NEWS: Firefox 3 Hits 17.3 Million Downloads

Ed: Why is the software business a great business? Firefox reached 17.3 million in a week. Distribution cost is a bunch of servers. Mindshare control is hours per day. By comparison:

• The superbowl reaches 90 million, but only for one night. 
• Apple targets 10 million iPhones in the first year, iTunes downloads have exceeded 5 billion, mindshare may be 24x7.
• Techcrunch reaches millions, but can't compare to the mindshare reach of Firefox.

Software still beats hardware and content.

Firefox 3 Hits 17.3 Million Downloads

from PC World: Latest Technology News

Since launch last week in excess of 17.3 million downloads of Firefox 3 have taken place.

NEWS: Modeling The Real Market Value Of Social Networks

The growth of social networks, high valuations without supporting revenues, and the race among Facebook and Myspace has been a subject of conversation. Mr. Chen did a market analysis by country. Mr. Arrington extended the analysis to place better valuation on the social network companies. DCF analysts claim that without cashflows, social networking is just the web 2.0 bubble.

A few observations:

• Data gathering is a problem. Are the UU counts accurate? Is there overlap among networks? Which network truly owns the mindshare of the user? We don't know.
• The asset-pricing model addresses both high growth and mature businesses. Earnings multiples is the inverse of the differential between expected growth and risk. (i.e. 1/g-r) 
• Mature companies like Microsoft have track records and low risk; however expected growth is also low. 
• A social network company has little revenue history, high user growth, and high risk. Is the growth/risk differential sufficient to offset low historic revenues? For leaders like Myspace and Facebook, their dominance of markets by country improves the multiple. Even Yahoo and Google cannot invade the social network space.
• Country dominance matters. Emerging countries have higher Internet growth. Revenue risk is also higher - it may take a long time to realize revenues. Ironically, Wall Street cares about long term sustainability of revenues, but don't value long term sustainability of user members.
• The best valuation is high growth and low risk, like Apple and Google.

Also, missing from the discussion is the implicit statement that advertising has become a global business - not a segmented business like newspapers and magazines. Monetizing a global business traditionally requires a global salesforce, which is expensive to build.

Modeling The Real Market Value Of Social Networks

Michael Arrington

105 comments »

Is MySpace worth $3 billion, or $20 billion? It depends on how you value a user.

It’s time to start comparing the big global social networks on something other than unique visitors and page views. I believe an effective way to value a particular user is based on the average Internet advertising spend per person in the country they live in. The higher the spend, the more value the social network can get out of the user by serving them advertising and other products. That means that, for now, users in a handful of key countries are worth far more in terms of revenue potential than those in the rest of the world.

We’ve begun to build out a model that looks at social network usage by country/region and compares that to available data on total Internet advertising spend in each of those countries. The model is then able to turn an apples-to-oranges comparison into an apples-to-apples comparison. The early results are surprising.

The ultimate financial value of any asset is, ultimately, what the market will pay for it. We have only a few data points to help us: Facebook, Bebo and LinkedInare worth $15 billion, $850 million and $1 billion, respectively, based on relatively recent valuations (although only Bebo was actually sold completely; Facebook and LinkedIn raised investments at those valuations). The last valuation of MySpace was just $580 million, back in 2005 when it was acquired by News Corp...

MySpace versus Facebook: Analysis of both traffic and ad revenue, using Google Trends

(above, Facebook beating MySpace in Australia with the crossover at Oct 07)

MySpace versus Facebook

As some of you know, I've previously written about the MySpace versus Facebook topic, both a year ago in the post Wanna bet? In 1 year, will Facebook be bigger? Or will MySpace? and MySpace versus Facebook: Winning in the US, Losing internationally. In general, I've taken a fairly pro-MySpace stance, since I think there's a lot of qualities of the sitewhich are lost on the typical technogeek here in San Francisco...

NEWS: IAC To Bind Spin-off Companies In Ad Network

Ed: Classic problems.

• Over-stated reach - perhaps by 10 fold
• Non-unique product - everyone offers banners and text ads
• Marginal brands on the global Internet
• Anecdotal targeting that does not scale

Thus, they resort to the firm handshake and low prices.

IAC To Bind Spin-off Companies In Ad Network

from Silicon Alley Insider by Michael Learmonth

The old InterActive Corp. (IACI), soon be broken up into five companies, is staying together in at least one respect: They'll be bound togther via an ad network. IAC says ad inventory across the five companies -- the "new IAC", Interval International, HSN, TicketMaster and LendingTree -- will be sold together as part of a network after the breakup. The network will be managed by IAC Advertising Solutions president Rich Stalzer, who told AdAge inventory across the sites reach 57 million unique visitors a month.

What's IAC's play? Separating their collective audience into nine "cubes": young people 18-34, men, women, "affluents," parents, active shoppers, active travelers, homeowners, and sports fans. The network could target those that researched high-end restaurants on CitySearch, declared six-figure incomes on Match.com, or searched for an expensive home on RealEstate.com. Sounds great. And sounds like another niche ad network, one of an estimated 400 now clamoring for advertiser attention...

Diller Fashions IAC Ad Network

Bands Together Targeted Audience Segments in Bid to Lift $216 Million Ad Revenue

By Abbey Klaassen 

Published: June 23, 2008

NEW YORK (AdAge.com) -- A high percentage of ad revenue from Barry Diller's IAC comes from a small percentage of inventory, leaving the bulk of it to be outsourced to aggregator ad networks. IAC could earn $1 or $1.50 per thousand on that outsourced inventory, but what the company really wants is to charge advertisers such as Lexus $6 or $7 CPMs to reach the deep-pocketed users who rely on its 63 companies such as Ticketmaster, HSN and time-share travel business Interval International...