The Praized Blog

Yesterday was Kodak’s annual analyst day and the New York Times seized the opportunity to discuss the progress made in the last few years as the company transitions from a film-focused business to a digital one. In light of disappointing newspaper industry and print directory news, it’s heartening to look at the new opportunities Kodak is seeing in the market.

But to hear Mr. Faraci (Kodak’s president) tell it, the factors that are hurting newspaper publishers in the United States — the migration of advertising and readers to the Internet tops the list — are not having the same impact overseas. “Literacy is growing through the world,’’ he said, noting that it is encouraging more newspaper readership in developing countries.

And even in the United States, he said, Kodak is benefiting from the moves that some publishers are making to recoup at least some of those lost advertising dollars. He notes that The Chicago Tribune and some others are trying “microzoning” — printing several versions of the paper in the same city, each with ads aimed at a specific neighborhood. And, he said, newspapers all over are using more color.

All of that, he said, promises to yield increased sales of Kodak’s high-speed production printers — particularly of the 1,600-page-per-minute printer Kodak is about to introduce. And far more important to the company, the trend can yield a steady stream of orders for inks and other highly profitable consumables.

As Mathew Ingram says regarding the newspaper industry, “… just because newspapers aren’t doing well doesn’t mean that journalism or media or the news business itself isn’t doing well. If anything, people are searching for more and more news all the time. They’re just doing it online instead of on paper.”

Now, going back to the Yell Group news that made their stock price fall 18% this week. The Guardian has more details:

John Condron, chief executive, said the problems in the market came to light as Yell’s sales teams put together about 20 directories, out of 102 it produces across the country, to be published in January, February and March. “I think UK plc, as far as our company is concerned, came back after Christmas and took a very cautious, very conservative view of the future. We seem to have replaced the regulatory pressure on us with recessionary pressures,” he said. “But it is important that we all realise that customers are staying with us and renewing with us, they are just not increasing expenditure.” Under its current regulatory regime, Yell cannot increase Yellow Pages prices by more than inflation minus 6%, which in effect means it must cut rates every year. From April, Yell can increase rates in line with inflation. Its average planned price rise is inflation minus 1%.

Based on those explanations, I think that situation might be more cyclical (stock market nervousness, UK regulatory pressures, etc.) than structural, but it certainly serves as an early warning signal to directory publishers worldwide to get on board the digital train fast, and start re-inventing their business.

I leave the last few words to Charles Laughlin from the Kelsey Group as I fully endorse them:

Amid such a sharp sell off, it’s worth reiterating some truths about the directories business. Yes, print revenues are declining, but directories are still a highly valuable source of leads for small, local businesses. The directory industry remains hugely profitable. It seems to us that many investors got into directories based on an oversimplified story (lots of cash, visible revenue, stable customer base). And they seem to be leaving based on similar reasoning (no one uses Yellow Pages anymore, Google has made the medium obsolete, it won’t exist in five years, and so on). While search is a growing factor in local, search cannot yet replace the volume of leads available from printed directories, and it may be some time before it can. Directories will be a major player in local media for quite some time to come.

(via the Financial Times)

The rise of social networking websites such as FaceBook and MySpace could bring the rapid growth of UK internet advertising down a gear this year, according to media forecasters at WPP, the marketing services group. GroupM, the umbrella forecasting group for WPP’s media buying teams, cites the increasing time that audiences are spending on such websites as one reason to anticipate a slowdown in the “warp” speed expansion of web advertising. Any deceleration in internet growth would be relative, especially compared with the sluggish state of UK broadcast and press advertising. (…)

Advertisers are interested in the fast-growing social networks but still grappling with how to market on them. The sites have fewer obvious advertising slots to sell than conventional web publishers and portals or search engines. Using techniques such as branded banners or pop-up windows to reach online networkers can appear intrusive to users primarily logged on to communicate with other individuals and share music and video clips. Networking audiences also tend to spread thinly over many different website areas and focus on their own content, such as blogs or homepages. That distinguishes them from portal audiences, which usually congregate in popular areas such as news, sport or entertainment channels, making them easier for advertisers to target.

What it means: remember my predictions for 2007? Clearly, Atomization/Deportalization and Verticalization are happening within social networks, which means that traditional online ad vehicles are not as efficient as in centralized portals. New ad models might have to be invented. A good example is the soon-to-be launched Lookery, discussed today on GigaOM. Lookery is an ad network for Facebook Apps.

(via BBC News)

CBS just picked up one of the darlings of the Web 2.0 world, Last.fm for $280M. The site “allows users to connect with other listeners with similar music tastes, to custom-build their own radio stations and to watch music video-clips. The online network was founded in the UK five years ago and it now has more than 15 million active users. As part of the deal, Last.fm’s managing team will remain in place and the site will maintain its own separate identity. ”

What it means: great acquisition by CBS as Last.fm is a very interesting site and application. Interesting also: CBS will maintain Last.fm’s separate identity. It seems like this is happening more and more when large media corporations acquire smaller Web 2.0 start-ups. The Flickr example comes to mind. I think media companies are realizing that innovation happens in smaller, tightly-knit teams.

The Kelsey Group blog reports on the various rumors surrounding Yell Group, the international directory publisher based in the UK. They mention an article in The Independent that states “the word is that the internet giant Google is favourite to buy the company”.

Kelsey adds “Such a deal has some logic to it. After all, Google clearly wants access to a massive local channel (Yell’s UK and USA businesses combined have almost 8,000 sales reps). It is unclear, however, what it would do with the print business, which represents about 90 percent of revenues, though online has been growing rapidly in the UK, and is beginning to take hold in the US. It is hard to see the cultures of Google and Yell meshing easily.”

What it means: although a Yell Group acquisition would give Google sales force and local search critical mass in the US, UK, and Spain, I seriously doubt Google would buy a directory publisher at this moment in time. Other than the YouTube purchase (which in my mind was the first large media acquisition by Google), they have focused on technology & brain power acquisitions. But I might be wrong!

(via Forbes.com)

Seat Pagine Gialle SpA’s 2008-2011 business plan, due to be released on May 11, will include investments into the company’s internet activities and its international operations, chief executive Luca Majocchi said.

In an interview with Milano Finanza on Saturday, Majocchi said investments will be financed via the strong cash flow he expects from Seat PG’s activities in Italy, where also an ‘interesting’ sales growth is expected.

Majocchi said the re-engineering project at is UK unit Thomson will be brought ahead, and in Germany an internet business will be launched.

Turning to new markets, he said in that Turkey Seat is developing a joint venture with Dogan and in China it plans to reinforce its position.

In further comments, Majocchi said he expects a ’strong growth’ of operating margin this year thanks to the absence of one-off costs for the launch of new products and organic growth in Italy.

What it means: I consider SEAT PG one of the most innovative directory publishers in the world (and they are very fun to work with!). Can’t wait to see what they have in store. Check out their 3D view of major cities in Italy (similar to what I blogged about on Monday) to get an idea of their innovations online. Click on the 3D button and select Roma to see Rome’s colosseum. Very cool!

About 10 days ago, iBegin released a new service called iBegin Source, “a comprehensive source of nationwide business data”. As I think this is a very innovative way of aggregating and licensing local business information, I contacted Ahmed Farooq to ask him a few questions.

Q: Can you tell the Praized blog readers about who you are and what you do?

A: I am the Director of Enthropia Inc, a web-dev firm located in Toronto. We have roughly 20 people working with us.

Q: What is iBegin Source?

A: iBegin Source is about raw business data. Buying business data is not cheap (and it is woefully inaccurate). We have made the data affordable and have coupled it with an open system (allowing for much easier updates), aiming for more accurate data.

Q: Where did the idea for iBegin Source come from?

A: It actually came as a defensive play. As we worked on iBegin City sites, we realized that we were (in essence) at the mercy of other data providers. We ended up creating our own dataset and even our own geocoder.

Q: What are the data sources for the iBegin database?

A: We seed with the usual suspects - telco records, federal/state agencies. We then supplement these with extra databases (restaurant databases, business license filings, registrations, change of addresses, other purchased databases, etc). In the first week we had roughly 50 user-submitted updates.

Q: iBegin Source could be quite disruptive. What has been the reaction so far of major local data providers like Acxiom, InfoUSA or Localeze?

A: They are watching us. Publicly they are shrugging us off, but once more and more updates come through our system, it will get interesting.

Q: I especially like the track back update mechanism, the idea that all iBegin Source partners will work together to improve the database in the long run (a la Wikipedia almost). We know how much of an issue that is in local search data. How many sites (using iBegin Source) do you think you’ll need to reach critical mass, i.e. constant improvements and best data source out there?

A: The trackback is just one element of our ‘update mechanism’. Based on a churn rate of 3 million, I believe we need 1 million updates a year (2500 a day) to blow the rest out of the water. This number is a combination of user-submissions and trackback updates.

Q: iBegin Source feels like an open source project: for example, you source content from users, the more people use it, the stronger it becomes and it’s free for non-commercial usage. Yet, it’s not structured like other open source project I know (I’m thinking of Music Brainz). Have you thought about setting up iBegin Source as a non-profit organization before launching it or in the future?

A: Data acquisition is expensive. Very expensive. iBegin Source would simply collapse on a non-profit model. The best we can do is what we have now - a free download for non-commercial usage, hopefully pushing enthusiasts and hobbyists to build interesting local sites. We also intend on award free commercial licenses to the most intriguing sites.

Q: Do you think you’ll have a hard time convincing local search partners to work with you given that you already operate a local search destination site?

A: Some people do get confused. I’m sure TrueLocal has that headache too. But what better demo of our data and what you can do with it by showing it off on our own sites? Mind you, we are only in one four cities (two of them Canadian), and in none of the major US markets.

Q: Right now, you offer data for the whole US market. What countries are next?

A: On the drawing board are Canada, Germany, Australia, New Zealand, UK, Italy, and a few more. Estimated time of arrival is unknown at this point.

Thank you Ahmed!

ComScore Media Metrix reports through eMarketer that sites based on user-generated content are very sticky in the UK. Wikipedia, MySpace, Piczo, YouTube and Bebo are mentioned in the article. These sites “generated an average of 4.2 usage days and 79.9 minutes per visitor, according to comScore. By comparison, sites in the top 50 that were not based on UGC saw far less usage. Visitors went to these sites an average of 3.5 days and spent an average of 33 minutes.”

What it means: if you want deeper relationships with your users, give them more control over your site.