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May 2, 2007

Digital media pitches at WSA forum

Posted by Kim Peterson at 4:48 PM

I sat through six presentations in the digital media part of the WSA's Investment Forum and Technology Showcase today. I was surprised how often advertising-supported business models came up in the discussion. The subject was addressed early that day in a panel (see Brier Dudley's blog for a full rundown of the lively debate).

At the end of the day, panelist Bill McAleer of Voyager Capital summed it up nicely: "There's only so much advertising-supported models that can survive and thrive."

So which ones will thrive? We'll have to come back in a year or so and see what happened to the presenters. For now, here's a quick rundown of who said what:

1. Smilebox. We wrote about this startup last year. The Redmond company, started by Andrew Wright, offers the ability to create slideshows and digital greeting cards. You can insert your own video and photos and then e-mail the creation to friends and family.

Smilebox now has 30 employees and is approaching 1 million installations of its software. Helped in part by a key partnership with Hallmark, Smilebox had 700,000 unique users in April and is expecting 825,000 users this month. Smilebox's product has some good viral distribution: Wright said that 40 percent of the people who receive Smilebox greetings go on to install the software.

2. Alphabet Lane. Chief Executive Villette Nolon said her company is going after people who are remodeling their homes and need help planning and finding experts. Founded in September 2006, the Seattle company has six employees and 12 contractors. It started a private beta site in February.

Nolon is planning to refine the Seattle version of the site and then take the model to 36 cities in the next 18 to 24 months. She's hoping to be profitable by 2009 and is seeking $500,000 in angel funding.

3. Flowplay. Yet another casual online game company in Seattle. This region is the headquarters for this growing industry. Chief Executive Derrick Morton (who, no surprise, came from RealNetworks' game division) said he's getting ready to launch a closed beta in late May.

Flowplay is targeting teenagers with a site that is part social networking and part gameplay. It's hoping to run a subscription model that costs $5.99 for premium PC access or $9.99 for mobile phone access. Teens who don't have credit cards can pay for the service by putting it on their phone bill. Flowplay said it will break even at about 80,000 to 90,000 subscribers and is aiming for $27 million in sales by year four.

4. Mixpo. An online video company selling to small business owners, not the consumer space. The company helps companies embed a player in their Web sites that can show photos and video. A business owner can add and delete files from that player without having to hire a Webmaster.

President Anupam Gupta, who previously worked in Microsoft's MSN/Windows Live group, said the technology would be perfect for real estate agents, travel agents, architects and designers. About 2,000 customers are using the product, and Gupta said he envisions a business model that relies on subscriptions and partner licensing deals.

5. RIPL. The panelists seemed a little mystified by RIPL and I have to admit that I was, too. Chief Executive Bill Messing, in his first public demonstration of the product, showed how users can create their own profiles with photos and widgets that showed what iTunes songs were listened to recently. Those profiles would go out to the users' friends, who could see a slideshow of the photos, along with ads.

RIPL is an example of a trend that I call a revival of push technology - particularly the way that ads pop up on friends' computers. But Messing said that this advertising will be useful and relevant. RIPL has completed a $2 million Series A round and is opening a $1 million bridge round to Series B funding, Messing said.

6. Yodio. Chief Executive Clay Loges said he thinks that voice is the "undeveloped frontier on the Internet." The basic idea is that people can call a phone number and leave a voice recording, and then go to their computers to get that voice file and publish it. You can mash it with photos or tag it, for example.

Loges showed an example of an e-mail message that featured a person's picture and a voice recording from that person. Yodio wants to sell those voice recordings, giving a percentage to the performer and keeping the rest of the money. But who would buy these? Maybe Yodio can hook up with Sanjaya Malakar now that he's free.

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