Why do Car Comparison Sites Have So Much Pricing Power?
Digiday notes that car comparison sites are price setters, unlike nearly everyone else in the online ad world. This seems counterintuitive, especially since it doesn’t apply to sites one level downstream (e.g. eBay Motors) or one level upstream (like auto blogs).
Turntable.fm Signs Record Deals
Turntable.fm has finished one leg of their licensing deal arbitrage by signing deals with major labels. Now that their costs are predictable, all they need is a revenue model.
Can Bing Compete with Google?
Wired has a PR puff piece from Bing arguing that, at a technical level, it can. And this blow-by-blow analysis of Bing and Google’s performance during breaking news stories also indicates that Bing is more willing to push news-driven results into high-volume queries.
It may just be their PR, but Bing appears to be on the right side of an innovator’s dilemma: they have a worse reputation than Google, so they have less to lose if they promote new pages in search results long enough to measure user click behavior. And that means their search results will be more adaptable during breaking stories—which is an indirect subsidy for the technical improvements that Bing cites in the Wired story.
Meanwhile, a smart webmaster who was hit by Google’s various Panda updates argues that they’re more based on user clickthroughs than any other metric.
How Not to Invest in Facebook
Andrew Chen walks through his thought process when he decided Facebook didn’t have great potential as a business based on their metrics when they had about a dozen employees. Every part of his analysis makes sense—it’s actually much more reasonable than what Facebook’s early VCs seemed to think, which was that a) there was a new business model in there somewhere, and b) that Facebook’s growth could continue indefinitely. As it turns out, those fairly irresponsible assumptions were exactly right.
Sharespost, EB, and Felix Investment Charged by SEC; SecondMarket Unscathed
The SEC has looked into the private stock market, and spotted some dubious actions: Sharespost was dinged for failure to register as a broker-dealer (they’ve since fixed that). EB Financial made some more serious mistakes, including buying Facebook stock from an entity controlled by the wife of the manager. And Felix Investments (as one might have predicted) got accused of attempting to sell stock it hadn’t actually acquired from investors—apparently shorting non-public equities is possible, but probably criminal. Felix intends to fight the charges.
SecondMarket’s CEO has a detailed explanation for why they weren’t charged. Their model is much closer to the way a typical exchange would work; the companies that were charged seem to operate more as principals than as agents.
(The SecondMarket answer is an interesting case study for another reason: SecondMarket employees used Quora’s “Credits” system to promote the answer, which is apparently how some media outlets found it. Given that Quora could theoretically charge cash for credits, a business model naturally suggests itself.)
Netflix has Recovered from “Quickster”
PaidContent cites some Citigroup research indicating that Netflix’s usage and brand perception have both largely recovered from their attempts to split the service into separate streaming and DVD companies last year. Consumers have short memories for PR debacles, and long memories for products they actually like.
Android Tablets Growing Faster than iPads
IDC argues that Android will be more popular than the iPad by 2016. But as long as Apple can avoid Android’s device and OS fragmentation, it will remain the default choice for developers for longer than that.
Meanwhile, iPad users have a high lifetime value, at least on design-centric site Fab.com
“How Garbage Ranks: a Case Study”
This is worth reading: it’s a look into how a site ranked near #1 for terms like “Car Insurance” and “Auto Insurance” despite having weak content and few to no brand signals. (The author didn’t publish the piece until Google had demoted the offending site.)
The Most Trusted Tweets
Apparently social connections weigh more heavily than expertise when people evaluate opinions in social media. That’s empirically true, in the sense that a huge fraction of social media activity involves following a known stream of users, instead of browsing for expert opinions. But in some ways, that’s part of the medium: recommendations from social connections are trusted in social media because, when users want expert opinions, they use search instead.
Twitter Buys Posterous, Aimed for Tumblr?
Twitter has acquired Posterous, and will likely shut it down and have its staff focus on Twitter. Ryan Tate claims that Twitter was really hoping to buy Tumblr—which hardly makes sense, given that Posterous is a talent acquisition and Tumblr would be a product buy.
MTV Targets Artist-Name Searches
MTV is using their new .MTV top-level domain for a product targeting artists. This will be an interesting case study in how Google treats branded top-level domains: optimizing thousands of new dot-com sites would be tough, but the .mtv domain is a strong signal that these sites fit under MTV’s umbrella.
FAA May Review Tablet Policy
The FAA may reconsider its rules against using tablets during the beginning and end of most flights. Internet ads are worth roughly $.70 per hour, takeoff and landing take about an hour per flight, and there are about 637 million enplaned passengers per year in the US. So the potential marginal revenue for the US Internet advertising industry is measurable, though not significant—marginal revenue for companies like Boingo Wireless could be a bit higher. And that ignores the fact that more passengers choosing to turn on their tablets in flight means more reasons to target that specific demographic—a hotel offering spa treatment might get far more takers in hour six of a six-hour flight than they would offering the same deal a week earlier.
Is AOL Shooting the Messenger?
They are, at least, laying off many of messenger’s product staff. Since messenger is integrated with Google Chat (and plenty of other chat clients), this shouldn’t have a huge effect on users—but it’s surprising to see AOL give up on this kind of asset. Perhaps DST wasn’t interested in buying another legacy chat network from AOL.
The Internet Bubble: A Rational Tournament?
Albert Wegner makes the case for the bubble: since successes can be so huge, so quickly, it makes sense to value more companies based on the small chance that they’ll suddenly turn into growing businesses with defensible margins. That’s a good first-order explanation, but what happens when investors raise money knowing that this is how VCs think?
Digital Due Diligence Weekly