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The first: Started as a print product by Kierna Mayo and Joicelyn Dingle with Harris Publishing Money.
The second: Bought by Keith Clinkscales and his Vangaurd Media (still print but with much Web potential before the company tanked).
The third: Bought by Sahara with Michaela Angela Davis as EIC and a slew of bloggers. Something of a black glam before a black glam. [This was the impetus for the current sale.]
Now about the ROI for the investors, there's this, it's going to be more than just a content site or a community. So it's not even about the numbers on that old CPM game if that's what we're playing here. I'm looking at this shopping feature as a plus. I'm considering the success of Karmaloop and urban gear in general as an indicator.
The comparison of Essence to Honey is like comparing apples to oranges. Not the same audience at all. And if they do the social media and perhaps even a mobile play correctly, the numbers will be hot.
Is $10 million too much. Maybe. But it really depends on what you said in #1. Not having any idea what was laid out in that business plan that was presented to investors, it's hard to call it. There was some formula that convinced them they'd get that 10 mil back, even if it just ends up being in equity and a losing game for Honey itself.
I'd bet though with this many incarnations and owners, there's life yet. A lot more competition now, but if they pull the right mix of this biz plan -- things could ride.
Now if it doesn't do well... then it won't be a good look. So it should be interesting to see how they approach there new presence. They better bring a good mobile presence too.
But we do have to consider, that we're in a new era and that younger generations respond to the Web differently than we did back with the Hookts, Volumes, UBOs, Vanguardes, etc. That's one thing I'm considering when I assess that the audience is there for them to tap into -- if they do it smart. The problem though, is that they can't rely on the old brand identity to bring in new fans or a new brand identity to sway the old heads to return to the brand.
I did have an inside scoop on this project once, but no more -- so I'm not 100% sure where they're going but I know this, they're going to tap into every possible revenue stream possible, bc the honeymag.com they had up in 2006 just wasn't bringing in the traffic or the revenue -- and then one of their own ended up at black glam doing exactly what they could have been doing there.
Either way, it's going to be interesting to see how it all plays out. I've got my fingers crossed, just for the simple fact that Essence just doesn't cut it for a lot of women of color (and though Clutchmag and Interactive One's Hello Beautiful, as well as black glam are doing their best to fill the void there's still room out there).
Here's my PS: I'm not a total expert in this stuff, but like Siddiq having a long history in this game, I can analyze the information that's presented pretty well. (He's the expert). And 2: I have no insider information though I know some of the players involved. Basically, I'm waiting to see what unfolds just like everyone else.
Lets be clear - We are at a special moment in time. Whether your investors hand you $10 million, $8 million, or $50,000. The art of creating, feeding and growing an online audience is tough, mind-bending work. And all online audiences are not equal - some you can monetize, some just you can't. The question for Sahara is whether or not they have the passion and character to build a worthwhile audience. The days of "black guilt money" from brands is over. If you're going to make money in this business you have to earn it one click at a time.
I spoke with Kojo Bentil of Sahara a few weeks ago and he seemed clear minded and enthusiastic about the opportunity. Time will tell whether or not they have the talent to make it happen, but clearly they plan to be in the game.
Since my business partner, Patrick McElroy, and I launched EverythingBlack.Com back in 1997 I've seem dozens of Black internet businesses come and go. The primary reason for their failure was not poor strategic planning or lack of funding. They failed for the same two reasons that black offline businesses fail. One, because of some "Negro Foolishness" - like oversized egos internally battling it out; or way to many Chiefs and to few Indians. And secondly, because the never truly were in the game. Most talked alot, but never truly were in the game. Some had great parties, with a huge open bar, but were never truly in the game.
Nick Denton is in the game! Check this link for the proof:http://brownblogbusiness.wordpress.com/2009/01/03/question-3487-why-do-black-people-want-to-be-athletes-when-nick-denton-make-14-million-dollars-a-year/
When is friend Jason Calacanis sold Weblogs Inc. to AOL for $25 million, Nick stayed - wait for it - in the game. Now he is estimated to be pulling in over $1 million a month in profits.
It's my feeling that Sahara intends to be in the game, in a big way. I for one hopes that they are successful. I don't know who their investors are, but we need to own more of our own media - not withstanding Sandra Rose! We need to find ourselves with REAL MONEY chasing our entrepreneurs around begging to invest in their digital media businesses. I have been hoping and praying for this moment for over a decade. I hope that we are collectively bright enough to profit from it.
All the best,
James Harris
Elemental Interactive
ListenShare
ClutchMagonline
BrownBlogBusinessJournal.wordpress.com
Nice to hear from you. Check with me on Monday for more info.
All the best,
James
Question, how do I edit my last post? I hate typos?
Thx
James
Oh HONEY! This has been a painful movie to watch over the years. What my buddies Kierna Mayo and Joicelyn Dingle created was amazing; Since the Vanguard "takeover" (and even before) it has been like watching a boxer who was the man back in the day struggle to win rounds. However the race is wide open today so Interactive One, Honey and many others have an opportunity to seize a space that I consider to be wide open.
We are living in a day when the business of creating a "media" property creates a huge opportunity for savvy companies Nothing about what I see so far with Honey leads me to believe that what Honey is doing is compelling or interesting. However the space is so wide open, in 90 days that could all change. I remember a time when the automatic "black, urban" print ad dollars either were going to Vibe or Source to reach young progressives. Today I imagine media planners struggle on where to reach progressive African Americans. There is a huge opportunity to reach AA women and the business is big so $10m may as well be a wise investment against a highly coveted consumer.
The race is on for who has the goods to deliver great content and build communities. Do I think Honey can get it? Maybe. Do I think properties like aforementioned ClutchMag have an even greater chance to be successful. Absolutely. I agree with James Harris when he says that he hopes Sahara is successful. I'm a UBO "survivor" and the last thing I want to see is anyone blow thru money and not win. I think in the next 90 days it will be apparent whether they are setting up for success or not. How they are launching a new property and not giving blackweb20.com an exclusive or have called Lynne D, or Siddiq (my assumption) sends cultural cues that they are "building a website" and just don't get it the larger opportunity.
Nuff rambiling for me
Markus,
What a timely investment. It will be interesting to see who makes the most of their funding... Honey or Clutch.
Does anyone have an opinion on whether they think this is boon that will grow the online women's market or make things more competitive between Honey and Clutch for now?
Having worked with Shanel, I think she's got what it takes to make the site's editorial appeal to all the women of color who are currently under served in the media space. She's got eclectic tastes, a keen eye for fashion and music, and the drive to seek out excellent contributors and to arrange for interesting cross-platform initiatives. Now, I can't speak on Sahara's business plan or exactly what features the site will have, but I'm hoping for the best.
One last thing: The Radio One/Interactive One reference also doesn't add much weight in terms of the argument that HoneyMag.com won't recoup its investment (or see gains in the end). For one, Interactive One encompasses so many properties — HelloBeautiful.com, TheUrbanDaily.com, MiGente.com, BlackPlanet.com, NewsOne.com, etc., etc., and most of these (barring MG and BP) were launched in the last year to year and a half, so they're just starting to gain momentum. We can't really make any sound judgments about black online media based on these sites' profit margins just yet.
My two cents...
Agreed, the audience for Essence and Honey is different. The reason Essence was used was because it is one of the largest (if not the largest) website specifically targeting African-American women, by audience. Had another website been used the number would have been much lower. Take another look at the post and keep in mind that the actual number used was 1.5 million, the largest audience Honey ever attracted to its print publication. Essence was just a comparison used because, again, it is one of the largest out there according to available information.
Also, it is agreed that Interactive One has a lot that it is managing and businesses that it is just starting, so the discomfort with using its profits as a comparison is understood. However, if you take a closer look at posting, only revenue was considered for Interactive One in its calculation, because it is one of the larger African-American sites on the web by revenue. Had the profit margin for Interactive One been used, the resulting estimate for Honey would have actually been lower (much lower). The profit margin used in the actual calculation was that of myspace, a business has been around for a while.
Regardless of whether the comparison is fair, the calculation still assumes that Honey would start off with a 20% profit margin out of the gate and continue to maintain that kind of margin regardless of whatever challenges it faces. In reality, startups are often given 2-5 years time to even reach profitability, and lose money until then. Again, had the likelihood for starting the first few years losing money been considered, the numbers in the posting would have actually been lower.
The calculation was actually an attempt to be optimistic and give Honey the benefit of the doubt based on information available. Based on what information is available, the only way it seems that Honey could actually do better is to gain more income per visitor than the best of its predecessors, which would likely require a creative or very efficient business model. It's yet to be determined what that business model is, or if it is even there.