paidContent news watch | Asia

@ CMS2010: Jimmy Wales: Papers Should Ditch Columnists, Google Is Naive

2010-03-18T11:08:38Z

Not sure on what basis the Wikipedia founder pontificates about the future of news media, but every disruptor deserves his say, so Jimmy Wales took the opportunity at MediaGuardian’s Changing Media Summit…

—On Google’s China problem: Wales likened Google’s position up ‘til recently (agreeing to censor results in order to make in-roads) to how businesses regarded “apartheid South Africa” in the 80s - a reluctant embrace, but involvement nonetheless. “I know Larry and Sergei and they’re a little bit naive. They are idealistic and very, very wealthy - and quite young. They don’t need another few billion from China.” So now Wales, whose Wikipedia there was blocked for a time, ‘very strongly supports Google” in what may be a principled retreat from China.

—What’s eating traditional media?: “There are things communities do better than the traditional model ... The best of the political bloggers are easily the equal of the opinion columnists at the New York Times (NYSE: NYT). I don’t see the added value there and question whether a newspaper should be paying large sums of money for that anymore. The traditional newspaper publishing cycle doesn’t really work that well online. In the newspaper business, we’re selling the stale bread, which is the print paper, and giving away the fresh bread for free (online).”

—Wrong kind of cutbacks?: “The basic nuts and bolts of traditional journalism is something we’re not seeing being replaced by communities. Large segments have basically been cut out - that’s a mistake because there is a demand for that information. A lot of the moves that have been made have been cuts in the wrong areas.

Indian Media Industry in 2010: TV Is The Juggernaut

2010-03-16T10:29:58Z

In how many markets can media companies honestly say they’ll be growing in double digits this year? Exactly. The Indian media and entertainment market, which had a relatively tepid 2009 in face of collapsing media markets all around, is slated to be back on track, according to a new 234-page report by KPMG-FICCI report on media and entertainment sector in the country. Some numbers:

—Indian M&E industry will grow at a compounded annual growth rate of 13 percent per annum through 2014 to reach INR 1.1 trillion.
—Outdoor, Films and Radio had a negative growth year, while print was a moderate growth year. TV industry showed a good growth rate.

—TV industry is estimated to have reached a size of INR 257 billion, a growth of 6.8 percent over 2008. Expected to grow at the rate of 15 percent over 2010-14 and reach a size of INR 521 billion in 2014.
—The film industry has clocked revenues of around INR 89 billion in size in 2009, a negative growth of 14 percent over 2008, due to lack of infrastructure and other issues.
—Print’s slowing down in India too: a very moderate growth of 2 percent in 2009 and reached around INR 175 billion in size; projected to grow at a CAGR of 9 percent over the next five years and reach around INR 269 billion in size by 2014
—Radio industry is estimated to have grown at a CAGR of 9 percent over 2006-09. It is estimated to have reached a size of INR 7.8 billion by end of 2009, a decline of 0.3 percent over the previous year.
—Music industry was estimated at around INR 8.3 billion in 2009, up from INR 7.3 billion in 2008, implying a growth of 14 percent during the period. Digital growth is driving it there.
—Gaming’s the biggest growth area: While the sector has shown a 22 percent growth in 2009, it is expected to grow at a CAGR of 32 percent in the next 5 years to reach INR 32 billion by 2014.
—Internet advertising is only about 1 percent of the total M&E revenues in 2009, and is only expected to go up to 3 percent by 2014. But given its small base, is expected to grow the fastest at a CAGR of 29.6 percent over the next five years.

The sectorwise breakdown chart is below; click to enlarge:

Full report embedded below:

Indian Media and Entertainment (M&E) industry 2010 report

Is Google Finally Ready To Make Its China Move?

2010-03-12T17:49:41Z

China has now reiterated its position in its standoff with Google (NSDQ: GOOG)—and it looks like all that remains is for Google to finally make its move. China says it won’t let Google operate an unfiltered search engine in the country. The latest statement from a government minister (via CNET): “If you insist on taking this action that violates Chinese laws, I repeat: you are unfriendly and irresponsible, and you yourself will have to bear the consequences.”

Google, meanwhile, continues to insist that it will no longer censor its search results in China—a position it first took two months ago. The two sides are in ongoing discussions—although considering the public stands Google and the Chinese government have taken it doesn’t seem like any sort of compromise is possible.

Any move by Google to stop censoring its results in China will likely lead to a shutdown of its search service there, although the consensus is that the company will probably be able to maintain its other operations in the country.

Expect some sort of formal announcement by Google soon. Google CEO Eric Schmidt said this week that a resolution was coming—and the WSJ cites sources who say that Google may stop filtering its results “within weeks.”

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Live From Yas Island, for Abu Dhabi Media Summit

2010-03-09T10:05:48Z

Big media chasing money isn’t new. That they’re coming to the oil-rich desert nations of late, is. More specifically, at the call of Abu Dhabi Media Company (ADMC), the cash-rich media and investment company owned by the local government, they’re converged here for the next three days, at the man-made Yas Island, home of the recently constructed Formula 1 track here in Abu Dhabi, in UAE. The very futuristic Yas Hotel, built over the F1 track, is the venue for the inaugural Abu Dhabi Media Summit, where Rupert Murdoch will open the proceedings later this evening. Other big names in the show include Steve Ballmer, James Murdoch, Eric Schmidt, Tim Armstrong, Jon Miller, Maurice Levy, among others. And someone whispered a few royalties into my ear as well, though remains to be whether they actually show up: Queen Rania of Jordan, and Prince Bin Talal of Saudi Arabia, one of the largest individual shareholders in News Corp.

At stake are a few complementary agendas: how do the multinational media giants tap into the still-nascent and closed middle-east media and digital market? Conversely, how does a small Emirate like Abu Dhabi, till recently overshadowed by the glitzy Dubai, attract these companies for investment and presence in this region, to expand beyond its dependence on oil? Then perhaps more urgent at this point, how do these cash-strapped media giants attract these sovereign wealth funds? ADMC’s recent investment in online music video JV service Vevo is one example. This WSJ story has a deeper explanation of the significance of the market.

I’ll be covering ADMS here, and on Twitter on our official feed and my personal one as well. The Twitter hashtag is #adms.

Baidu Makes It Official: Providence Equity Backs Video JV With $50 Million Investment

2010-02-26T12:37:34Z

Chinese search giant Baidu (NSDQ: BIDU) says it has received a $50 million investment from Providence Equity Partners to start an online video subsidiary. Rafat was able to confirm reports that a deal for a Hulu-like service was in the final stages early last month. At the time, Baidu was said to be investing $10 million of its own money in project. The company eventually announced its intention to create an online video company venture but it did not officially identify Providence as its partner. Baidu will hold a majority stake in the venture, but it didn’t outline the specifics of the split between it and Providence.

In its release today, the company didn’t say too much more about its plans for the video site, except that it would be ad-supported and feature licensed premium content. The Chinese-language site’s name is registered as Qiyi.com. As China’s leading search provider, Baidu is in a perfect position to jump start what’s expected to be rapid growth in online video ad spending. The choice of Providence as Baidu’s partner certainly makes sense as well, given that the PE firm helped Hulu raise its $100 million in start-up backing. Release.

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Chinese Online Ad Targeter Yoyi Media Raises First Round From Steamboat Ventures

2010-02-24T14:54:18Z

Beijing-based ad network Yoyi Media has raised first round led by Disney’s Steamboat Ventures and Gobi Partners. Online advertising is still expected to grow at a rapid pace throughout Asia. Three-year-old Yoyi expects to capitalize on that growth. The company plans to build up its ad platforms and refine its business strategy. Steamboat’s Perry Chui praised the collective experience of Yoyi’s senior management as well as the technical appeal of its targeting system. The investment in Yoyi is part of a continuing wave of funding and M&A activity in the Chinese ad market. Last month, for example, UK-based Aegis Media took a minority stake in Chinese ad agency Charm Communications. Release

Penske's Mail.com Launching India Portal With Zee, on India.com

2010-02-23T16:01:18Z

Mail.com Media Corp, the owner of Nikki Finke’s Deadline.com and other portals, has finally closed and announced its JV deal in India, after working on it for a year: it has tied up with Indian media conglom Zee Entertainment, and will launch a local Indian portal later this year, the two companies announced. What wasn’t announced: that the portal will be on a rather memorable domain, India.com, we have learned. MMC bought the domain last year and plans to use that to compete in the country against bigger portals like Rediff (NSDQ: REDF), Indiatimes, Yahoo (NSDQ: YHOO), MSN, Sify and others. The JV has appointed Arvindra Singh Kanwal, most recently Chief Revenue Officer at local SMS community service SMSGupshup, as the CEO. Prior to that, Kanwal was Chief Revenue Officer at Rediff.com.

It won’t be easy going in light of local competition, Zee’s own lack of digital mojo over the years, and most importantly, the mechanics of running a multi-continent JV. Plus the fact that stateside, MMC and its founder Jay Penske has to sort out its own expansion and funding plans after its acquisitions in the last year, including Finke’s Deadline and bringing in Bonnie Fuller to develop HollywoodLife as a celeb portal.

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Baidu Credits New Ad System For Better Than Expected Results

2010-02-09T22:05:16Z

Baidu (NSDQ: BIDU), the Chinese search giant which stands to gain the most if Google (NSDQ: GOOG) goes ahead and pulls out of China, had a standout fourth quarter, as it completed the roll-out of its new Phoenix Nest ad system and benefited from an uptick in online ad spending.

The company had surprised analysts last quarter by issuing lower than expected guidance for the fourth quarter because of the switch to Phoenix Nest. But Baidu said that the ad system had put in a “better than anticipated performance”—driving the results, which were above the company’s guidance and analyst forecasts.

Baidu’s revenue jumped 39.8 percent to $184.7 million and its net income increased 48.2 percent to $62.7 million. Next quarter, Baidu expects revenue to come in at between $176 million and $181 million—also above analyst expectations. The company’s stock is up more than 9 percent in after-hours trading.

Baidu Prevails Against Record Labels Over Piracy Suit

2010-01-26T19:51:55Z

A Beijing court has cleared Chinese search giant Baidu of copyright infringement suits brought by the International Federation of the Phonographic Industry (IFPI), which represents the major record labels. The court’s judgment was simply that the search engine had not broken rules by linking to unauthorized music downloads. In the suit, which was filed in February 2008, Universal Music Group, Sony (NYSE: SNE) BMG and Warner Music Group (NYSE: WMG) sought $9 million against Baidu (NSDQ: BIDU) and an additional $7.5 million against Chinese web portal Sohu and its Sogou multimedia search site. While the IFPI said it was disappointed, a statement given to Reuters added that the organization is considering its next steps.

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Dentsu Aquires 360i; More Acquisitions In The Works?

2010-01-26T03:09:52Z

Dentsu’s U.S. unit has acquired Innovation Interactive, the parent of digital ad shop 360i, AdAge reported (Later: announced officially, here). The purchase ends several months of searching for a significant digital acquisition for Dentsu. Back in August, Dentsu, Japan’s largest ad agency, saw its $700 million offer for Razorfish rebuffed in favor of Publicis Groupe’s $530 million bid. After Razorfish was transferred from Microsoft (NSDQ: MSFT) to Publicis, to become part of the French ad holding company’s VivaKi digital unit, Dentsu made it loud and clear that it was determined to buy a digital shop.

From the official statement: The company, with 9 offices in 4 countries, will continue to operate under co-CEOs Will Margiloff and Bryan Wiener, who will report to Tim Andree, President & CEO of Dentsu Holdings USA.

Search marketing specialist iCrossing recently put itself on the block and many observers considered Dentsu a likely buyer. To be sure, just because Dentsu has acquired Innovation Interactive, it doesn’t mean that Dentsu is done shopping.

But Innovation Interactive does satisfy several of Dentsu’s needs. The New York-based company claims it brought in $61 million in revenue last year and is projecting end 2010 with more than $80 million. While 360i has mainly been known as a search marketer, its acquisition two years ago of interactive design shop i33 helped it develop its creative side.

AdAge said that the talks with Innovation Interactive have been going on for a year, long before the Razorfish loss and the more recent focus on iCrossing. Aside from iCrossing, there are two other acquisition holdouts that remain targets. Rosetta is a New Jersey-based independent shop that that boasts of more than $100 million in revenues. And, as always, AKQA, which sold a majority stake to PE firm General Atlantic nearly three years ago, remains one of the top digital acquisition targets among major ad holding companies.

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Aegis Media Takes Stake In Chinese Ad Agency

2010-01-25T12:48:41Z

Aegis Group is continuing its expansion into China, with the acquisition of a 17.7 percent stake in media buyer and ad agency Charm Communications. Terms weren’t disclosed, but Aegis says that Charm’s total gross assets are $143 million. As part of this acquisition, Aegis’s Vizeum unit is forming a joint venture with Charm. The JV will operate as Vizeum China. The shareholder structure of the JV will initially be 40 percent for Aegis and 60 percent for Charm. But over time, Aegis will take full ownership, though that isn’t expected until 2024. The two companies will move to that point through incremental put and call options. With advertising still in the doldrums in the west, Aegis has been making a number of small acquisitions in the Asian region, along with Publicis Groupe and WPP Group, as ad spending continues to grow at healthy rates. Release

Liberty Group Sells Stake In Japan's Jupiter Telecom For $4 Billion

2010-01-25T12:26:51Z

Cable operator Liberty Global is selling off its 37.8 stake in Japanese broadband provider Jupiter Telecommunications to wireless operator KDDI Corporation for $4 billion. The deal is part of a plan by Liberty Global, which is controlled by John Malone, to refocus its concentration on Europe. Exiting the Japanese market will also allow Liberty Global to continue its ongoing stock buyback initiatives, said Mike Fries, president and CEO, in a statement. Two months ago, the company acquired German cable and broadband business Unitymedia for €2 billion ($2.96 billion; £1.79 billion). Liberty had a partnership agreement with Sumitomo Corp., which held about a quarter of Jupiter, to manage J:Com. Release (PDF)

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Google In China: More Fallout

2010-01-18T17:05:31Z

It’s now been six days since Google (NSDQ: GOOG) issued its China manifesto—and the repercussions continue. Here’s a round-up of some of the latest developments:

» It’s possible that the attacks on Google’s network, which led the company to threaten to pull out of China, were an inside job. Reuters cites sources who say that Google is trying to determine whether the attacks “may have been facilitated” by China-based employees. Google isn’t commenting.

» Google will hold talks with Chinese government officials in the “coming days,” presumably to determine whether the company can continue to operate its search engine in China even if it does not censor results, according to Marketwatch. Meanwhile, the Chinese government isn’t showing any signs of bending. The state-run China Daily has two critical editorials today, one of which refers to Google’s actions as a “corporate maneuver.”

» More executive turnover at Baidu (NSDQ: BIDU), which likely stands to benefit the most if Google pulls out. CTO Yinan Li has left the company for “personal reasons.” That sounds suspicious, especially considering that Baidu COO Peng Ye also left for “personal reasons” just ten days ago. What may be behind the departures? Baidu’s site was hacked last week. Also, the roll-out of the company’s new ad system reportedly hasn’t gone as planned.

Tension Between Alibaba Group And Yahoo Goes Public

2010-01-18T03:50:48Z

Google’s threat to exit China in response to internet attacks originating from that country is drawing attention to the rocky relationship between Yahoo (NSDQ: YHOO) and Chinese e-commerce giant Alibaba Group, which it owns a 44 percent stake in. Last week, Yahoo said: “We condemn any attempts to infiltrate company networks to obtain user information. We stand aligned with Google (NSDQ: GOOG) that these kinds of attacks are deeply disturbing and strongly believe that the violation of user privacy is something that we as Internet pioneers must all oppose.” Sounds uncontroversial, right? No mention of internet censorship in China. No note that Yahoo’s infrastructure was also likely targeted in the attacks. And what company wouldn’t say that “the violation of user privacy” should be opposed?

Well, the statement was apparently too much for Alibaba, which is calling it “reckless.” Here’s Alibaba’s response (via NYT): “Alibaba Group has communicated to Yahoo! that Yahoo’s statement that it is ‘aligned’ with the position Google took last week was reckless given the lack of facts in evidence. Alibaba doesn’t share this view.”

Not a good omen for the future of the two companies’ relationship. Already, there were reports that Yahoo CEO Carol Bartz was less than pleased with how Alibaba was handling Yahoo China (Over the summer, Alibaba removed its classified listings business from Yahoo China in what was described as a setback for Yahoo).

Yahoo sold its 1.4 percent stake in Alibaba Group subsidiary Alibaba.com earlier this fall. There’s some speculation that Alibaba Group wants Yahoo to divest itself of its overall holdings too.

Bartz, however, has shown little inclination to do so, saying the stake is a “very good investment for the future” and adding it’s a “way to profit” from the Chinese internet market without having to directly operate there and deal with the Chinese government.

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China To Google: Follow The Law

2010-01-14T16:00:54Z

Not a big surprise, but the Chinese government has not been won over by Google’s manifesto. The government made its first official statements on Google’s threat to shut down its China operations if it isn’t allowed to uncensor its search results, with a foreign ministry spokesman saying, “China welcomes international internet enterprises to conduct business in China according to law” (via AP) and adding that “the Chinese government administers the internet according to law and we have explicit stipulations over what content can be spread on the internet” (via Bloomberg).

Other statements from government officials show a similar unwillingness to provide an exception or loophole to Google (NSDQ: GOOG), with a State Council Information Office official saying, “Effective guidance of public opinion on the Internet is an important way of protecting the security of online information.” That implies that China won’t be receptive to Google’s demand.

It’s unlikely, however, that there will be any immediate action. A Google spokesman tells us that the company will be “talking to the Chinese government over the next few weeks, and hope(s) to reach a mutually constructive outcome.”

Google In China: Reaction Across The Web

2010-01-13T21:40:36Z

You can follow our own coverage of the Google China manifesto here—but here are some additional updates and analysis from around the web that have caught our attention:

» Google’s stock ended the day down 0.57 percent, while Chinese internet giant Baidu (NSDQ: BIDU) saw its stock jump more than 13 percent. Barrons has more on that, as well as a round-up of analyst commentary. The bottom line: Positive for Baidu, slight negative for Google.

» In China, some Google fans have brought flowers and cards to Google’s offices in Beijing, the WSJ reports.

» As for the Chinese government, it isn’t saying much, with an official saying the government wants more information from Google (NSDQ: GOOG). American politicians are being more talkative; Secretary of State Hillary Clinton says Google’s allegations “raise very serious concerns and questions,” while Speaker of the House Nancy Pelosi says Google’s decision not to censor its search results “should serve as an example to businesses and governments.”

» “Google has taken the China corporate communications playbook, wrapped it in oily rags, doused it in gasoline and dropped a lit match on it,” says China-based PR pro William Moss. He contrasts Google’s confrontational blog post with the typical phrases included in press releases issued by foreign companies in China.

» At TechCrunch, Sarah Lacy argues that Google’s decision is “more about business than thwarting evil,” noting (unconvincingly) that Google is not doing well in China. Robert Scoble responds. James Fallows also offers his own take.

» Wired has details on the 32 companies, in addition to Google, which were targeted by the hackers. They include Adobe Systems (NSDQ: ADBE) as well as financial institutions and defense contractors.

» A visual representation: Reuters (NYSE: TRI) charts the rocky history of Google’s entry into the Chinese market.

... And Google Was Just Gaining Some Ground In China

2010-01-13T18:30:16Z

Some cynicism today that Google’s threat to leave China isn’t so altruistic. The basic argument: Google (NSDQ: GOOG) was facing an uphill battle against Baidu (NSDQ: BIDU) and is cutting its losses. And while it’s true—as we pointed out yesterday—that Google’s revenue in China is currently minimal, the company’s business was on the way up in that country, as measured by market share.

Data from two firms indicates that Google had managed to cut somewhat significantly into Baidu’s lead in the Chinese search market in recent months. StatCounter figures, for instance, show that Baidu’s market share had dropped from 71 percent in August to 56 percent in December, while Google’s had risen from 27 percent to 43 percent during the same period.

Another report indicates a similar—albeit less pronounced—trend. Marketwatch points to data from Chinese consulting firm Analysys International showing that Google had 35.6 percent of the market during the fourth quarter, up from 31.3 percent in third quarter. Baidu’s share, meanwhile, fell from 63.9 percent to 58.4 percent.

No reason given for the trend, although there were some signs that so far Google’s new music search service—designed specifically to go up against Baidu, which gets a substantial percentage of its traffic from searches for MP3—has been a success.

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Google: Revenues From China Are 'Immaterial'

2010-01-13T03:25:46Z

If Google (NSDQ: GOOG) follows through on its threat of pulling out of China, the company would be sacrificing significant long-term growth in the world’s biggest internet market. In the short term, however, the decision won’t have much impact on the company’s revenue. During an interview on CNBC, Chief Legal Officer David Drummond said Google’s revenues in China are “truly immaterial”—and even says, unbelievably, that his company’s entry into China “was never really a financial move for us.”

The term “material” is notoriously difficult to define. However, JP Morgan estimates that Google was set to make $600 million in revenue in China this year. That number seems excessive, considering that Baidu (NSDQ: BIDU)—which dominates the Chinese search market—is expected to bring in only $900 million in revenue. But even if JP Morgan’s estimate is correct, it only represents just over two percent of the $26 billion in revenue that most analysts expect Google to post this year.

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Google May Shut Down Operations In China

2010-01-12T22:06:52Z

Google (NSDQ: GOOG) says it is reviewing its operations in China—and may even shut them down—citing limits to freedom of speech in that country. The move would mean that Google would lose access to a country that could be its biggest source of long-term growth. China is already the largest internet market in the world, even though internet penetration there far lags that in more developed countries.

In a blog post, Chief Legal Officer David Drummond cites recent attacks on the Gmail accounts of human rights activists in both China, the United States and Europe as driving the decision. “These attacks and the surveillance they have uncovered—combined with the attempts over the past year to further limit free speech on the web—have led us to conclude that we should review the feasibility of our business operations in China,” he says. Drummond goes on to say that Google will no longer censor its search results in China and will therefore discuss with the Chinese government whether it can operate an “unfiltered search engine within the law.” That’s unlikely, and Drummond says “this may well mean having to shut down Google.cn, and potentially our offices in China.”

The move is a shift in strategy for a company that—despite having some of its properties, including YouTube, pulled offline by the Chinese government over the last year—has continued to invest heavily there. Last March, the company announced the high-profile debut of a legal music search engine in China in order to compete with Baidu (NSDQ: BIDU), which dominates the web search market there. And, due to a search deal with major carrier China Mobile, Google has already matched Baidu’s share in the mobile search share market. During the company’s most recent earnings call, executives talked up the state of the China business, saying several times that China had been a “strong performer” during the quarter.

In the blog post, Google never directly blames the Chinese government for the attacks—which involved both a “targeted attack” on its corporate infrastructure and a phishing or malware attack—both aimed at Chinese human rights activists. However, Google says that the “information goes to the heart of a much bigger global debate about freedom of speech”—and that when it launched its service in China three years ago it wasn’t a decision that was irreversible and instead was one that would depend on “conditions in China, including new laws and other restrictions on our services.”

One additional thought: Google’s decision—which is already being called “corporate bravery” by some is quite the contrast to Yahoo (NSDQ: YHOO), which has been accused in the past of handing over information about dissident e-mail accounts to the Chinese government.

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Shanda Games Gobbles Up Mochi Media For $80 Million

2010-01-12T05:09:10Z

China’s Shanda (NSDQ: SNDA) Games is on a buying spree. Its latest acquisition is of Flash-based game distribution and monetization platform Mochi Media. The company expects the $80 million deal—$60 million in cash, and $20 million in equity retention agreements—to close in Q1.

Founded in 2006, S.F.-based Mochi Media raised $14 million over two rounds of funding from Shasta Ventures and Accel Partners. The company’s MochiAds ad network has grown to include over 15,000 online games; it also offers game development and analytics tools. Shanda Games will use Mochi Media’s platform to better monetize its own roster of MMORPGs and other browser-based games, but also to make inroads into the more “lightweight’ casual and social games market.

The deal comes less than a week after Shanda Games announced its purchase of fellow Chinese online game developer Goldcool Games; it’s the newly-IPOd company’s first U.S.-based purchase. (How ironic, then, that China has banned all foreign investment in its own online gaming industry).

Mochi Media will continue to operate as a standalone company post-acquisition, with co-founder and CEO Jameson Hsu staying on. Hsu told the WSJ that the company had “just recently” reached profitability in 2009. Release.

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