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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.

At 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.

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.

I 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.

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).

Treehugger 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.

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.”

The 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.

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.

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

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]

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.

I don’t do this often, but my Globe and Mail colleague Simon Houpt — who is based in New York — had a great piece today about the blurring of the lines that is going on between the Web, theatre, video and so on. He writes: “Here’s some advice for aspiring playwrights: Forget theatre school. Just start a blog.” Then he goes on to talk about several plays that use the Web and what you might call a “crowdsourcing” model:

“My First Time is an 80-minute collection of stories about first-time sexual experiences, performed by an eager-to-please quartet of two men and two women…

My First Time isn’t so much written as it is constructed from stories written by real people. The stories can be read on MyFirstTime.com, a website started in 1998 that now boasts 40,000 entries (no pun intended).”

Simon also mentions other productions, such as the WYSIWYG Talent Show, which he says “yanked bloggers out from behind their computer screens, made them change out of their pyjamas, and put them onstage at a downtown venue to bring their voice into the real (aka non-virtual) world.”

Nice story — read the whole thing.

Scott Karp of Publishing 2.0 writes about the NowPublic financing and takes issue with the terms “citizen journalism” (which I admit is a terrible term) and “crowdsourcing” (which I actually kind of like). He says that what is going on at NowPublic is just journalism, period — or perhaps “networked journalism,” which Jeff Jarvis suggested as an alternative here.

Update:

My mesh friend Jeff Howe — who coined the term “crowdsourcing” — has a post in response to Scott’s, in which he effectively agrees that it’s really just journalism, extended to new sources.

NowPublic.com — the “citizen journalism” site based in Vancouver — has turned down takeover bids from two major media entities (both based outside of North America) and closed a $10.6-million financing round with a series of U.S. and Canadian venture funds. I wrote a news story about it for the Globe and Mail

Update: TechCrunch has the news about the financing (but not the acquisition offers), and there is also some coverage at VentureBeat and at GigaOm, where Liz Gannes also talked to Leonard Brody.

It’s one of the larger — and possibly the largest — Series A financings of any citizen journalism site (OhMyNews.com of South Korea did an $11-million led by Softbank at one point, but that was a Series B financing). The round was led by Rho Ventures out of New York, along with previous seed investors Brightspark and Growthworks out of Toronto. NowPublic said that after a road show with about 20 venture funds, it wound up with nine term sheets or expressions of financing interest.

The deal is a major vote of confidence not just in NowPublic, but in the idea of “crowdsourced” journalism or “citizen reporters,” and stands in sharp contrast to the recent closure of Backfence.com, a high-profile citizen-journalism project that had half a dozen local sites.

I talked on Friday with CEO Leonard Brody, who co-founded the company two years ago with Michael Tippett and Michael Meyers, and he said NowPublic is now the largest citizen reporting venture in the world, with more than 100,000 members in 140 countries and 3,800 cities.

Brody said that the company considered the acquisition offers, but “made decision that we felt we could grow this thing” and that it was just too early to sell. The NowPublic CEO said the company is focused on its plan to “build the largest news agency in the world” and that he is convinced they are building what will become “a billion-dollar company.”

NowPublic has 20 staff employees in all, with offices in Vancouver and New York and several employees each in Germany, Hungary and Slovenia. Unlike OhMyNews.com, which has about 50,000 members, NowPublic does not have any professional editors on staff, although a former CTV reporter plays the role of “Actual News Guy” in helping select stories.

NowPublic has also expanded its previous content-sharing deal with Associated Press. Under the original arrangement, AP’s foreign bureaus could have access to NowPublic photos and news reports, and Brody said that relationship has been expanded to include the wire service’s U.S. bureaus.

Brody said the money would be used to expand operations, beef up NowPublic’s technology — including adding more mobile features such as automatic GPS geo-location — and that the company is also looking at compensating members who submit eyewitness news reports, photos and video.

Compensating members of a “crowdsourcing” effort such as NowPublic or even a video-sharing site such as YouTube has been a major source of debate over the past year or so. While Brody said he doesn’t think most members submitting things to the site are motivated primarily by money, NowPublic is thinking about ways of compensating them, monetary and otherwise.

Some NowPublic members have already done deals with AP as a result of items they submitted to the site: a member from Oman who posted photos of a storm later sold his shots to Associated Press and they were used by Yahoo News, Forbes magazine and several other breaking news sites.

Of the Backfence.com closure, Brody said it was “a sad day for citizen journalism — they were pioneers.” But he said that NowPublic has a much different model from Backfence, which focused on “hyper-local” reporting, while the Vancouver site is targeting a global market. Interestingly, Brody said he didn’t see hyper-local journalism as a very good business model, at least not for younger Web users.

“For people 35 and under, hyper-local doesn’t mean anything any more,” he said. “Local weather, news and that kind of thing is a commodity, and there’s lots of places you can get it. We’ve moved from that to hyper-personal news… younger users check their Facebook feed way more times a day than they check CNN.”

Congratulations to the team at NowPublic on closing the deal. It will be interesting to see what kinds of uses they can put that $10.6-million to over the next year or so.

I can’t tell if Jason Calacanis is just trolling for some Techmeme reaction on a weekend (which he has certainly gotten in spades) or in a grump because he’s been sick, but his post about Facebook bankruptcy and closing off comments is a doozy. I’ll leave the Facebook part to Fred Wilson and others to respond to, except to say that it seems pretty simple to me: don’t want as many requests for things? Then don’t friend so many people.

The Facebook thing doesn’t bother me that much — like Fred, the Web and blogs are more important to me than some closed system, however appealing. And that’s why I find the part about Jason closing his blog to comments more troubling, for reasons I have expressed before, including a recent post about Joel Spolsky’s take on comments and one about Marc Andreessen also deciding to close comments.

Like Scott Rafer, I am more than a little disturbed by Jason’s comment that:

“If you don’t have a blog – which takes 10 minutes to setup – then maybe you’re not worthy of commenting, or others reading your comments.”

A comment typed in haste, perhaps — but that sounds pretty elitist to me. Yes, it’s easy to start a blog, but not everyone has the time or the inclination. By preventing those people from commenting, it’s true that you avoid the idiots as Jason says, but you also miss some thoughtful contributions as well, as Fred Wilson has also pointed out.

Update:

Jason says that his response to the elitism charge is:

“I’m 100% available to the entire world by SMS, email, AIM, Facebook, LinkedIn, Skype, Twitter, and blog post. If someone want to reach me they can — that negates your whole elitist argument.

It is not my job to give people the platform, it’s their job to take it… It’s not elitism, it’s a meritocracy.”

Fair enough. But by building barriers, such as the “invitation-only” comments that Jason seems to admire, I think we are sending the wrong message to those who are still trying to wrap their heads around the whole blogging thing.

Well, it seems that Twitter is good for something: I watched a blog war (or at least a skirmish) blow up in real time via the “micro-blogging” app that just got funded by Fred Wilson at Union Square. First, Robert Scoble said that he was in an all-staff meeting at the company — and that Mike Arrington “got a lot of things wrong” in his recent post on the status of Podtech.

To this, Mike responded on his Twitter — directly to Scoble — that:

“If I got the story wrong, its because John wasn’t being clear in how he describes the company.”

and

“It’s bullshit to call this out publicly. I assume the off-record conversation is now fair game for TechCrunch.”

Fair game for this latest post by Mike, in which he writes that the previous post was one “Podtech pleaded with me to write, to counter the massive negative publicity they’ve been getting around the blogosphere,” and that he agreed to write it “after two phone conversations with Furrier and some independent digging.” I actually thought that Mike was pretty fair in that initial post.

In any case, he says now that:

“I’ve kept most of my personal opinions about Podtech to myself so far. I haven’t for example, said that I personally find 90% of Podtech content just slightly more entertaining than watching paint dry.”

Ouch. He also says that:

“I write stuff how I see it, which is not the same thing as what the companies involved necessarily want to see. Never confuse TechCrunch with your PR or marketing team.”

Game on. Should be a fun TechCrunch party tonight 🙂

Update:

In a Twitter post this morning, Scoble says:

“I’m tired of fighting with people in public about it. We’ll have the ultimate laugh if we make PodTech profitable … I certainly have lots of opportunities and would have left long ago if things were dire.

We ARE going through turbulence, though … and nearly every startup I know has gone through changes in direction, unstatisfactory employees, strategies that don’t work out etc …

What doesn’t kill us makes us stronger. My show is doing very well, though, and I’m having a ball personally.”

Update 2:

Scoble just posted this to his Twitter, saying Gillmor told him Arrington was right “about everything.” Mike responded within minutes on Crunchnotes with this post:

The funny thing is that Robert and I were immediately laughing together at the TechCrunch party, just an hour or so after the big fight on Friday. He apologized. I apologized. Then we shot some video.

Another one destined for the “No Surprise” file: HBO is planning to shut down its comedy-video site This Just In (I know, I’d never heard of it either) in August, according to Variety magazine. Why? Because — as one NBC executive admitted when the network shut down its InnerTube site, which was supposed to compete with YouTube — This Just In might as well have changed its URL to “nobodycomeshere.com.”

Two of the most succinct appraisals of this turkey come from a commenter on the TechCrunch post about it and from Om Malik at NewTeeVee. At TechCrunch, Ian Bell says: “Unfortunately this goes to show that you can’t just slap a site together, throw ads up on it, buy keywords and think it will be successful. A successful property requires its own culture and essentially a ‘soul’.” Bingo. And Om notes that gigantic conglomerates with multiple layers of bureaucracy and poisonous office politics are not exactly a great breeding ground for comedy:

“The big media, especially Time Warner (my former employer) is a tad clueless about this new video revolution. With a studio mentality, management by consensus and a bonus-driven culture, they are waddling in a world that moves at light speed.”

Double bingo. And examples abound of just how clueless network executives are, and how flinging money and press releases at something doesn’t amount to much in the world of online video: Come on down, Bud.tv — one of the most expensive, and yet almost criminally un-funny, sites you will ever see. And then there’s FunnyOrDie.com, which features Saturday Night Live star Will Farrell. Why does it work? Because it’s funny, that’s why.