Buzznet acquires music social network Qloud
Buzznet, a Los Angeles based company has bought the music sharing social media company Qloud.
Qloud’s application embedded in social networks such as Friendster and Facebook, allows users to download unlimited amounts of free music. Furthermore, members can discover and share music with each other. Qloud has been funded by Steve Case and several well-known music industry veterans.
Buzznet is a multimedia social network where users generate content around their favorite singers and bands. In the social network, members, photos and videos get "buzzed" (rated) and rise up the popularity charts. The site gets about 4 million visitors a month and carries content submitted by a million users.
Qloud’s MyMusic application on Facebook has 1.8 million users. The offerings of the two sites are clearly complementary ,and cater to the teen and twenty-something demographic.
Buzznet is rumored to be raising a further $25 million in funding, according to PaidContent, on top of the $6 million in Series B raised last year.
The Forbes billions
And so are we in a recession? You wouldn’t know it from the latest Forbes billionaires list which now boasts of 1,125 members, breaking four digits for the first time.
Bill Gates is down at number three, giving up the number one spot to his good buddy Warren Buffett , at $62 billion - with a 6x surge in net worth since last year, thanks to flying shares of Berkshire Hathaway. The number two spot now belongs to Carlos Slim Helu of the Mexican wireless telephone company, America Movil.
Interestingly, the Ambani family of the Indian company the Reliance group might have come in first on the richest list with a combined worth of $85 billion, except that the warring Ambani brothers Mukesh and Anil split up their fortune and showed up in fifth and sixth positions respectively, with individual net worths of $43B and $42B.
And how about the youngest self made billionaire? Yes, you guessed it - it is 23 year old Facebook genius Mark Zukerberg who is worth $1.5 billion. Of course this number is based upon Microsoft paying $240 million last October for a 1.6% stake in the company, which pegged Facebook’s value at a whopping 15 billion. Not many believe this huge valuation, and the story going around is that Microsoft paid up not necessarily because it believes that the company is worth as much, but more to keep out those who might be thinking about taking over all of Facebook!
While on unnamed suitors for Facebook, Google founders Larry Page and Sergei Brin made the top of the Forbes thirtysomething list with $19 billion apiece.
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Robert Scoble and the secret Microsoft killer product
We know that Microsoft is going to unveil a revolutionary product. We think it is coming out March 3rd. We don’t know what it is. We know a lot about what it isn’t.
The hoopla started when Scobleizer Robert Scoble broke the story that he was shown a Microsoft product which was so moving that it made him cry.
Microsoft researchers make me cry
It’s not often that I see software that really changes my world. It’s even rarer that I see software that I know will change the world my sons live in. I can count those times pretty easily. The first time I saw an Apple II in 1977. When Richard Cameron showed me Apple’s Hypercard. And something called Photoshop, all in his West Valley Community College classroom. Later when I saw Marc Andreessen’s Netscape running the WWW.
I think we have all been there. Seen an invention that you knew was going to change the world.
So it was when I saw the first web browser. It was Mosaic (the mother of all browsers), beautiful, even in its first version. I tried to tell others what I had beheld. "It had graphics, hot links that you click on to go to yet another page, you book mark things you like….". But it was like speaking a language no one understood. If all you had encountered were Bitnet, Decnet and ATDT (remember?) there is no way you would have the vocabulary to understand how revolutionary the first graphic web browser experience is.
So I understand Robert Scoble, and his need to write about what he had seen, even if he cannot divulge the details yet.
Techcrunch has spent some time speculating about what this is. Scoble has replied on his blog with what the new product isn’t - ie everything that Techcrunch is speculating about. According to Robert it is not operating systems, productivity apps, data centers or databases, video game consoles. And no, it is not the touch table top pc either. What is seems to be is a clever, small application that two (presumably very smart) people built.
So then Valleywag gets into the fray. They scold Scoble for starting hype about a product before he is released from an embargo regarding divulging information!
From Valleywag: Unsolicited advice, Robby: If you have an embargoed piece of information, don’t talk about it until you can talk about it. You’re not building buzz, you’re killing it in advance by sending people’s imaginations soaring in the wrong directions
Excuse me! There is no great product that has needed buzz before it was released, to be successful (think Facebook, Google, Ebay). Nor has any product been killed simply by hype.
For those who are pointing to the Segue as a prime example of high expectations generated due to too much buzz, lets just be honest. The product did not get killed because of buzz. It faded away because it looked dorky! Steve Jobs thought so, and a focus group of a few teenagers would have come to the same conclusion if the designers had let anyone have a peek at the product while it was being built!
Meanwhile - yay for Microsoft! We are all ready for them to totally wow us with their next app!
Hot or Not Valuation - $20M is way too low and is very likely wrong
I am intrigued by the metrics and the factors related to the valuation of online enterprises (see here, here and here). Every time there is a new major acquisition, it gives us a new data point to calibrate the dynamics of the current market conditions and expectations.
Blogosphere is reporting that Hot or Not was acquired for $20M by a Canadian company, Avid Life Media. HotorNot is an online photo rating site that has a dating component to it.
HotorNot’s web strategy gives some insight in to the free vs. paid service models. HotorNot had a paid "premium services" model and they claimed that the conversion rate was very high (as much as 15%; typically it is 1 to 3% for similar sites). Then last April, in a very bold move, they changed their business model and decided to go the completely free route.
The site did see a huge jump in traffic; from 6M visitors per month to 10M visitors/month; the revenue from advertisements and virtual gifts increased, but not to the level that would make up for the lost receipts from the membership plans. Of course, a period of few months is not enough time to gauge the effect of a major transitions, but it was interesting to watch them go through the transformation.
With the free service, came spam; and I understand that they have gone back to the paid premium service model, mainly to protect the users from getting junk mail.
From the Alexa traffic graphs, it seems that they did experience a huge traffic boost but it was not a sustained one; the traffic is back to the pre-free-model levels.
There are reports that HotorNot was acquired for $20M but I hesitate to believe these figures.
Some of the available stats about the site are as follows: Annual Revenue(est.) $5M; profit (est.) $2M; the current visitor count has stabilized to around 5M visitors/month. They also have an established brand and a significant presence on Facebook.
Given these numbers, where would one peg the valuation of HotorNot?
As a comparison, Face book has about 100M monthly visitors (theoretically valued at $15B) and Plaxo has about 2M visitors/month, and was looking for a valuation in the range of $200M.
Another variable that goes in here is that HotorNot is a risqué dating site, and traffic on similar sites does not monetize well.
Even after taking this in to account, I find it hard to believe that HotorNot would receive a valuation of $20M, I think there are some multiples missing here.
If I were to throw out some numbers, I think the total package that HotorNot sold for, might be about $40M, may be $50M (but definitely not $100M).
Well, we will know in a couple of days.
You can add your estimate of the valuation in the poll (current poll is on the sidebar, see here for the results of past polls)
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