| Tue, Jun 16, 2009 |
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Microsoft To Scale Back Its YouTube Rival Soapbox
Two years after making a strategic decision to launch a user-generated video upload service of its own rather than buy another site, Microsoft (NSDQ: MSFT) is pulling back from the market. Microsoft Corporate Vice President Erik Jorgensen tells CNET that the company is rethinking the strategy around the service it launched—Soapbox. Rather than continue to offer a wide selection of uploaded videos, Microsoft wants to create a “forum where bloggers and citizen journalists can post videos relevant to areas in which MSN focuses, categories like entertainment, lifestyle and finance”—if it keeps the service up at all. Jorgensen says, “We haven’t decided whether you just continue to support it or whether it is too expensive and out of our focus to do.” A spokeswoman said that Microsoft did not have anything to add to Jorgensen’s remarks (We have an interview scheduled with Jorgensen Wednesday and will update if we learn more).
Microsoft was reportedly in the hunt for YouTube several years ago but when Google (NSDQ: GOOG) ended up purchasing the site in October 2006, Microsoft put out a statement saying that while it had “evaluated acquiring this type of technology several months ago” it had decided that building its own video-sharing service would be “a more cost-effective way to compete in this new space.” It certainly has been more cost-effective, considering that in addition to the $1.65 billion Google spent to buy YouTube, the site is reportedly on track to lose nearly $500 million this year. However, Soapbox has never been a hit for Microsoft. comScore (NSDQ: SCOR), for instance, said that Microsoft sites had 1.7 percent of the total market for online video in April, while Google had 40.7 percent (mostly from YouTube). And looking at both services today, it’s easy to see how Microsoft may have been a little discouraged with the current state of its site. Only 22 videos were uploaded there over the last hour.
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Microsoft To Scale Back Its YouTube-Rival Soapbox
Two years after making a strategic decision to launch a user-generated video upload service of its own rather than buy another site, Microsoft is pulling back from the market. Microsoft Corporate Vice President Erik Jorgensen tells CNET that the company is rethinking the strategy around the service it launched—Soapbox. Rather than continue to offer a wide selection of uploaded videos, Microsoft wants to create a “forum where bloggers and citizen journalists can post videos relevant to areas in which MSN focuses, categories like entertainment, lifestyle and finance”—if it keeps the service up at all. Jorgensen says, “We haven’t decided whether you just continue to support it or whether it is too expensive and out of our focus to do.” A spokeswoman said that Microsoft did not have anything to add to Jorgensen’s remarks (We have an interview scheduled with Jorgensen Wednesday and will update if we learn more).
Microsoft was reportedly in the hunt for YouTube several years ago but when Google (NSDQ: GOOG) ended up purchasing the site in October 2006, Microsoft put out a statement saying that while it had “evaluated acquiring this type of technology several months ago” it had decided that building its own video-sharing service would be “a more cost-effective way to compete in this new space.” It certainly has been more cost-effective, considering that in addition to the $1.65 billion Google spent to buy YouTube, the site is reportedly on track to lose nearly $500 million this year. However, Soapbox has never been a hit for Microsoft (NSDQ: MSFT). comScore (NSDQ: SCOR), for instance, said that Microsoft sites had 1.7 percent of the total market for online video in April, while Google had 40.7 percent (mostly from YouTube). And looking at both services today, it’s easy to see how Microsoft may have been a little discouraged with the current state of its site. Only 22 videos were uploaded there over the last hour.
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New (Lower) Odds For A Microsoft-Yahoo Deal
The new consensus on Wall Street about a possible Yahoo-Microsoft (NSDQ: MSFT) deal: Not so likely. In a report Tuesday, Collins Stewart analyst Sandeep Aggarwal puts the odds of a deal at 50 percent, down from 80 percent. He says that the likelihood of a deal has gone down in recent weeks—with disagreements over price and also “operational aspects/deal structure.” (Not to mention that Yahoo (NSDQ: YHOO) CEO Carol Bartz has straight out said that her company would be “cleaner and simpler without a Microsoft connection”).
Aggarwal’s view is significant because, as Eric Savitz at Tech Trader Daily points out, he has been saying for months that a deal was imminent. Of course, while he may be lowering his odds, Aggarwal is not saying a deal is completely off the table. He notes that even with its Bing search engine relaunch, Microsoft won’t get the share needed to “remain sustainable/meaningful in search.” That largely mirrors the view of Citigroup analyst Mark Mahaney, who said in a report of his own Monday that while a deal with Microsoft was “very unlikely near-term,” Yahoo remained the only target left for a company that wanted to build up scale in the online advertising market.
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Microsoft Targets Click Fraud With Lawsuit
Microsoft (NSDQ: MSFT) filed its first ever lawsuit targeting click fraud Monday—and hinted that more might be on the way. The company alleges that the defendants drained the ad budgets of rivals on Microsoft’s adCenter network by bombarding rival ads with clicks so that their own ads could get higher play in results. Microsoft says in its complaint (via NYT) that it ended up having to provide legitimate advertisers with $1.5 million in ad credits to compensate them for the defendants’ actions. The company is asking for an injunction as well as more than $750,000 in compensatory damages. A Microsoft attorney tells the NYT that the company has “decided to become more active in the commercial fraud area on the enforcement side… The theory is you can change the economics around crime or fraud by making it more expensive.”
John Battelle notes however that click fraud hasn’t actually been in the headlines much lately—and that’s likely because, while it remains a major problem, it’s on the decline. According to research firm ClickForensics, the average click fraud rate for all online ads was 13.8 percent during the first quarter of the year, down from 16.3 percent a year ago. The firm credits efforts by Google (NSDQ: GOOG) and Yahoo (NSDQ: YHOO) in part for the drop.
There have been other click fraud lawsuits filed in recent years by search engines. Google launched its first click fraud lawsuit in 2004—against a Texas firm that signed up to put ads on its site via Google’s AdSense program and then clicked on those same ads to make money. At the time, CNET said it was one of the first ever click fraud lawsuits. Search engines have also found themselves on the opposite end of click fraud litigation. In 2006, Google agreed to pay up to $90 million (mostly in advertising credits) to settle a class action lawsuit brought by advertisers, who alleged they were charged but not reimbursed by Google for invalid clicks on their ads over a four year period. Microsoft was sued by a Florida online retailer last summer for much the same reason.
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Microsoft Targets Click Fraud With Lawsuit
Microsoft (NSDQ: MSFT) filed its first ever lawsuit targeting click fraud Monday—and hinted that more might be on the way. The company alleges that the defendants drained the ad budgets of rivals on Microsoft’s adCenter network by bombarding rival ads with clicks so that their own ads could get higher play in results. Microsoft says in its complaint (via NYT) that it ended up having to provide legitimate advertisers with $1.5 million in ad credits to compensate them for the defendants’ actions. The company is asking for an injunction as well as more than $750,000 in compensatory damages. A Microsoft attorney tells the NYT that the company has “decided to become more active in the commercial fraud area on the enforcement side… The theory is you can change the economics around crime or fraud by making it more expensive.”
John Battelle notes however that click fraud hasn’t actually been in the headlines much lately—and that’s likely because, while it remains a major problem, it’s on the decline. According to research firm ClickForensics, the average click fraud rate for all online ads was 13.8 percent during the first quarter of the year, down from 16.3 percent a year ago. The firm credits efforts by Google (NSDQ: GOOG) and Yahoo (NSDQ: YHOO) in part for the drop.
There have been other click fraud lawsuits filed in recent years by search engines. Google launched its first click fraud lawsuit in 2004—against a Texas firm that signed up to put ads on its site via Google’s AdSense program and then clicked on those same ads to make money. At the time, CNET said it was one of the first ever click fraud lawsuits. Search engines have also found themselves on the opposite end of click fraud litigation. In 2006, Google agreed to pay up to $90 million (mostly in advertising credits) to settle a class action lawsuit brought by advertisers, who alleged they were charged but not reimbursed by Google for invalid clicks on their ads over a four year period. Microsoft was sued by a Florida online retailer last summer for much the same reason.
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