Club Penguin got bought — is Webkinz next?

It’s rare enough to have an industry-leading Web service that is based in Canada, let alone two of the top 10. But if you define “online virtual worlds aimed at children” as an industry, then that’s what we’ve got with Club Penguin and Webkinz. The former just got acquired by Disney for an eye-popping $700-million, after less than two years in business.

In what is sure to become a legendary Canadian example of bootstrapping a company, the popular social networking/game site was created by three friends in Kelowna, B.C. as a wholesome place for their young children to play and was completely self-funded by credit cards, angel investors and friends (much to the chagrin of several VCs).

snipshot_e4cpbnum66l.jpgWebkinz is a little different from Club Penguin. While the latter is strictly an online phenomenon, Webkinz — which also got its start about two years ago, but in Toronto — is a clever blend of online virtual world and offline toy. The company behind the site, a third-generation toy company called Ganz, came up with the idea of creating a toy that had a virtual doppelganger on a social-networking style website. Webkinz plush animals (which cost $15 each) come with a code that gives their owner access to the Webkinz world. They can then design a “house” for their avatar, and buy toys or furniture with their virtual money, or Kinz Cash. They also have to take care of their virtual pet, and players can chat — but only using stock phrases generated by the site — as well as play games and win Kinz Cash.

Club Penguin and Webkinz are alike in one thing, apart from their appeal for young children and “tweens”: although Ganz (a private company) doesn’t release membership figures, it and Club Penguin appear to have roughly the same number of subscribers — about 4 million or so, according to several estimates. Does that mean Webkinz might be worth $700-million too? After all, Club Penguin reportedly talked to several other companies about an acquisition, including Sony, which was ready to offer $500-million, as well as News Corp. (although Ganz itself has not confirmed any previous talks).

The Webkinz business model is slightly different, however. While both sites have a free section in which kids can play to a limited extent, in order to do anything more elaborate they have to become members — which in Club Penguin’s case costs $5.95 a month or $60 for a year. Webkinz owners can get access to everything by buying a single toy, which only costs $15, although many owners (such as the woman we wrote about in this story) have half a dozen Webkinz or more. But while Club Penguin’s revenues may be higher, Ganz has likely made about $60-million already on its virtual venture.

Whether that is appealing enough for a takeover bid is difficult to say, and it’s also unclear whether Ganz would be willing to sell Webkinz, which is likely a blockbuster cash generator for the company. One (possibly hopeful) venture capitalist blogged recently that he could see a spin-off, acquisition or even an IPO in the company’s future, but Ganz spokesman Susan McVeigh said late Thursday that the toymaker likely wouldn’t be interested. “Ganz is a privately-held family business and is very proud of that,” she said.

Google wants you to help create maps

snipshot_e4rwknta5mt.jpgAccording to a recent speech by Google Earth’s chief technology officer Michael Jones — which Brady Forrest describes at the O’Reilly blog — the site is using “crowdsourcing” techniques to generate detailed maps of India — using a package that the company has put together with a GPS transmitter and some software that it hasn’t publicly released yet. There’s a transcription of the talk and some more details at Dan Karran’s blog, and the Google Earth blog notes that this approach is very similar to the Open Street Map project — except of course that OSM is, well… open. More thoughts at FortiusOne. We all work for Google in one way or another, don’t we? Whether we know it or not 🙂

Creating a top blog: So easy a kid can do it

Came across a great story at CNET, in a post that SEO (search engine optimization) blogger Stephen Spencer wrote about his 16-year-old daughter Chloe and her website. As she told a recent conference, Chloe loved Neopets so much that she wanted to set up a website about them, so with her dad’s help she looked up some popular keywords and built a blog on WordPress. He says she is now making close to $1,000 a month.

[youtube https://www.youtube.com/watch?v=djjl_4jeznw&w=425&h=350]

 

Next: A Simpson’s medical textbook

xin_3120704301027437122523.jpgI just love this story: an article on multiple sclerosis at Xinhua, the Chinese news site, used a “file photo” of an X-ray that happens to be a still image from The Simpson’s — namely, an X-ray of Homer’s brain. An editorial comment about MS patients? Unlikely. Tony Hung wonders whether it’s a cultural thing, and Joey deVilla at Global Nerdy thinks it might have something to do with the kind of animation used in Asian instruction manuals. I think the explanation is pretty simple: the image is number three when you do a Google image search for the term “X-ray.”

Nice guys do finish first sometimes

snipshot_e41bgtfca5ut.jpgThree hard-working, family-oriented guys from the picturesque mountain town of Kelowna, B.C. A website that is filled with nothing but wholesome, kid-friendly entertainment featuring that most kid-friendly of animals, the penguin — and not a single advertisement, pop-up window or spyware-installing toolbar. The only way the Club Penguin story could be any more Canadian is if the site featured Mounties in it. The company even donates 10 per cent of its profits to charities involving underprivileged youth. If Mother Theresa had kids, this is the website they would play on. The site is so clean it almost squeaks. Congratulations to the Club Penguin team — nice guys (and Canadians) do finish first sometimes.

Jay Rosen’s thoughts on NowPublic

Update (Aug. 3):

Leonard Brody of NowPublic posted a response to Jay’s note on Facebook saying: “Jay, thanks so much for this…great analysis. We really would love to have you as an advisor to the company. Interested?”

Original post:

Given that New York University professor Jay Rosen’s NewAssignment.net is at the forefront of “citizen journalism” (or “crowdsourced” journalism or “networked” journalism, or whatever you choose to call it) it’s probably not surprising that he has some thoughts on the recent announcement by Vancouver-based NowPublic that it has landed $10.6-million in venture funding and is also expanding its relationship with the Associated Press — all of which I wrote about in a Globe and Mail news story and a blog post.

Jay recently wrote a Facebook note about the deal, in which he said that he sees great potential for NowPublic to evolve from what it is now into a true “networked journalism” site with full-fledged news reports as well as photos and videos — but he says that doing so will likely take more co-ordination and editorial oversight than the site is currently doing (at the moment NowPublic has no staff editors, although it does have former CTV reporter Mark Schneider overseeing things).

Jay has been through his own experiment with networked journalism in the Assignment Zero project, which was a co-venture with Wired magazine writer Jeff “Crowdsourcing” Howe and a host of others (more on that in this post by Jeff and a follow-up here) and is currently engaged in another with HuffingtonPost.com — a political reporting effort called OffTheBus. Jay did an interview about Assignment Zero here.

After I read his note, I asked Jay whether I could excerpt some of his thoughts here (for you non-Facebook types), and he graciously agreed.

Continue reading “Jay Rosen’s thoughts on NowPublic”

Troll alert: The two Johns — Elton and Dvorak

We’ve got a double-troll whammy today — twin trolls, if you will — from the always dependable John Dvorak at PCMag and from Sir Elton John in The Sun, that most credible of British tabloids. The former launched into one of his patented Dvorak rants, thick with portents of imminent doom but thin on actual facts and/or details, in this case about the coming bubble (a troll that caught Fred Wilson and Marshall Kirkpatrick, among others).

In typical fashion, the rant begins with a totally unsupported and ridiculously over-the-top statement:

“Every single person working in the media today who experienced the dot-com bubble in 1999 to 2000 believes that we are going through the exact same process and can expect the exact same results — a bust.”

Brilliant. Notice how it’s not just a few people, or even a few smart people, but “every single person working in the media today.” And they’re not just expecting something similar — no, they’re expecting the “exact same” results.

But the best part of this particular rant is the way he bolsters his argument that this is just another bubble like so many others, by pointing to the previous bubbles in CD-ROM software, pad-based computing, IBM-compatible PCs and software for word processing and spreadsheets. WTF? Apparently, any evolutionary process in which some companies cease to exist — even if they are bought by other companies — qualifies as a bubble for John.

Sir Elton isn’t in quite the same league as Dvorak (but then who is, really). Still, he manages to get off a few howlers in this Sun piece about how he wants to “close down the Internet” because it’s ruining the music business:

“I do think it would be an incredible experiment to shut down the whole internet for five years and see what sort of art is produced over that span… there’s too much technology available… I’m sure, as far as music goes, it would be much more interesting.”

Classic. Of course, as the article points out, Sir Elton has been raking in the dough from digital downloads of his music (just the right amount of technology there, apparently). His Elton-ness also tries to get us to believe that “in the early Seventies there were at least ten albums released every week that were fantastic.” Ten fantastic albums a week in the Seventies? By who — the Bee Gees? Captain and Tennille? Foreigner? Please.

At least it won’t be called Club Mouse

As was widely rumoured a couple of months ago, Club Penguin is being acquired, but not by Sony, who was said to be deep in takeover talks with the company when I last wrote about it. Instead, the wildly successful virtual world for kids — which was started by three guys from Kelowna, B.C. as a side project about a year and a half ago — is being bought by The House That Mickey Built.

snipshot_e4ufvcdnb3u.jpgAt the time of the Sony rumours, Disney was said to be interested in buying Webkinz, another Canadian-built virtual world for kids. According to the Wall Street Journal and PaidContent, the price tag on the current deal is $350-million cash plus an “earnout” of $350-million based on future performance. That’s a pretty handsome return on a little over a year’s worth of work, and from what I have been told — by at least one VC who was kicking himself for not being able to get in on the deal — ClubPenguin.com had not taken any substantial venture capital money whatsoever. The Globe did a story on the guys who created the site last fall.

Further reading:

Staci at PaidContent has a good overview of the deal (so does the Journal) including some comments from Disney CEO Bob Iger, and points out that members of Club Penguin are pretty protective of the site (which carries no advertising of any kind). Mike Arrington says that previous talks with Sony and others got derailed in part because Club Penguin donates a chunk of its profits to charity.

Should Murdoch make the Journal free?

If you’re a traditional journalist with any interest in online media whatsoever, one of the central questions hovering over the acquisition of the Wall Street Journal is whether the Journal’s new proprietor, Australian billionaire Rupert Murdoch, will remove the pay wall and give the Journal away for free. He has said several times that he is considering such a move, but he has also mused about whether it would be worth it or not.

snipshot_e4udb69k0ux.jpgI know that many newspapers have looked to the Journal as a model for what a paper can do online, because it is one of the few that has charged for its content from the very beginning and built what appears to be a successful business doing so. But does it make sense now? This Wall Street Journal story notes that Murdoch commissioned a study that looked at what going free would mean for the paper, and from that he concluded that while readership would grow by a factor of 10, advertising would likely only grow by a factor of five, and the loss of subscription revenue would effectively make the whole thing a wash. In other words, maybe’s it’s not worth it. However, Murdoch has asked questions like this:

“What if, at the Journal, we spent $100 million a year hiring all the best business journalists in the world? Say 200 of them. And spent some money on establishing the brand but went global — a great, great newspaper with big, iconic names, outstanding writers, reporters, experts. And then you make it free, online only. No printing plants, no paper, no trucks.”

Fred Wilson has made it clear what his view is: Murdoch should make the WSJ free online, before he does anything else. Fred points out that the New York Times gets 10 times the traffic that the Wall Street Journal does, and is far more often the centre of an online discussion about business or financial matters. That kind of thing is going to drive Murdoch crazy.

Larry Kramer, formerly with Marketwatch, has a different idea about how Murdoch can keep charging for the Journal and use Marketwatch as a free alternative, an adjunct to his much-anticipated Fox Business Channel, but I’m not sure that would work. I’m going with Fred on this one. The Journal could be so much more relevant online if it were free, and Murdoch is just the guy to do it.

Further reading:

Darian Benkoil at Corante, a former AP correspondent and ABCNews editor, does the math and says that it doesn’t make sense for the Journal to go free (although I think one could question some of his assumptions), and Joe Wiesenthal has some thoughts over at Techdirt. Tony Hung at Deep Jive Interests isn’t so sure going free would be such a good thing for the Journal.

Treehugger now part of Discovery network

According to a report in the New York Post, and confirmed by this post at the company’s site, the environmental awareness network known as Treehugger.com has been acquired by the Discovery Channel for what the Post says is $10-million and PaidContent says is about $15-million (including “earnouts,” which are payments based on future performance).

snipshot_e41jopuwm1l6.jpgTreehugger has been around since about 2004, and is based in New York, but its founder Graham Hill is a Canadian from Ottawa, who got his start during the first Web boom with a design company called SiteWerks (he is also designed and sells this New York souvenir). According to Treehugger, the site has close to 2 million unique visitors a month and about 3.5 million page views. Hill says in his post on the sale that the company was approached by about 15 potential buyers and/or partners. Discovery apparently plans to make the site the online component of its Planet Green effort.

Interestingly enough, Nick Denton — founder of Gawker Media and former editor of Valleywag — apparently played a role in Treehugger getting started, and reportedly still has a stake in the company as well. Treehugger also has a Digg-style social networking site called Hugg.com. And as CNN Money’s blog points out, the deal for the environmental media hub is the second big deal for an online media property this month, coming on the heels of the $23-million acquisition of MediaBistro by Jupitermedia.

Hollywood still looking for online video hits

Busy day for online video today: not one but two “professional” video sites have launched — although one has no content to speak of yet, just an e-mail form and a press release. That one is 60frames.com, which according to the release was “incubated by leading Hollywood talent and literary agency United Talent Agency (UTA) and innovative Internet-based advertising agency Spot Runner” and has raised $3.5-million in funding.

As Liz Gannes describes it at NewTeeVee, 60frames — which has apparently signed filmmakers Joel and Ethan Cohen to an advisory board — looks to be more like an aggregation and advertising play, since it says consumers will “be able to view 60Frames’ original programming through top video portals, social network Web sites, and mobile and emerging broadband outlets.”

mydamnchannel.jpgThe site, which is being run by United Talent Agency exec Brent Weinstein, says that it will also help advertisers “create immersive online branding to better connect their company and products to targeted audiences.” Wow — I can hardly wait for that stuff. Sounds great, doesn’t it? Hopefully, 60frames has learned a lesson from the train wreck that is Bud.tv, and the failure of HBO’s This Just In, which I wrote about recently.

The second of the online video experiments is called MyDamnChannel.com, and sounds a bit more promising. It looks very similar to a site called FunnyorDie.com — the Will Farrell project that got much buzz for a hilarious series of videos starring his friend’s infant daughter as a foul-mouthed landlord (a video that has been watched a staggering 41 million times). MyDamnChannel even pays tribute to its predecessor in a parody of that video.

The new project is the brainchild of former MTV and CBS Radio executive Rob Barnett. The site has signed on comedian and Simpsons’ star Harry Shearer (who also writes for Huffington Post), musical genius Don Was, comedian Paul Reiser and filmmaker David Wain. Shearer has already contributed a funny clip in which he plays Dick Cheney (in a suit and very convincing prosthetic makeup) and sings a torch song about Scooter Libby.

Will these new sites succeed? I have no idea. But the site that wins will do two things: it will make it easy for people to effectively distribute its video, and it will be funny — and the second of those is by far the hardest.

Drudge the king-maker for online news

Via a post by my friend Paul Kedrosky I found out that the Drudge Report is responsible for one quarter — a whopping 25 per cent — of all inbound traffic to some of the leading British news sites, including The Guardian, the BBC, the Independent and the Telegraph. That’s a mind-boggling number.

It comes from a study of British online news sites by Neil Thurman, a researcher at City University in London. To put that Drudge figure in perspective, the site (according to Nielsen/NetRatings at least) accounted for more traffic than Google, Google News and Yahoo News combined.

Pretty impressive — even if Drudge does inflate its page views by forcing the site to reload every three minutes.

Update:

Martin Hofmann points out in the comments that the Drudge figure is based on a single month worth of traffic from more than two years ago.

Video: Arrington keynote at mesh 2007

As some of you may know, one of the highlights of mesh 2007 for me was the chance to sit down with my friend Mike Arrington from TechCrunch for a “keynote conversation” (as we call them at mesh) on the future of media. Thanks to the tireless efforts of video wizard Mark Mckay and the folks at mDialogue, there is a video of the entire keynote available at Google Video.

In the keynote, Mike talks about when he first realized TechCrunch.com could be a real business, why it’s less work to be first with a news story, what he thinks traditional media need to do to succeed online, why it pays for bloggers to get under his skin a little from time to time, and what he really thinks of Ted Murphy and the gang at PayPerPost.com.

http://video.google.com/googleplayer.swf?docId=-9050373797637792635&hl=en-CA

 

Video: the bizarre stylings of Tay Zonday

Who is Tay Zonday? Who the heck knows. But in my eternal quest to bring you the Internet’s finest moments (among other things) I feel compelled to share with you this video of him singing his smash Web hit, Chocolate Rain, which as far as I can tell appears to be a cryptic song about racism set to an incredibly irritating and yet somehow catchy keyboard loop.

As with many things, from Lolcatz to the “All your base are belong to us” meme, the Chocolate Rain thing has been fueled by sites like 4chan.org, which exist purely to irritate the rest of the Internet in as many ways as possible. As for Tay, he’s got a weird kind of infantile geek thing going, like a cross between Michael Jackson and Urkel. And he makes weird faces. But for some reason, it has caught on — over 2 million people have watched the video.

[youtube https://www.youtube.com/watch?v=EwTZ2xpQwpA&w=425&h=350]

 

K. Paul Mallasch on local journalism

After my recent posts on hyper-local journalism as well as NowPublic and the failure of Backfence, I got some comments from K. Paul Mallasch, a former Gannett journalist who runs a small, local “citizen journalism” or “networked journalism” site called MuncieFreePress.com in Muncie, Indiana. We exchanged emails about the failure of Backfence and about the right way to do local media, and I thought it was worthwhile excerpting some of his comments here (which he graciously agreed to let me do).

When it comes to local journalism and media sites, he says, there are two camps. One is:

“Those (like BackFence, NowPublic, etc.) who are trying to use the ‘big media’ (big business) approach to this problem – throw a lot of money at the problem, buy other properties, expand at a terrific rate, etc.”

K. Paul says that his site and some others that have had some success, such as Baristanet, are a very different kind of model — a more grassroots, ground-up model that lets the community determine what a site will be about:

“Me, H20town, Baristanet, iBattleboro, and others fall into the other camp, I think. We don’t really have a business plan per se. I joked a while back that I follow the Craig Newmark school of business customer service, customer service, customer service.”

Mallasch also says that he thinks print — perhaps counter-intuitively — is one additional tactic that hyper-local sites can use to nab audiences:

“One of my short term goals to increase cash flow is to start-up a print component (free, weekly tabloid reverse-reverse published from website content.) There’s another 5 to 10 years worth of (big) revenue in print … at least.”

“One of the things that stands out about BackFence is that they vehemently insisted they were an ‘online only’ product [but] print will bring much needed revenue as well as serve as a marketing vehicle for MuncieFreePress.com.”

K. Paul also says that he wants to raise money from the site, but primarily to compensate his contributors:

“As a case in point, over the weekend, I received a batch of photos from a volunteer firefighter in one of the communities I cover… Anyway, he’s volunteered to ‘take assignments’ and is supplying me with a lot of great content.

And he’s just one. I want to pay him (and the others) for their efforts. (If NowPublic were smart, this would be number one on their plate – it would take them way ahead of others out here…)”

Mallasch also says that while “a corporate approach will probably be one of the first to ‘succeed’ on paper (and get mentioned in big media), people like me and the hundreds of others who are taking the grassroots approach will still be around, I think.”

Thanks for your thoughts, K. Paul — much food for thought in there.