Social-Networking Software Supplier Pursues New Revenue By Distributing Content for Media FirmsSlide Inc., a startup best known for software tools that help people personalize their profiles and amuse themselves on social-networking sites like Facebook and MySpace, is trying to prove it has staying power.
The San Francisco company, begun in 2005 by Silicon Valley wunderkind Max Levchin, on Thursday will kick off distribution partnerships with Time Warner Inc.'s Warner Bros., CBS Corp., and Comcast Corp.'s E! Entertainment channel, among others. Using a new Slide video service, social-networking users will be able to view clips from shows such as NBC's "Nightly News" and "Beverly Hills 90210" for free.
Slide has become one of the most popular services on the web, building tools for social-networking sites. But as WSJ's Jessica Vascellaro reports, its successful applications, which are visited by 160 million a month, haven't translated into proportional revenue. (Oct. 1)
The partnerships are a sign of the maturation of the growing business of building services for sites such as Facebook and MySpace, which allow users to create personal profiles and connect those profiles with others. As the social-networking sites have grown, so has the competition for viewers and advertisers.
Slide plans to sell ads alongside the new content it will offer through the video service, called "FunSpace Channels." In other cases, Slide will take a cut of ads that its media partners sell. The company hopes to distinguish its video service from others by recommending content based on an unusual popularity measure: how actively viewers forward clips to their friends.
Mr. Levchin declined to comment on financial details of the distribution agreements. But the 33-year-old, who co-founded online payments company PayPal in 1998, said he expects the new service will encourage more marketers to advertise with Slide. "Television is a world that advertisers love," he said.
Slide, like many software companies targeting social-networking sites, has had trouble getting the attention of big advertisers. The social networks often limit the types of ads Slide and other service providers can sell. Advertisers also tend to prefer purchasing ads from better-known Internet brands, rather than smaller startups.
Other developers are partnering with big media to expand audiences and ad revenue. San Francisco-based Flixster Inc., which offers a service that allows Facebook users to rate and discuss movies, in August signed a deal with Warner Bros. to promote the distribution of its movies through Apple Inc.'s iTunes service. Another San Francisco developer, Loomia Inc., announced a deal in January to distribute via Facebook online news content via from NBC, The Wall Street Journal and technology web site CNET.
Slide's new online video service is part of the effort to attract new viewers and advertisers. The company's services draw more than 160 million viewers a month, according to research firm comScore Inc. But revenue -- from selling online banner ads, sponsorships and branded tools, such as quizzes -- remains small. The company wouldn't disclose revenue projections for this year. It expects $30 million to $50 million in 2009 revenue, according to people familiar with the matter.
In March, Slide announced it would focus on just three products for Facebook: a service that allows consumers to organize and communicate with a group of "top friends," a greeting card-like service called "SuperPoke," and "FunSpace," which includes the new video service.
Slide changed its approach earlier this year, dropping some services, such as one that distributed digital fortune cookies. "We asked ourselves," said Mr. Levchin, Slide's chief executive officer, "can they generate cash and are they going to be engaging to users a year from now?"
Slide also raised new financing. In January, it announced it received $50 million from T. Rowe Price Associates Inc. and Fidelity Management & Research Co. The funding valued the company at $550 million.
Media companies so far appear enthused about Slide's new video service. Andy Forssell, senior vice president of content acquisition and distribution for Hulu, an online video venture of NBC Universal and News Corp, owner of Wall Street Journal publisher Dow Jones & Co. Mr. Forssell likens the experience that Slide has created to an online version of gossiping around a water cooler. "Half the fun is watching [the shows] and half the fun is talking about them," he said.
By: Jessica Vascellaro
Wall Street Journal; October 1, 2008
