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Jason Calacanis Punches Comscore In The Face. Comscore Punches Back. Fred Wilson Drags Us Into It. $SCOR

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Jason Calacanis, our partner over the years on the TechCrunch50 conference, wrote quite a rant yesterday about analytics company Comscore. His argument: that Comscore has vastly undercounted traffic and visitors over the years, and is now formalizing “their extortion ring” by offering to track traffic more directly (and the numbers are generally much higher) via tracking pixels for a $10,000/year fee.

You can read the whole post over at Calacanis.com. He doesn’t pull any punches (in fact he goes on a tangent about punching bullies in the face as a kid) He suggests that companies refuse to pay Comscore for the service, and that investors short the stock.

Comscore investor Fred Wilson laid into Jason with a couple of comments on a copy of the post on Posterous. He also randomly dragged me into the argument (I think he’s still mad about the Zynga stuff):

jason, since you’ve slandered me, i’ll respond here.
you don’t know what you are talking about. comscore (SCOR) is a public company. you can go look at their financials. they aren’t exactly printing money. it’s hard to measure the internet and they spend well over $100mm per year doing just that. they aren’t “shaking down” anyone. their move to a hybrid model is a reaction to many of the criticisms that people have had of their panel model over the years. but it isn’t cheap to manage that data either. someone has to pay for this. or of course we could all just let google do it for free. we know how that will play out. eric schmidt has said “analytics are infinitely monetizable” well for google they are. if we want a third party keeping everyone honest, the market has to pay something for it. as i said, go look at comscore’s financials and you’ll see they aren’t exactly getting rich doing that.

and the “huge venture return i made in comscore” is in your imagination. i have not ever made any money personally on my comscore investment.

please don’t spew lies about me jason. with “friends” like you, who needs enemies?

and

hey Karl, i bet if you and i sat down and had a coffee or a beer and talked for a half hour or an hour you’d come away with a different perspective. if you get your data on me and my investments from Jason and his friend Mike Arrington, of course you are going to come away with an impression that isn’t correct. they like to sling mud at me and my investments. i am not going to get into a pissing match with them online. but i am “kinda sad” that you are getting the wrong impression. i don’t know where you live but if we are ever in the same town, give me that half hour and i bet you’ll have a different and better opinion.

Comscore’s CMO Linda Abraham also weighed into the argument on Posterous:

Jason:
You really need to get your facts straight.

1) First of all, we measure Unique People rather than Unique Cookies which web analytics systems erroneously can unique visitors. I would challenge you to find any kind of server side measurement system that measures people, not machines or cookies. To show you how absurd server side numbers are, AOL Inc. had about 259 MM Unique cookies which gives it over 125% reach compared to a true reach of 54%. The inflation is driven by cookie deletion, multiple browsers, multiple machines for the same users, multiple devices etc… Large companies do not complain about their numbers because they know their server side numbers are flawed as obviously evident by the AOL metrics, not because ‘comScore fixes your number”. This dynamic is less obvious with smaller sites—they don’t realize how inflated their numbers are until their reach starts exceeding 100%.

2) Our Hybrid measurement is not mere pixel tracking as you assert. Our panel, which allows us to distinguish people from cookies, is a central part of the system used to correct for the inflation of cookie based server-side measurement.

3) You are confused about our pricing, so let me explain it to you:

• We charge a one-time setup fee of $5,000 that enables us to audit the beacon implementation and make sure we are measuring everyone consistently. This means auditing beacons on every page to identify pages with multiple beacons that result in over-counting, and pages with no beacon that result in undercounting. We have found about 15% of sites have placed multiple beacons on a page, and over 30% of sites that have missed a number of pages on their site. This auditing function is crucial to protect the system from being gamed. Imagine what happens, if unchecked, sites start cross beaconing each other to inflate their audience. The ‘free’ services do not incur this cost because not much is expected of them. We have seen many sites where the Quantcast beacons ‘fire’ up to 7 times from a single page!
• The initial $5,000 setup fee pays for that audit and gives you access to our reports on comScore Direct $5K for 6 month period.
• The $10K annual price is for ongoing access to our comScore Direct reporting system. However, you don’t have to subscribe to continue being measured using the hybrid methodology. As long as you maintain your beacons we will measure you with our hybrid methodology FREE of charge.

4) You may be upset because you don’t get a free subscription to the reports. We make no apologies for charging for access to our reporting system. That is the only revenue source we have to cover our costs. In doing so, we make a ‘mafia like’ pre-tax margin of less than 9% . Google and Quantcast offer metrics for ‘free’ because they have an advertising supported model. They use the data they collect from users or publishers to sell targeted advertising. We chose not to have a business model based on selling advertising, because we do not want to compete with our clients who make a living selling advertising, and who need a neutral third party to provide audience data that is free from conflicts of interest.

5) As for the free trial offer we made you, you need to get your facts straight. When we rolled out this new hybrid system, we needed some sites to beacon with us early to test it out and get user feedback .This is a common practice you might have heard of—it’s called ‘free beta.’ You chose not to participate, which is fine. But there was no attempt to ‘buy your silence’ and we challenge you to prove otherwise.

We provide a valuable service and we are proud of it. We offer the most accurate 3rd audience measurement tools available which are paid for in real dollars by more than 1,200 companies who, unlike you, freely choose them despite available ‘free’ services.

It’s unfortunate that you were picked on as a child. It must have been difficult to you. But you’re an adult now. If you want to debate, please do so with facts, not just blind fury.

My take – Abraham is right. Comscore is by far the best analytics service available. Alexa, Compete and Hitwise are seriously flawed (I may dive into this more in a future post). Quantcast has its own issues and is subject to abuse, which we’ve seen directly. Comscore uses panels and statistical analysis to generate traffic estimates. The new product measure traffic directly off of website servers and should provide nearly perfect data.

And the fact is that the company probably does need to charge to do this properly, as Abraham argues. If a competitor can provide the same service for less (or free), God Bless Them and I’ll support them all the way. Until then, the market will bear what it can bear.

We always choose to use Comscore data first when its available, and will continue to do so. Here’s an example of how useful it can be.

So in this case I respectfully disagree with Jason on the merits of his argument. And I ask Fred Wilson to try to keep me out of his various fights.

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