Tweeting Bankers: Is JP Morgan Chase Investing in Twitter?
-- Is JPMorgan Chase trying to invest in Twitter at an astounding $4.5 billion? Sort of. New York Magazine has a good explanation of the whole affair.
JP Morgan is not going to make a direct investment in the company. If the firm is going to get a stake in Twitter, the magazine explains, it will get the shares on the secondary market. Tech investor Chris Sacca has set up a $1 billion fund that owns Twitter shares. JPMorgan, through its Digital Growth Fund, appears to be making an investment in Sacca's fund. So, JPMorgan would indirectly own shares of Twitter and no capital will find its way to Twitter.
In any event, jus the mention of a $4.5 billion valuation has people thinking we're in the midst of a good ol' fashioned Internet bubble. Does a messaging service with a spotty service and no substantial revenue model deserve such a sky-high valuation? Maybe, maybe not. But good thing for the secondary market. It's letting institutional investors take all the risk while allowing venture capital firms cash out and put their money into new companies.
( NY Mag)
Market to iPad 2: Meh
-- If the iPad 2 is a breakthrough product, it wasn't immediately apparent in movements in the company's stock price. In fact, investors initially had just a lukewarm reaction. Shares of Apple rose as much as 1.26% before closing up 0.80% at $352.12. Maybe they needed more time to digest the new product, compare it to a growing list of competitors and read media coverage and various online pundits. Investor enthusiasm continued as shares quickly shot up 1.5% to $357.35 in early Thursday trading and closed up 2.1% to $359.56.
Shazam's Shazamable TV
-- John Sykes, co-founder of MTV Networks and former chairman of Infinity Broadcasting, has joined Shazam's board of directors. Sykes founded the investment firm the Pilot Group with Tom Freston and Bob Pittman, another MTV co-founder who is now working with Clear Channel. Shazam has branched out from its music search roots and is working more in television. In partnership with NBC Universal's Simfy network http://www.syfy.com/beinghuman/shazam/, Shazam debuted a "Shazamable TV" initiative that allows Shazam users to "tag" episodes of "Being Human" to access exclusive video and other content. In December the company announced it had surpassed the 100 million user mark.
( App Market)
Music Biz Modeling: Free Trial, Mircrocurrency or Upselling
-- Here's food for thought on business models that might apply to digital music: Of the various online gaming business models that have been attempted, the successful ones offered either some type of free trial, microcurrency or upselling. According to Alex St. John, president and CTO of social entertainment service Hi5, there have been two successful business models in games: trial-to-own and free-to-play.
In trial-to-own games, companies gave consumers a free game and upsold them on a paid game, he writes. In free-to-play games, companies found that hosting free games drove a lot of traffic and created low-value advertising opportunities.
Considering the proliferation of music subscription services, it's interesting to read why the "book of the month" model worked for games. This was a model employed by RealNetworks that "looked a lot like a subscription." As St. John explains, "critical among [the model's advantages] was conveying a clear sense of value and ownership to the consumer over the typical buffet-style subscription model."
The huge success, he writes, was the ad/commerce hybrid model. "Where others failed to blend ads into purchased games, WildTangent found a solution that elegantly blended advertising and commerce without cannibalizing commerce revenues. The solution required enormous analytics control to correctly predict a user's behavior and serve each user the right mixture of commerce and advertising to maximize revenue without losing commerce sales."
Another huge success was the commitment plan, an improvement on the book-of-the-month-club model. "Commitment plans increased the average probability of converting a trial gamer to a buyer from 1% to 3%. They also increased average revenue per payer from $27.50 to around $80. Altogether, commitment plans produced a 900% increase in monetization yield over the early trial-to-own model."