Democratizing Media: Partnering With BitTorrent To Distribute My Novel Captive

Guest Post by Megan Lisa Jones, Author of “Captive”

My alternate title to this post was How to build a global audience in days, and the story begins with over 400,000 downloads in the first twelve days of the promotion.

Captive was the first book chosen in BitTorrent’s new artist program.

BitTorrent is a peer-to-peer file sharing protocol with an active user base of over 100 million people in which, essentially, the more people downloading a file the faster it downloads.  The company has promoted films, shows and bands prior to Captive being in the spotlight.  The last band they chose, Sick of Sarah, had 1.5 million downloads in about six weeks.

Captive is a thriller in which George, a psychologist and interrogator, must get critical information from Khalil, a hardened Algerian terrorist.  Meanwhile, a young Saudi chemistry student is building a related string of bombs when not attending his classes at UCLA.  The book is more pertinent today than when I started writing due to the unrest throughout Northern Africa and the Middle East.

I’m a new writer with a first-time book and can’t afford the type of marketing campaign more established thriller authors have (plus, they already have large built-in audiences).  Despite BitTorrent’s success distributing other media, I was uncertain with respect to potential audience size for a novel since it was limited to those who read English.  Being the first novel promoted, I couldn’t evaluate expected audience based on historical results.

I wanted to reach an audience that would be interested in and enjoy Captive.  I also wanted to do it quickly.  Being from the tech world by birth and profession, I know and understand the business models tech and Internet start-ups are using to build their businesses and scale online.  And it’s more than just “social media marketing”.  Also, I know that model better than I understand the media windows and ins and outs of publishing (which seem so expensive).  But ─ let’s also not ignore that ─ traditional media businesses are struggling while Internet-based social networkers and gamers are scaling.  Media is dependent on scale and writing books is a business like any other.

Then I lucked into the experts.  The people at BitTorrent blow my mind.  The traffic from their promotion soared at announcement and thus far hasn’t let up.  I can’t fully grasp how they reached “my” audience so quickly.  The initial press release somehow lit a fire.  There is a little Twitter, some Facebook and soaring traffic to my site and blogs.  News articles and blogs covering the promotion also helped.  But not over 340,000 worth of audience.

And that’s where the peer-to-peer concept matters.  Sure, some of my audience wants (and does…thanks for the emails and other messages, by the way) to connect with me.  But I’m guessing they would rather discuss the book with each other.  That’s what I do when I read a book I really like or find a great offer.

I’ve had global traffic from most regions of the world including South Africa, to Moscow, to Pakistan, Iraq and Thailand.  I’ve reached Chile, most of the US and Europe and large swaths of Asia.  Australia and New Zealand.  BitTorrent has helped me reach countries (China, Saudi Arabia, Iran, Tunisia, Algeria and Egypt) where a book that addresses terrorism wouldn’t be published.

BitTorrent promotion has allowed Captive to be real media…something with a message that is being shared by all people regardless of where they reside.  And, in this case, the sharing literally was person to person.  No book sitting on a shelf is doing as much.

One other note, I’ve written about the monetization aspect (or lack thereof) of the promotion on both my blogs so won’t belabor the discussion here.  But I will say that I’m getting contacted by numerous readers about the release date of the sequel (2012 unless I start writing faster).  Will they pay for it?  Some will.  Some won’t.  For example, I just told someone about the ending deadline for the promotion.  They told me they’d rather order a hard copy from Amazon.

Moreover, I do trust the streets…they have, do, and will pay for content when the price is fair and the content what they value.  But first, before I can worry about money, I need to find my audience so I can keep reaching and satisfying them in the future.  Doesn’t any value proposition ultimately rely on giving your customer or audience what they want and making them happy?

THIS QUARTER IN VENTURE FUNDING – Q1 2011

In a comprehensive review of the VC transactions in Q1 2011, we identified each investment made in a company we classified as a Social Media focused company.

VC funding of Social Media companies rocketed to $2.18 billion in Q1, surpassing the $1.6 billion raised by Social Media companies for full-year 2010.  This surge was driven by the $1.5 billion financing round in Facebook by DST and Goldman Sachs in January.

Excluding the Facebook round, average deal size for the quarter was $8.1 million, down from $14.4 million in Q4, and in line with the 2010 average of $8.3 million. The two largest deals in Q4 2010 were the $183-million raise by LivingSocial and the $200-million raise by Twitter.  Excluding those two deals, average round size in Q4 2010 was $7.9 million.

Below is a list of the 10 largest Social Media investments in the first quarter, which totaled $1.79 billion. The 10 largest transactions equaled 82% of the total amount raised in the quarter.

Below we detail the data from Q1 2011.  If you have or know of a company that was left off the list please let us know by writing to us at privateshares@wedbush.com. We apologize ahead time for any misclassifications, and will be updating the data in future publications.

Once again, we look forward to hearing from the community to help us make the data as correct as possible. In addition, we look forward to hearing from the community with regards to future financings. While we acknowledge the data presented here may be imperfect, we believe it is directionally correct, and we feel it’s important to put a stake in the ground and highlight how rapidly the VC landscape is adjusting to the evolving Social Media landscape:

Source: Crunchbase, Wedbush Securities, Inc.

THIS WEEK IN SOCIAL GAMING – 4-15-2011

After the meteoric rise of Cityville in December 2010, and post the holiday season, Monthly Active Users (MAUs) for the Top 10 Facebook game developers trended down for two months, but March saw an MAU increase of 2%, to 432.3 million.

From the time we began tracking the social gaming sector in April 2010, the three largest developers in terms of aggregate MAUs have remained at the top.  Of this group, however, only Zynga has experienced MAU growth since April, which is largely due to the success of Cityville and its 89 million MAUs.

 

Source: developer analytics, Wedbush Securities, Inc.

Cityville remains the most successful social game ever, peaking at over 100 million MAUS, and is off only 11% from its peak (against an average of almost 45% for the other current top games).  Texas HoldEm Poker remains the most enduring of all social games down only 5% from its peak.

Source: developer analytics, Wedbush Securities, Inc.

One other success story is Wooga which, powered by the success of Diamond Dash, Monster World and Bubble Island, has eclipsed Playdom as the fourth largest game developer.  Playdom’s decline, after being purchased by Disney in July 2010, highlights the risks that large media companies face when acquiring social assets of which they have minimal understanding.

Source: AppData.com

Facebook Advertising Showing Improvements

In a report released this week, Efficient Frontier reported that cost-per-click rates on Facebook ads increased by 40% in Q1 ‘11 versus the prior quarter (Q4 ’10).  While we appreciate the strong macro trends driving Internet advertising growth, and Facebook’s improving optimization techniques, we were still very impressed by this significant growth, particularly given the seasonably strong Q4.

Facebook is particularly well positioned to grab a larger share of advertising dollars as spend shifts online; as the platform can offer advertisers the ability to make large-scale buys, deliver highly targeted audiences (According to Blinq Media, Facebook averages more than 220 data points per member), and enable advertisers to buy on a cost-per-click or cost-per-action basis.   Advertisers are increasingly embracing these benefits, reflected in display advertising growth significantly outpacing search advertising growth in 2010.

 

Facebook is also utilizing massive amounts of data relating to advertising effectiveness to better optimize campaign performance.  As an example, when the data revealed that non-home-page impressions were driving brand recall, Facebook dropped the frequency cap of the advertising impression served on the home page per user from five impressions to three impressions.  The additional two impressions were redistributed elsewhere on Facebook, leaving more high value home page impressions for other advertisers, driving non-home page impressions, and improving advertisers’ ROI.

Source: WSJ.com via eMarketer

As Facebook continues to grow its user reach and optimize its advertising offering, we expect that the company will increasingly close the gap between the user time spent on Facebook and the share of advertising revenue captured.

 

 

Facebook Friends Baidu

News of a potential partnership between Facebook and Baidu surfaced this week.

Why China?

Facebook is entering China at a time when China is adding 10 million Internet users every month to a current Internet user base of 457 million (still only 34% penetration).  In addition to this massive user base, China’s online advertising market is growing rapidly with estimates that it will triple to almost $13 billion by 2014 (roughly 14% of the global online revenue estimate).

In addition to accessing incremental advertising revenue, this partnership will allow Facebook entrée into China’s thriving social gaming market. With an estimated gamer population in excess of 300 million, producing revenue of $4 billion, China’s social gaming marketplace is roughly double the U.S. market, and growing rapidly, with estimates of $8 billion in 2014.

Facebook is currently restricted by the Great Firewall of China.  Users within China who want to access Facebook (or YouTube, or Twitter) must use a VPN or other proxy service to bypass the block.  As we have written about previously, Zuckerberg wants global ubiquity for Facebook, which means working with the Chinese bureaucrats to provide the control required by the government. This is a very different tact from Google, whose political views take precedence over near-term business objectives.

As the largest search engine in China, with an estimated 84% search market share, Baidu is an attractive partner as Facebook will gain access to significant traffic through Baidu’s search site.  We also note that Baidu has strong ties with the Chinese government.  Domestic sites such as RenRen and Tencent’s Pengyou currently dominate China’s social network market.   Also of note are the Twitters of China — Sina’s Weibo and Tencent’s Weibo both reach in excess of 100 million users a month.  Baidu currently has services to compete in either the social network of micro-blogging space, so a partnership with Facebook is a tremendous coup for them as well.

While commentary in China about the Facebook-Baidu partnership has been positive, challenges remain.  Most notably, Facebook-Baidu will need to localize its offering to effectively compete against entrenched competitors.

 

Raising Our Facebook Estimates To Reflect China Contribution

To account for incremental revenue coming from advertising and eCommerce in China, we are raising our revenue estimate for Facebook in 2015 by over $900 million or 4%, yielding an incremental $10 billion in value in our 2015 estimate.

 

THIS WEEK IN FACEBOOK

BarackObama.com Re-launches with Focus on Facebook

 

President Barack Obama’s re-election campaign officially started on April 4th with the launch of a revamped BarackObama.com; and Facebook is front and center.

 

On the homepage, where users are prompted to add their email address, the traditional “Enter” or “Submit” button was been replaced with an “I’m In!” and users can also can sign in using Facebook.

 

When logged in via Facebook, a banner appears showing users which of friends are not yet “in” and encouraging users to invite friends to join the “Are You In?” app.

 

 

 

 

We note that the first blog entry on BarackObama.com was made by “Christopher.”  We don’t know if the entry was made by “Chris Hughes,” one of the founders of Facebook, but since Chris worked on Obama’s campaign last time, it wouldn’t surprise us.

 

One last note . . . President Obama will be holding a Town Hall meeting at Facebook Headquarters on April 20th.  This event will be streamed online.

 

As we mentioned previously, one of the major risks to Facebook remains government regulations.  Facebook clearly recognizes this threat and has added a competency to navigate the political landscape.  Facebook’s COO, Sheryl Sandberg, is a former Clinton administration official, and Facebook’s General Counsel (Ted Ullyot) is a former clerk for Supreme Court Justice Antonin Scalia.

 


Facebook Announces Open Compute Project

 

One consistent trait of social media is the freemium business model.  Typically, we think of the philosophy as enabling easy access to content, open sourced software, and free social connections.  On Thursday, April 7, Facebook announced the Open Compute Project, bringing that model to the hardware world and facilitating the creation of more energy efficient and economical data centers industry-wide.

 

The project started two years ago with Facebook building its own custom-designed servers, power supplies, server racks, and battery backup systems.  Despite following the mantra that “done is better than perfect,” Facebook’s end results were impressive as the completed Prineville data center used 38 percent less energy and costs 24 percent less to do the same work as Facebook’s earlier facilities.

 

Facebook was not content to keep its secret sauce internal.  Instead, believing that what is good for the industry and consumers as a whole is good for Facebook, with The Open Compute Project, Facebook is publishing specifications and mechanical designs the company used to achieve these improvements, thus allowing any company to replicate the systems.  Facebook’s Head of Operations, Jonathan Heiliger, explains: “It’s time to stop treating data centers like Fight Club.  It’s time to demystify them.”  Facebook believes that building an open community around this aspect of the business will allow significant and rapid improvements to be layered on top of what Facebook has started.

 

Tellingly, after Zuckerberg and Heiliger presented, a Q&A followed, but rather than involving Facebook execs, the panel was comprised of chief technologists from Zynga, AMD, Dell, Fidelity, Goldman Sachs, HP, Intel, Rackspace and Synnex.  All of the panelists spoke of their excitement in adopting the Open Compute standards in order to strip out costs and increase scalability in their businesses.

 

Much of the social media discussion has focused on revenue and metrics like active users and CPMs that contribute to the top line, but improvements to the infrastructure that power these businesses have dramatically improved the cost model.  Facebook’s announcement is significant and will help facilitate growth, both internally and across the industry as a whole.

 

THIS WEEK IN TWITTER

Refocusing the User Value Proposition

 

Last week we highlighted the return to Twitter of co-Founder Jack Dorsey and indicated product changes would follow that would be designed to make the user experience more intuitive and useful for average users.  Twitter’s major problem today is “onboarding,” which is the process of taking a new user and helping them quickly understand Twitter and derive value so they return and become active users.  On cue, this week Twitter unveiled several new features focused on improving the on-boarding experience to convert a higher percentage of registering users to become active users.

 

On Monday, the company updated their search engine to ease the discovery of Twitter feeds that better match a user’s interests.  Previously, the Twitter search engine had to contain the key term in the user name.  Now, it seems Twitter has worked on indexing/profiling their users.

 

Tied into the push of helping its users find interesting content, on Wednesday, Twitter released a new homepage with the new call to action of “Follow your interests”:

 

 

 

THIS WEEK IN GUEST POSTS: MONETIZING SOCIAL

 

Refocusing the user value proposition for Twitter is not only designed at growing the sheer volume of the user base, if successful, this strategy will also allow Twitter to better monetize its traffic by enabling advertisers to more effectively target users with offers that match known interests.

 

This is one example of the unique advantages that are driving revenue growth at social media companies.  While the major macro trend driving social media is the shifting of advertising dollars online, we also believe that social commerce is poised for dramatic growth as well.  The following guests posts from XA.net and Gigya, and Epic Social, will show different data sets that give insights into how fast the ad dollars will shift.  The final three posts, from Adgregate, Bonobos and Venessa Miemis, focus on social commerce.