Bronte Media

It’s not easy being a Knicks fan. And it’s not getting any easier.

The decision to send Channing Frye to Portland and get Zach Randolph in return is a nail among thousands more in the coffin.

The Knicks are a Betty Ford clinic for delusional, over-paid talented players with a bad attitude. They all have huge contracts, all don’t know how to win and all have only discovered the letters m and e in the word team so far in their lives.

Isiah knows how to draft players. David Lee (my favorite player), Channing Frye, Trevor Ariza, Renaldo Balkman and Nate Robinson are all great promising players, with great attitudes, who want to win.

Yet drafting ability is Isiah’s Jekyl to his trading ability Hyde. There isn’t a ballooned contract in the NBA that Isiah hasn’t lusted after and that hasn’t end up roosting in New York.

The Knicks are being managed like Enron, from quarter to quarter, with no focus on the longer term and no fiscal responsiblity (because chumps like me still pay $60 a pop to see a game). That’s Dolan’s fault, who only knows how to run a monopoly business, and even then poorly.

The Knicks traded Ariza to Orlando for Francis and his huge contract. They then trade him along with Frye to Portland for Randolph and his even bigger 4-year $60m contract. In the space of 1.5 seasons. What vision does that demonstrate?

The end result: the young guys are leaving, and the acquisition of huge stupid contracts spirals out of control. There is Jalen Rose who was paid $15m/year, stayed half a season, and then sat on the end of Phoenix’s bench last season while the Knicks picked up the tab.

The Knicks have no core. Head-in-the-stars-bury is a good point guard who is horrible in the clutch, can’t win and is past his prime.

The Knicks have Eddy Curry and David Lee, which is the beginning of something but that skinny semblence of something has been set back another year because of the departure of Frye.

They didn’t even get the point guard throw-away they should have.

This just kills me. But I’ll just keeping on lining up for more punishment.

There have been two brilliant posts on the Facebook App eco-system recently.

One from Marc Andreesen (best blogger of 2007?). And the other from Nissan at startupreview. Go and read them both right now.

Pretty interesting email leak from an entrepreneur who used to work for Microsoft, left to found a startup, which was subsequently acquired by Google.

Deadline Hollywood Daily has the scoop that the founders of MySpace each want $12.5m a year for the next two years.

Duncan Riley writing for Techcrunch (I will differentiate Arrington Techcrunch posts from the other writers he has on) says: “Are DeWolfe and Anderson worth the money? On the surface the request would seem absurd. This is not to belittle their contribution to the success of MySpace, but to ask for a pay rate that would make virtually everyone in Web 2.0 blush reeks of pure unadulterated greed.”

Riley’s thoughts reek of pure unadulterated naivety and jealousy.

Let’s look at the situation. Anderson and DeWolfe started MySpace within the corporate structure of a spam and spyware shop. News Corp acquired the company for $580m in July of 2005. But the pair didn’t own that much equity at all. This from a Fortune profile on MySpace last year:

“How much did DeWolfe and Anderson make? According to public filings, DeWolfe got $2.9 million from the deal, but that’s surely conservative. The pair got millions more from their stake in MySpace Ventures - a minority owner of the site - plus handsome contracts when they joined News Corp. The company won’t discuss the matter”

From July 2005 the site has increased in value from $580m to a proposed $12 billion by bankers to leverage into a stake in Yahoo. Let’s halve the value and say it’s worth $6 billion.

So each founder got about $5m each say in the acquisition. News Corp then gave them a bonus straight after because they were embarrassed by how little the two owned in the entity. Let’s say that was $10m each, as a wild guess.

Each founder gets about $15m for driving the valuation to $580m. Then in two years the valuation goes from $580m to $6bn. Now they had a lot less to do with that creation but asking for $25m each over the *next* two years doesn’t seem like a lot. In fact it seems small only because News Corp has all the leverage.

Terry Semel was paid hundreds of millions of dollars per year at Yahoo.

Getting paid $12m a year is nothing in comparison to the value creation they have driven. But the press seem to have a very hard time accepting when someone is paid a lot for working somewhere versus when someone is paid a lot for selling equity in a business.

News Corp would be wise to pony up the minuscule ante to the two people who’ve helped drive huge wealth creation for all of the senior management and shareholders.

Continuing along the theme of sites that are enjoying great success after being pronounced “dead”: Insiderpages. You might remember the firm was acquired by Citysearch back in January for essentially the amount put in by the venture guys. Since then the site has doubled traffic, according to Compete (who are actually a pretty reasonable and useful sort of data, at least in the US where their ISP data comes from).

Then again, as Citysearch has proven - owning local search usage hasn’t been that useful in turning spectacular profits in the past 10 years. But still, the Insiderpages acquisition will go down as a very smart one for IAC.

You might think I am feeling a little peachy after Techcrunch recognizes that Friendster is experiencing huge growth despite being ‘dead’ and ‘failed’.

Instead I just had to laugh at the comScore graph:

I expect to see more of this type of news in the coming year. Chitika, a shopping based ad network that shows affiliate deals on blogs, is buying up some of the blogs in its network.

You’ve heard me crap on about the business model of ad networks enough but here it is again: over time all the value goes to the person who owns the consumer relationship. Getting the consumer to turn up to a web site in a valuable context accounts for the lion’s share (80+%) of the value. Sure there are scale issues. Sure publisher’s don’t grow as quickly as stitched together ad networks can but they create the longer term value.

One interesting company to watch in this space is Blue Lithium.

These are the stories that are conveniently forgotten when pundits say that “online is taking away from the budgets of TV”:

“CW, jointly owned by CBS and Time Warner, expects to secure $640 million to $650 million in ad deals, according to a person familiar with the situation. That is compared to the $625 million to $640 million the young network secured the year earlier. CW expects price increases in the low double-digits, according to this person.”

Overall it looks like the TV upfront is up low single digits in dollar terms. That doesn’t take into account the trend of more spot spending. And this in an environment of measurement mess where advertisers know their ads aren’t being watched (by virtue of the commercial ratings vs tv show ratings) and rising DVR usage.

All of that and the CPMs on a channel like CW were up by double digits. Anyone in online advertising should simply accept this inevitability. Online dollars are growing because of direct-response justification and the big branding dollars are not shifting (they may be growing in parallel) but the word shifting is just categorically wrong at this point in time. Maybe ten years down the track, but not in 2007 and not since the Internet’s inception.

From an ESPN piece comparing Durant vs Oden:

“Oden will be a superior rebounder and shotblocker on par with the likes of Dikembe Mutombo, Alonzo Mourning, the Georgetown-era Patrick Ewing and the Teen Wolf wolf. He’s a game-changer. Durant can’t compare, obviously, but he does grab his share of boards (he was fourth in the nation last season) and protects the rim surprisingly well for someone who is skinnier than Kate Bosworth.”

The Teen Wolf wolf!

I subscribed to Portfolio magazine, the business magazine launched by Conde Nast. And think it is fantastic. Exactly what a magazine should be and what you would expect from those who publish the New Yorker and Vogue. The profiles have always been my favorite stories in the New Yorker and Portfolio basically doubles down on only profiles of business leaders.

They probably spent way too much money, ad pages mightn’t be what they were expecting but the product itself is outstanding.