profitability

Are group buying companies money pits?

There are a lot of skeptics when it comes to whether merchants should use group buying sites like Groupon.

For good reason too: there are enough horror stories to demonstrate that heavy discounting and lots of customers can be a really, really bad combination.

But the viability of group buying sites themselves is increasingly called into question. Groupon, the 800 pound gorilla of the space, went public last year, giving everyone a glimpse into is finances. Finances which showed lots of revenue but heavy losses.

Facebook more profitable than Amazon. Who cares?

Facebook’s revenue growth over the past several years is almost as
impressive as its user growth. And with money pouring in, thanks in
large part to advertisers eager to reach consumers on the world’s
largest social network, its profits are growing. How much?

According to Michael Arrington, Facebook generated nearly $800m in
operating income in the first six months of this year.

By comparison,
Arrington’s sources said the company produced $1bn in operating income
in all of last year.

Spotify: growth and scale don’t necessarily produce profit

Spotify is one of the most popular streaming music services in the world, and since its July debut in the U.S. and the recent launch of a deep Facebook integration , it has gained 250,000 U.S. subscribers, bringing the company’s worldwide paid subscriber total to “well north” of 2m.

But it’s not all good news for the Swedish-based company: while revenue grew from just over £11m in 2009 to just over £63m in 2010, during the same period Spotify’s after-tax loss jumped grew by nearly £10m to £26m.

AOL asks editors to do marketing and ad sales

In 2007, Tim Armstrong was the head of Google’s North American ad sales, making him one of the company’s most important and powerful executives.

He was also very interested in local content, and disappointed by the lack of information about his hometown, helped start Patch Media, a company dedicated to building a network of local news and information.

After Armstrong became CEO of AOL in 2009, AOL purchased Patch and started funneling money into the network with plans to establish a footprint in hundreds of cities.

Apple proves market share isn’t everything

Startups and established companies alike measure success using a variety of metrics. One of the most popular, of course, is market share. And for good reason: if you control a large chunk of a particular market, it would seem that you’re doing something right. And there’s the fact that impressive-sounding  market share figures make for great PR fluff.

But is market share all that it’s cracked up to be? According to an interesting analysis of the mobile phone market conducted by Asymco, the answer might just be ‘no.

The five clients you should avoid like the plague

Becoming a freelance consultant or service provider is easy, but turning a profit can be difficult.

One of the lessons learned through experience: profitability often has a lot more to do with avoiding the wrong clients than it does finding a never-ending stream of new clients.

Fortunately, the wrong clients typically come in several well-defined and easily identifiable shapes and sizes.

Here are the top five clients you should consider avoiding like the plague if you hope to be profitable.