Category: Media/Tech Business Models

A good overview of MSFT’s role in the industry, with special attention paid to the European antitrust case and the role Google plays as MSFT’s next target.

Remember when everyone was calling Amazon the Walmart of the Web? That was so 1990s. But…after reading Marketing Wonk’s interesting take on this article in Internet News, Walmart certainly came to mind, and not because they both sell a lot of shit. The commentary:

It might have taken warehouse store price pressure 300 years to develop and begin to put out of business Main Street bricks and mortar stores, but on the Internet, Jeff Bezos hopes the process will take merely a few years. In comments to financial analysts, Amazon.com CEO Bezos said the corporate strategy will remain to lower prices – even at the expense of gross margins – in order to gain share, prevent competition and create more power to put pressure on suppliers.

Back in the day, everyone was going to spin out and go public, even the digital unit of the New York Times. Then the crash came. The press (that which even bothered to cover the sector, or was left standing) beat everyone about the head in a fit of schadenfreudian pique, and the game was called over.

Well, game’s on again. I’ve said this many times, and I will keep saying it. What happened in the late 90s was a warm up, and the main event is upon us. I hope we’re not headed back to the mania of that period, but certainly many – if not most – of the bets of that era are proving prescient, if not financially rewarding in the short term.

Case in point: The New York Times’ earnings, announced yesterday. In essence, the NYT’s digital business (NYTD), run for years (including the late 90s) by the remarkably adaptable Martin Nisenholtz, is the story of the day. The NYTD is now on an earnings run rate of $30 million a year, and it’s only going up. Were it not for the NYTD’s earnings doubling this past quarter, the entire NY Times Corp’s earnings would have stalled compared to last year. I am sure shareholders are quite pleased with Martin, and he deserves the credit. I’ve no idea if NYT execs wish they could have spun NYTD out, but I am quite sure they are pleased they stuck with it after the crash. They are only beginning to reap the rewards of that foresight. (Not many publishers had it.)

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TiVo disclosed late last week that it has purchased Strangeberry, MediaPost reports. Strangeberry was the company founded by key ex-Marimba employees to do home networking/broadband stuff. So far no clarity on how the peanut butter and chocolate will mix, but I sense it will be pretty cool. Strangeberry was doing a lot of work using Apple’s Rendezvous wireless networking technology. Blog rumours say look for a kick-ass home-server kitchen-sink type box.

TiVo’s SEC filing w/r/t the purchase. More via PVRBlog…

I hate to crow. Well, no I don’t. When a monthly beats the NYT to a story, it’s kind of fun. Anyway, the Times picks up on the web/TV advertising meme, which I wrote about a few months ago in 2.0.

Utilizing Unicast technology, a slew of sites, including MSN, ESPN, Lycos and others, will run ads from Pepsi, AT&T, Honda, and several others. This is real marketing. More than 100 million ads will be run in the six week test, with an estimated reach of 50-75 million folks. For those of you who don’t read 2.0…here’s the last line of my column (edited a bit for clarity):

“There are any number of problems with selling television advertising on the Web, of course. Will Web surfers accept it? Will they hit the fast-forward button (or will they be able to)? Will advertisers see the Web as a valuable medium? Can they even buy it in a way that makes sense to them — using the same reach and frequency metrics they apply to buying television and print? Can they let go of their decades-long dependence on the up-front and learn to love the Web?

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I’ve been watching as the predictions for broadband go higher and higher, and now this….Jupiter claims broadband home penetration in the 35% range in 2004. And for high income households, it soars way above that, to nearly 50%.

PS – My ISP went down today, till now. Sorry for the light posting day…

Advertising Age has a headline today that sounds familiar: “Superbowl Ad Prices Set New Record.” On first blush, it’d be easy to say that the $2.25 million marketers are paying for one 30-second spot proves how robust broadcast television is as a medium. In fact, I’d argue it proves quite the opposite. Broadcast television continues to bleed out as niche cable, the internet, and gaming take hold, creating a a significant shortage of Major Marketing Moments. Back when Laugh In or the Texaco Theater was king, average ratings hovered above 50 for hit shows. Now a show is a hit if it cracks the teens. Hence, when something like the Superbowl creates a mass marketing opportunity (a rarity today), marketers naturally bid it up. So here’s a new law: The price of a 30-second Superbowl spot is inversely correlated to overall network television revenues. I’d wager Major Marketing Moment revenues won’t make up the overall network decline year to year. I’d love to do the stats on this, but I’m supposed to be writing a book, so I’ll leave it at that.

Dan Gillmor nails it when he says:

The post-broadcast culture is a democratization of media, and it comes at things from the opposite stance. It says that anyone also can be a creator, not just a consumer. There’s a world of difference.

This evolution hit the print world in the mid-1980s, when desktop publishing spurred an array of new magazines, newsletters and other print publications. Then the Web arrived, spurring even more variety in what remained essentially a modern version of printed news and information.

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Google is well known as a poster child for Linux – it’s got clusters of some 10,000 Linux machines happily cranking out hundreds of millions of searches a day. SCO is well known to be a sore loser in the Unix OS wars – it’s suing IBM, claiming Linux (which IBM is pushing hard) violates their intellectual property rights. Folks have speculate for weeks that perhaps SCO would go after Google, given its high profile and imminent IPO. Google would capitulate, the reasoning went, since they’d prefer to pay off SCO and insure a big IPO payday, rather than screw up an offering with a messy legal battle over some of the most important technology they use.

Well, Rueters is reporting that the other shoe has dropped, if somewhat softly. In the story, which has been commented on widely in the Linux/blog world, a company representative says that “SCO has had ‘intermittent, low-level discussions’ with Google, which is well-known for harnessing Linux technology to run its popular search service.” Some wags say that means SCO called Google, asked the receptionist for money, and were hung up on.

Now, I am no expert on the SCO suit – it smells wrong to me – but I’d count on the opinions of Larry Lessig. He says the suit is crap. If and how Google responds will be important. I’d wager they’ll simply ignore it as long as the suit is only against IBM. If SCO sues Google, I imagine the company will join IBM and fight hard. That feels like the right thing to do.

Over at Boing Boing Cory’s got a good rant on TiVo’s attempt to free video from the opaque prison most commercial PVRs have become. But he finds the DRM TiVo has imposed too limiting.

From his post: What’s funny about this is that it’s the exact opposite of the traditional way of running a disruptive technology business: no one crippled the piano roll to make sure it didn’t upset the music publishers, Marconi didn’t cripple the radio to appease the Vaudeville players — hell, railroad barons never slowed their steam-engines down to speeds guaranteed to please the teamsters.