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Half a billion, more or less
November 28, 2006
Where's Carnac the Magnificent when you need him?
Answer: $500 million.
Question: What do big media companies say they're earning online?
Advertising Age's Claire Atkinson has a funny, and slightly disturbing, article that describes how old-line media firms are all converging on a single number in estimating their Internet revenues. "While each of the main media companies defines digital slightly differently," she writes, "everyone seems comfortable projecting the same revenue: about half a billion dollars." NBC Universal? $500 million. News Corp.? $500 million. Viacom? $500 million. Disney? $500 million.
The problem, writes Atkinson, "is figuring out what is being counted as digital revenue. Is it video advertising? ITunes-download fees? Banner ads? Social-networking sites? Wireless? Online sales of ringtones and Bill O'Reilly coffee mugs? All are thrown onto the same line, leaving observers to wonder just which parts of the business are growing the fastest." And which parts are smaller than they might seem.
Atkinson also picks apart the estimates for online advertising sales, showing that a fairly small portion is going to the media companies. Of the approximately $16 billion being spent on online ads this year, about $10.4 billion is going into the pockets of Google, Yahoo, eBay, AOL, and MSN. That leaves just $5.6 billion to be split among all the remaining players, including the entire long tail of web sites.
Traditional media companies face the same challenge as traditional software companies: How do we maintain our sales and profits in a world in which "free" is becoming the expected and default price? Moving your content online and attracting eyeballs are, it turns out, the easy parts. Making money is, still, where it gets hard.
As for Carnac, he continues to ply his trade - less lucratively, one assumes - in the online afterlife.
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