BPN 1087 Skoeps to be discontinued

Returning from my break in Belgium, there awaited me a rude awakening. The Dutch user generated content site Skoeps, the Dutch version of Ohmynews, will terminate its existence by Monday May 5, 2008. The joint venture with the newspaper conglomerate PCM and Talpa Media/Cyrte investment will end their co-operation. The conclusion is that Skoeps can not exist commercially.

I had my last contact with Skoeps, when I told the management that they were not a prize winner in the World Summit Award 2007 competition; but they were one of the eight Dutch nominees. I had also suggestions about their internationalisation. At the celebration of its first anniversary, the management told that it was cash flow positive. But soon there was an omen of things to come when the team that brought Skoeps into the world, soon after the anniversary was changed completely. And I noticed that something was wrong, as e-mail messages were not answered and appointments postponed one after the other.

Skoeps had the ambition to make of every Dutch man a reporter. The site published photographs and movies of amateurs, who witnessed a newsworthy event. The management succeeded in this ambition as the site contains now 7500 registered Skoeps reporters, who send in 100 to 1500 news items a month. The site did not exploit the reporters, as it shared revenues from sold photographs and movies on a fifty/fifty basis.

The basic problem of Skoeps has been to attract a regular base of users to the site. And Skoeps had a lot of competition. The PCM free daily DAG has a full page of user generated content photographs, while NU.nl has a site Nu.jij; there is also the site Dumpert.nl. Internationally of course Flickr and YouTube dominate this scene.

Skoeps had also an international ambition. It sold the concept abroad. There was an English version in the Netherlands, filled with Dutch items as well as a German version. Negotiations with UK and German companies were on the way. Foreign services did not necessarily bear the name and logo of Skoeps. The concept and technology were both available as white label as well. For example Zoom.in produces the Flemish and French Belgian sites. Skoeps provided the infrastructure for Africa Interactive Foundation, which runs the news service Voices of Africa in Ghana, Mozambique and Tanzania. This initiative will continue, according to a spokes person. One of their international ambitions will not be realised: the attendance at the Olympic Games, sponsored by a consumer electronics company (not Philips).

The investing companies, PCM and Talpa Media/Cyrte, have indicated that they service is no longer strategic to them. Talpa Media stepped out as it no longer is involved in digital productions and PCM is experimenting with another citizens’ journalism project EN.nl, which is still a project without any real direction (and in my opinion heading nowhere). The Skoeps staff point Skoeps reporters to the free daily DAG, which is busy to produce an alternative site for the active reporter

Media companies have looked at the site as a take-over target. However they shied away once they saw the costs involved for beefing up the site. Yet the initiator of Skoeps, Michael Nederlof, said in a comment that the disappearance of Skoeps, is a pity and unnecessary. According to Nederlof a broader roll-out has lacked, internationally and in categories.

Blog Post Number: 1087

Tags: user generated content, citizens'journalism

Skoeps' first anniversary coming up

Last week, I visited the offices of Skoeps. The company is based in a posh canal house in Amsterdam. The founding group, of which most members came from the Dutch publishing conglomerate PCM, started there in the basement. In the meantime the company is growing so fast that it also occupies offices at the ground floor and populates the ground and basement level with all young people. The offices are sober and in the corridor a big golden statue of Nijntje/Miffy, a gift from the landlord and a reminder to the founders not to loose their innocence.

Skoeps, a joint venture by the newspaper conglomerate PCM and Cyrte, the investment vehicle of John the Mol, is a user generated and moderated content site where people can upload videos and pictures of news events and sell them. It is citizens' journalism, but excludes photographs from VIP spotters, paparazzi and ambulance chasers. The company has been launched a year ago and has already made impact in The Netherlands. John de Mol is already using the material for a television station on internet and for regional television stations.

After half a year the company behind the site is already cash flow positive. It is also selling the concept abroad. There is an English version in the Netherlands, filled with Dutch items as well as a German version. Negotiations with UK and German companies are on the way. Foreign services will not necessarily bear the name and logo of Skoeps. The concept and technology are available as white label as well. For example Zoom.in produces the Flemish and French Belgian sites. In the meantime Skoeps has already services and offices in South Africa and a few other African countries.

The business model behind the company is interesting. The company gets revues from licensing the concept under the name of Skoeps or as white label. It picks up money by licensing the service and software for events like the Cape to Cape rally, a car rally from the top of Finland to the cape of Gibraltar. But it is also negotiating for the Olympic Games next year in Beijing. Of course there are revenues from classic bannering as well as the sale of a photograph or a movie to news media or Youtube –like services. Another revenue source is sponsoring.

But after almost one year, Skoeps is not resting on its laurels. It is actively looking for partners in other countries. Presently Skoeps is talking to an international network which might deliver contacts in some 50 countries. But it is also working on additions to the service; video logging is one of the opportunities. Recently Skoeps started a cooperation with Startlog Nederland, providing authors of weblogs with news scopes. Startlog Nederland will distribute the scopes through its press release service.

The company celebrates its first anniversary on October 5th, 2007 with a nice first year result of operating a service, foreign services and a positive cash flow. What could an investor wish more for: a product, international expansion and a positive cash flow?

Blog Posting Number: 871

Tags: user generated content, citizens' journalism

John de Mol: never say NEVER

In 2005 the Dutch media tycoon John de Mol said that he considered Endemol to be a closed chapter. It was a one-liner, which he diplomatically used in order to create silence on this subject. Telefónica had just offered the shares of TV and digital media production company Endemol to the stock exchange. But when in 2006 Telefónica solicited serious offers to sell the company, John de Mol was one of the parties; his investment company Cyrte bid for the company in the consortium with the Italian media company Mediaset and the haute finance company Goldman Sachs. In the meantime John de Mol kept silent.

Now Endemol will be transferred to the consortium for 2,63 billion euro. All three partners are in the consortium for an equal share of 876 million euro. John de Mol will laugh at the deal. In 2000 at the height of the internet hype he and Joop van de Ende sold Endemol to Telefónica. This telecom company had been convinced by the gurus that telecom would converge with the digital media and that the mobile telephone would become a pocket PC, an MP3 player (when did MP3 players become fashionable?) and a television screen. Content would be needed to fill that market hole. While Time-Warner merged wit AOL, Telefónica acquired Endemol. The price paid, 5.5 billion euro, was reasonable, given the bright future.

But then internet crashed. The CEO of Telefónica was dismissed. The company was left with a company which was no core business for a telecom company. Besides the price paid was too high given the revenues. The accountants had to write off a hefty sum. But Telefónica took the time to get rid of the Fremdkörper. So the years went by and in 2005 Telefónica thought that the time had come to sell and cash. But as the acquisition of Endemol would be expensive, Telefónica sold 25 percent of the shares on the market. The value of the company was estimated on 1,1 billion euro at that time; after five years it was just one fifth of the original price paid for by Telefónica in 2000. With the present price of 2,63 billion euro, Telefónica can say that the company made a profit of 1,4 billion euro. But that is only the view of the new Telefónica mangers. You can also say that Telefónica has lost2.87 billion euro over the past five years.

John de Mol played the game DEAL OR NO DEAL well. He cashed with Joop van de Ende in 2000 5,5 billion euro. He was not allowed to be in the entertainment business for 4 years, so he invested his money in telecom companies and other companies. Once the entertainment clause was not valid any longer, he started the radio and television station TV10 in The Netherlands, just to show that he was back. And back he is with a vengeance. TV10 might not be the hottest station with the consumers, it is however a station to merge with or be acquired by RTL Netherlands or SBS. Once the position of TV10 has become clear, John de Mol can go back to Endemol to create formats and test them out on the channel TV10/RTL.

What is the future of Endemol? There may be three shareholders in the consortium. Usually this is a sign that the company will be broken up (see the scenario for the beleaguered bank ABN AMRO; do not show sympathy for that bank as they mess up the present sale in an Italian way!). But in this case only Goldman Sachs could take advantage of that; Goldman Sachs will be the company that will step out after a while and offer the shares to the two consortia members. A break-up would not help them. As a global creative entertainment company Endemol needs profits of the entire value chain from creating formats, to production and distribution. Endemol will teach Mediaset the international way of trading entertainment products for Italian and Spanish products. But Mediaset will always stay in the Golden Cage of Endemol, while Endemol will behave like a Big Brother to Mediaset.

(The picture is of the first Big Brother series in The Netherlands in 1999)

Blog Posting Number: 755

Tags: entertainment industry