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Open Letter to Our Readership
By John Porentas, Editor, Publisher, the-Ozone.net

The Big Picture

There is an old Chinese curse that goes "May you live in interesting times". I have a new respect for that curse.

The last 18 months or so have been very, very interesting times for the-Ozone. It has been a time of change and of interesting and sometimes difficult developments, but developments that we think will be well worth the effort expended to turn the ideas that we had 18 months ago into realities today. This open letter is an attempt to let you, our loyal readers and supporters, know what is going on and what we hope to further accomplish.

Last year the-Ozone brought aboard Brandon Castel and Tony Gerdeman as full-time staff writers. They have, in my humble opinion, combined to make a quantum leap in improvement in the content of the-Ozone. They also did something else.

The presence of Brandon and Tony allowed our publisher/writer/editor/floor sweeper/cook and chauffeur to refocus his efforts away from creation of content and concentrate solely on the business aspect of the business.

It was something that has been sorely needed for a long, long time, and without the patience and faith of both Brandon and Tony, that would never have gotten done. Both came aboard with the full disclosure that there was risk involved for them, because quite frankly, unless we could make some things happen, we weren't going to be able to pay them.

Despite that, both took a flier with us, and for that I will be forever grateful to both of them. And while I'm at it, Jim Davidson has been patient beyond belief. Without the support and assistance of all three of those people, the-Ozone would have gone off line this year. Honest.

With them aboard, however, I was finally able to concentrate on formulating a business plan and attempt to execute it. The logos you see on our front page today are a result of that, but are only a step along the way in what is an ongoing journey.

The Details

The redeeming value of sports, in my opinion, is that they teach us about the larger issues in life. With that in mind, we developed a Jim Tressel-esque game plan. First, we would make sure our fundamentals were in order, then we would move on to specific game-day plans in the hopes of making some big plays and putting points on the board. This past 18 months has been about securing our fundamentals.

What has become increasingly evident on the Web is that almost no publisher save perhaps the very largest or those with long-standing brands can survive or thrive on its own. Strategic alliances are needed in order to market ad space and in order to have relative and interesting content. Below is the story of how each of our deals came to be, and what we think each brings to us.

A little over two years ago, I had this discussion about strategic alliances on the Web with Mark Silverman of the Big Ten Network. Amazingly, he had come to the same conclusion about the Web, and that it also applied to his own online enterprise. He believed that the BTN online had a role for his company, but that it would never be the place where any single fan base would go for news about the athletic program that interested them. In other words, OSU fans would go to an OSU site, Badger fans to a Badger site, and so on.

Silverman said the idea of putting together a group of web affiliates had been kicked around in his office. My response was (and this is a direct quote) "How do I become the first affiliate?"

Talks began, then stalled, then resumed, then stalled, then drug on and on and on. Frankly, the issues we encountered were never large, but our reality was that every change in a proposed contract had to go through the law office of the BTN operating partner, Fox. In fairness to Fox, an agreement between BTN and a single-school web site in Ohio was perhaps the smallest deal they were looking at in their Beverly Hills offices. They were dealing with movie deals, TV deals, and so on. We were a flea on the back of the elephant, and the elephant was busy with bigger issues like avoiding the lions and the guys with elephant guns.

Eventually we arrived at a working understanding with the BTN but could not get a formal contract drafted, approved and signed in any kind of short order. There were just too many people who had to approve it, and those people were really busy. In spite of that impediment, we agreed to begin serving some ads for the BTN last October and did so without having a signed agreement in place. For the record, the BTN paid us for our services despite the lack of a written agreement. That is a credit to them and their way of doing business.

In January there were some personnel changes within the BTN that led me to believe that our talks would once again stall. When that indeed happened, I moved on to an attempt to execute Plan B. We had, after all, taken on Tony and Brandon, so we needed something to happen, and the BTN thing wasn't happening fast.

About two years ago we received an invitation from FSV to participate in their network. We were interested, but thought we would have a deal with the BTN, so we declined. Last January, however, we re-opened talks. We explained to them that we were still interested in the BTN deal, and they made it easy for us to participate in their network and still keep the door open to the BTN. It was a perfect arrangement, so we signed a deal with them which allowed us to continue to talk to the BTN.

Fantasy Sports is probably the biggest network you never heard of. It is not well known to the general public, but is an incredibly strong and effective network within the online sports industry.

The network is comprised of over 500 sports web sites and reaches over 15 million unique viewers monthly. This past month they passed CBS Sports.com to move from number five to number four in terms of total people reached (according to Comscore). They are behind only Yahoo! Sports, ESPN.com, and Foxsports.com on MSN as far as the number of people reached by a sports network. Some of the networks they have recently passed include MLB.com, Sports Illustrated Sites, NFL Internet Group, AOL Sports and NBC Sports.

The ownership of FSV includes Gannet/USA Today. We now have access not only to the FSV sales force, but also a connection to other publishers both on the Web and in print with USA Today. We began serving FSV ads last January. They are an important piece to our marketing and content puzzle.

A funny thing happened on the way to football season. We have literally been squeezing every dime in an effort to get to football season with the prospect of making a little money via our new relationships with BTN and FSV. Out of the clear blue last month, we were asked if we would like to participate in a new venture being formed by Fox, the Fox Sports Ad Network.

The Fox Sports Ad Network is a new venture that officially launched on July 1 of this year. The-Ozone was invited to be one of the first members of the network. We were, of course, interested, but in the spirit of full disclosure, told them that we were on the verge of making a deal with another Fox-related entity, the Big Ten Network. The people at FoxSports made the appropriate contacts at Fox corporate and received word that an agreement with both entities would not be viewed as conflicting. Additionally, the BTN also agreed with that opinion, so we began talking with Fox. In what has to be a record for fast deals, within 48 hours we became the 22nd member of the network and were serving their ads.

It is our understanding that many of the existing Fox Sports online properties will be consolidated and rolled into this new network, possibly even Scout, though it is likely that the national recruiting aspect of Scout will remain separate while the local news sites (like BSB in Columbus) could end up in this new network

We like this relationship because it allows our site to be "packaged" with national TV and sold by a national sales force. The entity is new, so their current level of business is modest, but there is every expectation that will change as soon as football season begins.

How These Deals Will Benefit Us

Each of these agreements contain three components; a marketing deal, a cross promotion provision, and a content sharing provision.

The marketing deals are nearly identical with all three companies. They sell ads to national advertisers, and the ads are then spread across the sites of the members of the network. There is then a split on the ad revenue. The arrangement opens the door for the-Ozone to share in ad dollars being spent by companies that would never make a direct buy on the-Ozone. For example, our site is far too small for a Coke or McDonalds to make a purchase. Those kinds of companies are looking for buys that will give them broad, national exposure. By dealing with the networks they get that, and we get our piece of the action by making our audience a part of that larger deal and larger audience.

Each of the deals also includes at least a provision for cross promotion and content sharing, though none of them have formal or well-defined, structured, promotional or content sharing agreement. Those things happen on a somewhat ad hoc basis. We have, in fact, already had our content on other FSV sites. Fox has indicated that we will have access to video highlights, etc.

Is the-Ozone Rolling in Money?

Nope. Like we said, this is simply getting our fundamentals in place. To continue the football analogy in a way that OSU fans will understand, we now can run "Dave" and get about three yards every time. That still leaves us just a little short of a first down. In other words, this stuff is really important, but it's still not quite yet enough. Here's why.

Like the rest of the economy, the online ad industry is experiencing some tough times. Prices are extremely low, sometimes on the order of less that one dollar per thousand ad impressions. That is very, very cheap, about one tenth of one cent per impression. The sports ad networks are able to get considerably more per impression, and that is good news, but the revenue must be split with them, so price remains an issue. Then there is the collection issue.

Advertisers do not pay in advance, at least not national advertisers who make buys with sports networks. They pay when their campaign ends. That means that an ad campaign that begins when football season begins and runs through the end of December comes due to the network in January. The network then pays us in February. That's a whole lot of waiting for your money, but that's the way business is done. It makes it very tough to make payroll.

There is also an issue with seasonality. We have traffic year round, but the people who buy sports advertising relating to college sports want to buy it about twice a year, during football season and during the NCAA men's basketball tournament. That means we have to earn all our money in about six months, August through December and March, and to be honest, many ad buyers aren't too interested in August.

How are you coping?

One of the good things about having these deals in place is that they are, to some extent, bankable. Lenders understand that a deal with BTN or Fox of FSV can yield income, so they are willing to lend against future income once earned. We've been able to borrow some money based on the earning power we now have with the networks, and that is something we could not do before.

Additionally, we are involved with other ad networks, though not sports ad networks. Google Ad Sense is one of them. We are also involved with two others you have never heard of and whose names are not important. Those companies pay very low rates, but they pay us more promptly than the sports networks, in effect advancing us the money. Between that income and our loans, we've kept things going.

We did make a small fund raising plea on our front page this week, and we are serious about that plea. Our reader support will remain important to us, at least through the end of this football season when hopefully we will collect on some of the network earnings we accumulate.

Ultimately, however, the answer for us is to sell more of our own ads. Those are the "big plays" that come out of a good game plan, the kinds of plays that determine the winner of a game and the loser. Now that we have the mechanism for a sort of base income in place, I'll turn my attention to ad sales, but we had to get this other stuff in place first.

There have been several people outside of the-Ozone who have been extremely supportive over the past year or even longer, and I'd like to recognize them. Several of them are posters on our message boards. You know them by their board handles of Club Seats, Escargray, Longtimebuckeyesfan and By'not'e's Apostrophes. All have spent time with me, listening, offering encouragement and suggestions, and I am grateful to all. Two more are Dan Harker and Jerry Lease. You know Dan for his photography, but Dan is a whiz-bang business guy who has mentored me with some of the best advise I could have gotten. Jerry is a long-time friend of the-Ozone who is also a business and marketing strong man. The advice and support of both has been invaluable.

I hope this hasn't all bored you. While the past 18 months have been at times very frustrating, they have been interesting to say the least. Remember that curse at the beginning?

Oh, and I just noticed, there is a donate button just below. We really could use a bit of help. Honestly, if things work out the way they could, this could be our very last fundraiser, but like I said, we're not quite over the hump yet. We haven't scored a single touchdown, but we are ready to kick off and we think our game plan will allow us to score enough to win. Until then though, we could still use your help.

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