Cashing in on blog bling

Cashing in on blog bling

San Francisco startup Slide has a plan to make big money off tiny free
software programs now populating the Web, writes Fortune’s Jessi Hempel.

By Jessi Hempel, Fortune writer
August 9 2007: 6:44 AM EDT

 (Fortune
Magazine) — Spend any time online these days and you’ll see and hear a
lot about widgets. On the web, these are tiny free software programs
that can be dragged, dropped, and embedded into web pages, offering
everything from weather reports to sports scores.

Call them
bling for your blog. They’re all over the Internet — some 220 million
people used widgets in May alone, according to ComScore — and their
viral-like success has set off a frenzy over how to make money from
them.

max_levchin.03.jpg
PayPal co-founder and Slide head Max Levchin

bratz.03.jpg
Slide’s
new model lets users doll up their widgets with ads. Here, LionsGate,
distributor of ‘Bratz: The Movie,’ has created special graphics and a
movie trailer that users can add to their slide shows.

 

JibJab
Media took the Web by storm with its election spoof in 2004. Now it’s
disrupting the media business again by allowing users to star in their
own JibJab film.
Play video

Max Levchin, who at 23 co-founded online pay-processing firm PayPal, which was sold to eBay (Charts, Fortune 500) in 2002 for $1.5 billion, thinks he’s found a way.

Slide.comNow
32, Levchin has a new startup, Slide.com, a site that lets users post
snapshots of friends, say, or vacations in slide-show format. Slide has
fast become the most trafficked widget maker on the web; Levchin’s plan
to embed advertising around slide shows could help transform widgets
from a web gimmick into a profitable business.


What’s so special about
these software snippets? Consider basketball fans, who spend game time
toggling between the NBA website and their work.

They can now
embed the scoreboard in their Google home page. It’s a
page-within-a-page, a small piece of the NBA site that lives inside a
larger site. The tools are particularly popular with bloggers and
MySpace users, but as Facebook and other social networks open their
platforms to developers, their popularity is mushrooming.

More
important, widgets are shifting the dynamics of the web. Once, people
surfed from site to site to do virtual errands. With widgets, they can
bring those sites to one central landing page, exercising more control.

This has grand implications for the $20 billion
online-advertising industry, which doesn’t work very well. Web surfers
don’t really pay much attention to banner ads from, say, car brands or
liquor companies, and they block disruptive pop-ups.

Levchin’s
pitch? Do-it-yourself product placement — let users embed ads inside
their widgets. Slide users have always been able to jazz up their slide
shows with flowers, stars, and the like. But Levchin’s newly signed
deals with several big companies — including Paramount Pictures (Charts), AT&T Wireless (Charts, Fortune 500), and Discovery Channel — let Slide users decorate their slide shows with logos, props, and other branded elements.

A
fan of Discovery’s new survival show, for example, could add a sword
with the show’s logo to his photos. Discovery pays only if the Slide
user opts to use the bling.


Will the strategy work?
There’s no proof Slide users will choose to brand their photos, though
Levchin insists they will. "There are definitely brands that have
proven to be extremely successful at connecting with their users," he
says.

Another challenge: The bigger websites that host widgets
will probably demand a cut of advertising revenue. Right now Facebook
lets widget developers keep any revenue they generate. At some point,
however, it is likely to request a percentage of the take.

Then
there’s competition. Levchin has the biggest widget site, but close on
his heels is RockYou.com, a startup testing its own ad strategy.

But
Levchin has massive aspirations. He thinks Slide’s model could
ultimately be as significant as PayPal’s. "Our valuation will be
comparable to hosts [like Facebook] themselves," he says.

One way or another, all that bling has to be worth some cash.

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