Media Executive Interview Series: Jim Voelker, CEO, InfoSpace: PaidContent.org

Ed's Note: We've recently launched a new monthly media executive interview series. This is the seventh one...the archives are here.
It is being brought in association with The Jordan, Edmiston Group.

Interview by Rafat Ali Speak your mind

As "mobile" and "mobility" becomes a larger part of the search industry, InfoSpace is positioned to have a sizable impact on the digital media industry, at least more than it has had in its history till now. And that is saying a lot for a company which has been somewhat ignored in the reinvigorated new media sector.

Until recently, InfoSpace had been operating as two separate divisions: online search and directory; and mobile content/infrastructure. Now, the two divisions are merged with the rationale that search is becoming more and more mobile and InfoSpace will provide the thread that connects users through search or pure content.

CEO Jim Voelker joined the company as CEO in 2002. He has helped InfoSpace claw its way back from the Internet bust and is now driving the business through the technology boom. The company’s mobile division was somewhat decimated in the first half of 2005, when a number of senior executives left in a short period of time. The company, however, has rebuilt the division with three high profile hires in the second half of the year. Jules Haimovitz, former President of MGM, joined as a board member; Kieve Huffman, former VP at SonyBMG, joined as VP of Content; and Stephen Davis, former President of Granada, joined as President of Mobile Media.

The following interview with Mr. Voelker addresses the rationale of the divisional merger, the mobile search and advertising industry, mobile carriers and the mobile music industry:

Q: Recently, you merged the two divisions of the company: search and mobile. Can you explain the rationale?

A: In 2002, InfoSpace was one-third the size of the current business. So, we have made a significant transformation. We decided to remain in the two businesses, because we liked both business models, and we thought somewhere down the line we could bring search and mobility together. One of the key functions that mobile needs is discovery. Companies such as Amazon, eBay, Google and Yahoo have built value in online discovery, and we continue to think that discovery is critically important.

Q: Do you see the major online search companies becoming bigger players in mobile, or do you see space for new entrants?

A: There are significant differences between the services provided by Google and Yahoo online and what is needed on a mobile device. The biggest difference is that there is a huge data set largely unrelated to the Web. For example, search queries via mobile devices are vastly different from those on Web search. On the Web, a lot of research is done via search, but on mobile, search will be used not so much for finding the distance to Mars, but for locating the closest Mexican restaurant.

What we have done with meta-search (searching the search engines) online is very well suited for mobile. If you are looking for content, personalization, entertainment, local content, services, directions, maps, etc., we have provided all of these things with our meta-search environment online. That is on the product side.

On the business side, it is important for people to understand that while there are many similarities between mobile and online, such as the importance of speed in both environments, there are also differences between the two media. For example, mobile is not an “open” device or network. Mobile carriers have and will continue to have tremendous influence on how information flows via mobile devices. They will maintain their own brand and feel, and this is where we think we can be particularly effective. Currently, we handle the portals for Verizon, Cingular and T-Mobile, but we are a private label shop by definition.

Q: On the content side, you have made a few changes in management: you brought on a board member from MGM; and hired heavy-hitter content talent for the mobile side. Is the thinking then to get more and more into original content?

A: We will continue to be a programmer and licensor of content and help companies get mobilized. There are opportunities for us in mobile games, for example, where we can raise our profile and titles. Last year, we secured all the technical capabilities. That's probably why Electronic Arts (EA) paid such a huge premium for Jamdat (a provider of entertainment applications and technologies that support multiple wireless handset platforms).

We are looking for original titles in games and animation, and we're counting on Stephen Davis (the new head of mobile) to drive this.

Q: You have mentioned in the past that your company is developing a direct to consumer offering in the mobile content arena. What are your thoughts there?

A: I can't tell you about the branding, as we are not ready to reveal that yet. I can say that we were never terribly enamored with the Jamster approach of gaining subscribers (by selling hidden subscription services using ring-tones), because we didn't think consumers would see long term value in that approach. We have been researching a number of different business models in Western Europe and beyond and synthesizing what we have learned. Ideally, we want to leverage what we do very well: on-phone applications; content; licensing; and working with the carriers for accurate delivery. This also provides us with a forum to try different things much more quickly than we would through a carrier channel. This enables us to test and then bring the success stories to the carrier channels as well.

Q: Do you see the U.S. carriers becoming more open to off-portal content?

A: The start last year was grand, but unfortunately, the finish was not. The carriers have learned some lessons, and they just won't open their deck to anybody. We have been approached by a lot of carriers, and we always ask why they aren’t allowing delivery of off-portal (sites not sanctioned by the wireless carriers) content. We know what the carriers want, what the standards are, and we are already integrated with them on so many system levels that maybe this is something they need to be thinking about. However, the carriers like to see others spending marketing dollars, and the bottom line is that they understand it makes economic sense for them as long as they don't encounter customer service problems.

Q: How do you see the business outside the U.S. growing for you? Will international growth be primarily on the mobile side?

A: I think the online side of our business will grow strongly in Europe, mainly because search (and private-label search) is not as developed in Europe as it is here. Broadband deployment has just started to get rolling. On the mobile side, we would like to have a larger position, and that might be a place where we look at acquisitions.

Q: How are your relationships with Yahoo and Google, both of which recently renewed their contracts?

A: Google and Yahoo are immensely important to us, because we need them to monetize our online products. We may be the only online and mobile player that has relationships with both Google and Yahoo. Usually, they have exclusive arrangements. The reason we are the exception is that both companies see value in meta-search, and we also deliver good traffic to them.

Q: Have you looked at blog search?

A: We have, but we're pretty focused on mobile right now, and we don't think people are going to spend a lot of time looking at blogs on mobile phones.

Q: In mobile music, how do you see the evolution of an aggregator like InfoSpace?

A: Mobile music, in terms of full track downloads, has been a real conundrum. The labels have largely been reticent about forming an economic model that is appealing to the carriers. As a bystander, we are a bit confused, since this is a medium that should be very exciting to label owners. They have a very secure network and a secure device for downloading. Most importantly, they get paid for every download, as opposed to the Internet where they get paid for one in a thousand. It has truly been baffling to everyone on our side of the fence.

InfoSpace’s role in mobile music will depend on the kind of technical applications built around it. There are several different types of aggregators. Some purely do license aggregation, and I think there is some value in that. But, we offer so much more than that, since we are an integrator of content, technology, merchandising and delivery. All of those pieces in the chain continue to be very valuable. We take roles where we own the paper or don't, in terms of licensing. I think the ring-tone business continues to be strong, and we were pleased with how the year ended in that market.

Full track downloads have tremendous potential, but you have to create a business model that works. Sprint and other mobile carriers are trying to take less than optimum business models and prove to the labels that they can sell the downloads. If the labels continue to seek $.78 per dollar, they will not see a boom in this market.

Q: What about advertising on mobiles? Ad listings? Ad-supported content?

A: We are bullish on mobile advertising (listings, ad-supported content, etc.). I think mobile advertising will take several forms, including a search-like form, where the user is looking for a local restaurant, finds it, calls it, and basically, conducts a transaction between the advertiser, InfoSpace and a carrier.

For more promotional kinds of advertising that is sometimes accompanied by a video, I usually point people to Web sites, such as ESPN with its InMotion, a short promo, maybe even just an image, that will come up before the piece of content to be consumed. So, I think real opportunities exist there.

As location-based services continue to roll out, we'll see even more applications. We are very early in this game, maybe even too early. Once we start to understand how users behave when they are in certain places, you will see a lot of advertising opportunities develop.

Overall, I think there is a lot of excitement in the industry, but nobody knows exactly how it is all going to start or how specifically we’re going to get there, but everyone has a view on where the end will be.

Q: How do you foresee mobile video evolving and what role will InfoSpace play there?

A: The evolution of mobile video will depend on devices and how the networks evolve, but watch MocoNews.net (PaidContent’s sister site) for how those things will shake out. We have been working on the licensing side of that for over a year, and frankly, I have been amazed at the consumer reaction to mobile video. We have conducted a number of focus group studies on this, and personally, I can't see myself watching a lot of long form video on the mobiles, maybe because of my bad eye-sight. However, the market reaction has been very strong, and it seems to us that people will consume it; many more than we believed would do so a year ago.

Another very interesting point is that the Internet took time away from TV watching, but mobile adds hours to media consumption, because users will be using media in places where they never had before.



Comments (0) | TrackBack0)



location based services