LinkedIn’s Growth Concerns: Bloomberg West (02/06)

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Feb. 6 (Bloomberg) -- Full episode of "Bloomberg West." Guests: Magid Advisors President Mike Vorhaus; CEO and Co-Founder Mike McCue; Trulia’s Chief Economist Jed Kolko and Bloomberg’s Ari Levy and Cliff Edwards. (Source: Bloomberg)

Live from pier three in san francisco, welcome to the latest edition of "bloomberg west ergo i'm emily chang.

Our focus is on innovation, technology, and the future of business.

Some concerns are not just hitting twitter, but also apparently linked in.

Sales hit $447 million in the fourth quarter, a 47% gain.

Profit was a 67% drop.

Membership growth is down slightly from last year, and sales in lincoln's corp.

Business -- core business were up 52%, but trailing last year's numbers as well.

This is a company that helps to match jobseekers with jobs come a based on data.

Cory johnson as well as our immediate are joining me.

If facebook blew it out of the water last week and twitter was disappointing this week, where does lincoln fall?

It is like goldilocks, right in the middle.

Not to -- not too cold and not too hot.

We see slowing growth.

You expect from growth for a company that is more than a couple years old.

We see a company that is continuing to monetize better.


-- revenue per user is gently picking up every single quarter on a sequential basis.

At some point, this might be a story where sequential does not matter, where things are seasonal.

To me, a business that is not seasonal like this shows you that they are still growing linkedin has been investing more in its mobile products.

In terms of where else they can invest, what are the possibilities?

Asia is a big market for them.

They are talking about china right now on the call.

To the extent that there is locally which expertise, there is a huge market there.

And his private acquisition shows you that they are after a transactional model.

We have not heard much about what they plan to do with that, but there is a ton of money to be made in the lead generation for jobs.

Someone who applies online and get connected, that middleman, or middle software, if you will, didn't get the -- can get paid.

This is a new possibility for them.

With twitter, we are talking about how user growth slowing down is a huge concern.

Is it the same for linkedin?

Are they different because they have so many different revenue streams?

They have different resident -- revenue streams and, like twitter, they are finding ways to use them.

But the user system is picking up a little better than twitter's, even though it is around about the same size.

And linkedin has been around a lot longer.

And a much more specialized need.

The numbers are getting much more revenues per fuser -- per user.

Even though the growth is slowing down, they have grown into something that is usable.

People are reading those stories and they're getting ads attached to those.

They're finding ways to monetize the user they've got.

And the market solution business is growing only 30% year-over-year, but last quarter it was 38% year-over-year from 36%. a two percent increase, you will take what you can get.

That is really strong growth in a year-over-year business like this.

Mike mccue is going to be joining us.

Facebook just came out with paper.

Linkedin bought pulse.

Where does lincoln fit in with this content consumption of news?

Linkedin wants to be a portal for news.

In order to make that a profitable product and not just a user-friendly product, they need to figure out how to monetize it properly.

That is where they bring in those sponsored updates, sponsored content.

They want to go from a place where advertisers are going to a site, including banner ads and text ads to a place where they are putting meaningful content on the side that is relevant to you and they get paid for that.

They are paying for that.

And it is unique content.

And it is unique.

It is sort of a new news model, if you will.

It is like a newspaper making money in a new way.

And they are quite active about soliciting that content from us.

I wonder how much work it requires on their part to keep that engine going.

You would probably know that better than i would.

They do want it to be premium content and unique.

They want people who are writing for linkedin to be writing for linked in.

In that context, they are not making articles from the web and putting them in front of you.

They are doing that as well, but this is something where people would come to linkedin specifically to hear from these voices.

What do you think about the right acquisition?

Who knows?

There are a lot of acquisitions going on.

There is a general notion that only after a bubble pops will you know about the acquisition.

But it is really just the opposite.

They don't want to miss out.

They will come back to this idea that linkedin has not been a transactional company to date, but there is a lot of money to be made in transactions.

Whether they hit that business or they just use this idea that the connection is very valuable, they can make money using that platform.

Their premium solutions business is their smallest business, but to meet you might is a bit alarming how much the growth slowed down.

It went from 51% to 48%, which is a pretty dramatic slowdown in the fourth quarter.

I don't know what that says about employment or what it is about, but it is a big drop.

Thank you both for joining us today.

Call of duty has been a huge act . how is this bucking the trend that is hurting others?

? welcome back.

I'm emily chang.

Popularity helps activision.

It had a better than expected fourth quarter.

A record $1.5 billion.

But net income is down year-over-year.

With us is the president of padgett advisers, as well as cliff edwards, who covers gaming for bloomer.

What is -- for bloomberg.

What is the big thing out of the acquisition today?

It shows that they have a great slate of games.

They are weathering the console transition a lot better than the other guys.

We are seeing the sales falloff on the older generation consoles while they are waiting for people to buy the new generation stuff.

How about you?

We have seen so many gay makers get pummeled this earnings season.

What makes activision any worse or better off?

Activision has done a great job of having hits.

They got three or four huge titles, sky landers, call of duty, world of warcraft.

They have done great on the hits in the past.

Tony hawk and some of the other music games.

But they still have a lot of challenges.

It is a very different world now.

You've got games like super cell making a billion dollars a year off of one game, advertising free super bowl.

It is a very different world than activision and the others are used to competing in.

And i think activision still has challenges on the digital side outside of world of warcraft.

It shows there is fatigue.

I noticed some on the numbers, too.

But i wonder in the case of activision -- i mean, we saw these results that were really not strong from electronic arts, the number two player.

And we saw the same thing with the maker of grand theft auto.

Does activision seem to have a better portfolio, or is it too early in the cycle to tell you i think it is absolutely too early in the cycle to tell.

We are talking about 8 million consoles sold for -- worldwide.

We are just the first six months of the cycle.

It is way too early to say.

I'm not a stock analyst offer say, but if you look at the ea, it has sold better than activision has.

That will be the challenge for activision -- what can they do in mobile, digital other than world of warcraft?

It is also social gaming companies that are having trouble.

What is going on?

Is it that the business model is changing and they have not caught up yet?

Know, what is really going on is there are so many different platforms for people to play on.

What is really happening is the power of the brand is shining through.

The guys with the best brands are winning.

And right now, activision has three very popular brands and that is why they are doing better than some of the other gaming companies.

The others like them because they have moved first to try to get the digital.

They spend a lot of money on it.

But they should be in a better position than some of the other players.

You said some really information -- interesting information about where people 18-35, that is, men between 18-35, are looking for entertainment.

I was surprised to see a lot of things in this chart.

Not least of which was that consoles come in fact, were not the central place people were looking for entertainment in the home.

That is exactly right, and the reason is that the pc has started to compete with the tv as a place to get full-length tv shows and movies.

Netflix and hulu and hulu plus, not to mention the other services, are making the pc really attractive.

I took the numbers that you send us about what is popular and added a change to that.

The rate of change is fascinating.

But that slide back up again.

It showed this notion of the rate of change of what is becoming more popular just on the year-over-year basis, and we see that the tv as a place for people looking for entertainment really declining among 18-34-year-olds.

Phones and tablets are increasing as the places they look for entertainment.

That is exactly right.

People are still watching tv about five hours a day.

There is no big change in the hours of viewing.

If you asked consumers to pick one device, the tv, the smartphone, or the tablet.

In the 18 to 34-year-olds, a huge group said they would pick the non-tv digital devices as their one primary device for entertainment.

That is a huge change.

Tv has dominated this world since radio.

And it is interesting also there that with those changes -- i wonder how much of that is demographic or about the technology.

People want to watch five hours of tv because bloomberg west is on at least six of those five hours.

But beyond that, there is not a lot of change.

We will have to leave it at that.

Thank you both.

Facebook is -- has new paper.

We will talk about how the new app stacks up.

? welcome back.

I'm emily chang.

Facebook made a big splash this week with this new paper app designed to give mobile users a better way to use facebook as was -- as well as read the news.

It turns your favorite news sites into a personal magazine for your phone and tablet.

After the big upgrade last week, what do they think about facebook moving into its territory this week echo -- this week?

It is content all of a sudden, especially this week.

The announcement of paper from facebook raise the stakes and is calling attention to a company that may look a lot like paper.

It is a revolutionary product, flip board, and a lot of people saw this and thought it was something like they got in experience with print.

What do you make of this launch of paper?

I think that when you are a startup and you are starting to make progress in a huge space, you have to expect that you will have some really big competitors.

That is something that we have been used to.

Google has been competing with us.


Has been competing with us, and now facebook.

This is something that is one of those milestones along the way as you are going from a startup to being a really important company.

We are excited, actually, about the overall space getting the attention.

And i think as a startup, you have to think about two things when you have these big competitors.

The first is, stay true to your vision, who you are and what you are about and not let the competitors pull you off into some other space.

And number two, stay true to your customers.

Keep offering the things they will love.

What is interesting about what is -- what facebook has done is they have treated a better way to look at facebook using some of the same magazine-mike ideas -- magazine like ideas that flip board has been doing.

But it seems that facebook has been living in the direction of wanting to offer personalized content.

And they do that now, but it is mostly user generated and not professionally generated.

It is stuff that is on facebook.

You cannot look at tweets or other content on other social networks.

It is very much about letting you navigate facebook in this more magazine like interface.

It is two very different approaches.

As a former magazine guy, i started my career and worked in magazines for a long time, the discovery of flip board in the magazine industry is a revolutionary thing.

The magazine publishers about three or four years ago were talking about it.

You talk about print anymore, but they were talking about flip board and magazine apps.

What is it that you think they do not get about print?

I think it is the reverse.

I think that people in print understand better how content should look than technologists.

The ideals of print that have been around for a long time actually apply in this new world that we are in.

If you understand those ideals -- which are what?

Beautiful, graphic design, paginated layout, great typography.

I rarely use your app, but i have great affection for the way you brought tight back into a world where there is hundreds of years around type and microsoft killed that.

I think technology is now at a point where -- especially because of the ipad, you have something that kind of looks and feels like a magazine.

Now the ideals of print are starting to affect content online broadly.

This is not just with what we are doing or what the industry is doing.

-- or what facebook is doing.

Across the industry you are starting to see this.

The record industry having the dishes with a record stores and the guys with a hand trucks and the vinyl pressers -- whether it is the newspaper or the magazine having the relationship with the factories.

A change of that takes away a big but -- a big chunk of cost, but also business for these industries.

Is that the barrier that a lot of these companies have with media?

The revenue side, the advertising has been about 1/10 of what you would get for and had in print.

-- for an ad in print.

Online, you will sell at about 1/10 what you can get in a full-page ad in a magazine.

It is important to try to change that.

As we start to move to brand advertising -- well, it is changing.

That is why you see print struggling.

And it is also about the fact that people are not reading print as much.

They are reading the content, but online.

The opportunity is to have the lower costs.

You don't have to have all of the fuel to ship the magazines around and print them and so on.

And similar print economics with the full-page ads that you are used to seeing them print making their way into something like clipboard.

What we have managed to do is to have all of our publishing partners to help them monetize much more comparable to print with full-page ads that look much like what you would see in print, but are imbued with great digital qualities as well.

I would imagine that industries -- that companies like facebook would start to see that people retain digital less than they do print.

And they're less likely to go to those.

There is a lot that has to do with the product and how the content is delivered.

If it is instantaneous and super easy to pick up and start flipping through, there is much more -- it is much more likely that you will start to have that content.

I think you will see more content now with devices like the ipad than we've ever had or -- had before.

I think there is more opportunity for people to read more news, have that content and look more like print and the monetize more like print with ads that are more like print, but done on a digital framework.

That is what flip board is all about.

I look at great apps, like i think the bloomberg businessweek cap is great.

-- at his great.

-- app is great.

That is the opportunity, to establish new kinds of ads.

But part of the problem with ads i can jump around and do all kinds of things is that they take forever to load and they annoy the user.

There is something really wonderful about a full-page ad with beautiful typography that is beautifully laid out.

If you can spin a product around in 3-d, takes the mystery away.

You look at it a bit or clinically.

I don't think that is what ran advertisers want.

How many users do you have?

Well over 100 million.

And growth capital about 250,000 users per day.

Do you have any partnerships, such as samsung?

We do have a variety of partnerships.

If they turn to google, will you get off that platform?

Google is a major part of all of the different hardware manufacturers out there.

We will be back right after this break.

? you are watching "bloomberg west" where he focused on technology in the future of business.

Sony is trying to launch another restructuring plan.

They split the tv business into a separate subsidiary.

Aereo is boosting capacity in new york and in atlanta, they have sold out.

They're facing a legal battle in the supreme court.

They have removed block chain from the app store.

The owner said it is being withdrawn due to an unresolved issue.

Apple did not comment.

Is technology and the tech industry really responsible for rising rents and housing prices in san francisco?

The answer may surprise you.

Trulia has a report out on tech hubs.

Is technology the reason that ran down housing prices are rising so fast in san francisco-- that rent and housing is rising?

We're seeing it rise higher in the other tech hubs than in other areas.

It's much more affordable in san francisco.

The affordability gap separating san francisco in the rest of the country was here long before you and i were using e-mail.

Were saying it's not necessarily technology causing this to happen.

It's not the whole story.

What we see across these tech hubs is they are drawn into places that were expensive to begin with, places with good weather, universities, other industries already there.

Toast of the gap in home prices we see today between tech hubs and other metros was actually in place 25 years ago.

Would you go so far to say that it has nothing to do with rising rents and housing prices in san francisco?

Technology is a big part of demand.

Housing prices as a result of strong demand and tight supply.

San francisco is an incredibly difficult place to build new housing.

Other tech hubs like austin and raleigh have much lower home prices and a lot more construction.

Supply matters.

Rents and housing prices are rising because san francisco is san francisco.

We are only so big.

It costs so much to build new homes and there are regulatory issues that are so great.

At make san francisco the most extreme is supply-side because of geography, the san francisco peninsula and hills nearby and also regulations.

It's very difficult to build new housing here.

As a result, we see one 10th of the construction and san francisco that is in raleigh, north carolina.

It is very hard if little to no new construction is built.

What was a surprise in this report?

Anything that you saw that you did not suspect?

How much the gap in affordability existed 25 years ago.

We are so focused on what's happening now.

Most of the gap and housing costs between tech hubs and other metros was in place in 1990. how much bigger has it become a new last 15 years?

Home prices have risen more in tech hubs than other markets.

It has been growing and without a lot more construction, it will probably continue to grow.

Many of them have tight supplies and that is a recipe for escalating home prices.

What do you think is a responsibility in this issue of tension between the haves and the have-nots?

In san francisco, it's an important part of the economy.

A lot of the story has to deal with building more housing.

It needs to be affordable but building more housing overall will help slow down the rise in rents.

You think it's up to the government?

It's a much bigger issue than just the tech economy.

Jed kolko, thank you for breaking that down for us today.

Amazon isn't making a move to boost its software presents.

Have acquired double helix a gaming and they say the acquisition is part of an ongoing commitment to build innovative games for customers.

They also announced a deal with freewheel yesterday.

Cory johnson is back with that.

I do not know amazon had an ongoing commitment to provide games to customers.

Brad stone, did you know amazon had an ongoing commitment?

May have been doing it during the app store and kindle fire.

Getting into the publishing and creation of games is a little bit new.

I look at it as running the same playbook.

The top 10 most popular ebooks, some of them are published by amazon.

There are 10 great new pilots.

It is in books, video, and now games.

The technarati -- nerds who cover -- are we?


You feel the speculation, proof that they will make their own game console.

There was similar speculation about the eu reader.

Do you think this is like all of the other speculation or is this kindle?

It is likely.

We broke that story.

It was more of an entertainment device, set top like a roku.

They are repositioning slightly as an entertainment and they gaming device.

It's another foundation when you can build and did officers significant differentiation between an apple set-top box or a roku.

How has amazon prime don?

Want-- how has prime gone?

The trick is to have it on the box.

Prime, video on demand, being built into tv's. only apple as the orthodox from preventing some of its rivals to go to the box.

Brad stone from "business week," thank you.

Move over, google.

Oakley has a pair of high-tech goggles for the ski slope.

We are going for a run coming up.

? i'm emily chang and this is "bloomberg west." it is the end of the nara.

Jay leno is passing the torch to jimmy fallon.

Is nbc going to take a ratings risk especially after the conan disaster?

Jon erlichman is with us from los angeles.

I remember johnny carson and now i just feel old.


Good on you.

When you look at the numbers behind the tonight show, it's amazing how big of a risk this is because that program is one of the few nbc had was number one and by a mile.

It generates a huge amount of revenue and the reason they are doing it at this point when jay leno is still under contract, which is a little awkward, they have the olympics coming up.

They want to make this transition to jimmy fallon so they can get that younger demographic.

Why not do it when a lot of people are watching nbc?

You spoke to bob eiger about how they are preparing for the switch.

Any color there that you can share?

Jimmy kimmel is part of the catalyst for this happening.

They decided they wanted to move him to be more head-to-head with the tonight show and in some ways it may have forced the hand or forced it earlier.

We asked him about the marketing strategy and here's what he had to say.

It creates a need for us to aggressively remind audiences that not only is jimmy already there but the show is really good so you will see more support for the jimmy kimmel show, not just here but across the company because the competition is changing and it's clear they will go after the incumbents in a big way.

It almost feels like the battle for late-night will be over the battle of the viral video.

Kimmel ofr fallon.

Jon erlichman, thank you.

We got so wrapped up in twitter being down, twitter is not having a good day either.

From the 30,000 foot view, the big issue with pandora continues to be content cost.

343 million dollars in content cost for a company that brought in $600 million in revenue.

They are spending so much money to pay for the music that they are playing that it's a difficult thing and they are continuing to find ways to lower costs.

How does that differ from spotify?

We really have not seen their numbers although some of them have leaked.

Will they face pressure from ih eartradio?

The place the right to get paid, bmi or ascap, they control the music rights so we spoke to the president ahead of the 100th anniversary.

I started out by asking a little bit about the history of the organization.

Check out what he had to say.

Ascap, we license and collect royalties on the music of almost 5000 members.

I started out 40 years ago.

I'm writing a book right now, gratitude and trust.

I'm grateful for the life i've had and i trust in the future largely because of ascap i know in my music is performed it will be properly licensed, royalties will be collect data, and it will get back to me in time with a small operating cost in that money turns into food on the table and gas in the car so i can raise my kids.

The introduction of a new mobile technology, there is a way suddenly to distribute and play music for mobile locations.

They did not have to be in a place where it was being performed, have the right ticket . the music was widely distributed in it was called the player p&l. when i look at things like ascap and bmi, it is written around this antiquated strategy.

It cannot be relative for pandora?

A consent decree was created.

I'm over 70 years old and i operate pretty well but a consent decree 70 years ago long before the cyber world existed is really unfair to us.

We are forced to operate in a fashion that is really unfair.

We love technology.

Why would i not love pandora that delivers 70 million people listening to our music?

We want them to be wildly successful but what we want them to do is to honor the music.

They're building business on the backs of music so they need to honor the creators with fair compensation.

We've been licensing online since 1995. from the largest of the smallest, we have successful licenses in place and we are able to make sure there is more music being played more often than ever before in the history of music.

When radio came in, they said it was not a performance but an electronic transmission.

Same thing right now.

There is not a question.

Paying numeral eight cents for 5000 streams, it is just not fair.

-- paying 8 cents for 5000 streams.

They are at a disadvantage when they are fighting with the likes of iheartreadio.

They are different business models.

It's a different business model.

We cannot get into the finite specifics because we are in court right now with pandora.

From cable, satellite, straight down the line, we've always had that adjustment where we could find a way to do business.

We will continue to do so but there are challenges.

Paul williams just won a grammy.

He also wrote "rainbow connection." i love that version.

I play it for my kids.

It's their favorite.

We will be back with more "bloomberg west" right after the break.

? welcome back to "bloomberg west." when you think of wearable technology, you may think of a niche market of the obsessed geek.

Maybe not.

You are just a little geeky, but you found wearable tech.

On the slopes of park city, utah.

For oakley, it's happening now.

They communicate with users in real-time.

It's the next generation.

As they ride down the mountain, the goggles project a series of data points, altitude, maps, and speed.

It may sound dangerous, but the monitors are unobtrusive and the services are interesting.

The buddy finder find your friends of the mountain and tubes.

All managed with a glove- friendly controller allowing the rider to switch between fields.

We base everything off of technology and design and being first to market with products that are disruptive and revolutionary.

They've already sold tens of thousands of these goggles.

This is not just about geekdo ed out goggles, but defining the brand as innovative.

They sell cheap sunglasses to $650 ski goggles.

It is estimated to be three .6 billion dollars.

Cracks we are pushing the envelope in a small niche market but this translates into product that is maybe downstream a bit as well.

Quick schoolkids wear cool sunglasses so there is a massive marketing effort at the celebrity filled sundance film festival.

They launched a learn to ride program where top olympians and snowboarders give lessons to adrian grenier, kellan lutz, ireland baldwin, all festooned in oakley swag.

They hope it will enhance the entire product line.

Any time we are looking at telling the technology story, it trickles down.

I thought i was going to get to critique your snowboarding skills.

I can critique them myself.

The point is not that they have these goggles.

Hardly anyone will buy them.

I don't imagine they will get to half a million ever, but it does position the brand as technological, something they can say.

We are cutting-edge.

You can buy these but they are nearly as high-tech as the high- end stuff.

It's about the sunglasses company positioning itself closer to things like "bloomberg west," google, and other things in technology.

Who will actually way are technologically connected glasses-- who will wear the glasses?

I can see construction workers using an on site or a doctor in an operating room, a teacher with lesson plans, but am i going to want to wear it walking down the street?

You would.

What will the case studies be and how will this work?

There were concerns.

As i was boarding down the mountain, i was wondering if i could go faster.

It's kind of fun.

I would have loved to see that.

Thank you for bringing that to us and thank you for watching this edition of "bloomberg west ." ? . .

This text has been automatically generated. It may not be 100% accurate.


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