Peter Kafka

Recent Posts by Peter Kafka

Give CrispyGamer an “A” for Honesty–But About Those Ad Rates…

If you’re not paying attention, it may seem as if the cratering economy hasn’t stopped the steady stream of start-up funding announcements.

Today, for instance, we learned that online music distributor TuneCore has raised $7 million, while CrispyGamer, a newish videogame site, has raised $8.25 million from J.P. Morgan’s Constellation Ventures.

But don’t be deceived: Almost all of the deals you’ve read about recently, as well as the ones you’ll see for the next few weeks, were closed earlier this fall.

If you want to get a sense of why these announcements will slow to a trickle going forward, scan down through VentureBeat’s discussion of CrispyGamer’s business.

Let’s leave aside the basics. The site wants to make a name for itself in the crowded world of videogame review sites by offering high quality reviews, but it’s not clear that CrispyGamer’s reviews are much different than its peers, and it’s not clear that readers are making the distinction either.

Instead, focus on the dollars, from the VentureBeat report:

Right now, the site isn’t commanding huge ad rates. It gets about a $2 CPM (cost per million, a measure of the amount of money that comes in for every 1,000 readers). Just a month ago, it looked like it would get $8 CPMs, but the economic downturn is taking a toll. CrispyGamer relies on a half-dozen ad networks to feed it the ads.”

Assume that the CripsyGamer folks, like most publishers, are inflating their advertising rates (and traffic, too) for public consumption. It’s still telling VentureBeat that its ads have been marked down 75 percent in the last month.

Yikes.

The upside, I suppose, is that CrispyGamer has advertising revenue, period. There are plenty of ad-supported start-ups that have yet to get around to actually selling ads, and it’s going to be awfully difficult to start doing so now.

And, if you want to be really generous, you could argue that videogames are going to get beaten up less badly than other sectors during the coming recession/depression/meltdown/whatever. In theory, dudes will keep buying videogames, while they hunker down in their basements, because it’s cheaper than most other entertainment options.

But CrispyGamer also says it has a staff of 20 people, including five full-time writers (what does everyone else do there?). That’s an awfully big staff to keep afloat on $2 CPMs–and it’s hard to imagine that CripsyGamers’s backers imagined that’s what they were getting into earlier this year.

[Image Credit: Itjournalist]


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik