Content plays; bad investment?

I never invested in Amanda Congdon. I saw her at BlogHer and have heard she's around working on a new project, but hasn't surfaced yet.

As for 20/20 hindsight, well, welcome to investing! Google is a proofcase that investors can make a boatload of money. But none of them can tell you what the next Google is. Heck, even John Doerr, who was the lead investor in Google, asked me to give him a call if I thought I had the next Microsoft.

All I was doing was showing that there's proof cases for media developers to make a boatload of money. Nothing more. Nothing less.

Good Grief, Scoble, you are asking people to be clairvoyant. You are citing examples of what are now well known brands. For every one you cite, there are hundreds that would have been failed investements. I mean, by the same token you could ask if people would have invested in Tom Snyder, Dick Cavett, Pat Sajack. At one time the Spice Girls looked like a no brainer investment. And I'm old enough to remember "The Knack" being touted as the next Beatles. That would have been a great investment. Your arguments make no sense as they are all based on 20/20 hindsight.

BTW, how's that investment in Amanda Conger working out? Anyone heard from her lately?

Huffington Post is the new New York Times and GigaOM is the new CNET News.

Vinnie: true, but I know of more investments coming in content networks. It's one of the things I'll be judged on (building a network).

Robert, not my excuse - what I hear from investors about people/knowledge investments..

Vinnie: true, but a network of bloggers won't get up and leave. Heck, Martha Stewart got thrown in jail and her little network survived.

VCs have never cared much for people businesses. Assets walk out at night. Not scaleable. other reasons not to invest. Even mow many will say companies like Cognizant or Corporate Tech Board or Infosys valued at 10X revenues are flukes...having said that I am not sure media investors really understand the blogger model either. They want bulk at low cost. Most bloggers i susbscribe to have day jobs/businesses and will not work at $ 20 a post..

Don's point has statistics on his side.

Robert's suggestion only pans out if one can similarly say all kids can become NBA stars with huge endorsements - in fact an NBA star future is probably more likely. The suggestion would be valid if clairvoyance were possible with certainty. It's easy in retrospect.

You could also argue that the celebrities you mentioned are infrastructures - or platforms - for launching the actual content. You would be investing into Oprah as a marketing channel for books, etc, rather than her own content-creation abilities.
Take care, a fan.

#5 - James, you are a dingbat...and know not of what you speak.

The subtopic was Sacramento radio (meaning radio personalities FROM Sacramento), half of those are not "right-wing". That the most successful are "right-wing" is more the take of the market, being that shrill Air America is seriously crash landing.

Om is building a network. So is Arianna. They already have multiple people writing for them.

Robert, of course I would have invested in Howard Stern or Oprah Winfrey knowing what they are now. But, they were not bloggers. Secondly, VCs did NOT invest in Howard or Oprah. It is not a VC style investment. That was my point. Why would a VC invest $5M in an individual blogger? Individual...not a blog network.

Jason C sold his Weblogs for a tidy sum, but that was a well established network. Om Malik and Arianna Huffington are individuals. Very high profile for sure, and proably in the top .001% of all blogs, but individuals none the less. If they are building out a network...great. If they want to pay me $1K per month or $4K per month to write for them...great! Where do I sign up?

My points were that VCs don't typically invest in individual media personalities, and second, $5M is a lot of money for an individual blog. Hey mine only costs $79 per year.

Believe me, I understand media companies. I was on the management team of AltaVista and Napster. Meida is big business...but very very difficult to monetize.

Larry: I'm not sure, but if you asked me when I was a kid whether Oprah Winfrey would be among the richest human beings in the world I would have asked "who?"

That's why this is "venture" capital. It's risky. Might not pan out. Actually, correct that. Probably WON'T pan out.

But if it does? Well, then you're a genius and everyone wants to come and hear you speak.

" I’d be happy to hire the next Oprah, I don’t need to be one"

For a moment I read, "I'd be happy to hire the next Booger..."....umm...on second thought, never mind the rest...

Party on, Robert

Booger

Joe: I'd be happy to hire the next Oprah, I don't need to be one! :-)

Michael, the Huffington Post commands a high rate because it trades on the fame of the folks who post, who already are well known or have personal brands.

And Robert, a blog network of 1000 bloggers might command a high ad rate (or higher than normal spot rates for certain focused blogs), but they have not yet yielded (and may never) a multi-media star like Oprah or Stern.

If one indeed compares bloggers to journalists, then can you name a journalist who commands the power of Oprah or Howard Stern? How about Jon Stewart or Stephen Colbert?

I think you touch on a good point here though, that blogs should be considered for potential just as much as any other media channel. If nothing else, the amount of energy it takes to look for emerging potential is worth it if you truly find something worth investing in.

Behold the Oprah of blogging, the star of the elite, the one and only Mr. Robert Scoble!

Your dreams of grandeur make me giggle. :D

Granville: and most VCs know that only 1 out of 300 investments will pay off. But all you need is one "Oprah" in your portfolio to pay for a whole lot of "bloggers."

If the internet has taught us one thing it is that anything is possible - $5 million could turn into $100's millions or it could return $0, like any investments its always a calculated risk.

Brad: the network that has 1,000 good bloggers in it will be able to command a high advertising rate. That won't come cheap, even if you are paying $4,000 per blog per month, which isn't that high a pay for many people, especially people who become subject area experts.

It all depends on the quality of the content, of course. Om is producing some very informative blogs, and if they can bring more traffic to the site and continue to build the company with quality personnel that can produce great content, that's all the better.

However, you have to understand Don's point that $5M is quite a lot for the first investment into the business (is it the first?) But, perhaps it's the strategy of the investors to invest this much?

If $5M is invested and the investors are targeting a 5 year return on their investment they will expect the value of the company will be $100M in 5 years. With an expected 50% ownership at the end of 5 years, the rate of return of that investment will be $38M. And, that must seem ok with them.

Maybe the investors are also trying to dissuade further investments so that their investment will not be diluted too much further down the line.

Still, I'm with Don, $5M for people who work from home is a tall order. Their capital investments are very low. We live in strange financial times.

Asking today whether I'd have invested in somone who I now know to be a huge success only calls for 20/20 hindsight. The question is how to identify the proper arena, and predict which nobody is going to make it big.

It reminds me of something that happened back when I was a kid. My Uncle Nick decided to invest in show biz, and wanted to back an up-and-coming young singer. He was considering two possibles. Both were unknowns, but were getting some recognition in the local clubs. It was a toss up. Uncle Nick put a chunk of money into Bobby Cole. Ever hear of him? Too bad.
Oh, the other one was Tony Bennett.
Yeah, Uncle Nick sure could pick 'em.

It takes a special kind of insight to evaluate the factors that make somebody a good bet. The lucky few who can do that before all the evidence is in are going to do very well. For the rest of us, knowing who to listen to, and finding a little space on their coattails is about all we can hope for.

Robert is right on this one.

Don's is the kind of thinking that looks at "content" as slurry or sausage. Cut me off a piece. It's all interchangeable.

Writers and editors can be brands just as surely as movie stars and directors. Would you have invested in Spielberg? In Showbiz investment is governed by who can put asses in seats. (More precisely on who investors guess will put asses in seats) The question that needs to be answered is who or what draws an audience? Not an easy or trivial question. (The online equivalent of the asses-in-seats metapor is even creepier--who can make eyeballs sticky. ew!)

Sometimes it's an experience or key set of functionality that makes stars of the user (e.g. Flickr, YouTube, MySpace). But sometimes it's real stars who have insight and ability that draws readers.

Of course, it's always a risk, because talent can grow cold, old, or just too weird for the room.

But don't discount personal brands. They've paid off their impresarios for centuries. Arianna, Om, Guy, and the guy whose name is in the URL at the top of this page have a good track record for saying things people want to read. What's more, they are specific enough to draw segmented audiences that will be of value to advertisers.

Long-tail Schmong-tail! generic user-generated content will get some of the audience some of the time. But people who are known to have valuable insight, knowledge, style, and opinions will continue to draw a crowd--and comments that extend the experience.

What might a star blogging attraction do with the investment? Develop the means to keep their audience more engaged, more often. If you want to build from the seed of a star blogger, you will require development, hosting, and if you want to make money, you'll need to start thinking about (and hiring for) sales.

Look at Huff Post today... it's a lot more than a blog.

Christopher Coulter is a wing nut!

Look at all the far right talk radio shows he listens to.

For every success story there will be a 100 failures.

Don Dodge doesn't get it, you get it. You don't counter his arguments by citing a random success story, you do that by showing him how.

Specifically his questions were : "Why would you need $5M to write a blog when your investment is zero? What kind of return will VCs see from this investment?"

Robert,

I think many people would agree that, at some point in the future, individuals and groups of people will be delivering content to people via the Internet on the kinds of scale that make people like Oprah Winfrey and corporations like Disney worth big bucks. And that these new companies may look very different to the way traditional media companies look.

I guess the point people struggle to understand is that this may take some time, and that it may be difficult to value companies in the meantime. In other words, the big question is: how are you going to make sure that the next round of financing you do is an upround? How will you justify the valuation you want to achieve?

From an investors point of view... nope not worth while.

To anyone with the imagination and ability to see a potential future, its an excellent opportunity.

Dreamers... and call screeners.

Well in Sac, at that time, he wasn't a nobody. :)

Don Imus, Morton Downey Jr., Tom Sullivan, Mark Williams, Kelly Brothers, Jay Allen, Kitty O'Neal, Dave Williams, Amy Lewis, Rush...great and (some national) radio talent just flows like a raging river from Sac, thanks in a major part to the great KFBK.

I predict Mark Williams will be the next big Radio King...