Young Internet Producers, Bankrolled, Are Seeking Act II
SAN FRANCISCO, Sept. 24 — Silicon Valley is awash in serial entrepreneurs, those who start a company, run it for a while, and then after success, failure or something in between, move on and start again.
Jay Adelson, 36, and Kevin Rose, 29, are parallel entrepreneurs — starting a second company just as the first one is taking off.
In 2004, the two started Digg, a fast-growing Web site that allows users to play editor by submitting links to news accounts around the Internet and collectively deciding which deserve top billing.
Now, while they are still very much involved with Digg, Mr. Adelson and Mr. Rose are preparing to announce that they have turned the Revision3 Corporation, an Internet video production firm they have been running on the side, into a full-fledged company.
Revision3 has close to $1 million in financing from a group of investors that includes Marc Andreessen, the founder of Netscape, and Greylock Partners, a venture capital firm that has backed the start-ups Facebook and LinkedIn, as well as Digg.
It is trying to capitalize on the rapid growth of Internet video, and its founders hope that their programming formula, a hybrid of the polished shows created for the networks and the amateur videos that populate sites like YouTube, will be the path to commercial success in this medium.
The company is built around a series of Internet television shows, or video podcasts, aimed at a young, technologically savvy audience, one steeped in “geek culture,” as Mr. Adelson, the chief executive of both Digg and Revision3, put it.
The most popular show so far is “Diggnation,” which is already in its 64th weekly episode. Each installment features Mr. Rose and a co-host, Alex Albrecht, 30, sitting on a couch, drinking beer and talking about some of the most popular stories that have turned up on Digg.com that week. Invariably, most of these are technology-related.
The core audience for “Diggnation” consists of users of Digg, which has more than half a million members and attracted 8.5 million visitors last month, up from 2.3 million in August 2005, according to Mr. Adelson. (That is much higher than the 1.2 million visitors reported for August by comScore Media Metrix, a widely used source of Web traffic data, but it shows a similar growth rate. Mr. Adelson argues that the service does not properly measure the site’s niche audience.)
Digg’s success has made Mr. Rose, 29, an exemplar of sorts in user-generated media, the phenomenon behind the startling growth of YouTube and the popularity of MySpace and Facebook, among other recently minted Internet companies.
The “Diggnation” shows, which are frequently photographed in Mr. Rose’s walk-up apartment in San Francisco, last 45 minutes to an hour and involve a fair amount of banter, off-color jokes and digressions on topics like skateboarding and beer-bottle openers. “A lot of geeks do that, but don’t have a camera,” Mr. Rose said, in explaining what he does and its appeal to fans.
The show is not for everyone, but Digg fans appear to be loyal. Mr. Adelson said that each episode of “Diggnation” was downloaded about 250,000 times, and that all Revision3 shows, including one about hacker culture and a cooking program called “Ctrl-Alt-Chicken,” were downloaded a total of about 1.5 million times each month.
Exact audiences are difficult to measure, especially since video podcast viewers often use software that automatically downloads episodes onto their PC’s, and may not watch all of them.
But “Diggnation” routinely ranks among the most popular shows in the Apple iTunes podcast directory. It is also distributed on its own Web site and through YouTube and other services. By way of comparison, when ABC ran a two-month test and offered free episodes from four hit series on its Web site, including “Desperate Housewives,” “Lost” and “Alias,” it reported 5.7 million online requests for the shows.
Many of Revision3’s performers and producers, including Mr. Rose and Mr. Albrecht, gained experience on the cable television channel TechTV, so they come to the shows with production skills.
That puts the company on the leading edge of a shift in Internet video from user-generated clips to “a more controlled environment,” said Allen Weiner, a research director at the market research firm Gartner.
Mr. Weiner predicted that the popularity of this kind of programming would surge in the next few months. Whether it will turn into an enduring form of entertainment, let alone a profitable one, is an open question. “Let’s face it, this is an experiment in progress,” Mr. Weiner said.
Indeed, Revision3’s technologically hungry audience represents a subset of MySpace enthusiasts, but it is not clear how large a subset it is. The company has broadened its lineup of shows to embrace alternative music, cooking and comedy. But in doing so, Revision3 may run into the kind of challenges faced by Digg.
In June, Digg expanded beyond technology to include world news, business and other topics. Mr. Adelson said more than half the site was now made up of links to nontechnology news. But on a recent afternoon, the top link in the “world and business” section was an item about whether the movie character Napoleon Dynamite was a nerd or a geek. The six most popular items on the site were technology-related.
“It’s a niche,” said George Zachary, an experienced veteran Silicon Valley investor who is a partner in Charles River Ventures of Waltham, Mass., and Menlo Park, Calif.
David Sze of Greylock Partners is bullish about Revision3’s prospects but acknowledges that the appeal beyond its core technology audience is unknown. “How new programs will extend the user base remains to be seen,” Mr. Sze said.
Mr. Zachary applauds the company, saying: “One of the most important things going on in media is that people want an authentic point of view. That’s why things like ‘Diggnation’ are popular.”
At a taping of the show last week in San Francisco, Mr. Rose and Mr. Albrecht settled on a couch — each with a laptop, unshaven and in jeans and a T-shirt. As a camera rolled, they spent five minutes chatting about each of seven top items on Digg that week, including one titled “How Paris Hilton Can Help Your Web Development (seriously).”
Everything about the show, including the ads, is unscripted. It is basically up to Mr. Rose and Mr. Albrecht to say whatever they feel like about their sponsors, which include the Internet domain company GoDaddy.com and CacheFly, which helps Web sites transmit video.
“It was a bit scary out of the gate,” said Barbara Rechterman, executive vice president for marketing at GoDaddy, which is known for its racy Super Bowl ads. But she added, “It has worked really well for us.”
Mr. Adelson said Revision3 was already profitable and had monthly revenue from “Diggnation” alone ranging from $50,000 to $100,000. While that is modest, it happened without much effort. Advertisers, he said, called him asking to be on “Diggnation.”
With the new funds, Revision3 will be able to put together an advertising sales team, give regular contracts to performers, lease office and studio space and spruce up its Web site.