AOL: Reverse Financing TV Shows

Pity the poor television networks. First, the writers' strike clobbers them. Then social networks sneak up and steal precious teenage viewing time. Well, if you can't beat 'em, join 'em. Time Warner's AOL, which is buying social networking site Bebo for $850 million, extolled a novel way to fund TV shows at this week's EconSM Conference in Los Angeles.

Call it Sunset Boulevard meets Madison Avenue. Bebo has been commissioning original shows to premiere on its site, which claims 40 million users worldwide. But unlike TV networks, including Time Warner's own HBO, the shows don't get the green light for production unless they have lined up enough sponsors and advertisers to ensure profitability, according to AOL President Ron Grant and Bebo President Joanna Shields. It's the other way around with traditional TV shows, where networks must first create pilots to gauge viewer ratings before selling spots to advertisers.

One of Bebo's shows is called "The Gap Year," featuring six high school graduates who spend six months exploring the world before heading off to college. After each episode, Bebo users get to vote on where to send these globe-trotting teens next. "It's the first global reality show to broadcast on a social network," Shields said. Bebo's other online show, "Sofia's Diary," has been turned into a regular TV show in Britain. Let's see if Bebo can now turn AOL, which said today that its first-quarter revenue fell 21%, into a hit.

-- Alex Pham and Joseph Menn

Geoff Yang's Got Game

Uber venture capitalist Geoff Yang of Redpoint Ventures says the future is in "activity webs," online spaces that are a cross between Facebook and "World of Warcraft."

He's put his money where his mouth is, having invested $6 million in Gaia Online, a site that targets 13- to 24-year-old females. The San Jose company has 5 million unique users each month who spend an average of 45 minutes each time they log on, he said.

Social networks are good at getting a big audience but have trouble getting them to stick around or be very engaged. Games such as "WoW," on the other hand, can take hours to play.

"The activity web sits somewhere in between," Yang said in an interview with the Times at the EconSM Conference in Los Angeles. "You come for the people, but you stay to do things. It's why people go to the mall. They go to hang out, but they're also there to do something."

So what do people do on Gaia? Just like going to a mall, they buy stuff and watch movies. Gaia gets most of its revenue, about $1 million a month, on selling virtual items. Visitors can also see movies, many from Warner Bros. and Sony Pictures Entertainment, both of whom invested in Gaia after using the site to promote movies such as "Nancy Drew."

All told, Gaia has racked up about $30 million in venture financing, Yang said. What's the endgame? "We're hoping to take it public in an IPO," Yang said.

While the site, which is not yet profitable, currently survives on microtransactions, it also gets money from ads from Nike Inc., Toyota and Verizon Wireless. But Yang, who invested in MySpace and TiVo, thinks the big opportunity is in advertising. "Forty-five minutes of heavy engagement from this demographic is worth a ton."

It's worth at least $6 million to Yang.

-- Alex Pham

Disney: Virtual Magic Kingdom Had No Business Model

At the EconSM conference today, Steve Wadsworth, president of Walt Disney Co.'s Disney Internet Group, responded to a question from an attendee about the company's controversial decision to pull the plug in May on an online game called "Virtual Magic kingdom."

Wadsworth said the game, which let players explore a digital version of the Burbank company's theme parks, was never meant to be permanent.

"It was built as a promotion" for the Mouse House's 50th Anniversary celebration of Disneyland, he said. "It had no business model."

Disney's decision sparked outcry among its fans, who accuse the company of heartlessly yanking a haven for disabled fans for whom the site is their only way to experience the theme parks. Some have launched a campaign to lobby for a reprieve.

Disney so far is not moved. "As dedicated as that audience is, it's super small," Wadsworth.

-- Alex Pham

Bing Gordon Leaves EA for Kleiner Perkins

Bing Gordon, the chief creative officer at Electronic Arts, will leave the video game company after 26 years to become a partner at premier venture capital firm Kleiner Perkins Caufield & Byers.

As one of EA’s first employees, Gordon helped shape the Redwood City, Calif., company’s path to becoming the world’s largest game publisher. Gordon started in the marketing department then moved to the creative side of the company, where he formed and ran studios, recruited developers and helped design games.

“I’ve done everything that I wanted to do in games and more,” Gordon said. “My epiphany happened as I was arriving home after dropping my daughter off at college. I thought, wouldn’t it be cool to do something scary and new and exciting?”

As a partner with Menlo Park, Calif.-based Kleiner Perkins,Gordon plans to lead investments in start-ups that could benefit from his experience in the game industry. But he won’t focus exclusively on game makers.

“I’d like to take the thinking behind video game design and help a new generation of entrepreneurs make cool new stuff,” Gordon said. “I have this thesis that video game design thinking is going to change advertising, entertainment, communications, media and telephony. People are growing up with brains wired differently because they played ‘The Sims,’ ‘Madden Football’ and ‘Pokemon.’ It’s just a wildly interesting time.”

Gordon, 58, holds a B.A. in English from Yale University and an MBA from Stanford University. He is a visiting lecturer at the USC School of Cinematic Arts, where he helped design a game development curriculum.

In leaving for venture financing, Gordon follows in the footsteps of John Riccitiello, who left his position as president at EA in 2004 to join private equity firm Elevation Partners. Riccitiello returned to EA to become chief executive last year.

Photo: Electronic Arts Inc.

 

Chain e-mail: make it stop!

Maybe it's your mother. Your brother-in-law. Your uncle you haven't seen in years.

Why won't they stop forwarding every chain e-mail to you and their closest 100 friends and family members? No, you tell them, Nina Totenberg didn't report that Congress is going to slash funding for public broadcasting. Bill Gates won't pay you for sending friends this message. No way is the government about to give your cellphone number to telemarketers.

But if you just don't have the guts to ask these frequent forwarders to stop, a website called StopForwarding.us (discovered via Daily Candy) is here to help. It will send an anonymous e-mail on your behalf, asking your serial e-mailer to please knock it off already. Here's a sample.

Please do not forward chain letters, urban myths presented as truth, potentially offensive jokes, videos or photos without being asked or first receiving permission. If you find something that is funny and it is clean and you genuinely think the recipient will enjoy it then foward it to that person only (not in an email blast to all your friends and family) and include a personal note about why you enjoyed it and why you think they will too. Avoid sending forwards to friends or relatives that you've grown distant with.

It also supplies a handy list of e-mail etiquette.

Remember: Only you can prevent chain e-mail.

-- Chris Gaither

Second Life gets second CEO

Linden Lab, the company that created the virtual world "Second Life," now has its second CEO: Mark Kingdon former head of digital marketer Organic Inc. The announcement came more than a month after Linden Lab founder Philip Rosedale said he would step down to become chairman of the board so the company could find a new leader to expand Second Life.

Kingdon will be charged with making the three-dimensional virtual world easier to use for its half a million active users while recruiting more businesses and consumers. "He grasps the enormous potential of all things 3-D," said Mitch Kapor, a board member and the founding investor of Linden Lab, which generates revenue by selling virtual real estate in Second Life.

Buoyed by publicity and novelty, Second Life grew rapidly in 2006 and 2007 but has slowed dramatically this year.

"Given the tremendous amount of publicity and public interest, we have to get better at getting people in-world and making it a better experience for them," said Kingdon, who goes by the Second Life name of M Linden.

Kingdon, who has an MBA from the Wharton School of Business, has also worked at the consulting division of PricewaterhouseCoopers.

Not surprisingly, Second Life users were divided about the company's business decision. Some of the 150 comments posted on the blog announcing Kingdon's appointment were in line with those of Bobo Decosta, who wrote that Second Life "can't be fixed! It's ruined!" A more supportive character calling himself Jazzman wrote: "Good luck. It'll be just a little like herding cats."

Kingdon said he conducted some of his job interviews virtually, in Second Life.

-- Alana Semuels

Semuels, a Times staff writer, covers marketing and the LA tech scene.

Yahoo looks to channel Monty Hall with Q1 earnings

UPDATE: Yahoo posted its earnings. Wall Street's reaction? Eh. Here's our story.

Wall Street will tune in to the Internet version of "Let's Make a Deal" today as Yahoo attempts to wrest a higher price from Microsoft. In the audience will be a cast of thousands: shareholders, employees, analysts and media, all ready for Yahoo to reveal its first-quarter financial results.

Analysts say the numbers, if good enough, represent Yahoo's best shot at gaining some leverage in negotiations with Microsoft ahead of its Saturday deadline to accept the software company's nearly $43-billion takeover offer.

Microsoft has vowed to launch a proxy fight and possibly lower its offer if Yahoo doesn't agree to a deal.

Yahoo has argued that it's worth more than the $31 a share in cash and stock that Microsoft offered (the stock portion has dropped with Microsoft's shares).

The Sunnyvale, Calif., Internet company has shown off rosy forecasts for its future prospects and has engaged in talks with Time Warner Inc.'s AOL unit and Rupert Murdoch's News Corp.

Yahoo shares rose 12 cents to $28.55 Monday. Microsoft gained 42 cents to $30.42.

Yahoo also has hinted that it's closing in on a deal to outsource some of its search business to rival Google, which posted better-than-expected first-quarter results last week.

Although Wall Street clearly believes that Google's market-buoying performance indicates that the online advertising sector has remained strong despite a weakening economy, it might not provide a good indication of how Yahoo has fared.

Google dominates search advertising, which gives advertisers more measurable returns and is generally thought to hold up better in an economic downturn. Far more uncertainty shrouds the display advertising market.

Yahoo has forecast first-quarter revenue of $1.28 billion to $1.38 billion. Wall Street expects...

 

Michelle Maltais' bio

Michelle Maltais is the editorial broadcast manager for the Los Angeles Times and a regular contributor to the Technology blog.

Since joining The Times in 1997, Michelle has worked as a copy editor, writer and video producer, among other things, for the paper and website.

This California native came to her love of (and obsession with) gadgets genetically -- her father would design and build high-tech devices, and her mother would buy them. She is a graduate of Scripps College in Claremont and the Columbia University Graduate School of Journalism.

Here's a full list of blog posts by Michelle Maltais, who can be reached at michelle.maltais @ latimes.com.

Person Michelle Maltais

Right click for SmartMenu shortcuts

David Sarno's bio

David Sarno covers the business of Internet culture and new media.

Before he became a staff writer in 2007, he worked as a producer at latimes.com. He was an editor for the Huffington Post in 2005, its first year, and before that was a freelance writer for Slate.com. 

Here's a full list of posts by David Sarno. You can also follow him on Twitter.

Alana Semuels' bio

Alana Semuels covers the wireless and cable industries, advertising and the Los Angeles tech scene.

She joined the Times in 2006 after writing for the Boston Globe in London and for the Pittsburgh Post-Gazette.

Before the Times, the Boston native covered such divergent topics as technological improvements in popcorn-making and Britain’s growing love of the S.U.V. She tries her hardest not to text while driving. alana.semuels @ latimes.com

Here's a full list of blog posts by Alana Semuels, who can be reached at alana.semuels @ latimes.com