Case Study: A Content Company Weighs Becoming a Technology Company

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Case Study: A Content Company Weighs Becoming a Technology Company

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Advertising: Vice Media Buys a Tech Company to Experiment With Content Distribution

ADVERTISING, journalism and technology continue to converge. The latest example: Vice Media’s acquisition of Carrot Creative, a digital agency that creates apps, websites and games for media companies and brands.

In its new home, Carrot will experiment with ways to distribute Vice’s editorial content. The agency will also focus on building digital initiatives for brands that work with Vice.

“We take our learnings as a media company and offer them to brands which are now trying to work like media companies,” said Andrew Creighton, the president of Vice Media. “It gives us an extra resource.”

A person familiar with Tuesday’s acquisition, who was not authorized to speak publicly, said the deal was valued at $15 million to $20 million in stock and cash.

Vice has long looked for ways to reinvent its business.

Vice, which began as a magazine in 1994, has since moved into video, television, advertising, music and events, among other fields. A spin through
Vice’s Brooklyn offices reveals as many studios, editing suites and lushly appointed meeting rooms as there are writers hunched over computers.

The company has grown through technology, Mr. Creighton said. “We started with desktop publishing,” he said, then “when we got into video we took advantage of the democratization of broadband and video production tools.” Two years ago, Mr. Creighton said, less than 10 percent of those who watched Vice videos were on phones. Now the number is escalating fast, and will most likely hit more than 50 percent in coming years.

“We’re growing into multiple new verticals,” said Mr. Creighton, pointing to news, fashion and sports efforts that will start next year. “We have a solid website, but we were focusing on content rather than tech, and now both go hand in hand.”

The acquisition of Carrot, said Mr. Creighton, will add to Vice’s technological capacity.

For example, Carrot has found that viewers take in and share material from either media companies or brands differently on different devices.

“The smaller the screen gets, the smaller the audience gets,” said Mike Germano, the chief executive of Carrot Creative. A smartphone has an audience of one, a tablet perhaps two and the TV many more.

He added that technology and content, brands and media companies, were no longer separate. Mr. Germano, who has worked with brands such as Ford, Jaguar and Red Bull, compares what he does to “Mutual of Omaha’s Wild Kingdom,” the animal-themed TV show that began in the 1960s.

“That was how people saw giraffes and lions for the first time, and that’s what we’re getting back to now,” he said. “When you don’t feel like you’re watching an ad, when they’re providing a service, that’s when you build a relationship with people.”

The changing nature of the industry, though, is also raising concerns. The Federal Trade Commission recently expressed concern that so-called native advertising or sponsored advertising could mislead consumers. “By presenting ads that resemble editorial content,” said Edith Ramirez, the chairwoman of the F.T.C., at a conference last week, “an advertiser risks implying, deceptively, that the information comes from a nonbiased source.”

Vice says it clearly delineates between editorial and branded content.

Such digital advertising has been on the rise as media companies look to bolster ad numbers.

Trade commission officials, citing recent surveys of online publishers, said that 73 percent offered native advertising and an additional 17 percent were considering it this year. About 41 percent of brands and one-third of advertising agencies use such methods, the officials said. (The New York Times is among the publications that will begin the practice in 2014.)

Mr. Germano noted that the proliferation of digital devices would change how people consume information, just as the Internet has changed how people buy things. And consumers, he said, can enjoy those just the same.

He cited a recent experiment in which a basketball player, Victor Oladipo, wore Google Glass to the N.B.A. draft, giving users of the website the Verge a player’s-eye view of proceedings.

“That’s not something that might make ESPN happy,” Mr. Germano said, “but it’s an example of how media is really changing.”

N.S.A. Said to Search Content of Messages to and From U.S.

The N.S.A. is not just intercepting the communications of Americans who are in direct contact with foreigners targeted overseas, a practice that government officials have openly acknowledged. It is also casting a far wider net for people who cite information linked to those foreigners, like a little used e-mail address, according to a senior intelligence official.

While it has long been known that the agency conducts extensive computer searches of data it vacuums up overseas, that it is systematically searching — without warrants — through the contents of Americans’ communications that cross the border reveals more about the scale of its secret operations.

It also adds another element to the unfolding debate, provoked by the disclosures of Edward J. Snowden, the former N.S.A. contractor, about whether the agency has infringed on Americans’ privacy as it scoops up e-mails and phone data in its quest to ferret out foreign intelligence.

Government officials say the cross-border surveillance was authorized by a 2008 law, the FISA Amendments Act, in which Congress approved eavesdropping on domestic soil without warrants as long as the “target” was a noncitizen abroad. Voice communications are not included in that surveillance, the senior official said.

Asked to comment, Judith A. Emmel, an N.S.A. spokeswoman, did not directly address surveillance of cross-border communications. But she said the agency’s activities were lawful and intended to gather intelligence not about Americans but about “foreign powers and their agents, foreign organizations, foreign persons or international terrorists.”

“In carrying out its signals intelligence mission, N.S.A. collects only what it is explicitly authorized to collect,” she said. “Moreover, the agency’s activities are deployed only in response to requirements for information to protect the country and its interests.”

Hints of the surveillance appeared in a set of rules, leaked by Mr. Snowden, for how the N.S.A. may carry out the 2008 FISA law. One paragraph mentions that the agency “seeks to acquire communications about the target that are not to or from the target.” The pages were posted online by the newspaper The Guardian on June 20, but the telltale paragraph, the only rule marked “Top Secret” amid 18 pages of restrictions, went largely overlooked amid other disclosures.

To conduct the surveillance, the N.S.A. is temporarily copying and then sifting through the contents of what is apparently most e-mails and other text-based communications that cross the border. The senior intelligence official, who, like other former and current government officials, spoke on condition of anonymity because of the sensitivity of the topic, said the N.S.A. makes a “clone of selected communication links” to gather the communications, but declined to specify details, like the volume of the data that passes through them.

Computer scientists said that it would be difficult to systematically search the contents of the communications without first gathering nearly all cross-border text-based data; fiber-optic networks work by breaking messages into tiny packets that flow at the speed of light over different pathways to their shared destination, so they would need to be captured and reassembled.

The official said that a computer searches the data for the identifying keywords or other “selectors” and stores those that match so that human analysts could later examine them. The remaining communications, the official said, are deleted; the entire process takes “a small number of seconds,” and the system has no ability to perform “retrospective searching.”

The official said the keyword and other terms were “very precise” to minimize the number of innocent American communications that were flagged by the program. At the same time, the official acknowledged that there had been times when changes by telecommunications providers or in the technology had led to inadvertent overcollection. The N.S.A. monitors for these problems, fixes them and reports such incidents to its overseers in the government, the official said.

The disclosure sheds additional light on statements intelligence officials have made recently, reassuring the public that they do not “target” Americans for surveillance without warrants.

Facebook to Shield Ads From Offensive Content

In a message posted on its Web site, the company wrote: “Our goal is to both preserve the freedoms of sharing on Facebook but also protect people and brands from certain types of content.”

“We know that marketers work hard to promote their brands, and we take their objectives seriously. While we already have rigorous review and removal policies for content against our terms, we recognize we need to do more to prevent situations where ads are displayed alongside controversial Pages and Groups. So we are taking action.”

Facebook said it would begin the manual review for pages containing sensitive content next week with a team of hundreds of employees in offices around the world.

The action comes a month after feminist groups campaigned for an improvement in Facebook’s process for identifying and removing pages that glorify violence against women. At the time, Facebook acknowledged that its procedures had not worked effectively. Activist groups sent more than 5,000 e-mails to Facebook’s advertisers and elicited more than 60,000 posts on Twitter, requesting the removal of pages featuring women who had been abused.

The protests caused Nissan and a number of smaller advertisers to temporarily withdraw their ads from the site. Other advertisers, including Zappos, Dove and American Express, stopped short of removing their ads but issued statements on digital media saying they did not support violence against women.

“The way you allocate your resources identifies what your priorities are,” said Soraya Chemaly, a writer and activist who was involved in the digital media campaign.

Ms. Chemaly said that since the protests in May Facebook had been “great” about removing content the groups flagged as offensive but that the procedure for removing such content had not been systematic. “Before you can remove the ads, you need to have an accurate assessment of what counts as controversial and that’s not happening now systemically,” she said.

Elisabeth Diana, a Facebook spokeswoman, said dealing with offensive content was something the company handled on a daily basis. “We take it really, really seriously,” she said, adding that the goal of the new procedure “won’t be as much content policing as there will be advertising policing.”

Removing the ads from such pages also removes a pressure point that activist groups have used to get media companies and advertisers to listen to their concerns. “They are hoping to dismantle the leverage,” Ms. Chemaly said. “From a business perspective that makes perfect logical sense.”

The company expects to automate the process of identifying such content after a manual review of thousands of its pages.

Advertising: In the World of Content, Web Follows a Trail Left by TV

As a week of presentations by media companies continues in New York, under the banner of the Digital Content NewFronts, the focus is squarely on efforts to create high-quality, engaging Web series and other programming that can be watched on smartphones and tablets as well as on desktop and laptop computers. Borrowing a page from the broadcast networks and cable channels whose so-called upfronts inspired the week’s events, the media companies are recruiting for their shows stars who will work on both sides of the camera.

AOL, in its presentation on Tuesday, described plans for a number of new projects that featured familiar names like the designer Jonathan Adler, Hank Azaria, the chef Rocco DiSpirito, the Nascar driver Dylan Kwasniewski, Gwyneth Paltrow, Sarah Jessica Parker and Nicole Richie.

Also on Tuesday, Hulu, the online video Web site, described at its event several series, planned and potential, involving the likes of Mario Batali, the Tony-winning British actor James Corden, Carson Daly, Eva Longoria, Seth Meyers and Jay Mohr.

And on Monday evening, Yahoo shared a lineup of programs involving Ed Helms, Cheryl Hines, Zachary Levi, Morgan Spurlock and John Stamos.

In the last year, Yahoo has more than doubled the original video programming on yahoo.com, said Erin McPherson, vice president and head of video at Yahoo, who shared the stage with stars like Mr. Helms and Mr. Levi. The actors, in a comedic Web series, “Tiny Commando,” will play a private eye who is 4 inches tall (Mr. Helms) and his arch-nemesis, also in miniature (Mr. Levi).

Other new Web shows for Yahoo include “We Need Help,” with Ms. Hines and Rachael Harris as high-maintenance Hollywood divas who share a personal assistant, and “Losing Your Virginity With John Stamos,” in which Mr. Stamos will interview other celebrities about their tales of loss of innocence; Mr. Stamos and Mr. Spurlock are to be the executive producers.

Marissa Mayer, the new president and chief executive at Yahoo, told the audience that premium content was one of her three goals for Yahoo’s products supported by advertising, along with innovation and performance.

Ads were also a topic of discussion at the Hulu presentation, as Jean-Paul Colaco, senior vice president for advertising at Hulu, declared, “We celebrate advertising at Hulu,” where, he said, executives are “building the world’s most effective video advertising service.”

On television, “brands are just one DVR skip from losing valuable viewer engagement,” Mr. Colaco said, referring to the practice, common among owners of digital video recorders, of skipping commercials when watching shows they recorded. By contrast, he added, commercials on Hulu enjoy high recall of the brands as well as their messages.

Several of the original series discussed by Mr. Colaco and other Hulu executives, including those with Mr. Batali, Mr. Daly and Mr. Mohr, are “brand-contingent” — that is, they will be made if advertisers sign up to support them. Such shows would integrate products in the plot lines, a practice known as branded entertainment or content marketing.

Mr. Meyers — who also hosted the Hulu presentation in addition to promoting an original animated Web series, “The Awesomes,” that he is creating for Hulu with Michael Shoemaker — even spoofed Hulu’s practice of refining its commercial-targeting through user surveys. “Was that joke relevant to you? Click yes or no,” Mr. Meyers said at one point, elaborating on the Hulu entreaty “Is this ad relevant to you? Click yes or no.”

Mr. Colaco and the other Hulu executives spoke confidently, despite it being an uncertain time for the company as two of its owners, the Walt Disney Company and News Corporation, weigh whether to sell. In March, the founding chief executive of Hulu, Jason Kilar, stepped down; one of his top lieutenants, Andy Forssell, is now the acting chief executive and spoke during the presentation, announcing that Hulu doubled the number of subscribers to its paid service, Hulu Plus, in the last year, to four million, with half of them ages 18 to 34.

In the increasingly crowded online environment, commissioning shows is becoming a way to stand out. Hulu, for instance, became this week one of only two places to watch “All My Children” and “One Life to Live,” the canceled ABC daytime soap operas that were resurrected online by a production company, Prospect Park. (The other outlet is Apple’s iTunes store.)

Stars from each soap appeared during the Hulu presentation, including Erika Slezak of “One Life to Live,” who spoke for the casts of both when she proudly declared the series are “no longer ‘daytime.’ ”

Because they can now be watched “whenever, wherever, however,” Ms. Slezak said, “we are anytime.”

In another sign of the growing prominence of online viewing, Nielsen said on Tuesday that it would begin a pilot of what it called Nielsen digital program ratings, measuring audiences for linear television content watched online. AOL is among the participants in the test, from May through July, along with A&E, ABC, CBS, CW, Discovery Communications, Fox, NBC and Univision.

The Digital Content NewFronts, under the aegis of the Interactive Advertising Bureau, are to run through Friday.

Brian Stelter contributed reporting.

This article has been revised to reflect the following correction:

Correction: May 1, 2013

An earlier version of this article misstated, in one instance, the title of a cancelled ABC soap opera. It is “One Life to Live,” not “One Live to Live.”

Barnes & Noble Posts a Profit, but Sales of Digital Content Slows

The company, the largest conventional bookseller, has invested heavily in its Nook e-business as consumers increasingly shop online and read e-books. Barnes & Noble said revenue from its Nook business grew, but revenue from devices fell because of lower average selling prices. Digital content revenue grew 38 percent, but that was down from a 46 percent increase in the fiscal first quarter.

Investors were hoping for higher growth, and shares of Barnes & Noble fell $1.79, or 11 percent, to $14.26.

Barnes & Noble reported net income of $2.2 million for the three months that ended Oct. 27. That translates to a loss of 4 cents a share, however, after the impact of preferred stock dividends. That matched analysts’ expectations, according to FactSet. The results compare with a loss in the same quarter last year of $6.6 million, or 17 cents a share.

Revenue was nearly flat at $1.88 billion. Analysts expected revenue of $1.91 billion.

Revenue from the company’s Nook division rose 6 percent to $160 million. Barnes & Noble introduced two new Nook e-readers, a 7-inch Nook HD and 9-inch Nook HD Plus, during the quarter, and began shipping them just after the quarter closed.

In a call with analysts, William Lynch, the chief executive of Barnes & Noble, said the company expected digital content buying to pick up after the holiday season, when Nooks are expected to be popular gifts.

The company said Nook unit sales doubled over the busy four-day shopping weekend around Thanksgiving as the company increased markdowns at retailers like Target and Wal-Mart Stores.

But the Nook faces tough competition from other new devices this holiday season, including Apple’s iPad Mini, new Amazon Kindles and Google’s Nexus tablet.

“They’re maintaining their market share by way of promoting and discounting,” said Peter Wahlstrom, an analyst at Morningstar. “But it’s a more competitive marketplace.”

TECHNOLOGY: TimesCast Tech | Content Creators

September 19, 2012 By Emily B. Hager, Nadia Sussman, Vijai Singh and David Gillen

Companies sharpen their focus on content creators. | Paperless Post pushes the envelope, literally. | Digital etiquette dos and don’ts.

Tekken Tag Tournament 2 Wii U Has Exclusive Content

Namco has announced that Tekken Tag Tournament 2 on Wii U will have exclusive content.

We spotted Mario, Link and Bowser costumes in the reveal trailer alongside in-stage power-ups, including the Mega Mushroom, which super-sizes combatants. It's pretty damn funny.

Tekken Tag Tournament 2 launched earlier this week on PlayStation3 and Xbox 360. Be sure to read our reviewand check out our interview withT ekken legend Katsuhiro Harada for more.