Google’s CEO Eric Schmidt just might have the best Poker face around. How come? Read on.
Google sees more partnerships, not major mergers, according to CEO Eric Schmidt. Problem is that Google’s already had its one major partnership, and since then, it’s grown so fast and so quick that no other media or tech company would really want to partner with it voluntarily.
The one partnership I am referring to, of course, is when Yahoo! decided to feature Google back in the day in exchange for warrants in Google. Those warrants definitely paid off in the short term, but in the long term, that “win-win” deal led to Google becoming the $120B market cap company it is today and it slowed down Yahoo! quite a bit (I own Yahoo! shares). Today Yahoo! is trying in vain to narrow the gap between itself and Google, but make no mistake about it: Yahoo! created the Google headache itself. It could have chosen to develop its search a bit more, but instead used Google.
End result: Google accounts for 45% of search volume and over 50% of total online ad revenues. Those are the kind of numbers than can make Google uncatchable.
On one brief day in 2000 (or 2001, you will have to forgive me), Cisco Systems delivered on the promise of the Web and was worth more than Microsoft. That lasted one day. Today, Walmart, GE and Exxon might be worth more than MSFT, but if there is one technology company that can usurp the crown of world’s most valuable company, I hate to say it, it’s not Yahoo! (right, they are a media company) or MSFT, but Google (I own shares of MSFT).
Of course, I am not drunk with Google Kool-Aid just yet and do believe that Google has a lot more to lose in the next 2-10 years than it has to gain. The reason is simple, search - while it will continue to dominate in online ad revenue contribution - will start to lose some steam to branded ads. On that front, Google is not king of the hill, Yahoo! is.
Then again, the one wild card that remains to come into play is video. On the front of online video, Google is basically tied with Yahoo! - tied in the sense that they are both trailing YouTube and to some extent, MySpace. Since MySpace is already a part of News Corp.’s FIM empire, then perhaps it might start to make sense for Yahoo! and Google to begin talks with YouTube.
Merger? Partnership? Hey, who knows. I am not privy to those talks. What I do know is that YouTube’s financial backers are none other than Sequoia, who incidentally invested in both Yahoo! and Google.
All right, enough pontificating, back to work.
Of course, YouTube could prove to become a magnet of liabilities for either company, but the truth is that film and TV studios already love Yahoo! by virtue of advertising on it, and they would have no choice but to welcome a combined Google/YouTube because of its sheer size and distribution opportunity.
On who else could buy YouTube, click here.
Read more on Mr. Schmidt’s comments here.
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WatchMojo NewsletterTranslation: we won’t build, we’ll simply buy one.
During a conference call with Wall Street analysts, Schmidt dismissed speculation that the company aimed to tie together its Web search and other services to compete with Microsoft’s Internet Explorer, the world’s dominant Web browser.
“It looks like people have some good browsers choices already,” Schmidt said. “We would not build a browser for the fun of building a browser,” he said.
Wow. This is unreal:
Shaun Harrison, 18, and Saverio Mondelli, 19, both of whom are from Suffolk County, N.Y., were arrested in a sting operation last week, the Los Angeles County District Attorney’s office said Wednesday. The pair had traveled to Los Angeles to meet people they allegedly believed were MySpace employees, but who were in fact undercover investigators, according to the district attorney’s statement.
Read more.
Ok, let’s not kid ourselves: for us folks who work online, the past 3 years have been rewarding in the sense that our friends and families thought that we were nuts to work online after the dot com meltdown of 2000-01 have come around to realize that the Web ain’t a bad place at all to try to earn a living. Heck, it could be so good that people start gunning for you when you do. But that’s another story altogether…
Of course, while the tide began to change in 2003, ’twas only in 2005 that people realized that the future of media would be determined by the Web, and not vice versa. That is not to say that the Web will supercede other media when things are said and done, after all, those who do not learn from history are bound to repeat history’s mistakes, but the fact of the matter is that by virtue of being a new, dynamic medium, the Web will impact print, radio and TV considerably over the next few years as offline companies chase growth.
But in 2006, something strange is happening: the Web is not putting its head down and charging ahead online, rather, it’s using its much ballyhooed current status as media darling / flavor du jour to leave its footprints on TV. I think the reason why the Web is so in love now with TV is because with broadband penetration being what it is, Web TV is a reality.
I know it, you know it, the American people know it, and apparently, the Web and TV execs know it, too.
Call it the Web’s way of “buying low and selling high.” After all, this might be the only time when TV execs will openly listen to their Web counterparts. With Google being worth more than Viacom, Disney and News Corp. combined, you can’t blame them, now can you?
It’s odd that an industry that still generates so much more money that the Web (be it print, radio or TV) is suffering from such an inferiority complex.
All to say, two cases caught my attention.
The second one is Google’s attempt to launch a TV guide style of programming guide.
Eric Schmidt, Google CEO, comments that their mission is to provide access to everything, including television content. Using Google search capability, coupled (for instance) with Media Center or an XBox, this vision could potentially be realized. There are questions, of course, about Internet connections fast enough to withstand the bulky data transfer that such content requires. This may ultimately get supported by a new format of advertising that Google is continually testing on a weekly basis.
The first one however is what is going on with News Corp’s FIM property IGN. The reason why this one is key is because IGN has the largest concentration of men 13-34, 18-24, 18-34 (you name it, they have cornered it) online. So what they do by default has the chance of becoming important by nature of the demographics they command.
Some background: when the deal (News Corp. buying IGN) went down last October, conventional wisdom stated FOX would try to prop up all of its online properties (be it through acquisitions, like IGN, Scout and MySpace, or through organic development, like FOXSports.com, AmericanIdol.com, etc) to generate considerable revenues from them. This year, FOX interactive is gunning for some $300M in revenues from the FIM division, which is a good amount of revenue, no doubt.
To help bolster its ROI though, FOX has launched on IGN the http://TV.IGN.com vertical as its own TV guide of sorts. While some cynics would say this is FOX trying to wring out as much value from the deal as they can, oddly enough, this channel could prove to become a great asset for IGN. First off, while I was expecting a heavy dose of FOX programming news, truth is that the vertical does an honest job of balancing out information on FOX with programming from ABC and company. It has a FOX slant, that’s to be expected, but it is not blatant to the average user who cares little about the business side of media.
What this shows is that TV execs have decided not to sit idle as their audiences turn to the Web, rather, they are using the Web to drive audiences back to television. After all, why would Web execs be so interested in driving audiences back to TV, where ad revenues dwarf those of their Web counterparts.
Whether this pays off or not remains to be seen, after all, online audiences are a fickle bunch, but the idea of using the largest concentration of men 18-34 on the Web to bolster interest for TV programming ain’t a bad idea at all for FOX. I’ll give them that. But when you think about it, it ain’t a bad idea for IGN either.
If over time, the channel remains neutral enough and not showcase FOX programming, then it might prove to become the online TV Guide that Google is looking to develop through algorithms alone. And in the end, let’s face it, as great as the Web might be, TV ain’t too bad. So if the average 13-34 online becomes used to going to http://TV.IGN.com to see what’s on the boob tube, then FOX and IGN win, which technically at least, is the goal of any M&A.
What FOX Interactive and/or IGN should do immediately to blow this up and cement this channel as the place to go for pertinent TV programming for men 13-34 is to leverage either MySpace or IGN’s social networking platforms and allow the 13-34 to develop their own TV guides… this could combine the mass market appeal of TV with the individuality of the Web.
This should serve as a lesson to Mr. Lloyd Braun, Mr. Terry Semel and company at Yahoo! who for the last two years have sat on the fence vis-a-vis developing original programming for the Web versus becoming a beachhead for TV programming online.
Some numbing stats:
- Google will earn approximately $23 per U.S. Internet user in 2006
- Google’s share of searches grow from April 2005 to April 2006, though it pegs Google’s current total at 43.1% of the search market, or 2.9 billion search queries for the current month
- But each quarter, Google’s revenue growth has outpaced the overall growth of the market. In the year-ago quarter, Google’s $1.26 billion in revenues were worth 45% of the $2.8 billion in total Internet advertising revenues. Last quarter, Google’s share was 53%, and in the first quarter of 2006, Google’s portion came to 58% of the total.
Has the fat lady sang?
http://www.forbes.com/2006/05/30/google-yahoo-0530markets11.html?partner=yahootix
SAN FRANCISCO (Billboard) - The digital music battle of the future may not be over where music is purchased, but where and how it is stored.
A number of companies have created online content “lockers” where users can upload their digital media files for storage that they can subsequently access from multiple devices.
Examples include Oboe, created by MP3Tunes founder Michael Robertson, and MediaMax, from Streamload. Oboe offers unlimited storage of music-only files for a flat fee of $40 per year, while MediaMax will store 25 GB worth of music, video and photos for free, with up to 1,000 gigabytes for $30 per month.
Find out more….
Vonage is one of the VOIP providers, who unlike the traditional telcos who are rolling out VOIP services, was conceived solely to offer consumers Internet Telephony.
Yesterday it had its IPO, and in the worst of its kind this year, the stock tanked 10-15%.
Not good for investors who bought in yesterday, or for that matter, the VCs who have poured so much money into the business.
What’s noteworthy here, once again, is that despite all of the hoopla over VOIP, the companies who stand to gain most are not the companies like Vonage who offer the phone packages, but rather, the companies that sell the “shovels and helmets” for deployment of phone services over the Internet, companies like Nortel, JDSU, etc. Note that I own shares in a cornucopia of these networking companies who have seen their shares fall off 90-95% since their pre-dot com bust bubble levels.
Nonetheless, in 1-2 years, when the VOIP promise goes from concept to reality, companies like Vonage will be reducing prices and cutting their margins in the fickle consumer and business segments while the networking companies will be offering more and more nuts and bolts to these.
The deal, announced before the opening bell, allows both companies to cooperate on advertising to extend their reach on the Web.
The agreement calls for Yahoo to become a provider of all graphic advertisements on eBay’s Web site, as well as a sponsored search for complementary products on numerous eBay search results pages.
Another major piece of the deal is that online payment system PayPal Inc. — which is owned by eBay — will be integrated and promoted to Yahoo’s customers and merchants.
This is an interesting deal on the Net for the simple reason that it starts to show established online companies sticking to their core competencies and trying to avoid doing everything for everyone… In this case, Yahoo! does not build their own payment service, while eBay does not move into display advertising or search.
So while Google is seemingly making an attempt to be in search, email, classifieds (Base), and God knows what else, some large Web companies are starting to focus on what they do and basically order with their stomachs and not their eyes.
Sometimes I wonder if HipMojo.com, the blog covering matters in high-tech, intellectual property, the search wars, online video and the Web in general is not actually a blog covering Fox Interactive Media’s journeys.
Of course, that might have something to do with the fact that Mr. Rupert Murdoch’s born a day before I am. Well, you know what I mean.
Then again, maybe the reason I write so much about FIM is because the company has implemented a Barry-Bondsesque’s strategy to make up for lost time on the Web with acquisitions of MySpace, Scout.com and IGN and has become one of the more entertaining companies to cover in the Web space…
Anyway, today I learned on TheStreet.com that as MySpace continues shopping for a search partner (read my free, pro-bono advice to Messers Rupert Murdoch, FIM head Ross Levinsohn and FIM COO / IGN CEO Mark Jung on what to do vis-a-vis search here)
the No. 2 search engine, Yahoo!, is “less interested” in a deal [with MySpace], the paper says. None of the companies could immediately be reached for comment on the story.
I could not help but ask: why is that? Yahoo! is struggling to make up the difference in market share between itself and Google. Especially since it was revealed that Google once again increased its lead, here, or as shown by the table below:
| April 2005 | April 2006 | % Gain/Loss | |
|---|---|---|---|
| 36.5% | 43.1% | 6.6 | |
| Yahoo! | 30.7% | 28% | (2.7) |
| MSN | 16.1% | 12.9% | (3.2) |
| Time Warner | 9% | 6.9% | (2.1) |
| Ask | 6.1% | 5.8% | (0.3) |
Source: comScore Networks
In that light, why would Yahoo! not go all out and try to secure a deal with MySpace?
Then it hit me. Yahoo! just tried to convince analysts that its new search recipe will lead to higher monetization. And, the simple truth is that as wonderful as MySpace is for its audience and reach, it is not a search destination. As such, the propensity for MySpace’s 65M users to search will be low. Moreover, even when people would search in Yahoo! (or any search provider’s) search box, the eventual click through rates on the search results and accompanying ads will be lesser than average, further driving down monetization.
This will not help Yahoo! at all.
It might help Microsoft, cause MSFT does not really care about monetization of search right now, it simply wants a bigger market share.
And while the search company who will secure the MySpace deal will increase market share, it will not necessarily lead to better margins on search. What I mean is that even the “contextual ads” that are so prevalent now would obtain less than stellar CTR’s. So in other words, given Yahoo!’s stock market inferiority complex, it does not make sense for them to pursue the deal. I own shares in Yahoo! and MSFT by the way.
What this shows once again is that MySpace should not adopt a me-too search strategy by simply copying and pasting any search company’s code on its site. It could do that as well, but it should instead continue to position itself as a unique player in search: the search of and for people. Over time, people can say “I MySpaced John,” and not ”I Googled John.”
Yes, those are violins you hear in the background, but think about it: somewhat inadvertantly, MySpace has built the largest database - 65M large - of the world wide web’s population.
That is powerful stuff. The people on Google go there to search. The people on Amazon go there to shop. The people on MySpace go there to have a space and find other people’s space. As such, the direction MySpace should take is just that: become the de facto directory of human beings on the Web.
I first reported on this a few weeks ago, click here. I am not saying that it cannot / should not have a default, standard Web search function, all I am saying is that by forcing searching down the throat of MySpacers, it will lose its intrinsic value of being the most representative sample of the WWW’s population online.
What LinkedIn and company are trying to do, MySpace has accomplished and then some.
Once again FIM, file this under “A” for
- Advice You Didn’t Ask For; and
- Assuming You Care.
Not really anyone big… just Yahoo and AOL.
This can mean only mean one of two things. Either these established giants of the Net will take over the gigantic demand for user generated video content, OR, their efforts are too little too late and will be seen as weak attempts to cash in on the craze. There are already so many established sites with piles of content that it seems like the latter option is the more likely one.
AOL’s video site is called Uncut Video and its currently in its Beta mode. It looks pretty similar to all the other sites out there and really doesn’t bring anything new to the table. While Yahoo does have an existing video site, it hasn’t yet launched its user generated content site, and it was only unveiled earlier this week in their new business stragey meeting that they would be launching one. There is a screenshot of what it will look like though, which you can find here.
It will be interesting to see how these 2 sites work out. Sure user generated video content is a big deal right now, but in my opinion these huge portals should be focusing on creating their own quality, and well produced video content and try and distance themselves from the YouTube’s and vSocial’s. UG content is cheap and usually crappy quality and it seems like a waste for the likes of Yahoo and AOL to try and jump on the bandwagon at this point when there’s so many players doing fine already.
But what do I know…
