The Ian Bell Weblog

Time Warner CEO Dick Parson’s thinks YouTube and Facebook, both supposedly valued at $1 billion, might be too high.

“Google is trying to lock down or control as many of the traffic-generating sites as they can to freeze out Yahoo, MSN and, to some extent, AOL,” Mr Parsons said.

He said the two most attractive assets available to increase web traffic were Facebook and YouTube. “[But] it’s a tough assignment. Valuations that are put on those businesses that currently make no money are astronomical and you have to have a big leap of faith,” he said.

I think Mr. Parson’s is thinking too traditionally. MySpace was once thought to have been purchased for way more than it was worth at a price of $580 million dollars by Fox Corp., but it was Rupert Murdoch who got the last laugh when Google decided to pay $1 billion dollars to be the search engine of choice across all Fox sites including MySpace. Lucky break? Could be. Analysts are predicting that MySpace could generate revenue upwards of $1 billion+ per year by the end of the decade, maybe sooner.

“Pali Capital analyst Richard Greenfield estimates that the “other” revenue that includes the company’s Web sites like MySpace and FIM will top $1.4 billion in fiscal 2006, up about 25% from last year, and will become News Corp.’s fastest-growing segment in fiscal 2007.”

So my answer to Mr. Parson’s would be that with the traffic numbers that MySpace has, you can easily mold the site into whatever you want. Create new revenue channels, maybe even a whole new portal. The sky is the limit as long as you have the right team at the helm. Never underestimate the net.

The folks over at NGOHQ.com have found out that AMD hired viral marketing firm Design Reactor to do some viral marketing for them. So what did they do? Well they posted in a number of computer hardware forums “positive” comments about AMD and their products. How did they get caught? All of the different users had the same IP address….talk about dumb.

“”When we were sure that these guys were just spamming, we started to check their IPs and we have been shocked to find out that the IP is leading to a company called “Design Reactor”. According to this company’s Website, they are dealing with advertisement, digital communications, and more. According to their Website, their main client is AMD.”

Busted.

A recent survey by Ipsos Media shows that traditional media is far more trusted for accuracy than the internet.

“When asked which source provided them with the most accurate news, 29% chose newspapers, 19% chose television, 7% chose the internet and 5% chose magazines.”

I would have to agree with this. I think that because the internet is such a personal affair and since anyone can have a website, you have accurate sources mixed in with innaccurate sources. Are bloggers real journalists? No. But can any journalist blog? Yes. People often get confused as to which source is to be trusted I think.

When it comes to print, its such a huge ordeal to obviously produce a magazine, that 9 times out of 10, the information has to be accurate if the publication wants to stay alive. I would argue that the costs to produce a magazine forces that publication to stay faithful in most cases.

There is a good article on USA Today that talks about how appointment TV (shows programmed for a set time) is losing momentum fast. The main culprits? DVRs, VOD (Video on Demand) and Digital Delivery (iTunes). The question here is: Can the networks make more money delivering content through these new methods than they can through a traditional broadcast? I have faith in the internet, but I get the feeling that broadcast TV content is harshly cheapened when it’s brought to the web.

DVR’s completely erase the chance for advertisements to have an effect, and VOD usually means the consumer is paying extra for it and does not want to see an advertisement anyways.

It will be interesting to see how things play out.

Media Post has an article (posted a short while back) that talks about Pioneer’s online branding efforts. Among the online properties they will be advertising on include: CNet, ElectronicHouse, CNN Money, Forbes and Yahoo! Finance. Oh yeah, and DigitalTrends.com

Its fun to be mentioned with the big boys.

Rupert Murdoch says he doesn’t see a need to distribute programming or other content from News Corp. through Internet portals. “We’re not sure the portal model is the way of the future at all,” says Murdoch, whose company owns MySpace. “People are going straight to the sites.

I am going to have to say this is a smart move for now. Content is king. Online media is like your favorite TV channel or magazine, and people want to go to the source. Advertisers definately view portals differently than niche sites. People want a deeper, richer experience than what a portal provides in my opinion.

Another thing to consider is that a lot of these portals like MSN, Yahoo! etc are using the same content providers like Cnet, Edmunds.com and others. Nothing differentiates them on some fronts. Is that hurting them? I think it could…

Paul LaMonica, editor at CNNMoney.com writes “Time Warner chief operating officer Jeffrey Bewkes said Tuesday he was confident that the media giant would be a leader in online media, even though the turnaround at the company’s struggling AOL unit is just beginning. “

I think this is a very smart move for them. Online media can be more cost effective for a business if you know how to do it right. Broadcast television is really limiting when it comes to growing your brand and garnering attention because of the lack of “cross talk” or the ability to promote one brand through another. But when it comes to the internet, its as easy as integrating content from one brand into another to help grow a new site.

AOL? Sell them now while you can. They are making desperate moves, losing viewers and brand loyalty. They should have stuck with their subscriber model and continue to target their older demographic.

An interesting blog post I found the other day compares the age comparison of Netscape users compared to Digg. The results? The typical Digg visiter falls into the 17-24 age bracket while the typical Netscape visitor is over 55 years old. While Netscape is obviously not the same as AOL, it is still an AOL brand and I am willing to bet their visitor demographics are very close. This is a tool that AOL needs to use, do not flip the switch on your audience! Ween and teach them to use newer progressive technologies, you cannot just expect them to be so tolerant. 

“Wall Street has been concerned about the steady decline in sales and operating profits at AOL as well as the sluggish performance in Time Warner’s magazine and movie studio businesses. “

AOL: RIP

You know that Walmart will probably have the best prices out there for downloadable movies, and in theory their user base is so large it makes sense. The problem I see: Are Walmart customers tech savvy enough to pay for downloadable movies? Unfortunately, the answer is no. I could be wrong, but their music business didn’t take off either. I really do not think early adopters shop there…thoughts?

This could be the smartest move of all, patent a triple format disc which supports regular DVD, HD-DVD and Blu-Ray formats all in a single disc. The bet? It’s cheaper to pay a royalty to WB and create a single, triple format disc than it is to manufacturer and market three seperate movie formats. Brilliant.

Now customers will trust WB because they know their new movies will “just work”. No confusion involved.

I just returned from CEDIA the custom installer home theater show. I was always told that CEDIA was rather small, but that it is gaining momentum. They also moved the show from Indianapolis to Denver which I think is a smart move. I thought I would attend and see what it was all about, and I am sure glad I went. There were a lot of cool products to check out, mostly home video and audio of course, and plenty of new start-ups which I think have some great potential. Sooloos has a very attractive music system that looks great and should sound really good. It supports FLAC which is great, but I would love to see uncompressed .WAV support in the future. The system comes with a backup drive to make sure your music is never lost. The PC part reminds me of one of those sampler terminals you would see in some music stores. I do worry that the Sooloos name and look will confuse people that might think they are the same company as Sonos. I hope they do not get themselves into trouble!

Blu-Ray and HD-DVD really were pushing strong at the show. So which will win? Well here are my observations:

1) There were obviously a lot more Blu-Ray manufacturers at the show

2) Almost all of the movies being touted for HD-DVD are also available in Blu-Ray

3) Microsoft was showing off their HD-DVD player drive…..only problem is that the games being run on the system appeared to be running off the main unit, not the HD-DVD drive itself.

4) Some companies like Yamaha and Denon etc. are waiting to see which format wins before choosing a camp. My best bet is that these two companies will decide to make a dual format player like they have for SACD and DVD Audio.

I am looking forward to CES to see if there are anymore new product launches between CEDIA and CES. I am glad I made it to CEDIA though.