VentureBeat

Putting “geo-context” into information is a hot topic these days on the mobile web.

The phrase means making data more useful by putting geographic context behind it, like listing all of the wireless Internet hot spots nearest you on a map on the phone. Adding geo-context to the mobile web is what LightPole, a start-up that launches today, is banking its business on.  LightPole says it can take just about any web site and turn it into a mobile service with geo-context.

For instance, it can make Yelp’s restaurant listings viewable on the map view of a cell phone. But it goes a step further than mobile map or search services because it lets someone comment on results, share it with a bunch of friends and have it viewable on a wide variety of phones.

On the consumer side, it lets phone users discover what’s around them, said Doug Klein, CEO of LightPole in San Francisco.

“A GPS navigator gets you to a certain point, but we let you discover what’s around you when you reach that point,” he said.

The software is a kind of translation service. LightPole’s customers put a Java-based widget on a web site. Users click on the widget (which looks like a mobile phone) to load a mobile version of that site’s services onto a cell phone. Users type in their phone numbers and enter confirmation codes to download the application.

LightPole is announcing a bunch of partners today, including Yelp, Hotspotr, Mappy Hour, Yahoo Local, Zvents, The Bathroom Diaries, Gables and Fables, and Platial Mobile Map. Yelp identifies nearby restaurants. You can use the application to view restaurant details, make a reservation, share it with friends and then exchange text messages about a meeting time — all by looking at your phone. Hotspotr locates nearby Wi-Fi wireless Internet access points.

LightPole also announced today that it’s raised its $1.7 million first round of capital from Alloy Ventures and Stanford University.

Competitors include basic search services such as Where, ULocate, Google Maps and Yahoo Local, which is also one of the partners. In the future, services such as Yahoo’s Fire Eagle and Google’s Android phones are likely to compete in the same space.

At some point, Klein said, LightPole will create a third-party application for the iPhone, using Apple’s newly released software development kit.

Here’s the latest action:
–Jajah goes after Skype’s turf on eBay
–Nokia buys Navteq, what does Google do?
–YouTube intros Adsense
–Yahoo lags on universal search
–Viacom backs DRM
–Technorati’s new CEO
–Costs of a start-up

Jajah tries to exploit Skype dissatisfaction, releases button for eBay — Now that eBay has admitted the Skype acquisition didn’t pan out as expected, and that the Skype co-founder Zennstrom has left earlier than the desired retention date of 2008-2009, eBay is probably pretty fed up with the Skype story. Well, Jajah, a competing Internet service, is rubbing it in. It is bringing its new button (see our coverage) eBay, an invading what should be Skype’s turf. As we mentioned, Jajah’s button is perfect for small businesses wanting a toll free 1-800 number, just the sort of customers eBay has, and which Skype was supposed to serve. From Jajah’s statement: “With Buttons, JAJAH goes beyond Skype –beyond the headsets to calls received on all phones, beyond the regular quality concerns and beyond the limitations of the closed nature of the Skype userbase. Unlike other Internet calling solutions, JAJAH Buttons on eBay: 1. assures the merchants privacy 2. can be customized by when they want to receive calls and from what countries 3. it does not require a download, headset, contract or broadband and 4. works on every phone….” The list goes on. here’s an example.

Mobile-phone company Nokia has agreed to acquire electronic mapping company Navteq, for $8.1B– This should shake things up a bit. Google uses the mapping-navigation software from the company, and it comes at a time when Google is about to release a major mobile phone offering (depending on the market, Google will offer varying services; few people believe its actually manufacturing its own phone; it will leave that part to the vendors). Now Nokia has swallowed it, and it could leverage this against Google, or in talks with Google about services offered with its phone. Navteq’s technology is behind vehicle navigation devices and is allowing mobile-phone applications with location-awareness, good for things like shopping, emergency services and targeted advertising. Statement is here.

YouTube introduces Adsense to run alongside videos — It’s just the latest effort by Google to monetize YouTube after it shelled out $1.6 billion for the company.

Yahoo introduces “universal search” features — Yahoo continues to lag behind the rest of the field on innovation on its search results. Google, Ask and Microsoft have all introduced something that has come to be known as “universal search,” or providing all kinds of content in results beyond the traditional ten text links. So now Yahoo jumps on the bandwagon and is now also offering things like video and images in its results when you search for certain things, such as rock bands. It’s also introducing something called “suggestive search,” a technology that guesses what you’re typing in the query box if you’ve already written a word and hesitate for a second. It gives you more clues to what you’re trying to find, and is an obvious feature to offer. Yahoo’s market share in search continues to drop. It won 19.9 percent of total search market share in August, down from 24 percent the same month last year, according to Neilsen/NetRatings.

Technorati gets a new chief executive — The blog search engine has lost its way, recently redesigned its site, but has yet to articulate a clear direction. It’s not certain what a new chief executive Richard Jalichandra can do to help it turn around. Announcement here.

Viacom CEO Phillipe Dauman says company will stand by digital rights management — As companies like Apple and Amazon do their utmost to abandon DRM, Viacom will continue the battle in its support. Speaking at an antipiracy summit, Dauman said that his company prefers to deal with the piracy issue in a free market, rather than introducing new laws. However, he also suggested that piracy might be better addressed through international trade agreements, seemingly implying that sites like the Pirate Bay could be stomped out by placing more pressure on their home countries. Dauman’s speech shows that the internet’s copyright battles are far from over; he called the upcoming court decision on Viacom’s case against YouTube, now owned by Google, a “landmark case that will clarify the rights and responsibilities of all media and content owners.” A decision against Google could carry serious implications for dozens of smaller sites. Via CNET.

Costs of a start-up, broken down —Redfin’s Glenn Kelman breaks down the various costs, from rent to salary and more, of a start-up. So when your VCs and advisors are asking you to come up with those dang financial models, you have somewhere to go. Very useful.

Yahoo, the media portal that is under pressure to catch up with Google, has agreed to acquire BlueLithium, an online advertising company, for $300 million in cash.

Here’s the statement.

BlueLithium, based in San Jose, Calif, but with offices around the globe, is a large, fast-growing online global ad network. It’s just the latest company to be gobbled up by Yahoo and its competitors Google and Microsoft, as the three seek to attain size in an industry where size matters.

Yahoo bought Right Media for $680 million in April, right after Google bought DoubleClick and sparked an unprecedented acquisition binge in the sector. Old media companies have been forced into the action as well (see here and here).

BlueLithium is the fifth largest ad network in the US and second largest in the UK with 145 million unique visitors each month, according to comScore Media Metrix. The company collects ads from advertisers, who pay BlueLithium to place them on Web sites — with the advertisers getting feedback from BlueLithium about how the ads perform and how many people click on them.

“BlueLithium’s products, technology and team will be an integral part of our drive to build the industry’s leading advertising and publishing network,” said Jerry Yang, Yahoo’s chief executive officer, in a statement.

BlueLithium will help Yahoo serve advertisers better by delivering data analytics, advanced targeting and creative ways to place advertising with large publishers, he said.

BlueLithium says it can target audiences based on their consumption interests, and that it can remarket ads to consumers across the Web who have interacted with an ad or web page. It does so by placing a cookie on you browser when you visit certain sites that it has relationships with.

Yahoo will let BlueLithium bring its advertisers to Yahoo’s Right Media Exhange, a marketplace where publishers can go to get the advertising — now conceivably at better rates (given the advertisers supplied by BlueLithium).

BlueLithium’s network management technology may also help Yahoo, the company said.
The transaction is expected to be completed in the fourth quarter.

This was a very fast ride for BlueLithium, only three years old. Venture firms WaldenVC and 3i are believed to have done particularly well from their early investment in the company in February 2005. They invested $11.5 million.

Sedo, the world’s largest domain name auctioneer, sold a popular URL, Boobtube.com, for $41,688 last week, but then turned around and canceled the sale because the seller didn’t really own it.

This auction had lasted more than two weeks, and was frenetic.

The cancellation raises prickly questions about the nascent domain name exchanges, which are handling several hundred million dollars of trades. Are they trustworthy? Are they open to market manipulation?

This might be pardonable if it were an isolated, very rare case. However, it doesn’t appear to be so — from what we’re hearing. I know about Boobtube.com, because I was one of the bidders, and Sedo’s customer service department notified me of the nullified auction. I was the first bidder at $5,000 (my wife and I are authors of BOOB TUBE, a novel about the daytime television soap opera industry, to be published later this year). Click on thumbnail images to see the start and ending bid prices.

Clearly, the exchanges must take more decisive measures to protect the interests of buyers and sellers. While I appreciate that I and my fellow bidders weren’t defrauded of our money, it was still a big time sink. Sedo apparently noticed the problem only at the last minute. Without the essential service of trusted and transparent exchanges, domain buyers and sellers are forced to negotiate blindfolded in the virtual equivalent of a dark alley.

If Sedo serves as any example, the domain exchanges have a long way to go. At Sedo, for example, domain buyers and sellers are presented with incomplete information about how the auction process works. In my case, my quest at Sedo for Boobtube.com actually began about one week earlier than the public auction. Sedo lets you negotiate one-on-one with seller, who was initially asking $7,500. My bid started at $500, I raised, he lowered, and when I raised it to $5,000 I was surprised to learn my private one-on-one negotiation was moving to a public auction. Nowhere in their online documentation does Sedo warn buyers of this possibility. (Sedo’s customer service department tells me sellers like this option). Imagine you’re at an art dealer, negotiating a price for a painting and at the last minute, the dealer ends the negotiation by saying, “sorry, I think I’ll auction this at Sotheby’s instead.”

Will Sedo press criminal charges against the naughty seller for trying to sell a domain he didn’t own? We doubt it. Despite my personal requests for additional details, Sedo has been mum.

If these shenanigans were taking place on the Nasdaq or NYSE, you can bet the exchanges and the Securities Exchange Commission would want to hang the perpetrator from the nearest lamp post.

Up until last year, Boobtube.com was owned by Rogers Cadenhead, an author, blogger and industry gadfly who himself came to notoriety when he registered benedictXVI.com in anticipation of the new pope.

What does Cadenhead have to say about last week’s Boobtube.com fiasco? I contacted him last week to inform him of the scam, and to learn if he still owned the domain and was willing to sell it. His reply:

“I just heard about this auction today from the winner, who had the high bid at $45,000. [Editor’s note: not the correct price]

I sold the domain last year. The current owner put his WHOIS information private and hasn’t done anything with it yet.

It’s very weird that Sedo allowed an auction for a domain that the seller didn’t own. I would’ve thought they had safeguards to prevent that.”

Why did it take Sedo so many weeks to determine that the seller of Boobtube.com didn’t own the domain?

It’s difficult to say, although for the rest of us amateur domainers it’s becoming more difficult than ever to identify the true owners of a domain. To liken the domain trading business to wild west horse trading would be an understatement.

Up until a few years ago, it was simple to identify the owner of a domain. You just searched the WHOIS database at Network Solutions or Internic. Search for “pepsi.com”, for example, and you see it’s owned by Pepsico. But search for BoobTube.com on WHOIS and you learn only that the domain is parked at Godaddy.com, but the identity of the owner is cloaked.

Big money is at stake for the domain name exchanges, all of whom are still small compared to the potential for this business.

Several domain exchanges have emerged as early leaders. Sedo is ranked number one by domain name appraisal consultancy, Zetetic of Davis, Calif, who recently released revenue data they compiled on the top five exchanges. Zetetic says approximately $111 million in after market domain name trades took place in 2006, with just over 50 percent of those taking place in private deals outside the exchanges.

Zetetic’s numbers, however, most likely underestimate the overall dollar volume of domain name buying and selling. In 2004 alone, for example, publicly traded domain aggregator Marchex of Seattle paid $155.2 million in cash and $9 million in stock for a single portfolio of 100,000 domains, many of which were misspellings of common brand names.

According to David Kesmodel, a Wall Street Journal reporter writing a book about the domain business, Marchex currently owns about 220,000 domain names.

Driving the rich price of domain names are the following: The combination of direct navigation (users type keywords or search phrases rather than URLs directly into their browser’s navigation bar), domain parking and keyword-triggered sponsor advertising such as Google Adsense, which is how web site publishers monetize the typically wayward traffic.

Click on any one of the millions of parked domains – we’ve all stumbled upon these nearly useless pages – and you’re presented with a bunch of sponsored ads. No original content. It’s big business for the domain parking players like Sedo and GoDaddy, as well as for Google and Yahoo who supply the ads. And for thousands of domain owners, parking means they can monetize their domain assets without ever having to type a line of HTML code. Owners of parked pages love direct navigation users, because they drive high click-through rates on sponsored links.

Much of this business would dry up, however, if direct navigation users would simply learn how to use search engines. We can only hope. Or, Web browser makers could kill the business overnight if they stopped trying to guess the user’s destination, and instead used the keywords to open a search engine query so the user could choose a real destination.

In the meantime, it appears I may never own the domain I’ve coveted for the last five years. At least I own boobtubebook.com. And yes, this and several other domains I own are parked at Sedo.

Mark Coker is a contributing writer for VentureBeat. He’s founder of Dovetail Public Relations, a Silicon Valley technology marketing firm. He has no clients among the companies mentioned in the story, nor among their competitors. More on Mark at http://www.linkedin.com/in/markcoker

Everyone seems to be chapping Yahoo’s hide these days, including even Yahoo itself — or at least one very audible Jerry Maguire over there. However while many large companies could benefit from more focus and cost-cutting, neither issue is really at the core of the company’s problems. Yahoo is still #1 in both users and page views, and will remain a leading internet property for the foreseeable future. And though some critics contend Yahoo is spread too thin, most businesses would kill to have Yahoo’s broad diversity of content and commerce properties and worldwide brand recognition.

There’s really just one big thing Yahoo needs to fix: monetization.

While Yahoo substantially outpaces Google in page views, Google does a much better job of converting traffic into dollars than Yahoo and is kicking their butt in revenue per search and revenue per page. As long as Google keeps monetizing traffic at a far better rate than Yahoo, they can always afford to pay more for acquisition or partnership deals — or at least jack up the price on anything Yahoo might want (note: possibly why a rumored deal to acquire Facebook still hasn’t happened).

So what’s the solution? Well I don’t know how to solve all Yahoo’s problems, but I don’t believe it’s about ‘too much peanut butter’. If monetization was working better, they could buy any content property under the sun and make the deal work. Rather than eliminating people or product groups, here are 3 things I’d suggest Yahoo do to right the ship:

1. Ship the new Panama advertising engine platform asap
2. Figure out a way to implement CPA-based (Cost Per Action) advertising
3. As monetization improves, accelerate acquisition activity (both large & small)

I’ll elaborate on each of these three points further below.

A Man, a Plan, a Canal: Panama!

Panama is the code name for a long-overdue upgrade to the Yahoo search engine advertising platform, and its delay last quarter contributed to the dramatic fall in Yahoo’s stock price. If Yahoo can get it out the door quickly • and if it works as promised to improve monetization • they may be in better shape to compete more effectively, both in quarterly reports and at the negotiating table. However if Panama doesn’t make a significant impact or is further delayed, look for Terry Semel to have more time to relax on a Santa Monica beach in 2007, and for private equity firms and hedge funds to stalk Yahoo and try to take it private, perhaps even sell to Microsoft.

CPA beats CPC beats CPM

Long-term, Yahoo has one significant advantage over Google it has yet to leverage: it controls point of transaction for a large collection of online commerce sites: Yahoo Stores. Furthermore via the Yahoo-eBay partnership earlier this year, Yahoo also has access to transaction info from the eBay marketplace, eBay stores, and all of PayPal’s small business websites and merchants. Why is this important? Because Yahoo might be able to use all that transaction data to implement a new, more efficient method of advertising known as CPA or Cost-Per-Action. CPA has the potential to leapfrog current CPC-based (Cost Per Click) advertising, just as Google has used CPC to leapfrog CPM-based (Cost Per iMpression) advertising. But if Yahoo and eBay take too long, Google will use its own growing pool of transaction data gathered from Google Analytics and Google Checkout to implement CPA-based advertising itself and get there first.

Attention K-Mart Shoppers: Web 2.0 Blue Light Specials on Sale

Finally, improved monetization is critical for Yahoo to better leverage partnerships and acquisitions to fuel its growth. This last point should be obvious — not just to Yahoo, but also to Google, Microsoft, eBay, Amazon, AOL, NewsCorp, and every other aspiring internet gorilla and media mogul. Here’s the basic playbook: you have millions of users, billions in cash… go find web properties with new products and features, buy them, and use your advertising platform to monetize their traffic! For Yahoo, it might make sense to look at acquisitions complementary to demographics they are lacking, or those with features that exploit popular Yahoo properties such as Yahoo Groups, Yahoo Finance, and Yahoo Answers. And if Panama doesn’t fix monetization, maybe they should go buy a startup developing CPA-based advertising.

If Yahoo can improve monetization, they should be doing small acquisitions ($25-50M) every month, larger deals ($100-500M) every quarter, and betting big ($1-2B+) once a year on a deal like Facebook or YouTube. So far, Yahoo has only done a good job on the small stuff — they’ve whiffed on most other big deals since Overture. In summary: buy LOTS of stuff, do it FASTER, then distribute it across your worldwide audience and monetize using your advertising engine.

Fortunately for Yahoo there’s no shortage of innovation available. Thanks to capitalism, entrepreneurship, Web 2.0, and lots of geeks in Silicon Valley and around the world, there are plenty of cool startups to go around.

But first, fix the monetization. Then eat more peanut butter.

It used to be de rigueur in Silicon Valley to stay out of the way of Microsoft’s product road map • even areas Microsoft hinted they might pursue. Nowadays, venture folks more commonly ask, “What are you going to do about Google?”

The reality of the marketplace is that unless a startup builds a huge community, Google pays only around $50 million for a company (if you’re lucky) and then only if they want to jumpstart a feature by buying a startup.

At this point, Google has trounced Yahoo with consumers. Google expanded its offerings by acquiring several YAW2 (Yet Another Web 2.0) companies with no viable business models, such as wiki software producer JotSpot, Upstartle (maker of the online word-processing program Writely) and of course YouTube. As a result, almost no gaps are left in Google’s consumer portfolio… and no $50+ million opportunities remain for startups other than in “Social Networking,” where Google might buy an existing community such as Facebook (estimates vary between $1 billion and $2 billion).

Google has clearly figured out that the advertising market is not big enough to justify its stock market valuation. The entire U.S. advertising market is $140 billion a year • that’s less than Google’s current market cap of $151 billion.

Which takes us to the Small-to-Medium Business (SMB) market. To grow, Google clearly is going after Microsoft’s SMB business. The chart below describes Google’s current product offerings, many of which have been filled by small acquisitions, with an educated guess as to where they are going in both the consumer and SMB markets.

Why is Microsoft vulnerable in SMB? Late to the Internet, Microsoft never really caught up. Its proprietary technology is archaic in a Web 2.0 world where systems can be easily “mashed up,” or tied together with lightweight integration techniques, using open technologies. Microsoft’s Windows Live is a nonstarter.

Within a year or two, companies with fewer than 100 employees will have no need to buy anything from Redmond other than perhaps Windows XP Home; within five years, the same will go for firms with under 1,000 employees.

The critical play for Google, in my opinion, is to acquire Intuit (current market cap of $12 billion). That would give Google a channel to a hosted accounting and inventory system and a majority of small businesses. In particular, the inventory functionality can tie directly into the local business search and mapping engine, Google Local. Also affordable to Google would be Salesforce.com (current market cap of $5 billion), though that’s more of a stretch due to the personalities involved.

Web 2.0 consumer and SMB startups that do not have large communities will be valued at a build vs. buy (i.e. an acquisition that doesn’t cost much) and have a maximum upside of $50 million. After Google’s failed Enterprise Search product, the consumer search giant will leave the enterprise alone for quite a while as it target its guns on the SMB market.

The clearest short-term opportunity for startups to avoid the steamroller is in the enterprise space, which commands relatively high valuations (e.g., 25 times annual revenues for open source companies like JBoss).

Although some may be happy with $50 million paydays after a seed and A round, if you want a shot at making some real money, best to stay out of Google’s way.