there is unlimited shelf space, so there is no limit to the number of repackagings you can do with this content to meet an ever-fragmenting audience, if you can find a scalable way to do it.
X: Is an EveryZing search box showing up on every NBC Universal website?
TW: That is the goal. We are seeing it roll out across their properties. They have 92 different websites, and the goal is to have one search provider.
X: You say you’re moving away from search engine optimization. Does that mean you’re no longer building the topic landing pages that you described last time we talked?
TW: No, that’s front and center. This is a wedding cake, and we’re building layers on top of it. The base layer of the cake is this ability to discover and mark up a piece of content, whether that’s through speech-to-text or automatic tagging. On top of that is the ability to organize content intelligently into topics and channels. Pets might be a high-level vertical, and inside that you might have a topic just about feline heart disease. It’s the long tail, no pun intended. The ability to know about every content object and publish it in such a way that search engines can consume it, and users can find it, and ultimately it can be used to better target advertisements—that creates a nice leverage point for all of that rich content. The topic landing pages are very much a part of that strategy, but rather than being the main thrust for us, as they were in the first year, we’re evolving toward a broader positioning based on all the work we did with our custom universal search.
X: So have you put a lot of technology work into being able to search text and images, in addition to your existing audio and video search?
TW: Yes, that’s all we’ve been doing for the last four to six months, around the next version of our product, which we’re going to announce shortly. We also have a couple of big partnership announcements coming out in the next two to three weeks—not quite as large as the NBC Universal announcement, when you throw in their investment, but of a similar magnitude.
X: It sounds a little like you’re trying to become the Google of professional media content. Google searches this content too, of course, but what I mean is that you’re trying to organize all of the content these media companies own and make it accessible, just like Google does.
TW: That’s not a bad way to describe it. It’s tough to crack the DNA of the different big search guys. Yahoo’s DNA is advertisers first, consumers second, publishers third. Those are the only three possible buckets. Google’s DNA has always been consumers first, advertisers second, and publishers third, so they have a slightly different agenda. What’s missing in the market is somebody who puts the publishers first. We really put publishers first, consumers second, and advertisers third—mostly because the advertisers work directly with our publishing partners. That’s what’s missing in the market, someone who specifically helps publishers and provides them with this rich capability so they can succeed on the Web.
Web 1.0 was clearly about search. It was growing so fast that search became a critical requirement. Web 2.0 was about user involvement—YouTube, MySpace, Twitter. It’s obviously self-serving, but we believe strongly that Web 3.0 is going to be about professional media finally leveraging the Internet as a real business. There are some early signs of that. Hulu is the first genuine shot at this. They are blowing YouTube away in terms of revenue per thousand users, because professional content is expensive to make. That’s a real barrier. Advertisers are not going to put an ad near a YouTube video of a cat riding a skateboard.
Web 3.0 does represent an opportunity for large media, but they need a lot of help. The reason they struggled through Web 1.0 and Web 2.0, if you think about it, is that they were caught knowing less about their own content than the search engines did and the end users did. They knew less than any of those guys, and they were disadvantaged by that. They watched Google build a $20 billion business by knowing more about their content than they did. But the media companies have really gotten religion now, and they want help knowing everything they can know about every content object in their archives. That knowledge is power, because you now have a contextual basis from which to drive the right kinds of consumption, and control your brand, and therefore have a real business on the Web.
X: I wanted to ask you about the huge decline in average CPMs [the amount advertisers will pay per thousand impressions] on the Web. The situation reminds me a bit of the biofuels business. People who come up with new ways of making ethanol generate a lot of funding and excitement when gas costs $4 a gallon, but in a world of low oil prices, there isn’t nearly as much interest in clean energy. In a world of low CPMs, is there still interest in media search?
TW: I’ve been a little bit surprised at how forward-thinking these guys have decided to be in a tough market. Even venture capitalists have been deciding to invest in a pretty wicked market. There is recognition of an inevitable sea change toward digital consumption. You can’t stop it by not investing in it, even if we are at the low point in terms of monetization. It’s hard for me to know exactly what’s going through their heads. But they certainly haven’t crawled into their shells and decided that this stuff doesn’t matter or that they’ll call us back when we’re making $50 CPMs. Our business is steady—if the market were good, we’d be buried. So it certainly matters, but I don’t think it’s been quite the nuclear winter that followed 9/11 on the Web, when truly everybody just crawled into a whole and didn’t want to come out.
X: This is the first time you’ve taken an investment from a big media company. Does that represent a strategic shift for you? Did you feel it was time to line up some big partners in the industry?
TW: My personal opinion is that it’s a bad idea to take strategic investments very early in a company’s lifetime. It’s like getting married too young. You have to figure out who you’re going to be before you can figure out who your investors are going to be. Once you have a good bead on who you’re going to be, then it makes sense to talk about strategic investments, and if there is a fit between what you are trying to accomplish and what they are trying to accomplish, then you do it. I’ve had many discussions with potential strategic investors, and some of them had very unreasonable expectations about the rights they would be getting from their investment. Peacock was extremely reasonable, and showed that they would be a terrific partner for us.
