Enom 2013 Annual Report Download - page 18

initiatives may require the engagement of producers, contributors, talent, editors and filmmakers with a specialized skill set, and there is no
assurance that we will be able to engage such specialists in a cost-effective manner or at all. In addition, our Society6 online marketplace and e-
commerce platform relies on artists to join our community and contribute original artwork and designs that they seek to monetize through the
sale of art prints and other print-on-demand products.
Furthermore, as our business evolves , we may not offer the volume of traditional content assignments that we previously offered, and
some of our creative professionals may seek assignments elsewhere or otherwise stop producing content for us. In addition, our competitors may
attempt to attract members of our freelance creative professional and artist communities by offering compensation and revenue-sharing
arrangements that we are unable to match. In the vast majority of cases we have no written agreements with these persons which obligate them to
create articles or videos beyond the one article or video that they elect to create at any particular time or to continue to contribute or maintain
original designs and artwork on Society6. We believe that our ability to attract and retain freelance creative professionals over the last several
years has benefited from the weak overall labor market and from the difficulties and layoffs occurring in traditional media, particularly
newspapers. This combination of circumstances may not continue, and any change to the economy or the media jobs market may make it more
difficult for us to attract and retain qualified freelance creative professionals and artists. In the event that we are unable to attract or retain
qualified freelance creative professionals and artists, we could incur substantial costs in procuring suitable replacement content, which could
have a negative impact on our business, financial condition and results of operations.
We may not be successful in developing new content offerings, including our content solutions services, or acquiring, investing in or
developing new lines of business such as our commerce initiatives, which may limit our future growth and have a negative effect on our
business, financial condition and results of operations.
Important potential areas of growth for us are the development of new content offerings , including our content solutions services and our
commerce initiatives. We regularly evaluate and consider acquiring or investing in new lines of business or developing new lines of business
internally, including businesses, such as our commerce initiatives, that are ancillary to our core content and media service offering. If we
develop, acquire or invest in new lines of business, including new content offerings, we will need to develop, integrate and effectively manage
these new businesses and implement appropriate operational, financial and management systems and controls. We have limited experience
developing our content solutions services and developing, launching or growing commerce initiatives, and we may not be successful in
implementing such new lines of business. These new lines of business may also be subject to significant business, economic and competitive
uncertainties and contingencies frequently encountered by new businesses in competitive environments, many of which are beyond our control,
including the lack of market acceptance. We may not be able to achieve the expected benefits from these new lines of business and we may not
recover the funds and resources we have expended on them. Our inability to successfully acquire, invest in or develop new lines of business,
such as expanding our content offerings to include paid content, commerce and other initiatives, may limit our future growth and have a negative
effect on our business, financial condition and results of operations.
The loss of third-party data providers, or the inability to use data in the way we currently do, could significantly diminish the value of our
algorithms, which could limit the effectiveness of our content creation process and have a material adverse effect on our business, financial
condition and results of operation.
We collect data regarding consumer search queries from a variety of sources. When a user accesses one of our owned and operated
websites, we may have access to certain data associated with the source and specific nature of the visit to our website. We also license consumer
search query data from third parties. We have created algorithms that utilize this data to help us d etermine what content consumers are seeking,
if that content is valuable to advertisers and whether we can cost-effectively produce this content. Some of these third-party consumer search
data agreements are for perpetual licenses of a discrete amount of data and do not provide for updates of the data licensed. We may not be able to
enter into agreements with these third parties to license additional data on the same or similar terms, if at all. If we are not able to enter into
agreements with these providers, we may not be able to enter into agreements with alternative third-party consumer search data providers on
acceptable terms or on a timely basis or both. Any termination of our relationships with these consumer search data providers, or any entry into
new agreements on terms and conditions less favorable to us, could limit the effectiveness of our content creation process, which would have a
material adverse effect on our business, financial condition and results of operations. In addition, new laws or changes to existing laws in this
area may prevent or restrict our use of this data. In such event, the value of our algorithms and our ability to determine what consumers are
seeking could be significantly diminished.
If we are unable to attract new customers or retain our existing customers for our content solutions offering, our revenue could be lower
than expected and our results of operations may suffer.
Our content solutions offering helps publishers and brands broaden their reach online by providing them with topically relevant custom
content to publish on their websites or use in other distribution outlets. The content spans across text, video, photography and designed visuals.
The content can either be owned outright or licensed by us, usually via revenue sharing agreements. We increased our investments in our content
solutions offering during 2013 and we plan to expand this service offering further. In order to expand
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