When I read the headline: “U.S. Internet will shrink to 2 strong players: report”
I thought: “this is why we pay analysts?” - thinking the two giants in question were Google and Microsoft (post YHOO acquisition). But, clicking on the link I realized they meant Google and Amazon:
Sanford C. Bernstein analyst Jeffrey Lindsay argues in a 310-page report entitled “U.S. Internet: The End of the Beginning” to be published on Tuesday that Google and Amazon are best placed to withstand the current economic downturn.
“We expect two players to continue to perform strongly, Google and Amazon,” Lindsay writes. “Both Google and Amazon.com are still racking up annual growth rates in the 30-40 percent range, with only a relatively modest slowdown in sight.”
I am not sure about this not because Google or Amazon.com won’t be dominant, but long-term,
1- Big Media
a media company will be less clueless and opportunistic enough to make a dent and become a force online. The Web is not really an altogether stand alone universe, it’s another medium… and someone will do the right thing. If history and track record are an indication, it won’t be NBC Universal or Disney, but News Corp. or CBS have a shot. Mind you, when Time Warner sold to AOL (yep, technically, AOL bought TWX in that merger), some people thought it was prescient; only after the fact did everyone say “idiots”. Ok, maybe lots of TWX staffers thought it was dumb. That shell shock explains why traditional media - while a likely player in the race - might not win the new media race.
2- MSFT’s $100B investment in the Web.
People, MSFT gushes $1B of free cash flow per month, and that figure is growing. It was about to spend some $40-50B to acquire YHOO. I think MSFT will eventually buy MSFT (though details will remain messy due to Jerry Yang and YHOO’s board criminal behavior), and the only exit I see for Facebook is MSFT. Right there, you are looking at $60B.
Considering that MSFT has already spent nearly $10B developing MSN.com and Live.com, along with a $400M purchase of Hotmail.com and hmm… a $6 billion acquisition of aQuantive… by the time Redmond is done, I think it will have spent $100B in building a Web division that creates as much revenue as Windows and Office do.
So long term, nothing against AMZN or GOOG, but don’t count out Big Software or Big Media.
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WatchMojo NewsletterActually, scratch that, Hulu has raised $100M. But Veoh is independent… while Hulu is a joint venture between NBC and News Corp. Both services are distribution partners of WatchMojo.com.
Veoh raised $30M more, giving it a valuation of $120M. I am not sure if it’s a pre-money of $90M, and with the $30M it’s now worth $120M, or it’s a pre-money of $120M and with the $30M it’s not being valued at $150M… but anyway you dice it, the company has now raised $70M… and with a $40M warchest it has built a $100M enterprise.
That’s a question Alley Insider asks. Hmm… at $15B in value, CBS is a bargain, I presume… Moreover, in a few years, Time Warner has been surpassed by News Corp. as the most global and diversified media company… acquiring CBS would strengthen Time Warner in TV, make it #1 in radio, give it a strong foothold in Outdoor and of course, make it even stronger online (AOL + CNET + CBS Interactive + Last.fm = pretty interesting).
But… what traditional media needs is:
- Better efficiency at the content creation and distribution space… not hooking up with more costly processes and expensive approaches to the media space.
- A hook with younger generations. New media is not going to put anyone - especially CBS and Time Warner - out of business, but they will offer them a gateway online… where younger generations migrate to at the expense of the Web.
That’s why, for example, CBS is now wisely using the Wallstrip crew to promote 60 Minutes. Who’s kidding who? 60 Minutes serves more viewers in 30 seconds than Wallstrip reaches in 30 days… but the audience is wildly different. At the risk of sounding the death knoll, I am not sure if the younger generation knows what 60 Minutes is, let alone ever watch it.
Digital media is going into hyper-growth, while traditional media is becoming less and less central to one’s daily activities, be it with regards to communications, commerce or entertainment:
The second annual World Digital Media Trends report, released at a meeting of the World Association of Newspapers, said the digital platforms of newspapers are growing at a double-digit rate worldwide, as the world increasingly goes on line. The report, compiled with the help of 71 research groups, said digital and mobile advertising revenues are expected to increase 12-fold from 2002 to 2011, to about $150 billion worldwide.
The report said the number of wireless device subscriptions is expected to increase threefold to 3.4 billion from 2002 to 2011, the number of homes with broadband is likely to rise 10-fold in the same period, and the mobile telephone customer base has increased from 945 million in 2001 to 2.6 billion in 2006.
I think the 2000s will mark the decade that mainstream media became less important, and taken less seriously.
In the first half of the decade, it was American media’s failure to question the Iraq war. That is a matter we will leave for our political blog.
The second half of the decade created another challenge for MSM: faced with an onslaught from blogs, competitive pressure on their business, newspapers stopped doing any kind of real investigative journalism and decided to protect the one advantage they have over new media, and that is access.
Take business reporters. I have a world of respect for traditional media and journalists, but what this YHOO case demonstrated was that journalists traded in their investigative hats for the coddler role. Go back to 90% of the stuff you would read in WSJ, NYT, etc. etc., and ultimately, I saw a series of writers seeking to show off how great their sources were and not once call out Jerry Yang and the Board for their borderline (if not outright) criminal behavior.
Much the same way that any politico journalist who asked tough questions lost access to the President and his posse, I think a lot of the journalists with access to YHOO and its board were afraid to lose the one edge they had over new media and bloggers and they dropped the ball.
The only thing that disgusts me more than that is YHOO’s behavior… I’d like to see what some of the thinkers who cover journalism have to say about this.
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