Sure, Mary Meeker raised her target on GOOG recently, which her company Morgan Stanley helped take public, but she’s seen the future of search, and there’s a lot of blogging in it. From her October “Update on the Digital World” (caveat: PDF download):
The Internet has become a leading source for news and information over the past decade, but we believe the emerging acceptance (by users and publishers) of Web content syndication services will drive even broader / deeper usage of the Internet as an increasingly relevant news and information medium. We see three factors that are combining to drive momentum: 1) rising usage of RSS (Really Simple Syndication) by content providers as a standard distribution platform for online content; 2) ramp in the creation of blogs and other user-generated content; and 3) Yahoo!’s easy-to-use integration of RSS feeds (including blogs) that was rolled out in beta to its distribution channel of 25MM+ My Yahoo! users in late September.
While Google’s search engine and advertising tools set the pace for new ways of searching information, we believe that Yahoo! may be setting the pace for new ways of serving information…
It usually takes years for new technologies to develop. Then, a very easy-to-use way to use the technology is launched and—seemingly overnight—related products become mainstream. Two recent examples include the Web browser, which brought the Internet to the masses, and the Apple iPod, which is doing the same with digital music. Today, this type of mainstream push for delivering syndicated news and information to consumers may be driven by Yahoo!’s newly redesigned My Yahoo! personal page…
….In our experience, if there is value in something that is also easy / friendly to use, people will use it. Consider iTunes for legal music downloads or TiVo for digital video recordings—in both cases, a clean interface and intuitive controls spurred adoption. The simplification of blogging tools, such as those offered by Blogger.com, has allowed anyone with an opinion and an Internet connection to become a publisher, journalist, and editor (our humble definition of a blogger)…Despite all the noise and random content in blogs, many bloggers have become sources for breaking news, fresh ideas, and expert commentary….
…And if there are hundreds or thousands of thought leaders and motivated, interested parties on the Internet with the ability to publish news or insights into any number of local or global issues, then it is safe to say that these blogs often become both the first source of news, a vital proving ground for authors and a source of potential community for other interested parties. For example, you’re probably going to get far more Boston Red Sox specific-content from a blog about the Red Sox made by a die-hard fan than you will from a random sports page, especially if you’re after opinions and community.
Mary then goes on to note that with blogs, the Power of the Tail comes into play (see Tim and my presentation regarding this and other trends at Web 2.0):
The mainstreaming of Web syndication technology such as RSS through easy-to-use and popular services such as My Yahoo! could create a new business model / revenue stream for companies such as Yahoo!, as well as independent freelance Web journalists / content providers. We believe that blogs represent the traditionally hard-tomonetize tail of content, and the barriers to monetization are slowly being overcome. … By integrating blogs with search, and by making it easy for end-users to find and add blogs, Yahoo! is playing a key role in driving blog readership and RSS usage among endusers.
Meeker then shows us another chart, which makes the “more music, less Britney” point:
This is another way of saying that the internet lets thousands of “bands” flourish, each supported by their own economies of scale.
Which is why I’m interested in and excited by Feedburner, Kanoodle, AdBrite (recently renamed from MarketBanker), and the like. In her report, Mary talks a bit about the potential for all this to mean money to someone (after all, she’s a Wall St. analyst) and she concludes:
We believe syndication technology is one of the tools that through a virtuous cycle should propel Internet leaders such as Yahoo! further into the forefront of all media, albeit slowly and steadily. High-quality, unique, and cutting-edge content is critical for the growth of any medium. We believe advertising and fees for syndicated content present a potential business opportunity for the Internet leaders and content providers.
…We would like to think that the popularization of syndicated content could further fulfill some promise of an engaging, useful and vibrant user-generated medium on the Internet. This does not suggest the endof mass media, either broadcast or narrowcast, but it could represent significant changes in consumption andmonetization. If the Internet is a marketplace of ideas, then the best ideas should float to the top, with traditional mass media perhaps serving as a tool for legitimizing/establishing discourse. The driver for Yahoo!, eBay, Google, Microsoft and Amazon.com’s Internet successes has been their never-ending quest tocreate the perfect, seamless user experience—in other words, they do right by their users. What open syndication shows is that by doing right by their users and independent publishers, they also have the potential ability to do right by investors, in our view.
I think Mary outlines trends in this space well, her report is a must read for all of you interested in the business implications of blogging. Her conclusion: This blogging thing, it got legs. And that’s a fine way to end my 1,000th post here on Searchblog.
5 thoughts on “Meeker on Digital World: Blogs, Yahoo Are Winners”
1000 posts! Congrats!
This is very good news for bloggers, but I’m not so sure it’s good news for Yahoo! and cohorts.
Case in point, I switched from My.Yahoo to MyWay to escape the advertising on Yahoo!. Essentially, I moved (as a consumer) from the Yahoo business model to the Google business model.
My next step, with RSS and all the tools that are evolving, is to quit MyWay for an RSS constructed page. I won’t need a Yahoo! or a MyWay to contruct the page for me. And it will be a page that has advertising that I want – not advertising that is foisted on me – if it has any advertising at all.
We shall see what business models emerge in the environment I envision, but I wouldn’t bet on Yahoo! or MSN or Google.
I’m betting on Quinset.
Woot on 1,000 posts!
Jim switched away too soon. Yahoo has heard the ‘call of the consumers’ on the open content model. The latest version of My Yahoo! allows me to add as many RSS feeds as I like.
Currently, I have fourteen (14) RSS modules and four (4) Yahoo provide ones – and I have one advertisement to look at. I find that business model quite compelling compared to paying for the RSS reader FeedDemon @ 29.95 USD a pop.
Yes, I said FOURTEEN RSS modules (including Battellemedia).
Move your bet Jim. 😉
And Yahoo… bring on the personalized text ads.
Google’s Now Worth More Than Yahoo
Bill Burnham has a different perspective:
“Why is Google worth more than Yahoo, despite generating 10% less in revenues? Two simple reasons: Growth and margins. On the growth front, Google’s Q3 revenues grew 15% sequentially compared to Yahoo’s 9% growth. On the margin front, Google’s operating margins (less the one-time legal settlement with none other than Yahoo) were 26% in the quarter compared to Yahoo’s 19% operating magins. As the old maxim goes ‘Wall Street Pays For Growth’ and Google is clearly growing faster at higher margins than Yahoo.
The big question now is whether or not Google can sustain its premium valuation to Yahoo. Detractors might point out that Google is more vulnerable than Yahoo because Google’s revenues are highly concentrated in search advertising, however the other side of the coin is that Google has plenty of opportunity to expand outside of search and into many of the paid subscription services that Yahoo and other internet portals now offer.
With its recently launched G-Mail service and rumors of an IM client and other portal staples forthcoming, I suspect that Google has a lot of incremental growth opportunities ahead of it that will help it sustain its growth. Indeed, at current growth rates Google will surpass Yahoo in terms of quarterly revenues by Q1 05 and they will do this despite the fact that they remain largely a one-trick pony. That’s quite a pony!”