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I wasn’t too surprised to read the WSJ article that discussed the potential GE and Microsoft bid for Dow Jones. Well, I’m a little surprised that after the rumours that GE was considering spinning of NBC that they would consider a major acquisition. I have commented on the need for technology companies to own content companies many times in the past. My articles include:
- March 5th, 2007: Tech firms must own content
- May 9th, 2007: When will technology companies buy media companies?
The “when” is still being decided, but this rumour goes to show you that there is increasing interest in the value of content when combined with a technology focused company. Would this deal make sense for Yahoo?
The fill-in-the-blank headline of 2007: [Insert Technology Company] powers [Insert Content Owner] video syndication
Today, I learned Microsoft and the AP combined forces to syndicate videos to local stations. Not surprisingly, the AP offers content and a newspaper/broadcaster network while Microsoft offers the technology. In the video portion of the post, Jim Kathman spoke to Beet.TV explaining the AP was concerned about the technology and went to Microsoft to reduce their concerns. But in regards to monetizing, Kathman said:
If [the local properties] were able to drive traffic to their site, how do they monetize it? We’ve taken care of that by partnering with MSN; and MSN does a great job selling national brand advertising
Yesterday I learned Borrell Associates had released a report that explained:
The local video advertising market is still small – just $161 million in 2006, growing to $371 million this year . . . In five years, local online video advertising will surpass $5 billion, representing more than one-third of all local online advertising
Local properties of all kinds, blogs, newspapers, broadcast, etc have advertising value because of their niche
As the video technology and hosting technology becomes more commoditized, technology solutions must appeal to the increasingly segmented world. New Media companies must have solutions that appeal to the rapid segmentation of content markets.
To capitalize on a $5 billion local video advertising market, New Media companies must develop solutions that enable niche advertisers to better target niche segments
MSN has created a system which shares national brand revenues with the AP, MSN & the local newspaper/broadcaster. But, how do niche properties insert local or targeted advertising into their online video content? As the local online video advertising market grows, is this partnership really the best way to monetize traffic? Shouldn’t the focus be on local/niche advertisers?
The New Media Trend (i.e. rapid segmentation of content) relies on Technology Companies for continued expansion. Google, Yahoo, Microsoft, etc benefit from the technology they use to distribute content because they monetize those channels with advertisements.Today in the Financial Times, Microsoft’s Associate General Consul, Tom Rubin was quoted:
“Companies that create no content of their own, and make money solely on the back of other people’s content, are raking in billions through advertising and initial public offerings . . . [And Google] systematically violates copyright, deprives authors and publishers of an important avenue for monetising their works and, in doing so, undermines incentives to create”
Mr. Rubin’s comments about Google and YouTube raise an interesting point. I don’t think anyone doubts the copyright issues of YouTube. But, what happens when you generate revenue from content that is owned by others?
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