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The Big Boys Do Social Commerce – Time Warner Buys Stylefeeder

So Time Inc, subsidiary of Time Warner and publisher of InStyle magazine has purchased Stylefeeder, the social shopping portal.

Smart.

Two reasons.  First, the widely forecast demise of dead tree media is accelerating – as the grim newspaper deathwatch site shows.  Next week, Apple will deliver the final poison pill.  Stylefeeder will future-proof Time’s InStyle magazine with a real e-commerce business model, and no doubt act as an experimental platform for working out how to save Time’s other magazines from extinction.

Secondly, Stylefeeder is special; unlike other social shopping portals, Stylefeeder focuses on delivering personalised shopping recommendations using collaborative filtering technology – similarities between your tastes and those of other Stylefeeder users.  It’s a Pandora.com for fashion – and part of a big idea – The Fashion Genome Project.  This could be Stylefeeder’s golden goose – that in time will lay golden eggs for Time.

We think that social for social’s sake is actually a fad – it’s when social becomes personal that social has value.  Using social tools to deliver personal recommendations makes Stylefeeder smart, and the purchase of Stylefeeder by Time smarter.

Update: For the record – a copy of yesterday’s Wall Street Journal article on the deal:

Time to Acquire StyleFeeder

Deal is Latest Among Media Firms Tapping Into E-Commerce

By SHIRA OVIDE

Time Inc. is acquiring StyleFeeder, an online service that offers personalized shopping recommendations, as the Time Warner Inc. magazine group tries to ease a sharp decline in advertising revenue with a largely untapped revenue stream: e-commerce.

Publications are scrambling for new ways to make money online and in print, prompting some companies to consider charging readers for access to Web sites and to raise subscription prices. Other companies are pushing into selling products, whether it’s The Wall Street Journal, owned by News Corp., and Gannett Co.’s USA Today selling wine or fashion or beauty magazines moving from writing about trends in handbags and lipsticks to selling the products themselves.

“Advertising will always be our core, and our primary revenue stream online, but that growth is slowing,” said Fran Hauser, who oversees digital strategy for a group of Time Inc. magazines including People, InStyle and Entertainment Weekly. “Our editors are generating significant consumer demand for products in the retail market. And what StyleFeeder allows us to do is share in that value creation.”

Time Inc. expects StyleFeeder to be laced throughout the Web site of its fashion magazine InStyle, a key brand inside a group of magazines, including People, that are highly regarded by Time Warner executives. Time Inc. said StyleFeeder also could be woven into Web sites of other brands, including Essence and People en Espanol.

Time Inc. didn’t disclose the price of the deal, which is expected to be announced as early as Tuesday, but a person familiar with the matter said it was “well into eight figures.” StyleFeeder investors include venture-capital firm Highland Capital Partners and investment firm Schooner Ventures.

Web sites such as StyleFeeder, TheFind.com and Covet.com offer to take the guesswork out of what to buy. StyleFeeder digs through 20,000 styles of women’s boots from dozens of designers and, more or less, in the manner that Amazon.com offers book recommendations based on what a consumer has bought or browsed. It learns the user’s tastes so that, for example, fans of Donna Karan will see more of the designer.

The deal comes as publishers’ biggest source of revenue, advertising sales, is in a protracted slump. Magazines carried one-fourth fewer pages of advertising in 2009 than in 2008, according to the Publishers Information Bureau. Time Inc.’s revenue from advertising fell 26% in the first nine months of 2009 from a year earlier.

The struggles, which Time Inc. executives say are mostly driven by economic cycles, have led to increasing questions about Time Inc.’s role as part of Time Warner. The parent company’s chief executive, Jeff Bewkes, has made it clear he expects Time Inc. to focus resources on its biggest and most profitable brands, a directive Time Inc. executives say is met by the StyleFeeder deal.

“The strategy is: Invest in the biggest brands, double down on digital and get into third revenue streams,” says Time Inc. Chief Executive Ann Moore. “This got a check in all three boxes.”

Visitors to InStyle.com have bought about $10 million in merchandise through another service, Time Inc. says, but the company keeps only a fraction of those sales.

Written by
Dr Paul Marsden
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Digital wellbeing covers the latest scientific research on the impact of digital technology on human wellbeing. Curated by psychologist Dr. Paul Marsden (@marsattacks). Sponsored by WPP agency SYZYGY.