MySpace, Sony BMG (Finally) Make Deal

This arrangement probably should have been made four months ago, when Sony Pictures Television joined with MySpace and Honda to create some “minisodes.”  It also would have fit into ongoing events a little more recently, when Sony BMG signed a deal with little old Imeem.

Still, despite whatever foot-dragging took place, it would seem that Sony BMG and MySpace are happy to finally be together, and according to Staci D. Kramer, “[t]he two companies will share sponsorship and ad revenues generated by the music videos and profile pages.”

Music lovers should also be pleased; although many of the deal’s details remain unknown, an official statement mentioned past MySpace events involving a lot of big names, including Tenacious D, Velvet Revolver, and Bruce Springsteen.  We can only hope that this quality will be maintained.

From a more businesslike perspective, it seems that this arrangement, if handled properly, could become an important development in MySpace’s war with Facebook.

Don’t feel too bad for the guy – he probably still makes more in a month than most of us earn in a year.  Also, it’s not like he was even replaced; BoomTown’s Kara Swisher reports, “Van Natta now shares power – how uneasily it remains to be seen – with newly installed Vice President of Marketing and Operations Chamath Palihapitiya . . . longtime exec Matt Cohler, vice president of strategy and business operations . . . newly installed CFO Gideon Yu . . . co-founder and Vice President of Product Engineering Dustin Moskovitz; and CTO Adam D’Angelo.”

The title change is nonetheless being viewed as a demotion, however, since “second in command” is not on par with “one of six lieutenants.”

Why the downgrade, then?  Facebook’s denying that this is anything of the sort, so there’s no official explanation.  As for the “move” – the neutral or even positive “move” – paidContent.org’s Staci D. Kramer describes it as “an expansion of the management team as [Facebook] hovers between well-funded, fast-growing startup, acquisition target and possible mega IPO.”

One has to wonder how many more of these expansions we’ll see as whatever’s happening comes to a head.

Panelists:
Esther Dyson (EDventure)
Jason Hirschhorn (Sling Media)
Mike Lang (Fox)
Quincy Smith (CBS)
Staci D. Kramer
Rafat Ali

Rafat: How do social media deals get funded?

Jason: These are usually young entrepreneurs, and the angel community is a little more forgiving. The big companies sometimes pitch it well, and sometimes not so well ("we love your product…and we want to bring some new people in, change the name of your company…is that ok?"). But a lot of these deals end at the press release….sometimes with the big companies, it’s all about the quarter, it’s all about EBITDA, and you realize all of a sudden that you’re in the middle of a Fellini movie.

Quincy: The entrepreneurs can provide a healthy tension. I’m sure that Chad Hurley is the advocate for the YouTube community, and is the guy saying "please don’t slap that NASCARification of ads all over our people’s eyes, or they’ll go elsewhere."

Quincy: We like companies like Electric Sheep, which allow us to put a toe in the water and understand the DNA that’s important. If we have observer or actual status, we can learn about the decisions that the entrepreneurs are making.

Rafat to Esthr: You invest in Europe and Russia. What are you seeing there, versus here?

Esthr: There’s a lot more ambient entrepreneurship here. The exits are harder [overseas]. Five years from now, I think a lot of things going on now are going to be interesting to people.

Jason: Big media companies will invest in scale, instead of building themselves sometimes. If you "buy," you’d better keep the talent around.

Audience: Could you give the entrepreneurs in the room some advice about mistakes that are made during the investment process.

Mike: #1 Not being realistic when talking to the acquirer. The biggest signal for me is "we don’t have any competition." That’s not realistic. We need a management team that’s going to be realistic and react to that. #2 The other is being way too influenced by the VCs, who may be driving to a hypothetical IPO, versus what the business could really achieve.

Jason: When you have a great product and have grown to scale, sometimes the person running the company should actually be the Chief Product Officer. Those are very important conversations to have.

Quincy: #1 Big acquiring companies have slower growth, and a good at telling you to downsize, and not about managing growth. Remember the context in which you’re being acquired. #2 The acquirers might make mistakes, too. Speak up. Both parties want this to work.

(Staci asks question of CNet representative in the audience)

CNet: We have a different goodie bag to sell the entrepreneur than Quincy and Mike do. We have to sell a culture, and acceleration and not destroy value. You can’t steal anything.

Rafat: Regarding DoubleClick, how do you compete against Google? (Regarding Google about maneuvering Microsoft for the deal)

Quincy: I think Google’s fantastic at acquisitions. But, I think Doubleclick’s decision was an anti-Microsoft decision.

Esthr: There are so many factors. Cultural fit. Earnout. And so forth. How do you compete with Google? Have a position on how you (the acquirer) will treat the entrepreneur better, and make it a better fit.

Mike: The toughest thing in the world is to drive traffic on your own. The MySpace secret sauce is very rare. Try to find ways to partner with distributors.

Kara: Quincy, Mike…what would you be buying today?

Quincy: #1 I look at reach. We don’t compete with Fox…we compete with Lonelygirl. In the Internet world, you have a lot more competitors. #2 I care a lot about "new content." Regurgitated TV and film aren’t going to cut it.

Mike: The two areas: #1 we are incredibly bullish on video on the Internet. That’s going to be about the user experience, great content and new types of applications. The #2 area is international. It’s clear to us. There are new types of content that only work in some regions of the world, and also mobile.

Audience: What’s your critique of the Skype/eBay deal?

Mike; It was a lot of money. What you read is that it’s driving a new vertical business for them. But I wouldn’t underestimate Meg Whitman and eBay.

Rafat: How long can Facebook hold on?

Quincy: Facebook is a CMO’s dream. It’s very sticky. Also, the reason why these next generation communities are so important to media players is that they’re build AROUND media, but they don’t INCORPORATE professional media.

Esthr: This is interesting. We used to talk about IPOs. Now, everything we’re talking about is a company being acquired by someone bigger.

Staci: Have some companies taken too much funding?

Mike: Yes. You see some of these later stage financings, and the valuations are crazy. Some of these later rounds where they don’t need the money, they take the round, then it limits their options.

Jason: Sometimes, though, the VCs are running the show.

Rafat: Jason, for $50MM more, Myspace would have been part of MTV. How would things be different today?

Jason: I don’t know? They’d (MTV) have to invest in it, they’d have had to get behind it. Newscorp did a great job, and let the original owners do what they had to do. You know, if I was 8 feet tall, I’d play basketball. Newscorp was a model…you help, but you get out of the way.

Esthr: I think the best place from M&A guys to come from is HR. And they never do.

Comments

He always laughs at me, though, because I tell him his more important property is WeSmirch - the gossip blog aggregator. And, let’s be honest – in PR and publicity, gossip is what makes the world go round. Heck, the top blogs and TV shows are gossip-based (and I am not talking about the Technorati 100, but those blogs that are read by more people but are not thought of as blogs – like TMZ or Perez Hilton).
Hell, I knew I had made it as a blogger when I was on the same email as Perez, being pitched the Lucky cover with Alexis Bledel, and the chance for 60 entrants to win the DVD of Gilmore Girl’s season six. Come on – how cool!

But, if you read WeSmirch, you know that Michael Richards went insane and off on a racial rant at a recent comedy club outing – here’s the video from TMZ. He also did the apology – half-assed and odd to me – on David Letterman.

This morning – while unable to sleep – I was watching FOX News and saw … that Richards has hired Howard Rubenstein. In PR, there are certain rules of engagement. And, one of them is if you are a celebrity, you go get Howard. I have nothing but the utmost respect for Rubenstein, partially because he was so nice when I interviewed him for this blog. He was interviewed early – before the blogging buzz got nuts – but he was gracious and nice.

But, can he save a man that has gone on two racial tirades – one against Blacks, one against Jews – and whose excuse for one is that he was angry, and the other is that he can’t be anti-Semitic since he’s Jewish (um, hello, ever hear of a self-hating Jew?). Rubenstein is a genius, and he is setting up Richards with meetings with some of the top community members of the African-American community … but is that the right route? We have seen how Alan Nierob has handled the Mel incident - alcohol, bad rants, etc. But this is very different … with the wonderful world of online video.

Is the usual dog and pony enough in a wired world? People have already passed judgement, the hecklers claim they are going to sue Michael Richards (but not sure for what), and it is just getting worse and worse with more claims of racism coming forward.

Others would say “launch a blog” and that would usually make me vomit. Everything does not need a blog, and in this situation, I think it would only fan the flames and make it worse. But, there must be some type of strategy that could marry online and traditional PR … I am just not sure what it may be. Maybe vidcasting … hello Blip.tv?

Comments

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Jeremy Pepper is the CEO and founder of POP! Public Relations, a public relations firm based in Arizona, USA.

He authors the popular Musings from POP! Public Relations blog which offers Jeremy’s opinions and views – on public relations, publicity and other things.