Libsyn sold to Wizzard for $15 Million? Well at least $15 Million in stock according to a new article in the Pittsburgh Tribune-Review. The Libsyn sale last March made headlines in the podcasting world, but I never saw any indication of the size/scope of the deal. According to the Pittsburgh Tribune-Review:
Wizzard Software, Inc., a technology company based in Bloomfield, snapped up Libsyn last year for $15 million in stock.
Interesting number given that Wizzard’s total market cap is roughly $109 Million. Wizzard (WZE) started trading on the American Stock Exchange last week and toyed with $3.00 a share but has since settled down roughly 17% to the $2.50 range. I never would have thought to dig, but the $15 Million number caught my attention. SEC filings reveal that there are a number of milestones and it would appear that the $15M number is a best case scenario. But if you are curious about the sale, stock, milestones, cash payments and some employment contract info etc., here are the relevant SEC filings. [PLAN OF MERGER & FORM 8-K] (The joys of selling to a publicly traded company.) The Libsyn team are great guys, I hope that everything works out as best as possible for them.
The question is what will Wizzard do with Libsyn over the long haul? Last week some controversy erupted around the 1 Billion download claim that Wizzard/Libsyn made. Scott Bourne pointed out that a press release from Wizzard last month stating that 1 Billion podcasts downloads had been achieved in 2007 was followed up just last week by a statement that Libsyn was “fixing” issues with its stats engine. Frankly the total number is irrelevant, whatever it is, it’s big, but once again the stats issue raises its ugly head. For true advertiser support/adoption of podcasting, stats need to be quantified and agreed upon.
The bigger issue as I see it for Wizzard is their podcast publisher base. The article details, “Wizzard’s growing roster of 8,500 shows…” While we know that these shows are not Wizzard’s, Wizzard certainly has an opportunity to assist in the monetization of these productions due to their position in the distribution chain. However, of those 1 Billion downloads / 8,500 shows how many really matter to advertisers? (As a side note, the 1 Billion / 8,500 number is suspect. It would mean that the average publisher has 117,647 downloads a year or 9,803 downloads a month. This contradicts their own VP of Podcaster Relations, Rob Walsh, who arrived at the optimistic number of “73.5 subscribers per podcast feed.” But I digress…)
Libsyn is a great service that enables any podcaster to handle their media distribution for $5 dollars a month as a base package. That also means that they often attract those willing to pay the least amount. Those of us who have been around from the start have witnessed publishers using the Libsyn system having to endure numerous outages and slow delivery at times from a system clearly experiencing growing pains. Libsyn’s users have been amazingly supportive and understanding during these service issues – true fans of the service. For hobbyists this makes sense. But for mission critical delivery: businesses, large scale podcasts etc., Libsyn Basic has not been the choice of professional podcasters, they have tended to go with larger CDN delivery networks.
As a result, Wizzard ends up with amazing volume but is it really the kind of content advertisers are looking to associate their brands with? Further, with such a disparate pool of producers what is the internal cost to deal with all of them on a single ad campaign? Except for their large publishers, Wizzard does not get to enjoy the benefit of economies of scale, it might actually work against them. Contrast that with a company like Federated Media: few publishers, but they all have incredible reach/size. FM’s publisher count is finite enough that advertisers know what they are buying and who they are associating with, plus internally dealing with 20 large publishers on a campaign is much easier than trying to coral hundreds of smaller ones. This is probably why you have seen the WIzzard/Libsyn team putting so much time and attention into the Libsyn Pro product, a media publishing platform built and priced much closer to a traditional CDN.
All this said, I am curious to see how the team and product(s) evolve. They have some smart folks working with them and I hope that Libsyn/Wizzard can pull it off.