Steve Jobs has passed away and it is a very sad day here in Silicon Valley and the country. There has been a tremendous outpouring of emotion and great articles since the news broke several hours ago. I'm not going to write the 10,000th article about Jobs and his legacy, but rather take a moment to point out some distinct things I've learned over the years from being a fan of Apple and him (not a cult member, but someone who just intensely loves and respects Jobs and Apple).
If Things Don't Work Out, Stay True To Your Passionno comments
This may end up being one of the last Koo Runnings but certainly a lot going on right now to warrant a new edition highlighting everything going on within the sports 2.0 industry.
Obviously Bleacher Report had a couple of huge announcements last week but before we go there, let's open with some smaller items.no comments
Been way too long but as the month comes to an end, here is a look at what's going on within the sports digital media space in this edition of Koo Runnings.
First off an apology for not posting. Traveling, flu, visitors in town, and you know running/bootstrapping/killing myself for Bloguin. I always think it's funny when blog posts start off with this kind of apology, as in many cases nobody really noticed/gave a shit. I'd like to think some people do here.
In this blog I'm going to tackle one issue, the value of platform. Yes, platform, the biggest buzz word there is but I'm not going to futz around. Instead I am going to extensively put my thoughts here and get your feedback as it seems in the not so distant horizon myself and Bloguin will have some decisions to make here with some additional resources internally coming into play.
When a content focused startup takes a round of funding there are only really three areas they can invest that capital. Sure the founders probably want a salary, a work phone, maybe a real office, etc, but the real bulk of that funding is going to go towards a) content b) technology/platform c) monetization optimization.
Investing in content could mean buying sites, hiring writers, paying writers more, or potentially working on distribution (newsletters, mobile, content partnerships), or advertising of that content.
Monetization optimization could mean hiring an in house sales team, working on new revenue streams, or sophisticating your ad operations.
There are pitfalls going down either road. Companies can overpay writers and overpay for sites or even adopt the wrong content production compensation model.
On the monetization front, I've seen and heard a lot of failed attempts to increase sales. Folks who moved up the ranks at CNN, ESPN, Yahoo, and other major media companies get the itch to take an elevated position at a younger company and the company is in need of a connected individual to increase revenue. Unfortunately these individuals are expensive and more importantly they have no idea what they're getting into. Imagine you sold ads for cnn.com for 2000-2007. Your phone rang with interested parties looking to purchase advertising as a lot of your sales were inbound and repeat.. Relationships were easy to forge. You had budget to wine and dine, to travel, marketing support, in house design/marketing/etc. Now you're at something like early stage Huffington Post or something that's not even close to mainstream. The phone is not ringing and the people who used to fill your 401k with comission money is a little weary of telling their boss that they want to stop buying ads on cnn.com and move to this new property.
Suddenly people don't know who your company is and you start looking around and realize you're at a company of dozen or so 20 somethings wearing tee shirts and you wonder "What the hell was I thinking?". I've litterally seen and heard of this exact scenario over a dozen times with the average tenure of these "hired guns" lasting 4-8 months. It can be even worse as one hired gun will often bring in others who are of the same ilk. Now you have 3-5 high earning employees who are in over their head.
Sorry for the detour and back on point. So what about investing in platform? I'm about to dive into that, but I got to say it's an interesting question. How valuable is platform?
On one hand you have SB Nation, Gawker, Weblogs, Scout, Rivals, 24/7 Sports, Bleacher Report and to a lesser degree Yardbarker all with proprietary platforms. How much of their value is derived from those platforms?
On the other hand you have the Y! Sports Blogs, NBC "Talk" blogs, TechCrunch all building their online empires on Wordpress and sites like Huffington Post using Movable Type. All of these examples are using free or low priced outsourced platforms. TechCrunch and Huffington Post were acquired for about $350 million and niether even blinked at developing their own CMS. TechCrunch rather tried to make it's own tablet computer instead of a platform.
Below is a look at some of the startups that have gone down the platform road.
Weblogs- The idea behind this post actually came from a couple of developments surrounding Weblogs, the blog network acquired by AOL for $25 million in 2005. At a recent conference, AOL's current CEO was on stage gushing about how they've been working on enhancing the Weblog platform. It's almost a scape goat for many companies. What have we been working on? Oh the platform or "the plumbing" as Armstrong kept saying. Basically stuff you can't see.
In the crowd was Brian Alvey, one of the co founders of Weblogs who let out an interesting tidbit about the acquisition of Weblogs. Apparently AOL bought the sites and content first and then there was a second transaction months later for the actual platform. Very odd. Migrating content is never pretty. I don't know what AOL was thinking at the time acquiring only half the equation. Alvey has actually been leading a new platform company, Crowd Fusion.
Also in the crowd was Jim Bankoff, CEO of SB Nation one of the main guys behind both transactions from the AOL side who would later tweet something to the effect that his bosses were skeptical of the second transaction (the platform one). AOL was now gushing about the Weblog technology. Times had changed from their skepticism to their new stance of embracing/investing in the platform.
But apparently that Weblog technology wasn't as improved as Armstrong was selling it at the conference as weeks later the editorial team from their very popular Engadget blog announced they'd be leaving AOL for SB Nation, citing the platform.
“We have been working on blogging technology that was developed in 2003......After looking under the hood of what they (SB Nation) have in terms of technology, we’re very excited about what we will be able to do there.”
Frankly speaking I'm not sure how much of that was marketing on behalf of SBN/a parting-shot at AOL versus reality. There were strong rumblings that Engadget refused to work along side TechCrunch under AOL and with new editorial directions at first from "The AOL Way" and later the Huffington Post's incoming management, you could surmise that their exit might have not been just been due to an inferior platform.
But regardless if you believe Engadget's outgoing comments about the Weblogs platform or Armstrong's comments that its been improved under his leadership, the fact remains that they built a proprietary platform that helped power their content. AOL fell in love with the content and later the platform and use it to this day. Building in house worked for them and Alvey thinks he can do it again but this time without the added responsibility of developing content internally.
Scout, Rivals, 24/7
I wrote quite the magnus opus about Rivals, Scout, and 24/7, companies that share the exact same model and even founders. What I found most interesting about that article besides the huge amount of traffic it got was the really interesting comments that came from people who worked for those companies including the engineers. They detail how the company blew through millions and millions of dollars in venture capital and chronicle some of the personalities who they contend nearly ruined those companies.
What was most interesting is that some contend that they would have been better off building their platforms on open source technology. Others chime in that those days (1999-2002), it would be possible but back then open source platforms were pretty crummy and it would have never really worked.
Both Scout and Rivals are considered successes selling for 60 and 100 million respectively to Fox and Yahoo, but in reality they burned through so much venture capital both were almost washes.
Fox still uses Scout's technology to this day and I hate to be an ass, but it's just very very dated. It works, but it just screams 2005.
Yahoo still uses Rivals' technology and it's better, especially in terms of design although it's been quite awhile since it's added any functionality.
The guys who bought Rivals out of bankruptcy and sold it Yahoo have since started 24/7 who are in the midst of building their own platform. A lot of folks aren't happy with the platform compared to the smorgasbord (dear god you should have seen how bow I misspelled that at first) of solutions that publishers used before moving over to 24/7. I actually see a lot of good work being done comparative to the stale Scout and Rivals platforms but have to say there is a long ways to go before it's clear they have the best platform.
Should 24/7 reach the size of Scout and Rivals, it will be interesting to see what happens to that company as Fox and Yahoo already own viable competitors. CBS, AOL, ESPN, or Comcast/NBC perhaps could pull the trigger to acquire the network and the technology. Very interesting to keep an eye on but it should be noted that I don't think 24/7 would exist if Yahoo continued to invest in the Rivals platform like the founders would have preferred. Rivals seemed to become less of an emphasis technology wise for Yahoo and now you have that most of the original team working in the same building doing the same thing as Rivals but just at a new company. They're basically Michael Scott Paper Inc but with a good track record.
Gawker has their own platform and it's got quite a bit of ink about their redesign. For a massive content company, you rarely hear rumblings of Gawker maybe getting looked at to get acquired but some of their PR of late has focused on their platform, potentially as selling point to a major media company.
One thing that sticks out about Gawker's platform and technology is that it really doesn't look or feel like anything else out there while other companies tend to share some traits. It's hard to tell if their commitment to proprietary platform will in the end help their bottom line and possible exit or if they same type of success could have been achieved by outsourcing their platform or adopting an open source/free platform. Probably the hardest company to add commentary around.
This one is a bit different as they're a destination portal and not a network of sites. Their installation of their technology is one site and not multiple sites. They've certainly been successful with their own technology as their slideshows, trivia, article viewer, editing tools, newsletters, and SEO have all been instrumental to their growth.
But I think their value is a bit different. Other examples on this list can been deployed on new sites with much ease, but I think Bleacher Report's technology is more valuable in parts rather than as a whole. Sure a big company could buy them and setup the same technology on a site called let's say "couch potato report" but I just don't see it working like that (similar to ballhype being mirrored with showhype once they were acquired).
Bleacher Report took so much attention that I don't think you could just take the technology and see success in another niche. You'd need to invest millions of dollars (mostly on manpower) to have a chance at similar success. The technology would help but it's not really feasible to scale it out to tons of sites and expect similar results or replace existing sites with their proprietary technology stack.
Instead I think the value is in the various segments of that stack of technology. Could a media company utilize their slideshows or newsletters on existing properties? Probably after some custom integration hence there is good value in the parts individually which drives the value for the whole platform.
For years, SB Nation ran off of a system called Scoop, mainly because one of their founders ran a popular political blog on that same platform. But then Scoop basically shuttered, a more common problem then you realize.
Very often companies kill products, the company themselves go under, or the open source development community erodes to where the platform is no longer being worked on. Having worked in software I can tell you that a lot of potential customers were only looking at new options because they somehow picked something that was no longer viable.
Scoop was a dead platform. SB Nation was looking for something else and here is where there is some mystery. You can find some crumbs on the web of their team looking for new solutions and then the trail goes cold and months later they rolled out their own technology platform. That's not an easy task.
What's interesting there is at the time they were like Bloguin is now, a bootstrapped entity or at least that's the story you see publicly. What I've heard is that Jim Bankoff who was no longer with AOL and still being bullish on platforms helped lead an angel round of financing to the young company, a round of funding that doesn't seem to be publicly divulged.
With that funding a technology team was put in place. They hit a home-run on the platform, the publishers loved it, more funding came, Jim Bankoff came in as CEO, and that seems to be sequence of events of how a bootstrapped company with no proprietary technology became the juggernaut it is now.
Again I'll rewind by saying that this is a good chunk of conjecture here, but that's the story I've put together connecting dots and if true, it's impressive.
The fact that Bankoff and the technology team really set the tone and direction for the company before a major funding was quite a successful bet. Almost like that 4 team parlay you never hit.
Yes their platform and design has continued to evolve, but a huge chunk of their success can be traced back to that early decision which seems ages ago.
It's still not clear just how much of their valuation they point to their platform being responsible for nor what price an acquiring company would put on that technology. Given the technology is now deployed on ~300 sites and you have the Engadget team singing it's praises, I'd imagine it will continue to be a big part of their value proposition when the time is right to sell down the road.
Yardbarker focused a lot of it's capital in content and monetization but actually put together a very capable technology team as well who seemed to focus on smaller projects rather than a huge platform. An athlete blog platform was developed as well as a system to tag articles and a Digg like community voting platform.
Yardbarker did unveil an overhauled platform for athlete blogs and for general bloggers in early 2009. Unfortunately some of the technology team would subsequently leave the company soon after.
Athletes adopted the platform and some at large bloggers did as well although it seemed to struggle to get mainstream traction. If you think I'm painting this as failure, you'd be surprised. Fox purchased Yardbarker and after some time Fox began to adopt the Yardbarker content platform.
In the end while the platform didn't necessarily become a huge driver of business independently for Yardbarker, it seems as if Fox is getting a lot of mileage out of the technology today.
So Why Is This A Hard Decision?
These stories all came in different years over the last decade plus. Some were huge successes others not so much. When you build in house, you have to build EVERYTHING.
Your own RSS feed system, your own login system, your own comment system, security systems (Gawker got pillaged FYI), your own mobile site versions, etc. etc. It's not just building a blog platform but dozens of other auxilary features and technologies which can be tricky and or expensive.
Nowadays you have startups focused on almost all of these features. Tumblr, Automatic, Posterous, Crowd Fusion, and many others make their own platforms. Disqus and LiveFyre are high quality commenting platforms. Open Source solutions exist that are highly competitive as well and given your ability to develop on top of these platforms so it can be possible to customize your way to a polished product instead of building from scratch.
If it was easy, Yahoo, NBC, TechCrunch, and Huffington Post wouldn't have thought twice about whipping something up. But it's not and if you swing and miss here and can cripple a company and potentially risk your job. There are a handful of companies I won't name who tried to tackle platform, fell face first, and they're dead or dying.
Also if you do build from scratch, you're not making a short term decision but potentially almost even a lifelong decision. You're going to need technology expertise for this platform as long as you have content on it and being created on it. You're not going to build a car from scratch and then let the mechanics go. You NEED them and you need them for a long time.
To the folks who work or have worked at these companies, I'd love to get your thoughts here as we close in on having to evaluate resource allocation. Definitely no easy decision even for The World's Greatest Chinese Jew who actually just defended his title on a competition versus a new worthy challenger who emerged.
What are the most important factors when deciding what to do here? What your board and advisors say? How much money you have? The quality of your technology team? The size of your digital imprint? How successful your current platform is? Probably all play a role, but I'm sure someone can provide some additional insight.
Leave a comment or feel free to email. You may just end up being on our advisory board.no comments
A couple weeks backs I mentioned I'd try to give a periodic rundown of industry news. This is the second installment and thanks to friend @roneface, I've decided to brand this column "Koo Runnings". A banner should be added to this column very soon and he should be receiving a Bloguin jacket anyday now for helping come up with the concept. So let's get going...
Feel the rhythm! Feel the rhyme! Read on up, its Chinese Jew time! Koo RUNNINGS!
- We'll leadoff with a bit of sad news that Dan Levy and Nick Tarnowski will be ending their podcast in the coming weeks. i'm not a big podcast guy myself but usually took the time to listen to Dan's (he seemed to largely "own" the show) especially when he had some interesting topics. I thought Dan did a great job balancing sports with industry news and had a style that was engaging and entertaining. Most importantly I found his takes on both sports and industry news to be largely on target from my own thinking.
Dan cited the need to move on to paying gigs to help support his growing family, a very honorable decision. He didn't pull any punches in the announcement stating he's a bit turned off by the lack of interest from a handful of old and new media entities to employ him. The show will be winding down sometime in April and he's eluded to doing some more venting during the home stretch. I'm definitely looking forward to this.
I have a lot of respect for Dan as well as Nick and hope the advance notice leads to someone stepping up and involving Dan in a prominent role as he'd be an asset almost anywhere.
- Two bits of news from SB Nation. First they've launched newsletters. Probably a smart move but to some degree it seems a bit late in the game given B/R and Yardbarker have been busy on this front for quite awhile. Still though they have a lot of users and its another way to promote member sites.
In another move, they've acquired two group of sites. Both are actually groups I know very well, the first being a group of soccer sites that I worked to sign with Yardbarker back in 2008. The other is the FanTake network which is run by Drew Dunlevie who is a great guy and is always quick to pick a tab when we meet up. While FanTake has a couple dozen of sites, only a handful were active and flush with content.
Barking Carnival and Recruitocosm are the two main assets that will be joining and likely moving over to the SBN platform. I think it's likely that other premier FanTake talent will move over to either writing for member SBN sites, SBnation.com, or the SBN local sites. Drew and revered college blogger, Paul Wadlington aka Scipio Tex, will both join the company and help the college vertical churn out good content.
Kudos to both those guys and kudos to me for not getting jealous haha.
- Not to air my personal beefs to my audience, but is anyone else having issues with Sportacular? Snapped up by Yahoo, I've always counted on the app for scored and game-times, that is until this happened.
What's wrong with this picture? The Ohio State Indiana game was not on Saturday 2/26 at 9am but rather Sunday 2/27 at 1pm. Even on Sunday the game still showed a tip-off time on the wrong day. While its just one error, it has completely turned me off the app as it wrecked my weekend. Late on Friday someone inquired about my availability to go out for drinks. I declined citing an early game the following day and being a bit burned out from the week. I also declined an event early on Saturday because it overlapped with the game. Making it worse I committed to something on Sunday when the actual game was being played. Waking up Saturday and trying to find the game for quite awhile definitely left a bitter taste in my mouth (can you tell?). I hate to do the personal venting here, but when your apps main function is scores and schedules, then you really need to have that perfected especially when you have the resources of Yahoo behind you now. "Everybody is working for the weekend"......except when Sportacular ruins it.
- Sportacular was the main product of Citizen Sports who was acquired by Yahoo. I consulted for their main competitor, Watercooler Sports which is now Kabam, for most of 2009. Kabam has been moving away from sports for quite awhile but still was active in the space up until recently. The company which is now focused on social games (similar to Zynga but aiming to be more robust) has got out of the Facebook March Madness bracket game which was a former emphasis of theirs. They've also shuttered their fan communities which used to be core of their former business. You may have actually belonged to some of these communities (remember being asked "do you want to add the _insert team_fans__ app" to your facebook page).
Kabam actually was successful in getting tens of millions of users to join the communities but didn't find much luck in engaging with their users or monetizing them. With the company churning on other fronts (when I left it was about 30 employees..... its now at 200 and rumored to be heading to over 500 by end of the year), they've opted to focus elsewhere which certainly makes sense. It remains to be seen if they'll keep working with Sports Illustrated to power their fantasy football app on Facebook, so definitely keep an eye out on that front.
- Speaking of fantasy football, RIP Open Sports. If you're unfamiliar with them it was founded by Michael Levy, the guy who founded and sold Sportsline.com to CBS. Levy raised over $14 million from his personal network but cited an inability to raise more traditional means of venture capital. Part of it was a timing thing as Open Sports was actively looking for more funding during most of the economic apocalypse of late 2008 and most of 2009. They did partner with Fox and made inroads elsewhere but in the end it wasn't enough.I had heard that they were having a tough time and recall thinking they were in trouble when they gave an update in Sports Business Journal that basically said "Yeah....we're raising money and its tough out here". With the closure of Fanball, Open Sports, and a host of other smaller fantasy providers, its looking like fantasy sports is just not a niche that a small startup can disrupt the big boys.
- One company that has secured funding is StarStreet, an artificial market for athletes. You buy and sell shares of ownership in players to help build your portfolio's value. It's pretty much the exact same concept as One Season and Pro Trade which both failed in addition to Athlete Exchange which seems to be finding some level of success. While the funding is certainly good news, I'm not the only who is skeptical of StarStreet's chances.
- On the acquisition front Coveritlive was purchased by Demand Media. Sports bloggers and bloggers of various niches have been very heavy users of the live blogging/chat system. I know their CEO very well and actually predicted this awhile back in some tweet that I am having no luck tracking down. Demand Media had partnered with CoverITLive over a year ago and it seemed like foreplay for an eventual acquisition given Demand Media is flush of cash and CoverItLive never went the traditional bloated VC route and ran their operations very lean and mean. Frankly speaking I think Yahoo and AOL missed a great opportunity to add some heavily used consumer facing technology at a great value price.
- FanHouse and Sporting News is now integrated. Not much here to say other than meh.... I really haven''t heard much positive feedback if any about the new site and integration between the brands.
- Couple of interesting tidbits from the Ohio State digital world. Bucknuts (where I contribute from time to time) has moved to 24/7 sports an upstart looking to compete with Rivals and Scout. In fact its the same team who sold Rivals to Yahoo and they're actually in the same building as the Rivals team (awkward!). Their betting big on more modern technology as Rivals and especially Scout have really become stale platforms. There has been rumblings that Scout is financially having a tough time and I'd surmise that given the amount of ads you'll see crammed on their sites, there may be some credence to that rumor. Seriously though 27 ads? If you have IE and dial up that's literally going to break your computer.
My first impressions of 24/7 is that the technology is good, the features are solid, but I'm not really keen on the design. In other Bucknuts news, one of their more popular writers, Ramzy Nasrallah, has decided to spend most of his time posting on elevenwarriors.com. The move makes sense given Ramzy's been more of a blogger type opposed to traditional media and it was rumored he had received some push-back in regards to some of his more edgy content. It's certainly a win for blogs and free content opposed to traditional media and the paid content model.
- I've always wanted to know the cumulative amount of page-views that the popular Y! Sports Blogs get on a monthly basis. Recently I scoured up some data that the dozen or so blogs received somewhere around 250-300 million pageviews and had an editorial budget near $2 million. Then Jamie Mottram had to go and post all of these details on a Yahoo corporate blog.
That's impressive growth, especially of late. It should be noted that Yahoo has launched other verticals of blogs so it's hard to tell exactly how much of this traffic is from sports although I'd guess the current % is likely around 70%. All of this success led me to these 2 questions surrounding Mottram and his success at Yahoo.
1) Given AOL butchered FanHouse and Yahoo is rolling now, how much of an impact do you think Mottram has has had on both company's stocks if any. It's not hard to imagine FanHouse having this level of success if Mottram would have stayed but on the flip side who knows what Yahoo Sports would be like without his leadership.
2) What company would suffer the most if Mottram left Yahoo, Bankoff left SB Nation, or Bill Simmons left ESPN. I know it's easy to say ESPN would be fine, but without Simmons, their ambassador of cool, they lose a lot in regards to their new online venture, podcasts, and things like 30 for 30. What say you?
- Also hot of the press is news that Ken Fuchs will join Yahoo to help manage sports. Who is he and what will he be doing? Read more here.
- Finally we'll close with Bleacher Report. Of late they've been seemingly very active on Twitter, industry publications, and sites like mine in beating the drum that content quality is the new focus. I have no doubt that indeed it's a priority for the company, but unfortunately they've suffered a very public setback as an insensitive story about the Japanese Tsunami and Earthquake was published on the site. The company was quick to respond with a statement and donation but the damage was done as the masses who decry the site and have been stymied by the content quality initiative found this as low hanging fruit to pile on the site.
Obviously this was a major setback for Bleacher Report and they were quick to scramble and take responsibility for the mistake. This time around it was not only the content that irked B/R detractors but the fact that someone internally moved the story to the very public and trafficked front page. That realization didn't sit well with many and I'm sure didn't go over well internally. In fact, I'd say it was a borderline fire-able offense depending on how the mistake was made and who made it.
One of the more interesting things is that I believe I saw King Kaufman mention on Twitter that "eliminating the bad" is now part of his job at Bleacher Report. In the past he's said developing writers was his focus and not the filtering of poor quality content.
If you look at Bleacher Report at a high level, I think their mission going forward is pretty clear in regards to quality. Take the top 1/3 content producers and increase production from these folks. Pay them, bring in paid writers, whatever. The middle third probably still has a place on the site, but that tier of content needs to improve and that's no easy task as improving content is so damn granular.
The bottom third just needs to be lopped off and I think they're doing that but that's hard too because you have to really have a keen eye for content and possess a very diverse knowledge of sports.
Recently, I traveled to meet some folks at a traditional media company. You know the guys who have tv channels with 3 letters. In my meeting they asked to position Bloguin relative to other companies like B/R, Yardbarker, and SB Nation. I followed up with a slide with a quadrant (taken from Gartner's famous 'magic quadrant" ) which had a x axis of quantity and scope of content. The more content your company had the further you were to the right.
On the Y Axis, you had quality. The higher caliber quality your company had the higher up you were on the chart. I think we all know that Bleacher Report is further to the right but lower than SB Nation meaning they have more content but its generally not as good as SB Nation. That said, they're looking to move upwards and SB Nation is looking to move to the right meaning they're looking to add more content as i've seen them adding sites and secondary contributors, some of them being very young (a characteristic many used to attack to Bleacher Report's writers).
What I am getting it as that both companies to some degree are looking to move towards each other. SB Nation wants B/R levels of content but is probably going to walk a fine line in terms of sacrificing quality. B/R on the other hand wants quality but will probably have to sacrifice quantity and scope of coverage if they want to meet their stated goal of improving content.
While the two companies seem to have a lot of friction, in the end they're trying to get to the same place (on my chart at least) although there are striking differences in models and culture. B/R has a lead in quantity and SBN has the lead in quality. I've heard that B/R's latest valuation was actually a hair higher than SBN's so it seems that investors prefer quantity over quality at this point in time. However it remains to be seen who will have the saucier exit and with the more prestigious company. Definitely something that I think all industry folks are keeping an eye and probably have already picked a horse in the race.
If B/R has similar high profile content snafus along the way and is unable to change the perception of their content or even adopt a new content model, they may have a tough time exiting the market. As always, time will tell.
Thanks for stopping by and reading all my drivel. Have a couple things in the works but things are really beginning to heat up for Bloguin. Might not be around for awhile so enjoy the Madness (Go Bucks!) and "peace be the journey" (From Cool Runnings).
For a blog that is not updated that frequently, Benkoo.com actually does alright. Comments, traffic, links, and more importantly a good deal of people I respect visiting the blog regularly. But there is a lot of ground I don't cover and it bugs me given that a lot interesting stuff goes completely unnoticed or uncovered.
Going forward I am going to try to do a roundup of industry news every 2 weeks or so. If you have a cool name for this feature that I end up using, I may just send you a Bloguin fleece*.
* = You will be required to wear the fleece on some nationally televised event in which you'll be close to the camera and constantly pointing to the logo. Without further ado....
- A lot of curious eyes are on the fine folks at FanHouse as their operations begin to wind down. I've heard that prospects of employees catching on at the Sporting News is slim to none. In fact even though AOL painted a picture that some jobs may be transitioned over, I was told that on a conference call employees were told not to contact Sporting News directly and that AOL would forward resumes over if nudged to do so which is obviously not a good sign. The Sporting News will be reportedly paying FanHouse $5 million a year and have apparently been slimming down a bit as well.
- One Person not looking for a job is former VP & General Manager of FanHouse, Kevin Lockland, who has joined SB Nation as VP of Editorial. Over the past 2-3 years, there has been an incredible amount of employee movement between Sporting News, AOL, SB Nation, and Yahoo Sports. With a lot of talent available it will be interesting to see if Lockland is brought in to help harvest some FanHouse talent and bring them over to SBN or if he just fills a need at the growing company.
- It seems the mystery of who is behind the veryfakeBR twitter account is a little bit less of a mystery these days. The account is a pretty harsh although a popular satire of Bleacher Report. In the comment of my last articles, one of the B/R founders strongly insinuated that the account was authored by someone at one of their largest competitors. I've seen this reinforced on Twitter with multiple Bleacher Report employees being a bit more specific with their accusations.
- SeatGeek raised another round of funding. There seems to be another wave of ticketing startups that are getting traction right now. I am pretty familiar with SeatGeek and TiqIQ and think they're both fresh takes to a rather stale industry.
- Deadspin has a new design that's causing quite a stir. They've also got some new faces joining the team. I've wondered if 2011 is the year where Deadspin traffic actually hits a plateau.
- In a surprising move, ESPN is moving forward with a new web initiative led by Bill Simmons. Feedback on the site (not part of espn.com, won't have ESPN branding, and staffed by a team of more blog style writers) has been very positive. The site will reportedly be a mix of sports and pop culture. ESPN has been VERY slow to embrace new innovative digital initiatives, so this move is definitely one to keep an eye on.
- On the same front, ESPN's SweetSpot blog and network is still without a lead writer as Rob Neyer left for SB Nation. Tick tick tick....
- Former VP of the Packers and National Football Post President, Andrew Brandt, will also be working over at ESPN as a business analyst. Michael Lombardi left the site earlier in the year to join NFL Network. I wouldn't be surprised to see the site sell in 2011 so stay tuned with a lot of the founding talent now working on new projects and involved with new roles.
- As you know my former employer, Yardbarker, is now part of Fox. If you visit any Yardbarker blogs, you might have seen ads promoting other Fox Sports properties. I've always though that Fox, CBS, ESPN, and NBC/Comcast would benefit from having a blog network to promote other initiatives. In fact some of those companies actually have spent a good deal of money advertising on Bloguin. Fox is now benefiting from the synergy of having a network of blogs to promote Scout.com and whatifsports.com. While advertising other properties makes sense, how to pay publishers for those ads has always been a bit tricky.
- Balltribe.com launched not too long ago. It joins the ranks of Twackle, Ballhyped, Quickish, Hitpost, Chat Sports, and FanFeedr in the very crowded aggregation/curation space. I really don't know if the market can really support all of these companies and would surmise that in 18 months the field of players is a lot thinner. Given that Bleacher Report has over a million newsletter subscribers (most of which are custom team/area specific), these companies might already be playing for second place.
- Fellow blog network Fansided, has left Yardbarker and is now part of FSV/Big Lead Sports. I believe originally as part of TheBiglead.com's contract with FSV, there was an option for FSV to buy The Big Lead which they later executed and used as a focal point of a rebranding. I wouldn't be surprised if there was a similar option for Fansided to be bought out by FSV which now goes by Big Lead Sports.
- Bleacher Report looks to be joining the likes of Yelp, Huffington Post, TechCrunch, Mahalo, and MetaCafe with a new focus on producing original video. Last year they made a huge investment in newsletters which proved to be a smart move. Video seems to be hot now so it will be interesting to see what this looks like when it rolls out and if they can build a big following there as well.
- FanVibe seems to adding advertisements to their fan engagement applications per a tweet that I just saw from good friend Arthur Chang. He doesn't seem thrilled about it. Embrace the monetization Art!
- Finally, Chris Cooley and others have launched SportsBuzz, a new venture help fans get more access to players and teams. What I thought was surprising is that it seems SportsBuzz actually bought Mouthpiecesports.com to help get the ball rolling. Mouthpiece Sports was never a huge site, but it did serve as somewhat of a farm system for writers who have sinced moved on to roles at ESPN, SB Nation, and Yahoo. Somewhat of a curious move for now. I don't have a good feel for SportsBuzz at this point, but I do know it combines two things that have historically not worked well. a) monetizing athlete content b) charging subscriptions for accessing exclusive content. That said Chris Cooley is involved and seems to know the space well. Maybe they can succeed where many others have failed.
Thoughts on this new feature type? If you like it, here is another question for you: Given it takes a keen eye to find all of this info, is it wise to share it here? Part of me is having lingering doubts that being the CEO of Bloguin and running this blog meshes well. I can easily piss off a competitor or partner as well as share a nugget of info which could be nice to just to keep close to the vest. Would love your perspective from all you smart folks.
My next planned blog was going to highlight the shifting content strategies of the major sports portals. It seems that after a decade of imitating ESPN, major players like CBS, NBC, AOL, Fox, and Sporting News have started to embrace new content strategies that veer away from the pre set course that ESPN.com has pioneered.
While there have been multiple subtle but impactful developments involving those companies, SB Nation and Bleacher Report are making the most waves of late as both have recently announced flashy hires on the heels of raising large venture rounds reported to be $10.5 million for each company at mid-high 8 figure valuations.
Content is King...... Kaufman that is (just writing that gimmicky lead makes me face palm)
Bleacher Report led off last week announcing the hiring of King Kaufman.
"He will lead writer development, build and direct online writer education and training resources, and mentor writers......King is an online sports media veteran. For more than ten years, King wrote a daily sports column for Salon.com, ran Salon's internship program and was associate media."
The move has been generally well received although many in the blogosphere have made it a point to voice their skepticism that this will not actually address the lower tier of content the site produces. In the last year 8 months Bleacher Report has moved to an application process, removed writers, and has made the move to compensate writers and other content people on the newsletter side.
Kaufman's hire seems to reinforce the commitment to high quality content as Bleacher Report's content helps fill out coverage on sites like CBS as well as many sports sections for various newspapers.
Although Kaufman's role seems to focus on the development of high quality content, he seems to have also embraced the role as reputation defender of the company as he's active on Twitter looking to turn the sentiment about Bleacher Report around. Up until now, criticism of Bleacher Report has largely been ignored or to some degree swept under the rug. Kaufman and others at Bleacher Report are no longer looking to turn the other cheek when confronted about some of the questionable content that the site produces as well the what many consider their unfair SEO advantage which has been termed "Google Raping SEO".
I think while many respect Kaufman and what he's doing at Bleacher Report, there is still some concern that his hiring only addresses one end of the Bleacher Report content spectrum. Time will tell if lower quality content can be better filtered off the site and if Kaufman can change the content brand of the company by helping develop a deeper and more potent front line of content producers.
For now the consensus is that there a lot of work to be done and maybe more than Kaufman realized he signed up for.
Rob Neyer And ESPN Divorce, Finds New Love with SB Nation
In the other major development, Rob Neyer left ESPN and landed over at SB Nation in a move that seemed to feel like the sports blogosphere equivalency of "The Decision". But Neyer's move didn't suffer the same fan reaction as James as his move to SB Nation has been largely embraced as a massive win for sports blogs while also serving as a jarring kick to the balls for ESPN.
It's not exactly clear what unfolded at ESPN in regards to his departure. Neyer's contract expired and I've heard ESPN didn't renew it, which seems almost unbelievable given his reputation and following. If you read Neyer's opening post on SBN, he makes no bones about feeling out of place at ESPN where the audience was dismissed/ignored and the revered writing talent was above reproach from criticism. If you don't want to read his post (SBN is actually down for maintenance right now too), this clip from Revenge of the Nerds is an accurate portrayal of his post.
Most likely it was a mutual decision as Neyer was looking for change either internally at ESPN or via a new destination. If there is one thing ESPN dismisses more than their audience, it is change and when a new agreement wasn't reached, Neyer was quick to find the loving arms of SB Nation.
The move is significant on many levels including:
- The baseball blogosphere is by far the most mature of any sport. Neyer has been a revered forefather of this space and inspiration to many of the biggest thought leaders. His addition to an already strong network of baseball sites, cements SBN as the leader in original MLB content.
- While there are some impressive voices that have helped build up SBNation.com, Neyer is signature addition to the site that will boost SBNation.com's audience, relevancy, and mind-share.
- ESPN has lost one of their most renown writers.
- ESPN is left in the lurch in regards to the wildly popular SweetSpot blog and team blog network.
- While in the past there has been some ad sales talent to leave ESPN for the likes of sports startups, I don't think we've seen a content person depart The Worldwide Leader for a startup.
The reaction at SBN has been exuberant as the company's early roots were in baseball. Privately I've never sensed the guys over there as prideful as they were with this development and that says a lot considering the many milestones they've reached over the years. I would liken their swagger right now to The Situation after a hearty post drinking meal and subsequent sexual conquest.
ESPN is apparently "close" to naming a replacement and have been allowing SweetSpot network members a chance to guest post until the void is filled.
If you recall, the SweetSpot Network was Neyer's creation and something I was vehemently unsupportive of. I was pretty tough on Rob and even followed up with another critical piece when I discovered that various ESPN network writers were now being bypassed for ESPN advertising efforts in favor of non affiliated ESPN blogs.
I will say though that while I standby everything I wrote in those posts, it is hard to determine where the fault goes between Rob Neyer, Henry Abbot (his NBA counterpart), or the clueless suits who put another bagel on the board by letting Neyer get away.
I can admit my criticism of Neyer was harsh and that a good deal of it could have been more targeted to the old media zealots who have their finger prints all over the current network models that offers minimal value to external content producers who are getting a raw deal.
Neyer's departure and subsequent rallying cry at SBN (who I've long considered an ally and not a foe), does a lot to repair my opinion of him and his potential role in the structure of the SweetSpot network.
ESPN's Poor History With External Networks
The network model has already imploded their college network of sites as only a fraction of sites remain affiliated with ESPN instead opting to move towards independence, Scout, Rivals, or new upstart 24/7. The NBA sites have been ESPN's lone success although I've heard some sites are growing weary of the lack of flexibility in terms of compensation, ability to sell advertising, and lack of choice in terms of implementing ticketing and apparel partners.
SweetSpot right now is in a precarious position. Under a full year of stewardship under Neyer, the network was never able able to fill out a full roster of sites, was rejected by many target sites, and now has more than a handful of either defunct or low quantity content sites. Below is a snippet of what I sent the higher ups at ESPN as they started their misguided foray into building a blog network over a year ago.
"If bloggers continue to find themselves in inferior competitive circumstances due to affiliating themselves with ESPN, you're going to find future advances in the sports blogosphere more difficult with less goodwill from the general blogging community and more writing talent already in exclusive relationships."
It is not really clear how much of Neyer's decision to jump to SBN was because of ESPN's lack of support of the blog networks or his unhappiness with the effort. Given the perfect hire, I don't think ESPN will be able to keep the network afloat.
I would imagine the person they do bring in will be more based around writing pedigree and reputation with added bonus points for anyone who has aspirations of building/maintaining a blog network. Honestly though, there is a lot of work to be done and this is a job requiring 2 roles where candidates interest and strengths just won't overlap much.
Network members I am hearing from are pessimistic at this point. Many got involved with SweetSpot, solely because of Neyer. He's gone, no contingency plan has been unveiled, and their is a lack of faith ESPN will make the network a bigger priority under new management than it was before. Meanwhile some members are hoping to reunite with Neyer at SBN and we're also hearing from some folks who are skittish with the current state of affairs.
I'm probably throwing dirt on the network prematurely though as I also have a similar Situation'esque shit eating grin on my face thinking of some of the more intense philosophical butting of heads I've had with the folks at ESPN.
At the end of the day Neyer made a career choice and it is one that reverberated around the sports blogosphere. Even if the SweetSpot Network does wither away, I think the statement that Neyer made and the perception for sports blogs compared to the mainstream media will far outweigh any harm that the affiliated site endure.
Speaking to one higher up at SBN, he was beaming proud that Neyer's move signaled the true validation of a fan empowered media entity. I certainly concur with that enthusiasm although inroads and major developments like Neyer's unexpected move will have to happen in bunches before fan empowered media begins to cobble way at ESPN's dominance. At a very least though it's moves like these that may begin to flush out the dismissive nature of ESPN's media strategy and decision making process.
I once met with someone who had decades of experience working with ESPN who told me "ESPN doesn't think it's a good idea, unless they came up with it". Almost a decade into the rise of sports blogs, the saying continues to hold true in regards to fan perspective, feedback, and engagement. While you'd like to think that maybe ESPN is beginning to realize the opportunity they're losing out on, I think it's safe to say that the continued growth of the company across the board doesn't necessarily instill an urgency for change. "If it's not broken, then don't fix it". Neyer leaving ESPN is symptoms that while although not broken, their strategy is flimsier than ever before.
As ESPN begins to field more competition from the likes of the big boys (Fox, Comcast, CBS) as well the upstarts below (SB Nation, Bleacher Report, and why not Bloguin), I think it is likely that the dominance of ESPN will start to erode. Neyer's departure coupled with the recent announcement that the unpopular Stephen A Smith is returning to ESPN, serves as a strong indication that change is nowhere to be found on the horizon.
Update: Well I took a stab in the dark and the folks at SBN are saying they didn't make a play at FanHouse. At least the ghetto photoshops (you don't even want to know what I use), are going over well.
My apologies for the shoot first stab and what unfolded. Its hard to imagine Brooks labeling any other company such as Big Lead Sports or Sports Fan Live as a "prominent sports blog network", or for either to really have an opprtunity at this. Both aren't fresh off of funding nor warrant a AOL drunk dial.
Maybe I'm wrong there, maybe Brooks whiffed on that detail,maybe SBN flirted with AOL but didn't ultimately put in a bid, or maybe AOL just faked that the whole situation was competitive when it was just Sporting News bidding against themselves. That would make the most sense, but for now its a mystery.
Very rarely does anything blow my mind in this space but I've literally been rocked by the Sporting News - AOL/Fanhouse partnership twice now. Coming from a guy who predicted or was privy to events like Bleacher Report's funding, SB Nation's funding, Fox buying Yardbarker, and Bleacher Report's new CEO hire, it says a lot when you blow my mind in regards to the business side of online sports media. Somehow....someway AOL seems to have done it twice now in regards to the same deal with the Sporting News.
On Tuesday I blogged about my thoughts on the deal and they seemed to go over well with a lot of folks both in and out of the business. But things have changed as Brooks from Sports By Brooks has uncovered some juicy details about what happened behind the scenes of this partnership. This includes:
- Sporting News will be paying/guaranteeing $5 million a year to AOL to fill AOL'S Fanhouse brand
- AOL will retain ~10 of the 100 employees/contractors affiliated with FanHouse which mostly includes big name journalists who they maybe contractually obligated to retain. Sporting News is still evaluating if they want any of the other 90 although it sounds like most will be let adrift.
- The Sporting News partnership was apparently chosen over another proposal to AOL from a "prominent sports blog network"
- The mystery prominent sports blog network (kidding) was likely to retain the majority of the FanHouse staff if chosen over Sporting News.
Brooks summarizes his thoughts well in this bit below.
"Throwing Fanhouse, a brand in which AOL invested heavily, overboard for what essentially amounts to a nominal bottom line bump is the kind of hasty deck-chair rearrangement that often signals the end of once-relevant companies."
Major credit goes to Brooks for breaking the story and I am going to write the rest of this blog post assuming the details he's uncovered are factual as Brooks has a good track record and this seems to make sense to me from many angles.
That said, I'm literally stunned on a couple of fronts and will give you my thoughts on what likely unfolded. Again, a lot of this is conjecture, but I feel comfortable giving it with a good track record in this space as well as some good investigative work in place via Brooks where I can connect some dots that are already in place.
First and foremost though, I wanted to give you a feel for how these competing bids unfolded. Its now clear that AOL was the one who decided to kill sports and that they didn't decide to make the move only when a good proposal found its way onto their desk. FanHouse was losing money and they reached out to people to try to save face as they weren't comfortable with the status quo.
This wasn't really partnership outreach but more like an auction. The winner was going to acquire not only AOL's portal promotion (a device that funnels millions of visitors to your site), the usage of FanHouse's brand, access to FanHouse's editorial talent pool, and most importantly AOL's Comscore number in the sports category which is a HUGE deal.
Sporting News allegedly won out over mystery prominent sports blog network that you'd have to assume is SB Nation (provided this detail is accurate from Brook's report). What's disappointing is that apparently the SB Nation proposal would have been a lot more favorable to AOL employees who are now in the process of being let go although AOL is being really coy about it. Just man up and say "Yes, this deal will probably lead to some job losses with our current employees, but the impact remains to be seen."
You can't expect a company like Sporting News to invest in editorial talent if they're already on the hook for $5 million a year. You'd have to assume SBN's proposal was much different if they also expected to retain the talent.
We know they've got at least $10 million in the bank and at last check-in they were still not profitable (not a big deal....to be expected when you are in growth mode and backed by vcs). For them to partner with AOL and retain the talent, they would have likely had to have at least $20-30 million in the bank to be comfortable enough to do it. The would have also likely have to sacrifice their relationship with promotional partner Yahoo who has been a tremendous partner for them and one that has potential to buy SB Nation.
My guess and I think its a good one, is that SB Nation offered AOL a very nice rev share on advertising sales as well a sizable stake in SB Nation which is now valued somewhere near $80 million.
This is actually a very common dilemma.. Going with the sure thing from a traditional partner or rolling the dice with a young startup.
Going the safe route doesn't get you fired though where rolling the dice and losing can cost decision makers their jobs. Also cash is still king, especially for a company in the last thrones of dialup subscription revenue. Rather than trying to do something "big" and maybe better "long term", AOL went the safe route. More traditional content from Sporting News and guranteed big checks.
But one wonders what they passed up. A FanHouse/SB Nation editorial and promotional marriage would have likely been huge. Maybe even IPO huge and then there is the content powerhouse that would have been. Its scary to think where that could have gone.
One thing that sticks out though is if down the road SBN sold to someone (say to Comcast or Yahoo) who would see conflict with the AOL relationship and end it. In that case AOL would have some money in their back pocket from the deal, but would be back to square one with finding someone to carry on the FanHouse brand.
All that said, AOL in my opinion has just made a mess of its sports strategy over the years. Below is the photo essay recap...
AOL Decides to Build FanHouse around Jamie Mottram's vision of an All Star team of bloggers under one banner
The group assembled was elite. FanHouse grew and made inroads with sports fans.
But Mottram left as did some of the bloggers when he went to Yahoo. His replacements fled as well and the higher ups began to merge AOL Sports with FanHouse while also implementing a stinker of a strategy.
After 2-3 years of pumping this strategy, AOL's new CEO probably had an epiphany that went like this.
Nobody at AOL wanted to touch this one and draw attention to the fact that they nixed a good thing that Mottram had built. Plus Mottram and Yahoo has essentially dwarfed what was in place with FanHouse when he left. FanHouse was broken and they didn't want to fix it or innovate in the category. AOL decided to get what they could to get in the black asap by offering their Comscore number and AOL.com promotion both of which are just massive accelerators to any sports media entity.
Sporting News and SBN were tapped for proposals. Leading Sporting News was their head of digital who was formally of SI. Leading SBN was their CEO, Jim Bankoff, who was in charge of AOL's programming in it's infancy. This is what their pitches probably looked like.
Now again this is a good deal of conjecture here. All we know at this point is that its likely SBN made a bid. But for the SECOND time, AOL had a decision. High quality content from cheaper new media Internet types or going with expensive talent originally from print.
They put their brand in the hands of Sporting News and decided thinking long term and big was not what they wanted to do. I mean let's say this deal lasts 2-3 years and AOL gets $15 million...maybe more because I'd assume they split some revenue on top if there are profits.
I think the upside of the SBN deal would have far outweighed that amount and it could have been a consistent profitable revenue stream.
I already went on a rant in my last post about how AOL has money, is profitable, and spends tons elsewhere. Shouldn't they be looking for good long term investments and revenue streams and not just cashing checks in the short term?
Everyone likes to beat up on AOL and yes its easy to when you bought Bebo for nearly a billion dollars and sold it for ten million. Its also not hard to do when they were worth nearly $200 billion and are now worth under $3 billion.
But for awhile though, I've actually been kind of attracted to AOL. The dialup money brings in a lot of money that they can invest in new businesses and revenue streams. In many ways the clock was ticking on them to find new ways to be relevant and profitable. Almost a startup like challenge.
They've been extremely aggressive the last year on multiple fronts to the tune of 9 figures in acquisitions, poaching lots of higher ups from Google, and ramping up hiring in a lot of areas.
Somehow though they just lost their stomach for sports and executed what seems to be a cash only auction to stop the bleeding at FanHouse.
In the end, a lot of my fascination with AOL has eroded after this move. Where's the innovation? Where is the confidence? People barely know what AOL does anymore (even tech people) and now they've given up on one of your most relevant and far reaching brands.
Who knows what the future brings for all parties involved. Maybe I'll be dead wrong, but for now I'd like to think that Armstrong made his second big mistake in sports (the first being investing/founding the now broke UFL).
Time will tell if Sporting News can make their money back on this deal and if AOL finds a long term strategy and partner that keeps them relevant. At the same token this one wreaks of "What could have been."
A lots been made about AOL's decision to part ways with the current FanHouse direction and personnel and license/outsource the brand to the Sporting News. I've been getting a lot of inquiries about the implications of the deal, how the deal was structured, and my thoughts on both companies moving forward.
Its been a couple of days since the news broke so below are some of the initial reports that about the deal. I'll be focused more on analysis so check them out. Also thanks to Dan Levy from Press Coverage, for letting me use this nifty graphic.
Sports by Brooks- AOL Folds Fanhouse Brand Into Sporting News
Understanding the Deal
First and foremost its important to understand that Sporting News did not buy FanHouse as some people have been insinuating. Just like PFT is not owned by NBC but NBC essentially rents the brand to fill its football coverage, Sporting News is licensing the FanHouse brand.
Yahoo and AOL have both done deals like this before. In fact AOL also made similar announcements in conjunction with this one regarding their Health and Real Estate channels. Yahoo in the last year partnered with Monster and Match.com for its jobs and personals verticals. Yahoo claimed they didn't pay attention to those 2 verticals and didn't wanted to be irrelevant in those categories which I find funny as how can you forget that a) people needs jobs b) people go on dates.
This one is really hard to find an analogy for as you know that's my biggest blog guilty pleasure. After 12 minutes of looking at this screen, here is what I came with: My first 2 years at Ohio State, they had two official bookstores on campus. At some point the university either realized they were losing money or at least leaving money on the table.
At that point they opted to let Barnes and Noble run those bookstores. They were still the official bookstores of Ohio State and reaped the benefits of being promoted by the university and working closely with the school to have the right inventory and having the school funnel students their way instead of the other bookstores. However they were co branded as Barnes Noble, OSU's official bookstore, or something like that. At a high level Barnes and Noble paid rent, maybe a licensing/franchise fee, took over operations and liabilities, and probably shared some of the profits back with the university as well.
The benefits of the move were lower expenses and guaranteed profits. The cons were lack of total control and possibly losing money in the long term. The same applies here.
AOL Lacked Dedidcation, Decisiveness, Faith, and Accountability
AOL's CEO, Tim Armstrong, who is quite the smooth operator, has done quite the job "selling" this move for AOL. He's got a lot of cute sound bites out there and it seems to have ducked a lot of criticism from the mainstream media around this deal. The truth is that this is just a real "soft" move. Other words come to mind but that's what I'll go with. Below is a video outlining my thoughts on Armstrong's comments on this deal.
I understand and support the idea of focusing your company and making deals to improve your bottom line and your relevancy in that category. But that's just simply not the case. In fact per Comscore, FanHouse reaches nearly 10 million people a month compared to about 3 million for Sporting News. Rule 1 of these type of deals is that you need to trade upstream and not downstream.
AOL has begun to show more competency surrounding online advertising and digital media. Sporting News doesn't exactly have a good track record here. I won't say much about the Sporting News in this blog, as really the only thing they're guilty of is picking up a late night drunk dial from AOL.
The call to Sporting News was sparked by continuing losses from the FanHouse division. Nobody knows the amount they were losing and I actually posted a question on Quora to see if I could dig up something.
Its really the biggest piece to this puzzle. How much was coming in the door revenue wise which would require some traffic figures and ad rate info, both of which I could guess but wouldn't really know with any level of accuracy. I also have no clue how much they were spending a month for all the writers (about 60) in addition to their sales staff, ad ops, etc.
But I will say is that AOL HAS money. They ARE profitable. People always forget that. They HAVE over $600 million in the bank. They've spent a lot of money on acquisitions lately including $25 million on TechCrunch in addition to a handful of other acquisitions in 2010 that add up a good chunk over 9 figures. This pales in comparison to the nearly 1 billion dollars they dropped into acquiring Bebo which they later sold for $10 million.
With that in mind, I think its ludicrous for AOL to wave the white flag on running FanHouse as part of AOL.
The reality is that AOL had completely botched the sports category and the management of FanHouse and just wanted to call it a draw and move on rather then trying to win. Its evident that nobody wanted to stick their neck out there and say "Here is how we make FanHouse and sports work for AOL".
I don't entirely blame them because by doing so they would also be acknowledging that they've pursued bad strategies in the past. Rather than saying "We made mistakes, but we can fix this" they've opted to go with "It just wasn't something that would ever work", probably citing the strong positions of ESPN and Yahoo and the growing importance of blogs which served as a two front war for them.
I'll get into FanHouse's long road that got us here, but thought I'd share a snippet from Alana Nguyen who I worked with at Yardbarker (now Fox). She was one of the early mangers/producers at FanHouse when it initially launched.
"Back when I was producing at FanHouse, our overhead was extremely low. We had about 60 bloggers creating quality content at cheap contractor rates with very little staff editing -- and this kind of content played well to the AOL.com portal audience. Later, FanHouse decided to move to what must have been a very expensive model with marquis writers and the editorial staff and travel expenses needed to support them. I'm not sure why that switch was made -- maybe it was an effort to create a property that could eventually stand on its own without the firehose of traffic from AOL.com (with AOL's dial-up business declining rapidly, you'd have to be nervous that the portal site would tank too). Maybe the original blog model would have had a good shot of surviving -- other sports properties have had success with that kind of content, and the price tag wouldn't have raised red flags with the new thriftier AOL leadership. But maybe FanHouse would have been a casualty regardless -- AOL is a pretty volatile company that still seems to be trying to figure out what to do with itself now that no one wants those CDs in the mail."
Alana is right on the money here. If FanHouse was getting shut down because it costs too much to run, you'd have to point to the marquis writers they opted to bring on as being one of the biggest expenses. But if you're the guy who decided to spend all this money at AOL, do you really want to suggest going back to your former strategy that you shunned in epic faction.
FanHouse 1.0 was actually doing quite well for itself under the stewardship of Jamie Mottram, John Ness, and Alana. They enlisted the best bloggers and the traffic grew quickly. It probably wasn't profitable, but it was growing and exciting.
But then it all fell apart. Mottram left for Yahoo where he's built a juggernut with Y! Sports blogs, which included many of FanHouse's elite voices. Ness left for NBC and Alana did some work for Yahoo and Ballhype before joining Yardbarker.
What I've heard for why they all left was that the AOL sports folks were not too keen on FanHouse stealing a lot of its thunder. This caused friction and the later exodus of management from FanHouse. Brian Cook one of the better contributors of FanHouse paints a good picture of what happened when the AOL Sports management folks took the reigns which also included them mergiing AOL Sports as FanHouse and ofcourse the infamous Fantasy Sports Girls experiment.
"There was a sea change at AOL once some deranged suit decided to bring in sad stripper types to be "Fantasy Sports Girls" and Alana, AKA Miss Gossip, fled from her post as general guru in charge. Alana was of the internet; her replacements were not. Things got corporate. I had a viewpoint as to which way the Fanhouse should go—moreOops Pow Surprise!—that lost out to a more sanitized one. Then my posts started getting edited after the fact without anyone so much as mentioning it to me, which severely depressed my motivation to post further.
From there things took their natural course. Check that link above on Moore moving to AOL: they've hired nine people, only one of whom (Clay Travis) has any profile in the blogosphere. The rest are former newspaper droids. I no longer fit with your Mariottis and Terrence Moores. Thus: this."
That post was from early 2009 and you can argue FanHouse was really at rock bottom around then. The last half of 2008 and most of 2009 were the dark days of FanHouse as it was an akward hybrid of journalists and bloggers intermixed under the AOL Fanhouse banner. The bloggers built that FanHouse brand and now the journalists were its biggest draw.
But things seemed to improve in 2010. Fanhouse was redesigned and the content seemed to improve. I was actually growing more found of the site up until this implosion took place.
So Why did AOL fail?
A few FanHouse people (former and current) have spoken to me and all point to the same thing. AOL constantly had new management and the sports people kept changing in partuclar. I can't get too specific, but there is a very strong general concensus that put to majority of the blame on the higher ups and the lack of any consistent strategy that made sense.
I'll chime in with 3 other things that stick out.
- Lack of community, engagement, and social.... FanHouse articles were always sparse in comments and there were rarely activities like polls, predictions, brackets, etc. Nobody ever made FanHouse the center of their sports web experience unlike other sites. Communities are key to sustaining growth and FanHouse just really didn't have any.
- No differentiation.... ESPN has great video. Yahoo has best in class fantasy games. FanHouse didn't really have any asset that was unique and could keep people coming back.
- Portal traffic just isn't enough.... Everyone is saying "AOL is going back to its portal roots" by getting out of the sports content game. While that's somewhat true its actually a stark admission that the portal strategy doesn't really work. If portals were indeed a hot growing commodity, then FanHouse would be successful as AOL could prop up the entity. Instead AOL is saying that portal traffic isn't enough to sustain a business. They'd rather invest in content sites that have a following outside of portal traffic which is really saying portals don't work well enough for us to have a business.
As for Sporting News
This deal makes them relevant again online and was the first big move for Jeff Price who was brought in to do just that. They'll apparently be adding some FanHouse people but it sounds like the vast majority of FanHouse employees/contractors will be let go.
That's another thing that bugged me about this announcement. AOL is doing a great job deflecting questions about job losses due to this move by saying the decisions are up to Sporting News and they'll work hard to get some people to stay on. That's 100% BS.
Sporting News is probably paying out the nose to rent out the FanHouse brand and has internally been cutting costs for quite awhile including selling/"trading" the Sporting Blog to SB Nation. That's actually kind of funny now because the people who were let adrift due to that move are actually probably the people best suited here to help merge these two brands.
Most reports are saying that not that many folks will be joining. I'm sure SB Nation, Bleacher Report, and Yahoo are on the prowl for some of this talent and I'll throw out that Bloguin's piggy bank might be worth breaking if the right fit presents itself.
A lot of people are throwing stones at Sporting News but I'll reserve judgement for now. Price got a big domino to fall but they still need a lot of things to go their way for Sporting News to be relevant beyond their magazine. We'll see what shakes out here.
- AOL had Jamie Mottram and the best bloggers out there. Now they have nothing except monthly checks from the Sporting News. Just a massive meltdown. If Mottram never left and instead was left to run things without interference, who knows what the online sports media landscape would look like now.
- I thought at first maybe Tim Armstrong just wasn't a sports fan, but then I remembered he invested in and is actually a founder the UFL. Its funny this FanHouse news came a week after Mark Cuban's lawsuit against the UFL went public. Maybe Armstrong lost his zeal for sports when he realized that the UFL was a bad bet. And while we're on the subject, I don't think I could ever hire anyone who invests in a football league played in the fall in the US and not named the NFL. Maybe the UFL gets bought by the NFL, but there are way too many sports going on in the fall months for anyone to give a crap about a secondary football league. Your highlights will almost NEVER be on television so you're essentially completely unknown. Sorry for the tangent, but yeah.....Armstrong just seems to not get sports it seems.
- 10 million folks went to FanHouse for sports coverage. That's meaningful. FanHouse was probably the only touch-point AOL had with a good chunk of that audience. It was a dumb move to give away control of that relationship. I'm totally shocked on a weekly basis how many people get what AOL does now. Even people in tech are unaware they do things outside of ISP. FanHouse was one of the few brands that actually shined for AOL and drew attention to the fact they do something other than dial-up. Now Sporting News is the prominent brand powering that content and millions will again forget that AOL exists.
- AOL will not be acquiring a sports entity anytime soon..... I believe at one point in time AOL tried to buy Scout and or Rivals. Some have speculated they could buy SB Nation as that's where SBN CEO Jim Bankoff made his name. That's totally out of the question now as is most likely any other significant sports acquisition. They're pinching pennies and their acquisitions have been low-mid 8 figures. SBN and Bleacher Report are creeping on 9 figure price tags and that's just too rich for AOL at this time. I know they did buy MMA Fighting, but that was a pretty small and niche specific deal. I would also guess that Sporting News won't be active as they're probably tapped out/pushed all in with this move.
- Any producer of original content of some modest scale gets a little help with this move as 2 competitors become 1 and talent becomes available.
Disclosure (because that's a responsible thing to do)
Bloguin has had some business interactions with The Sporting News as well as some editorial relationships with FanHouse. Doesn't "water down" my analysis imo. AOL screwed up. Needed someone to come in to help them save face. Sporting News gets a gift here and a seat at the table.....
For now this is just a placeholder until I get some more time to writeup some of these developments. I have some emails into some people on the FanHouse Sporting News partnership and am getting some info that will help paint a picture of what that whole mess situation is about.
But what's crazy is that this just one of a handful of rather significant moves going on that I'll link to for now and maybe add some commentary later. If you're a normal person who doesn't stalk this information down like myself, here is what you missed.
- Fanball is shutting down. At first it was the blog network. Now Liberty Media is closing the whole thing down. I learned of this last week but sat on it but now that the cat is out of the bag, its another example of a large media company running getting boxed out of sports on the digital front with so much competition from Yahoo, ESPN, CBS, and Fox.
- Bleacher Report is now paying writers. Looks like they're doubling down on their best writers. If you want the quality of your content to improve you need your best people incentived to create more content anD fresh off its new round of capital seems eager to shed some of their content stigma = especially as they get chummier with media partners like CBS, Washington Post, and other newspapers.
I like the move and appreciate the guys coming onto the site in my last article's comments and defending their strategy. I've never questioned that B/R has great content but just have been turned off by some incidents where some things slipped through the cracks that have become very public. Loved the tweet by my former boss Pete, CEO of Yardbarker, on their strategy although he could be referring to stuff like this as their "party in the back" .
- There are 3 interesting new ventures that launched this week as well that in include:
Quickish- Dan Shanoff's attempt to be the ultimate almost real time curator of what's going on in the sports world. A+ on the design. Concept is solid. Not sure how "big" this could be but its certainly off to a favorable opening week. I knew Dan was working on Quickish for awhile and the cynical side of me thought this could be a huge whiff (just because most sports startups are). Glad to see Dan bunking the trend and wish him the best of luck.
Hitpost- You can read this article or just check out the screenshot below to get a feel for what they are. Its only in Beta now and only a lucky few like the world's greatest chinese jew have access for now but that will change soon enough. My reaction at first is "looks cool......now what?". Allegedly there are a lot of mobile apps and other features coming and the web experience is just a part of what they're going to do, so for now I'll reserve judgement. Very similar at first glance to Flipboard which launched not too long ago. Check out their video to get a better feel for them as well although its not a pure sports startup by any means.
ThePostgame.com- Yahoo and Sports Fan Live have partnered to launch ThePostgame.com an online magazine also utilizing high end presentation to package content. This I think might be the biggest winner of the bunch as its backed by Yahoo and has some added help from Sports Fan Live. Haven't drilled down that much on the site yet, but it seems to have a vision and one that is not messy or intertwined with boring or just crappy content. Frankly speaking I think this is going be a big hit after 10 minutes on the site.
If you look at the three new ventures, its clear that all three are centered around the presentation and packaging of content in innovative ways. Lot of attention to design and to mobile/tablet consumption of media. Very nice designs and innovative concepts.
- ESPN announced that they're going to continue auto playing videos all over the site and aren't really worried about any of this because they're ESPN and innovation and social is just something they don't do.
- Then there is this whole situation with AOL's FanHouse sourcing their sports channel to Sporting News. I'll do a full writeup tomorrow as I think I set a new personal record of email activity in a day. In a nutshell though Sporting News found a way to be revelant online, good people at Fanhouse are going to lose their jobs (40-60 is the rumored number), and AOL really lost me here with this move. Nobody is saying good things about this and my opinion is not that rooted by the fact I value online sports coverage and think it will be a lucrative niche on the web.
10 million people read Fanhouse a month and I'll dig into some numbers tomorrow but for many, AOL is a company you don't have any connection with. I am guessing a decent chunk of that 10 million readers are very occasional visitors to the site funneled by AOL.com and tied into their usage of AOL's ISP service, but still millions of users are now losing their only touch-point with AOL as a company as they're giving up despite being a top ten property in the sports category.
AOL is still profitable has ~$600 million or so in the bank and has been spending around 9 figures a year on acquisitions. You couldn't foot the bill for FanHouse or find a way to make it profitable? Just vintage AOL here as only AOL could pay $850 million for Bebo and sell it for $10 million 2 years later. Anyone could of told you that this was not going to work and you were grasping at straws:
AOL’s intention, they told press in a briefing call this morning, is to marry AIM and ICQ with a proper social network. At a high level, AOL is saying they are basing much of their go forward social networking strategy around AIM. Layering in Bebo, they say, lets people communicate both synchronously and asynchronously
That was their old management and their new management has been bold in making some big moves. The middle half of 2010 saw some people growing weary of the new direction of AOL, but they've since won over some support with many believing a second wind was in sight for the former corporate giant. I was one of those people but have jumped off the bandwagon now. They've been beating the drums for the last year or so screaming about online premium content and then they just kill off one of their biggest brands and then give the remains to Sporting News? Crazy and more on this tomorrow.