomerate owns, as well as the ones that it is spinning off.
"We're in a unique position in that we can corroborate multiple kinds of data," Stalzer explained in a release, "including declared information users offer about themselves; transactional, online purchasing activity; and inferred, such as what they do offline like attend concerts or go on dates, from the diverse portfolio of IAC sites to more precisely identify users as part of a particular audience segment."
Someone who makes pricey purchases at the company's Gifts.com, for example, or who repeatedly queries Citysearch for restaurants of the Jean-Georges and Nobu variety, could be classified under the high-income "cube."
And Diller, well known as a yacht aficionado, is even more deeply connected to the luxury-brand market than your average CEO: He's married to fashion legend Diane von Furstenberg.
The view from Hearst Tower at Founders Club.
(Credit: Marc le Clef)NEW YORK--Thus far, my experience with the Internet Week New York party scene has one of dichotomies. On Wednesday I went from a lively dance floor to a room full of awkward male Kevin Rose groupies. Then, on Thursday, the social agenda involved one event that was impeccably classy and one that was so consciously puerile that it could only have come from CollegeHumor.
One more inch and this photo of America's Hottest College Girl (left) would be NSFW. She was honored at a party that coincided with but was not affiliated with Internet Week New York.
(Credit: Amandalyn Ferri)The earlier gathering was the latest installment of Founders Club, a series of quarterly events that pull together a bunch of local A-list entrepreneurs with the VCs who fund them and the big-media folks who want to get to know them. The Founders Club circuit kicked off last winter, fueled by the contacts lists of popular local digerati like Blip.tv's Dina Kaplan and IAC exec Jason Rapp. While its original digs in an investor's penthouse were nothing to scoff at, the events have grown more upscale in venue, this time taking over a 44th-floor space at the tower occupied by publishing stalwart Hearst.
For most, it was an escape from the Internet Week fray and a chance to catch up over an organic vodka-on-the-rocks with the likes of Gawker Media publisher Nick Denton, News Corp. M&A exec Jeremy Phillips, digital-politics guru Andrew Rasiej, and Greycroft Partners' Alan Patricof. A few out-of-towners were in attendance too, like Digg founder Kevin Rose, Wikipedia founder Jimmy Wales, and Facebook/Napster/other-stuff-in-the-Valley veteran Sean Parker.
The crowd at the Founders Club event on Thursday night.
(Credit: Marc le Clef)The most prolific topic of conversation: the fantastic views of Central Park and midtown Manhattan, including The New York Times building further south on Eighth Avenue--two arguably unstable exhibitionists had attempted to scale the outside of the building earlier in the day.
But the open bar and live jazz trio at Founders Club tapered off around 9 p.m., and several taxis full of fun-loving partygoers headed downtown to the flashy, chandelier-adorned Flatiron District nightclub known as Room Service, where the IAC-owned CollegeHumor was having its annual Hottest College Girl in America Party. The 2008 honoree was 19-year-old Alison from the University of Wisconsin, who eventually wants to be a high school English teacher. (Note to Alison: Those photos on CollegeHumor might make the average American high school think twice when you submit your resume.)
You know, it's kind of unfortunate that CollegeHumor co-founders Josh Abramson and Ricky Van Veen hadn't scheduled their party for the previous night. I would've paid a few dollars to see Alison and her barely-clothed friends transported to the Digg party; maybe then those Digg fanboys would've diverted their attention to something other than their lionized Kevin Rose.
