Posts Tagged ‘NY Times’
February 8th, 2012
The piece, written by FrÃ©dÃ©ric Filloux compared Facebook’s valuation 3 years ago, with its valuation now and pulled up some interesting data on its profit and value per user, then compared this to other social and traditional media.
The article set the scene with a snapshot of a Marc Andreessen interview, from February 2009, who was the creator of Netscape and a Facebook board member. At that time, the social network had 175 million users and Microsoft had just made an investment setting Facebook’s valuation at $15bn.
Andreessen was quoted on the vision for Facebook, saying: “6 billion people on the planet. Probably 3 billion of them with modern electricity and maybe telephones. So maybe the total addressable market today is 3 billion people. 175 million to 3 billion is a big challenge. A big opportunity.”
I’m sure there were a few raised eyebrows in 2009, but perhaps his statement is a little more believable today, although there are other issues such as strong competition in key markets, the member opportunity is indeed there.
Fast forward to last year (2011) when Andreessen was quoted commenting on Facebook’s funding ($1.3bn as of January 2011). Andreessen said the whole amount was actually a shrewd investment as it translated into an acquisition cost of “one or two dollars per user” ($1.53), which sounded perfectly acceptable to him.
As Filloux mentions in the article, if you look at Facebook’s pre-iPO filing: Marc Andreessen was right both in 2009 and in 2011.
So why the title of â€˜Facebook’s strange economics?‘ Well, this is where it gets interesting.
As Filloux points out, last year, each of the 845 million active members on Facebook brought in $4.39 in revenue and $1.18 in net income. He also pointed out that based on the $3.9bn in cash and marketable securities on Facebook’s balance sheet, each of these users actually generated a cash input of $1.53 dollars.
The article then suggests the expected market value for each user after the IPO, which is based on the $100bn valuation, comes out at a value of $118 per user.
Filloux then goes on to compare this to other social networks and more traditional media.
Looking at LinkedIn, which is obviously more specialised than Facebook, and has about 145 million users, it has a $7.7bn market cap and a value of $57 per user. However, LinkedIn makes $3.5 in revenue and $0.78 in profit.
The New York Times, until recently the most read online newspaper in the world, is a less straight forward case, as Filloux notes, simply because the company has numerous websites that deal with domestic and global users as well as traditional readers of multiple hardcopy titles.
Filloux suggested a figure of 50 million people worldwide who are in regular contact with one of NYT’s titles. Based on today’s $1.14bn market cap, this yields a valuation of $23 per NYT customer, five times less than Facebook.
However, there is a large anomaly because in 2011, each NYT customer brought $46 in revenue, almost 10 times more than Facebook. As for the profit ($56m for the NYT), each customer brought in a little more than a dollar.
Looking at traditional media company Gannett, Filloux noted it makes between $50 and $80 per year in revenue per customer, and, depending on the way you estimate it, the market values that customer at about $50.
This means Facebook or LinkedIn are flying high while traditional media are struggling; when Facebook achieves a 47% profit margin, Gannett or News Corp are in the 10% range.
This in no surprise in terms of the way social media are over taking traditional media, but the value per user is much lower. 10 times lower in fact, but the market values these users up to five times more.
Bringing this in to context, Facebook looks set to offer shares a multiple of 100 times its earning and 25 times its revenue. Apple is worth 13 times its earnings and Google 20 times. These kinds of figures do not tend to stand the test of time very well when the market matures, so beware of the Facebook Bubble as Filloux puts it.
The article offers real clarity on what has been one of the most dramatic valuations since the dotcom boom. Facebook’s success is undeniable and its meteoric rise to success/power is there for all to see, but surely the valuation is generous to a fault. Or too generous not to fault.
I have no doubt Facebook’s IPO will be a massive success, and the future of the organisation is bright, but why do we need to make a success story into a super success with falsely inflated valuations, when the real story is still pretty damn impressive?
November 23rd, 2011
This week you may have missed a small but important milestone in the move from print to digital publishing.
Initially reported in the New York Times, and later picked up by The Guardian, Atlantic Media a prominent U.S. magazine publisher, and more specifically its key title by the same name, 154-year-old monthly magazine; The Atlantic, has reported that its digital advertising revenue has exceeded print advertising revenue for the first time.
Ad revenue figures for October show The Atlantic’s ad revenue was 51% digital compared to 49% print, which is believed to be a first for a mainstream publisher.
Why all the fuss? Well the difference here from many other titles that are seeing print advertising revenue fall in-line with digital revenue is that The Atlantic say this isn’t the reason for its success. There has not been a decline in the share of print revenue. In fact, The Atlantic sold more ads in the October issue of the magazine than it had in any other issue since 1999, and website traffic has grown to 5.4 million monthly visitors. However, the Guardian confirms that Atlantic does have lower advertising rates than other similar publications.
Even if we take this lower advertising rate into consideration, it’s an impressive result, and shows that digital content does not need to be the poor relation to print content, and in fact is beginning to be favoured, if very slightly.
Although this story alone won’t change the many pre-conceptions about print vs digital publishing, it is the first of many that will follow, and the first for the right reason, i.e putting digital first (as the Guardian would say) and focusing on relevant content rather than just content for the print title.
According to the NY Times: “The Atlantic has been undergoing a gradual evolution from a magazine publisher to a multimedia company with a collection of successful Websites that also happens to put out a magazine once a month.”
The final word goes to The Atlantic’s publisher, Jay Lauf: “When I started in ’08, digital was 9 percent of our total ad revenue. With digital, everybody in the business is always talking about trading print dimes for digital dollars. Well, for the first time we’re actually beating print.”
June 14th, 2010
Here’s a story that caught my attention over the weekend, The New York Times’ editor, Phil Corbet, sent a memo around to staff telling them not to use ‘tweet’ or similar words, which he referred to asÂ “silly”.
Here is the memo:
How About â€œChirpâ€?
Some social-media fans may disagree, but outside of ornithological contexts, â€œtweetâ€ has not yet achieved the status of standard English. And standard English is what we should use in news articles.
Except for special effect, we try to avoid colloquialisms, neologisms and jargon. And â€œtweetâ€ â€” as a noun or a verb, referring to messages on Twitter â€” is all three. Yet it has appeared 18 times in articles in the past month, in a range of sections.
Of course, new technology terms sprout and spread faster than ever. And we donâ€™t want to seem paleolithic. But we favour established usage and ordinary words over the latest jargon or buzzwords.
One test is to ask yourself whether people outside of a target group regularly employ the terms in question. Many people use Twitter, but many donâ€™t; my guess is that few in the latter group routinely refer to â€œtweetsâ€ or â€œtweeting.â€ Someday, â€œtweetâ€ may be as common as â€œe-mail.â€ Or another service may elbow Twitter aside next year, and â€œtweetâ€ may fade into oblivion. (Of course, it doesnâ€™t help that the word itself seems so inherently silly.)
â€œTweetâ€ may be acceptable occasionally for special effect. But letâ€™s look for deft, English alternatives: use Twitter, post to or on Twitter, write on Twitter, a Twitter message, a Twitter update. Or, once youâ€™ve established that Twitter is the medium, simply use â€œsayâ€ or â€œwrite.â€
Techcrunch has a couple of updates on the story:
Update: Dave Itzkoff, who blogs for the New York Times, tweets that the report is indeed not true. Which makes it a perfect satirical piece worth sharing anyway. Update 2: Another New York Times staffer tells us privately that the memo is â€œ100% realâ€ and Itzkoff clarifies that it is not the memoâ€™s existence he was denying, but that some journalists inside the NYT recognise â€œtweetâ€ as a word and there is an internal debate ongoing about it.
Is it true or not? Whatever the case it is mildly amusing, and highly embarrassing for the NY Times, but hang on a sec maybe the guy has a point, will the vast majority of his readership know what “tweet” and similar words actually mean?