Monday, March 24, 2008
  • Ross Fadner, March 24, 2008, 11:00 AM
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  • Rock Band creators MTV and Harmonix are showing big music one way to save its tanking business model: sell songs to gamers. Indeed, you might not be able to get Gen Y to pay a buck for songs download on the Internet, but you could easily get Rock Band and Guitar Hero fans to pay twice the price for the privilege of adding new songs to their virtual set list.

    A recent update to Rock Band has effectively turned the game into an online music store, as gamers can now buy and instantly play new songs, released weekly, directly from the game for $1 to $2. Like iTunes, users have the option of previewing each song before they buy. They can browse by song artist, song title and eventually, by album. Songs appear alongside album art and include information about how difficult they are to play on each of the game's four instruments (guitar, bass, drums, vocals).

    Selling songs via one or two popular video games may not sound like much--especially when you consider how painfully and rapidly CD sales are falling--but Guitar Hero is a billion dollar-and-growing franchise, and Rock Band is headed in that direction, too. The latter has already sold 6 million songs through Xbox Live, and with the new store, those numbers will only get bigger. Meanwhile, SoundScan evidence shows that Rock Band sales drive digital sales, and visa-versa. Imagine getting people to pay twice for downloading the songs they love? Suddenly, the music industry is starting to look like a brave new world. Read the whole story...
  • What does Google has in store for advertisers and publishers now that its DoubleClick acquisition has been approved? So far, all we've heard is that layoffs are expected, but industry watchers point out that before GoogleClick comes to market, the company faces some tough integration questions. Some critics are calling for Google to let go of Performics, DoubleClick's search marketing and optimization unit. There's a clear conflict of interest with the world's No. 1 search provider selling services that improve Web site and advertising performance on search engines.

    Another problem Google faces is with publishers. Google may integrate its DART ad management and service technology with AdWords, its search advertising system, but do publishers really want Google to serve both their display and text ads? As Rubicon Project CEO Frank Addante says, "Now, if Google owns all the technology they have access to that data, they know what's being bought and sold. It puts customers in a tough situation."

    Then there's the issue of Google not allowing advertisers to use third-party ad-serving: "Our clients on DoubleClick that have contracts expiring with DoubleClick are saying it's a dead end," says Michael Cassidy, chief executive of online ad network Undertone Networks. Read the whole story...
  • Social networking is definitely the next big thing, but it's not necessarily the next big moneymaker. Like Web-based email before it, social networking will evolve as a feature tied to the Web portal experience. However, like email, it's not (really) a business.

    Meanwhile, as media companies bid up the value of social networks like MySpace, Facebook, and Bebo, the industry is still searching for a suitable revenue model. Recently, Google co-founder Sergey Brin admitted that "social networking inventory as a whole"--which includes its own offering, Orkut, as well as a search advertising deal with News Corp.'s MySpace--was performing worse than expected. Facebook has done even worse. The company recently admitted that it "simply did a bad job" with Beacon, an advertising program that tracks online activity and informs users of their friends' purchases or actions taken on third-party sites.

    The bigger question is whether users should really have to visit a specific Web site to make use of those connections. As Forrester Research analyst Charlene Li said in a recent report, "We will look back to 2008 and think it archaic and quaint that we had to go to a destination like Facebook or LinkedIn to be social," because social media services "will be like air. They will be anywhere and everywhere we need and want them to be." Read the whole story...
  • Wikipedia is one of the 10 most popular Web sites in the U.S., but it makes almost no money. In fact, all the money that the community-edited encyclopedia makes comes from donations-a great irony when you consider the company Wikipedia keeps as one of the most visited Web destinations: Amazon, News Corp., Yahoo, Google, etc.

    It comes as little surprise, then, that Wikipedia, more mature now, has started to look longingly at the success of its neighbors. Right now, the Wikimedia Foundation, the encyclopedia's parent, is pondering a number of changes to the site to help bring in revenue; among them is selling advertising.

    As Wikipedia founder and chairman Jimmy Wales says, the Web firm's bureaucratic system and structure has strengths and weaknesses. "The strength is, we don't do anything randomly, without lots and lots of lots of discussion," he says. "The downside is we don't get anything done unless we actually come to a conclusion." Wikimedia's financial situation isn't all that bad: the company raked in $2.2 million in cash contributions last year, up from $1.3 million in 2006. Meanwhile, the foundation's budget this year is $4.6 million. Read the whole story...
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