Friday
Start-up delivers fine art to flat-panel and plasma TV screens
Bill Gates once dreamed of having high-quality artwork -- from the "Mona Lisa" to Picasso's "Guernica" -- digitally delivered to video screens on the walls of homes, businesses and public spaces.
Although the Microsoft co-founder successfully deployed the revolving art concept at his Medina mansion nearly a decade ago, the idea has not caught on with the general public.
But now a new Seattle start-up called RGB Labs, which has raised $1 million in early-stage financing and signed partnership agreements with Corbis and other art houses, thinks the time is right to pick up on the billionaire's dream.
Founded by former Amazon.com and Avenue A technology executive Scott Lipsky, RGB Labs will introduce its GalleryPlayer delivery service today. About the size of a toaster, the GalleryPlayer allows high-resolution images from world-renowned artists such as Leonardo da Vinci, Georgia O'Keeffe and Andy Warhol to be displayed on plasma and flat-panel television screens. It does that in a secure manner that Lipsky said would befuddle even the most skilled computer hacker.
The idea already has some art and technology lovers salivating.
"The quality of the raw content in terms of resolution is phenomenal," said Enrique Godreau, a Seattle venture capitalist who sits on the start-up's board. "It is pretty darn evocative when you look at the screen and you think of where this could go."
Seattle intellectual-property law firm Black Lowe & Graham installed the GalleryPlayer on a 60-inch plasma screen in its glass-walled conference room last week. So far, the digital artwork, from Renaissance paintings to 20th-century photography, has received rave reviews from lawyers and clients.
"We are loving it," network administrator Chris McKinlay said.
The King County Library, Martin Smith Inc. and an undisclosed Seattle resident also are using the GalleryPlayer, which was released last month.
For now, RGB is only targeting business customers: law firms, hospitals, hotels, retailers and other companies that can afford to dress up a conference room or a lobby with a digital artwork system that costs more $10,000, including the $195 per month service fee for four galleries of images.
But as the price of plasma screens falls (a 50-inch device currently sells for about $6,000) and the numbers increase (the market is expected to double next year, to 1.1 million), Lipsky is hopeful that RGB's technology will make it into consumer's living rooms.
In fact, Lipsky, 39, started on his current entrepreneurial quest after attempting to display digital art work at his residence in Seattle's Mount Baker neighborhood.
"I wanted the 'Mona Lisa' staring me in the face," he said.
A self-described technology geek who was handpicked by Amazon.com founder Jeff Bezos as one of his company's first employees, Lipsky had no problem installing a 50-inch Pioneer Elite plasma screen above his fireplace. But he ran into problems finding museum-quality images from favorite artists such Yamagata, Van Gogh and Picasso.
"I started looking for content and couldn't find it," said Lipsky, who quit high school at 16 to start developing software. "That is when the idea struck me. I said let's research this and find out if no one is really building a box to play art, like there is a box to play movies or a box to play audio."
He couldn't find any direct competitors. So Lipsky formed RGB in January with Paul Brownlow, the former director of technology at Avenue A, and David Gabrieli, a lawyer who formerly served as director of licensing at Amazon.com.
RGB Labs will need plenty of legal assistance as it steps into the complex web of licensing digital content.
Seattle-based Corbis, a strategic partner that is supplying hundreds of high-resolution images to RGB Labs, has filed a number of lawsuits against Web sites for illegally displaying images. And the Recording Industry of America filed 261 lawsuits last month against people who participated in music-sharing services such as KaZaA.
With RGB Labs responsible for delivering artwork from masters such as Leonardo and Claude Monet over the Internet, Lipsky acknowledges that security is of paramount importance. Two of the company's 18 employees are lawyers. And Lipsky said the system was built from the ground up so it would not be "Napster-ized."
Mark Sherman, vice president of emerging markets and products at Corbis, said there are many challenges to delivering high-quality images to a flat screen. That's part of the reason why Corbis, founded by Bill Gates 14 years ago, has no intention of competing with RGB.
"We are sticking to our expertise, which is licensing content to our partners," Sherman said.
Another challenge is the cost. With corporations looking to cut expenses at every corner, a $10,000 digital art system might not be viewed as a must-have.
Lipsky doesn't see it that way. "Call a couple companies and ask them what they spend on corporate art. Call a couple retailers and ask what they spend on merchandising and environmental space," Lipsky said. "This is not a big number for them."
Lipsky -- who is planning on moving into a house that will have multiple flat-panel screens running the GalleryPlayer -- said people have been talking about viewing art in this manner for 10 years. Now, he thinks the timing is right.
"The reception has been tremendous in every direction," he said. "We showed this to hundreds of people and everyone just gets blown away. The challenge is you have to see it in order to understand it."
Although the Microsoft co-founder successfully deployed the revolving art concept at his Medina mansion nearly a decade ago, the idea has not caught on with the general public.
But now a new Seattle start-up called RGB Labs, which has raised $1 million in early-stage financing and signed partnership agreements with Corbis and other art houses, thinks the time is right to pick up on the billionaire's dream.
Founded by former Amazon.com and Avenue A technology executive Scott Lipsky, RGB Labs will introduce its GalleryPlayer delivery service today. About the size of a toaster, the GalleryPlayer allows high-resolution images from world-renowned artists such as Leonardo da Vinci, Georgia O'Keeffe and Andy Warhol to be displayed on plasma and flat-panel television screens. It does that in a secure manner that Lipsky said would befuddle even the most skilled computer hacker.
The idea already has some art and technology lovers salivating.
"The quality of the raw content in terms of resolution is phenomenal," said Enrique Godreau, a Seattle venture capitalist who sits on the start-up's board. "It is pretty darn evocative when you look at the screen and you think of where this could go."
Seattle intellectual-property law firm Black Lowe & Graham installed the GalleryPlayer on a 60-inch plasma screen in its glass-walled conference room last week. So far, the digital artwork, from Renaissance paintings to 20th-century photography, has received rave reviews from lawyers and clients.
"We are loving it," network administrator Chris McKinlay said.
The King County Library, Martin Smith Inc. and an undisclosed Seattle resident also are using the GalleryPlayer, which was released last month.
For now, RGB is only targeting business customers: law firms, hospitals, hotels, retailers and other companies that can afford to dress up a conference room or a lobby with a digital artwork system that costs more $10,000, including the $195 per month service fee for four galleries of images.
But as the price of plasma screens falls (a 50-inch device currently sells for about $6,000) and the numbers increase (the market is expected to double next year, to 1.1 million), Lipsky is hopeful that RGB's technology will make it into consumer's living rooms.
In fact, Lipsky, 39, started on his current entrepreneurial quest after attempting to display digital art work at his residence in Seattle's Mount Baker neighborhood.
"I wanted the 'Mona Lisa' staring me in the face," he said.
A self-described technology geek who was handpicked by Amazon.com founder Jeff Bezos as one of his company's first employees, Lipsky had no problem installing a 50-inch Pioneer Elite plasma screen above his fireplace. But he ran into problems finding museum-quality images from favorite artists such Yamagata, Van Gogh and Picasso.
"I started looking for content and couldn't find it," said Lipsky, who quit high school at 16 to start developing software. "That is when the idea struck me. I said let's research this and find out if no one is really building a box to play art, like there is a box to play movies or a box to play audio."
He couldn't find any direct competitors. So Lipsky formed RGB in January with Paul Brownlow, the former director of technology at Avenue A, and David Gabrieli, a lawyer who formerly served as director of licensing at Amazon.com.
RGB Labs will need plenty of legal assistance as it steps into the complex web of licensing digital content.
Seattle-based Corbis, a strategic partner that is supplying hundreds of high-resolution images to RGB Labs, has filed a number of lawsuits against Web sites for illegally displaying images. And the Recording Industry of America filed 261 lawsuits last month against people who participated in music-sharing services such as KaZaA.
With RGB Labs responsible for delivering artwork from masters such as Leonardo and Claude Monet over the Internet, Lipsky acknowledges that security is of paramount importance. Two of the company's 18 employees are lawyers. And Lipsky said the system was built from the ground up so it would not be "Napster-ized."
Mark Sherman, vice president of emerging markets and products at Corbis, said there are many challenges to delivering high-quality images to a flat screen. That's part of the reason why Corbis, founded by Bill Gates 14 years ago, has no intention of competing with RGB.
"We are sticking to our expertise, which is licensing content to our partners," Sherman said.
Another challenge is the cost. With corporations looking to cut expenses at every corner, a $10,000 digital art system might not be viewed as a must-have.
Lipsky doesn't see it that way. "Call a couple companies and ask them what they spend on corporate art. Call a couple retailers and ask what they spend on merchandising and environmental space," Lipsky said. "This is not a big number for them."
Lipsky -- who is planning on moving into a house that will have multiple flat-panel screens running the GalleryPlayer -- said people have been talking about viewing art in this manner for 10 years. Now, he thinks the timing is right.
"The reception has been tremendous in every direction," he said. "We showed this to hundreds of people and everyone just gets blown away. The challenge is you have to see it in order to understand it."
Sharpen the Arrow with Behavioral Data
How utilizing behavioral data in conjunction with demographic information increases the chances of reaching a larger and more targeted audience.
By Sandy Kobrin, Columnist
Factors such as gender, age, household income and zip codes have been used for years to successfully match products with appropriate demographics. Behavioral marketing takes traditional demographic data to the next level, adding to the list one more critical factor -- behavior.
Behavioral marketing targets relevant messages to users who have exhibited interest in specific products and services. By identifying where a consumer is in the buying cycles and keeping information up-to-date with a consumer’s current needs, marketers have the edge over their demographic-reliant competitors.
The future of online marketing depends on moving fast, turning on a dime and reacting quickly to behavioral data. Together, demographic and behavioral data add to the big picture, targeting consumers with a more accurate arrow.
Auto sales are an example of how behavioral data can be used to increase the prospect of a sale. While a demographic marketer might have the knowledge that people at a certain age and income level buy a new car every five years, if advertisements are not timed appropriately, messages aimed at the right people may become wasted efforts. Based on the Websites that consumers visit, behavior reveals where consumers are in the buying cycle. A marketer can ascertain if a user is looking to purchase a car (either new or used), has a car to sell or has insurance needs.
NYTimes.com monitors behavior and targets behavioral users after they have been to the same section more than five times in a month. Behavioral marketing data has produced results, especially in the areas of Health Care/Pharmaceuticals, Real Estate and Auto.
“Behavioral marketing has some concrete advantages over demographic marketing,” says Craig Calder, vice president of marketing for NYTimes.com. “We have found that targeting users based on behavior is a more accurate relationship to interest in a product or service than using demographics.”
For example, if an IBM advertising campaign is aimed at business-minded people, NYTimes.com could target registered users who read the business section and send ads to those specific consumers as they visit the business section or any other section on the NYTimes.com Website, Calder says.
“One advantage we have found is that we can offer our advertisers a much larger group to target using behavioral data than using demographic data,” he says. “Demographics give you a smaller slice of what the client is looking for. Our behavioral data allows us to offer very large audiences for targeted campaigns.”
Amplifying the effectiveness of behavioral marketing data, NYTimes.com has also introduced a new concept: Surround Sessions. Once a specific behavior is identified, an advertiser has the option to target users with a single advertising message for five to eight consecutive Website pages without interruption from other advertisers. A single message may be repeated or differing sequential messages may be designed for impact.
“Since we started our targeting campaign in February, we’ve sold over a half million dollars in advertising and we’ve had a number of advertisers come back,” Calder says.
Since NYTimes.com started implementing behavioral marketing, Calder says click-through rates of in section ads have increased from .48 to .63. “Clients have noted success in conversions, sales and lead generation,” he says.
“When it comes to marketing films, demographics aren’t enough to tell the whole story,” says Elias Plishner, vice president of interactive marketing for McCann Universal Interactive. The firm, which markets films online for companies such as Sony Pictures, used to rely on demographic marketing to target the correct users. Behavioral data has brought much more success. Instead of using demographic data such as income, age and opt-in research to identify consumers who see movies on the opening weekend, the company now uses behavioral data to target users who visit preview Websites for opening films or view online trailers for opening films.
“More than using just demographics, we needed to take our marketing to the next level and find people who have been to certain sites and have certain behaviors,” Plishner says. “My experience is that if you take an ad plan you have to take it with a grain of salt. The demographics may say that some person should be a heavy movie goer, but it isn’t always the case. If he or she has been to a movie site, the person almost pre-qualifies him or herself as a person we need to target. Where the person goes tells you directly about his or her preferences.”
Demographics can identify the user, but behavioral marketing makes for an easier sale by getting the message to the right person at the right time, Plishner says.
“Behavioral marketing makes selling easier, it gives you the low hanging fruit,” he adds.
By Sandy Kobrin, Columnist
Factors such as gender, age, household income and zip codes have been used for years to successfully match products with appropriate demographics. Behavioral marketing takes traditional demographic data to the next level, adding to the list one more critical factor -- behavior.
Behavioral marketing targets relevant messages to users who have exhibited interest in specific products and services. By identifying where a consumer is in the buying cycles and keeping information up-to-date with a consumer’s current needs, marketers have the edge over their demographic-reliant competitors.
The future of online marketing depends on moving fast, turning on a dime and reacting quickly to behavioral data. Together, demographic and behavioral data add to the big picture, targeting consumers with a more accurate arrow.
Auto sales are an example of how behavioral data can be used to increase the prospect of a sale. While a demographic marketer might have the knowledge that people at a certain age and income level buy a new car every five years, if advertisements are not timed appropriately, messages aimed at the right people may become wasted efforts. Based on the Websites that consumers visit, behavior reveals where consumers are in the buying cycle. A marketer can ascertain if a user is looking to purchase a car (either new or used), has a car to sell or has insurance needs.
NYTimes.com monitors behavior and targets behavioral users after they have been to the same section more than five times in a month. Behavioral marketing data has produced results, especially in the areas of Health Care/Pharmaceuticals, Real Estate and Auto.
“Behavioral marketing has some concrete advantages over demographic marketing,” says Craig Calder, vice president of marketing for NYTimes.com. “We have found that targeting users based on behavior is a more accurate relationship to interest in a product or service than using demographics.”
For example, if an IBM advertising campaign is aimed at business-minded people, NYTimes.com could target registered users who read the business section and send ads to those specific consumers as they visit the business section or any other section on the NYTimes.com Website, Calder says.
“One advantage we have found is that we can offer our advertisers a much larger group to target using behavioral data than using demographic data,” he says. “Demographics give you a smaller slice of what the client is looking for. Our behavioral data allows us to offer very large audiences for targeted campaigns.”
Amplifying the effectiveness of behavioral marketing data, NYTimes.com has also introduced a new concept: Surround Sessions. Once a specific behavior is identified, an advertiser has the option to target users with a single advertising message for five to eight consecutive Website pages without interruption from other advertisers. A single message may be repeated or differing sequential messages may be designed for impact.
“Since we started our targeting campaign in February, we’ve sold over a half million dollars in advertising and we’ve had a number of advertisers come back,” Calder says.
Since NYTimes.com started implementing behavioral marketing, Calder says click-through rates of in section ads have increased from .48 to .63. “Clients have noted success in conversions, sales and lead generation,” he says.
“When it comes to marketing films, demographics aren’t enough to tell the whole story,” says Elias Plishner, vice president of interactive marketing for McCann Universal Interactive. The firm, which markets films online for companies such as Sony Pictures, used to rely on demographic marketing to target the correct users. Behavioral data has brought much more success. Instead of using demographic data such as income, age and opt-in research to identify consumers who see movies on the opening weekend, the company now uses behavioral data to target users who visit preview Websites for opening films or view online trailers for opening films.
“More than using just demographics, we needed to take our marketing to the next level and find people who have been to certain sites and have certain behaviors,” Plishner says. “My experience is that if you take an ad plan you have to take it with a grain of salt. The demographics may say that some person should be a heavy movie goer, but it isn’t always the case. If he or she has been to a movie site, the person almost pre-qualifies him or herself as a person we need to target. Where the person goes tells you directly about his or her preferences.”
Demographics can identify the user, but behavioral marketing makes for an easier sale by getting the message to the right person at the right time, Plishner says.
“Behavioral marketing makes selling easier, it gives you the low hanging fruit,” he adds.
Billion$ and growing!
Just how much are consumers spending online? Billions. The third quarter of 2003 produced online retail sales of $12.43 billion, a 24% increase over the same period in 2002 when $10.02 billion was spent, according to shopping search and comparison site BizRate.com. For the first nine months of this year, online sales totaled $37.16 billion, up by 24% from last year's $29.90 billion for the same period.
Actual orders grew by 47% to 101.34 million unique transactions in the third quarter. However, the average purchase amount has decreased by 15% to $123 in Q3 2003 compared to $145 in the same period last year.
The lower transaction amounts are being driven by price comparison shopping. In a BizRate.com Online Research Value Panel in September 2003, 78% of online buyers cited they were deal shopping because of tighter budgets. And, ninety-six percent said they comparison shop some, most or all of the time. Nearly half of online buyers (48%) are using aggregators such as comparison shopping sites, shopping portals, search engines and auction sites to start their shopping versus going directly to a merchant site (52%).
Women are also driving most online transactions with September research highlighting that 62% of online buyers were females and only 38% are male.
Online shoppers are also expected to show more loyalty to price than store brand this holiday season as 45% of shoppers say they would not pay any price premium at all. The top categories in terms of sales volume were computer hardware ($3.09 billion), electronics ($1.97 billion), apparel ($1.28 billion) and entertainment ($1.24 billion). The strongest growth in Q3 came from Food & Wine (up 208%), Gifts & Flowers (up 198%), Office Supplies (up 182%) and Entertainment (up 181%) categories.
For Q4, the holiday quarter, BizRate.com forecasts $18.35 billion in online sales which is a 22% increase in spending over last year's $15.04 billion.
Actual orders grew by 47% to 101.34 million unique transactions in the third quarter. However, the average purchase amount has decreased by 15% to $123 in Q3 2003 compared to $145 in the same period last year.
The lower transaction amounts are being driven by price comparison shopping. In a BizRate.com Online Research Value Panel in September 2003, 78% of online buyers cited they were deal shopping because of tighter budgets. And, ninety-six percent said they comparison shop some, most or all of the time. Nearly half of online buyers (48%) are using aggregators such as comparison shopping sites, shopping portals, search engines and auction sites to start their shopping versus going directly to a merchant site (52%).
Women are also driving most online transactions with September research highlighting that 62% of online buyers were females and only 38% are male.
Online shoppers are also expected to show more loyalty to price than store brand this holiday season as 45% of shoppers say they would not pay any price premium at all. The top categories in terms of sales volume were computer hardware ($3.09 billion), electronics ($1.97 billion), apparel ($1.28 billion) and entertainment ($1.24 billion). The strongest growth in Q3 came from Food & Wine (up 208%), Gifts & Flowers (up 198%), Office Supplies (up 182%) and Entertainment (up 181%) categories.
For Q4, the holiday quarter, BizRate.com forecasts $18.35 billion in online sales which is a 22% increase in spending over last year's $15.04 billion.
Tuesday
Traditional Marketers Moving More $ Online
For the first time the biggest spending advertisers are moving more dollars to online advertising.
Nielsen//NetRatings reported at the iMedia Brand Summit last week that business & consumer services, autos, pharmaceuticals, travel/hotels/resorts and insurance & real estate led all industries in positive online ad spending growth on a year-over-year basis.
Business & consumer services, which includes large ad spenders such as financial services and telecommunications, led all industry segments with an increase of $100 million from the first quarter of 2002 to the first quarter of 2003. The $100 million represents 58% of the $172 million total increase in online ad spending during the same period, as reported by the Interactive Advertising Bureau (IAB).
The auto sector increased online ad spending by $30 million, from $27 million in Q1 of 2002 to $57 million in Q1 of 2003, an increase of 90.5%. Following closely was the drug/remedies category, which increased online ad spending by $26 million during the same year-over-year period.
Rounding out the top five, travel, hotel & resorts reported positive growth of 15.5%, an increase of $15 million, and the insurance & real estate sector moved up 29% by $10 million.
“The lion's share of this growth is now coming from industries known to spend significantly on traditional advertising,” said Charles Buchwalter, vice president, client analytics, Nielsen//NetRatings. “Selected Fortune 500 companies classically labeled as traditional advertisers, like auto manufactures, are more fully adopting online media into their plans.”
“With this data, we're getting more definitive evidence that the industries that spend the most on advertising overall, such as business and consumer services, autos and pharmaceuticals are stepping up their commitment to online,” said Buchwalter.
Nielsen//NetRatings AdRelevance research shows that other large advertisers like consumer packaged goods (CPG) companies are increasing their share of online advertising impressions. The CPG companies in this study, Pepsico, Anheuser-Busch, South African Brewers, Altria and Coca Cola have used their traditional advertising savvy on the Web, turning to sports sites, among others to reach online consumers.
“These industries are among the largest advertising spenders in the world economy, and even a small uptick in the amount of budget they allocate to online media has an impact that is felt immediately by online publishers,” said Buchwalter.
Nielsen//NetRatings reported at the iMedia Brand Summit last week that business & consumer services, autos, pharmaceuticals, travel/hotels/resorts and insurance & real estate led all industries in positive online ad spending growth on a year-over-year basis.
Business & consumer services, which includes large ad spenders such as financial services and telecommunications, led all industry segments with an increase of $100 million from the first quarter of 2002 to the first quarter of 2003. The $100 million represents 58% of the $172 million total increase in online ad spending during the same period, as reported by the Interactive Advertising Bureau (IAB).
The auto sector increased online ad spending by $30 million, from $27 million in Q1 of 2002 to $57 million in Q1 of 2003, an increase of 90.5%. Following closely was the drug/remedies category, which increased online ad spending by $26 million during the same year-over-year period.
Rounding out the top five, travel, hotel & resorts reported positive growth of 15.5%, an increase of $15 million, and the insurance & real estate sector moved up 29% by $10 million.
“The lion's share of this growth is now coming from industries known to spend significantly on traditional advertising,” said Charles Buchwalter, vice president, client analytics, Nielsen//NetRatings. “Selected Fortune 500 companies classically labeled as traditional advertisers, like auto manufactures, are more fully adopting online media into their plans.”
“With this data, we're getting more definitive evidence that the industries that spend the most on advertising overall, such as business and consumer services, autos and pharmaceuticals are stepping up their commitment to online,” said Buchwalter.
Nielsen//NetRatings AdRelevance research shows that other large advertisers like consumer packaged goods (CPG) companies are increasing their share of online advertising impressions. The CPG companies in this study, Pepsico, Anheuser-Busch, South African Brewers, Altria and Coca Cola have used their traditional advertising savvy on the Web, turning to sports sites, among others to reach online consumers.
“These industries are among the largest advertising spenders in the world economy, and even a small uptick in the amount of budget they allocate to online media has an impact that is felt immediately by online publishers,” said Buchwalter.
Monday
'Diller' of an Internet empire
Barry Diller
Barry Diller uses blunt words to describe his recent stint as head of Vivendi Universal Entertainment, the show biz empire that's about to be absorbed by NBC.
"Guess what? All it brought me was a lot of noise and abuse from every constituency," Diller told the Daily News during a recent interview in his elegant, minimalist office in Manhattan's ritzy Carnegie Hill Tower.
After an unpleasant return to show biz, the most scrutinized man in Hollywood has left the studio lot. Forget about "The Hulk." Diller, 61, is minding his monster-sized online empire - InterActiveCorp.
That's the publicly traded company formerly known as USA Interactive, a portfolio of some of the top names on the Internet, including travel sites Expedia and Hotels.com, dating service Match.com, ticketing giant Ticketmaster, financial services firm Lendingtree.com. and his latest conquest - discount Internet travel site Hotwire.
In August alone, nearly 39 million people logged on to Diller's online mall - more than Amazon's draw, according to data compiled by Deutsche Bank.
While many expected the former 20th Century Fox boss to jump at a shot at acquiring Universal Pictures and cable nets USA and Sci Fi, he passed. Investors who've made money betting on him aren't surprised.
That's because his comparatively boring InterActiveCorp job has become an online powerhouse. The stock's up more than 70% in the past year, compared to Viacom, down 10%.
"The sexy part is, he's found a company that will grow close to 50% over the next three years," said State Street Research's Larry Haverty, a longtime investor in Diller's companies.
"He's been able to understand what businesses work on the Internet," said Oppenheimer analyst Peter Mirsky.
Still, InterActiveCorp stock is a laggard compared to its rocketing Internet peers. In the past year, Amazon has tripled and Yahoo's is up nearly four-fold.
Investors are concerned that Hotels.com and Expedia could face big hotel tax payments, an issue chronicled in The New York Times and denied by Diller.
The company "has investigated every aspect" of the tax issue, Diller said. "We've taken an appropriate reserve of $12 million. We think that's adequate."
There's also fear Diller will make a risky acquisition with InterActiveCorp's multibillion dollar war chest.
Though Diller's no longer running the Universal entertainment empire, he remains a nuisance for NBC and Vivendi.
As a result of an earlier deal, InterActiveCorp holds an interest in Vivendi Universal Entertainment, which Diller values at about $2.5 billion. On top of that, Diller personally holds a stake worth about $275 million. Vivendi wants out.
So does Diller, who sees an opportunity to turn his stake into cash. He's expected to play hard ball to extract big concessions from his partner. InterActiveCorp already stirred things up by suing Vivendi for tax reimbursements. "Everyone knows he can be a real pain in the ass," a source said.
"We stand in no one's way, we have no ambition, we're happy for (the investment) to stay forever," Diller said.
The studio boss-turned-Internet don started out in the mailroom of the William Morris Agency. At ABC he launched the fabled "Movie of the Week" before moving to top posts at three movie studios.
In 1992, Diller, who's married to designer Diane von Furstenberg, left Fox to plot his next move. "I became curious about this magic box called the personal computer," he said.
Some cling to the idea that he'll return to Hollywood.
"It is just easier for people to think I have some big yen for entertainment businesses," Diller said. "The truth of my life is, since 1992, it's been completely different."
Barry Diller uses blunt words to describe his recent stint as head of Vivendi Universal Entertainment, the show biz empire that's about to be absorbed by NBC.
"Guess what? All it brought me was a lot of noise and abuse from every constituency," Diller told the Daily News during a recent interview in his elegant, minimalist office in Manhattan's ritzy Carnegie Hill Tower.
After an unpleasant return to show biz, the most scrutinized man in Hollywood has left the studio lot. Forget about "The Hulk." Diller, 61, is minding his monster-sized online empire - InterActiveCorp.
That's the publicly traded company formerly known as USA Interactive, a portfolio of some of the top names on the Internet, including travel sites Expedia and Hotels.com, dating service Match.com, ticketing giant Ticketmaster, financial services firm Lendingtree.com. and his latest conquest - discount Internet travel site Hotwire.
In August alone, nearly 39 million people logged on to Diller's online mall - more than Amazon's draw, according to data compiled by Deutsche Bank.
While many expected the former 20th Century Fox boss to jump at a shot at acquiring Universal Pictures and cable nets USA and Sci Fi, he passed. Investors who've made money betting on him aren't surprised.
That's because his comparatively boring InterActiveCorp job has become an online powerhouse. The stock's up more than 70% in the past year, compared to Viacom, down 10%.
"The sexy part is, he's found a company that will grow close to 50% over the next three years," said State Street Research's Larry Haverty, a longtime investor in Diller's companies.
"He's been able to understand what businesses work on the Internet," said Oppenheimer analyst Peter Mirsky.
Still, InterActiveCorp stock is a laggard compared to its rocketing Internet peers. In the past year, Amazon has tripled and Yahoo's is up nearly four-fold.
Investors are concerned that Hotels.com and Expedia could face big hotel tax payments, an issue chronicled in The New York Times and denied by Diller.
The company "has investigated every aspect" of the tax issue, Diller said. "We've taken an appropriate reserve of $12 million. We think that's adequate."
There's also fear Diller will make a risky acquisition with InterActiveCorp's multibillion dollar war chest.
Though Diller's no longer running the Universal entertainment empire, he remains a nuisance for NBC and Vivendi.
As a result of an earlier deal, InterActiveCorp holds an interest in Vivendi Universal Entertainment, which Diller values at about $2.5 billion. On top of that, Diller personally holds a stake worth about $275 million. Vivendi wants out.
So does Diller, who sees an opportunity to turn his stake into cash. He's expected to play hard ball to extract big concessions from his partner. InterActiveCorp already stirred things up by suing Vivendi for tax reimbursements. "Everyone knows he can be a real pain in the ass," a source said.
"We stand in no one's way, we have no ambition, we're happy for (the investment) to stay forever," Diller said.
The studio boss-turned-Internet don started out in the mailroom of the William Morris Agency. At ABC he launched the fabled "Movie of the Week" before moving to top posts at three movie studios.
In 1992, Diller, who's married to designer Diane von Furstenberg, left Fox to plot his next move. "I became curious about this magic box called the personal computer," he said.
Some cling to the idea that he'll return to Hollywood.
"It is just easier for people to think I have some big yen for entertainment businesses," Diller said. "The truth of my life is, since 1992, it's been completely different."
ONLINE AD SPENDING CONTINUES TO RISE
Major Marketers Focus More Resources on Internet
Led by financial services and telcom companies, online ad spending continues to rise, according to a new study by Nielsen/NetRatings.
Those two sectors increased their ad spending by $100 million from the first quarter of 2002 compared with the first quarter of this year. The $100 million accounts for 58% of the $172 million total increase in online ad spending during the same period, as reported by the Interactive Advertising Bureau.
"We're putting 15% to 17% of of our overall media budget toward interactive marketing and media, but I'd like to get to 30%," said one financial services executive in an interview at last week's iMedia Brand Summit in Santa Ana Pueblo, N.M.
90% automotive increase
The Nielsen/NetRatings report found that business and consumer services; automotive; pharmaceuticals; travel/hotels/resorts; insurance; and real estate have all focused more of their marketing resources online during the past year. For example, automotive marketers increased ad spending by $30 million, from $27 million in the first quarter of 2002 to $57 million in the same quarter of 2003, an increase of 90.5%.
Sports and recreation sites are top beneficiaries of the increased spending by automakers such as DaimlerChrysler, General Motors Corp., Ford Motor Corp., Honda Motors, Nissan and Toyota. All have shifted more marketing dollars into the interactive medium.
'More concerted' moves
"Three years ago some analysts thought that the online ad downturn would be short-lived because the big advertisers would come to the rescue," said Charles Buchwalter, vice president of client analytics at Nielsen/NetRatings. "But their timing was way off -- three years later, we now have some real evidence that the large ad-spending industries, i.e., financial services, telecommunications, autos and pharmaceuticals, are starting to adopt the online medium in a more concerted manner.
"For some of these large-spending industries," he said, "the online share of total media spend continues to be small, but these 'small' shares are shares of huge total spending, which is why online ad spending is starting to show some real gains after more than two years of free fall."
Travel, hotel and resorts
The travel, hotel and resorts sector reported a 15.5% increase ($15 million) during the period, while the insurance and real estate sector increased 29% by $10 million.
Online ad spending in the drug/remedies segment jumped by $26 million during the same year-over-year period, according to Nielsen/NetRatings.
Drug giants such as Astra-Zeneca and Glaxo SmithKline said they are upping their online spending with much of those buys aimed at Internet search-related advertising. Kimberly Lyons, strategic brand initiatives and Internet manager at Revlon, said the cosmetics giant will increase its online media spending in 2004, though it will remain less than 5% of the cosmetics marketer's overall media budget.
Consumer package goods giants including PepsiCo, Anheuser-Busch, Altria and Coca-Cola Co. are also slowly shifting dollars from TV to online.
15% increase through 2003
Mr. Buchwalter projected that online advertising spending could grow by 15% this year.
"Rising cost-per-thousand [viewers] and emerging standardization in the online ad space is creating the possibility of the medium becoming more profitable for agencies to play in," he said.
Led by financial services and telcom companies, online ad spending continues to rise, according to a new study by Nielsen/NetRatings.
Those two sectors increased their ad spending by $100 million from the first quarter of 2002 compared with the first quarter of this year. The $100 million accounts for 58% of the $172 million total increase in online ad spending during the same period, as reported by the Interactive Advertising Bureau.
"We're putting 15% to 17% of of our overall media budget toward interactive marketing and media, but I'd like to get to 30%," said one financial services executive in an interview at last week's iMedia Brand Summit in Santa Ana Pueblo, N.M.
90% automotive increase
The Nielsen/NetRatings report found that business and consumer services; automotive; pharmaceuticals; travel/hotels/resorts; insurance; and real estate have all focused more of their marketing resources online during the past year. For example, automotive marketers increased ad spending by $30 million, from $27 million in the first quarter of 2002 to $57 million in the same quarter of 2003, an increase of 90.5%.
Sports and recreation sites are top beneficiaries of the increased spending by automakers such as DaimlerChrysler, General Motors Corp., Ford Motor Corp., Honda Motors, Nissan and Toyota. All have shifted more marketing dollars into the interactive medium.
'More concerted' moves
"Three years ago some analysts thought that the online ad downturn would be short-lived because the big advertisers would come to the rescue," said Charles Buchwalter, vice president of client analytics at Nielsen/NetRatings. "But their timing was way off -- three years later, we now have some real evidence that the large ad-spending industries, i.e., financial services, telecommunications, autos and pharmaceuticals, are starting to adopt the online medium in a more concerted manner.
"For some of these large-spending industries," he said, "the online share of total media spend continues to be small, but these 'small' shares are shares of huge total spending, which is why online ad spending is starting to show some real gains after more than two years of free fall."
Travel, hotel and resorts
The travel, hotel and resorts sector reported a 15.5% increase ($15 million) during the period, while the insurance and real estate sector increased 29% by $10 million.
Online ad spending in the drug/remedies segment jumped by $26 million during the same year-over-year period, according to Nielsen/NetRatings.
Drug giants such as Astra-Zeneca and Glaxo SmithKline said they are upping their online spending with much of those buys aimed at Internet search-related advertising. Kimberly Lyons, strategic brand initiatives and Internet manager at Revlon, said the cosmetics giant will increase its online media spending in 2004, though it will remain less than 5% of the cosmetics marketer's overall media budget.
Consumer package goods giants including PepsiCo, Anheuser-Busch, Altria and Coca-Cola Co. are also slowly shifting dollars from TV to online.
15% increase through 2003
Mr. Buchwalter projected that online advertising spending could grow by 15% this year.
"Rising cost-per-thousand [viewers] and emerging standardization in the online ad space is creating the possibility of the medium becoming more profitable for agencies to play in," he said.
