Knobias Clip Report (11-13-2007)

Submitted By Knobias ClipReport

CWRL: Web 3.0 Social Networking Site Garners Attention

The face of technology has seen a transformation to put it simply. Traditional tech giants such as IBM, Cisco, and Dell are still huge in the industry, but have seen their standings slip down the list when investors think of technology names. Google, Yahoo!, Microsoft and other software producers have become the bellwethers when one thinks about the industry.

It’s basically due to consumers being wired to the teeth. An average person is now armed with handhelds, gaming platforms, and computers with ten times the memory and power of what was used to put a man on the moon almost 40 years ago. It also helps that the three names are gobbling up smaller niche players in the space to add to their growing line of services and offerings. The amount of specialization and functionality provided is almost incredible when trying to grasp the wide spectrum of this market.

Social Networking has become the newest “buzz” in this industry over recent years. NewsCorp’s purchase of MySpace at the beginning had everyone wondering what Rupert Murdoch was thinking. But now with Microsoft’s recent acquisition of a 1.6% stake in Facebook for $240 million which puts Facebook’s total value in the $15 billion range, Murdoch’s purchase looks like a move that would bring a tear to Warren Buffet’s eye. But another Buffet, tear jerking investment opportunity in the space could still exist and its name is CornerWorld Corp (CWRL).

Most of these sites are still in the Web 2.0 phase. From Wikipedia (which is also categorized as a Web 2.0 site) the definition is a perceived second generation web-based community and hosting service which aims to facilitate collaboration and sharing between users.

The next obvious question is: What is and when is Web 3.0?

In May of 2007, Eric Schmidt, CEO of Google attempted to answer the question. “Web 2.0 is a marketing term, and I think you’ve just invented Web 3.0. But if I were to guess what Web 3.0 is, I would tell you that it's a different way of building applications... My prediction would be that Web 3.0 will ultimately been seen as applications which are pieced together. There are a number of characteristics: the applications are relatively small, the data is in the cloud, the applications can run on any device, PC or mobile phone, the applications are very fast and they're very customizable. Futhermore, the applications are distributed virally: literally by social networks, by email. You won't go to the store and purchase them... That's a very different application model than we've ever seen in computing.”

Well CornerWorld is starting to piece it together and could become the first to establish the new standards for Web 3.0, or in the company’s perspective, Web2010. They foresee rich opportunity in building the platform for creators on keyboards and consumer consumption on rich mobile devices. They believe that over the next 3 years most people will desert their cell phones for powerful mobile devices that let them browse the Internet as well as talk. The Company is a social networking site and a web audio-video solution provider focused on the promotion and distribution of content from independent professional creators. But the aggregation and consolidation warrants Web 3.0 mention.

The origins of the Company started with the creation of CornerBand in Colorado as a destination for local bands attempting to get their content to broader markets thereby increasing consumer awareness and demand. CornerBand did this by providing the back end of weekly news publications in major cities throughout the US, predominantly for the marketing-leading New Times publications.

Fast forward some and after succeeding in their goals of raising awareness for these local bands, Kazaa, a Napster type survivor predominantly focused on MP3 sharing through the peer to peer architectural style, selected the Company to establish its emerging artist section. In May 2003, Kazaa was the leading application on the Internet and the fastest growing software and network of people of all time. The experience formed a unique understanding of distribution and global demand and eventually evolved into the founding of CornerWorld, which not only caters to the emerging bands market, but to professional and amateurs alike involved in photography, comedic skits, videographers and basically anyone who wants to share and profit with creative media.

But instead of starting from scratch, CornerBand members were turned into the newly created CornerWorld to the tune of 30,000 artists with over 250,000 registered members.

Knobias spoke with CEO of CornerWorld, Scott Beck who articulately described the business and future prospects.

“The key component in terms of attracting more (artists and users) is really the services that aren’t currently available. The business management tools that include: the ability to send out email invitations, the live broadcast component, the picture sharing, the audio sharing, the video sharing and the ability to charge. It’s all of these components and the widgets that exist with it that we believe are very attractive to the content creators. And we’re coming at it from a different angle. Whereas most Web 2.0 sites are geared towards the amateur creator, we start by solving problems for the professional creator but give all the tools available to the amateur as well.”

And the tools and functionality available is where the Company differentiates itself from all of the rest. Right now, Video Sharing (YouTube), Audio Sharing, Picture Sharing (Flickr), Online Classifieds (Craigslist), Invitiation Mailer (Evite), Social Networking (MySpace, FaceBook), Instant Messenger, and Email Web Account and Mail Aggregation (Plaxo) are all available under one roof: CornerWorld.com. Add to these the Live Broadcasting component, User Content Sales, live online help, and eventually on-demand iTV, and you basically get what could be compared to as the latest Rolls Royce with every imaginable amenity, versus a single seat moped.

With that in mind, comparing functionality with total value is seemingly incredible. FaceBook has an estimated value of $15 billion. MySpace, which is easily worth more now, was bought for $580 million in 2005. Both have functionalities that only include their core social networking and a small portion of what CornerWorld offers. YouTube was bought for $1.65 billion and only offers video sharing. So why is CornerWorld’s market cap only $140 million?

That question is easily answered: users. That and this ship is only beginning to sail. But to attract these users, content is usually the only prescription. The platform is there; the functionality is there. And the Company has started the content gathering to rival some of these Web 2.0 behemoths.

CornerWorld already has a deal in place with Napster in which their content is available on CornerWorld and vice versa if users want it available through Napster. Another advantage will certainly be its functionality. With the tools of almost every Web 2.0 available under one roof, the viral phenomenon will certainly take place, adding to the content and users.

As mentioned earlier, the site has 250,000 registered users. MySpace adds 230,000 new registrations a day. But CornerWorld also has a key executive who is adequately experienced in procuring users. Kelly Larabee, Co-Founder of CornerWorld and former strategist of Skype who helped promote and guide the once obscure internet telephony company into an international powerhouse ending with the acquisition by eBay for $2.6 billion, is on board and will attempt to achieve similar results through executive strategy and visibility via public media. Growing user bases is something that she proverbially wrote the book on and has the t-shirt to prove it.

But at the heart of this is Virality. Its something Wall Street hasn’t been able to put a dollar sign on and is much of the reason for the extreme valuation multiples behind MySpace, FaceBook, and YouTube. Social Networking has become this day and age’s “it” thing. And before the imminent tailwind comes to set this ship a sail; investors would be wise to check it out for themselves. Knobias certainly will as CornerWorld is its newest addition to the Investor Relations Issuer Services (IRIS) Program. We will keep you updated accordingly.

The company profiled above is a participant in IRIS™, a Knobias, Inc. program designed to feature selected small- to nano-cap companies. Knobias may have received monetary compensation from the investor relations firm representing the featured company. Please refer to http://www.knobias.com/ for the full IRIS™ Disclaimer for more information.




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