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Media Companies Adapt to New Online Publishing Tools



By
11/30/2005

Overview

RSS is an off-shoot of the XML coding language, which is the primary mover of data around the
Internet. Online content that is encoded with RSS allows users to
configure their email readers and Internet browsers to receive new
relevant information at user-specified intervals.

For example, The New York Times Company offers a wide variety of RSS-encoded
content through its Web site, www.nytimes.com, including nation-al news,
theater, sports, etc. Readers can set their browsers to grab all new
content in any of these categories, without ever visiting the actual Web
site.

According to Martin Nisenholtz, SVP of Digital Operations,
The New York Times Company, at the recent Syndicate Conference in New
York:

"We have gone from half a million page views in late 2003 to seven million
page views in April 2005, primarily through the use of RSS feeds. Although
RSS feeds currently account for only 1-2% of the Internet's total traffic,
it is the fastest growing delivery channel."

RSS feeds can be created from virtually any Internet content, including
press releases and marketing materials from corporations (e.g., users
sub-scribe to Apple's marketing RSS feed to constantly gather the latest
information on iPods).

Weblogs, or blogs, are individual users' Web sites that enable readers to
respond to postings. It is this interactive capability, along with the
ability for the average person to post opinions that can be read by a
far-reaching audience, that has made Weblogs such a social phenomenon
since they started in the early 2000's.

According to a recent ClickZ interview of John Cate, VP, Carat Interactive:

"Carat Interactive is tapping into the burgeoning blog phenomenon by
launching a new blog-focused practice. We see it as the fastest growing
area of the Internet and a great opportunity for two-way communication
between our clients and consumers."

Weblog authors, or "bloggers", often "re-purpose" content found on the
Internet, generally learning of the latest news through the use of RSS
feeds. Blog readers, in turn, often subscribe to RSS feeds from their
favorite blogs, greatly easing the task of checking for new information
across the large numbers of blogs for any given topic. Bloggers use
content found on the Web sites of newspapers, trade magazines and other
online channels to create discussions about topics and trends. They also
use trackbacks, a kind of posting that leads readers back to the original
article. This heavy traffic to and from information sources significantly
raises the search engine results for content providers and ultimately
extends content much further than would otherwise be possible.

Other technologies worth mentioning include: blog-specific search engines
(such as Technorati and Moreover), which are portals for the blog
community that are slowly transforming into commercial hubs; and
pod-casts, which are audio files published on the Internet that users can
down-load and listen to anytime by subscribing to an RSS feed. Expecting
strong growth in podcasts as a content distribution channel, several major
radio companies, including BBC Radio and Infinity Broadcasting, have
recently made significant investments in podcasting technology.

The M&A Market

Validating the rise in RSS, Weblogs, social networking and related trends, the M&A market
for these technologies has started to increase significantly over the past
year. For example, in March, InterActiveCorp (IAC) acquired online search
company AskJeeves, Inc. for $1.85 billion. The deal included AskJeeves'
Bloglines unit, which is one of the Web's most prominent blog searching
and headline news aggregating companies. IAC will likely use the large
amounts of traffic generated by AskJeeves and Bloglines to drive
transactions and advertising revenue to its other online holdings, which
include travel and ticketing services.

Some other recent notable transactions surrounding these new technologies
include:

Google's acquisitions of Blogger, a leading Weblog provider, and Dodgeball,
a social networking service; Yahoo!'s acquisition of the popular online
photo-sharing service, Flickr; and MSN's acquisition of MessageCast, which
adds broadcast messag-ing capability that works with RSS content feeds to
transmit blogs, podcasts, news and MSN Alert updates.

Interestingly, as these acquisitions proceed, the line between content
providers and technology companies is quickly blurring. For example,
Google is branded as a search engine and is well-known for its highly
effi-cient search functionality. However, by acquiring a blogging platform
and a social networking service, along with its photo sharing services,
Hello and Picasa, combined with its mobile content delivery capability,
Google is transforming into a wide-reaching content delivery channel.

So, What's at Stake? Eyeballs

According to reports issued by the Pew Internet & American Life project, more than 9%
of American adult Internet users (over 11 million people) have created
blogs, and 25% of Internet users (more than 32 million people) say they
read blogs. From a different perspective, one out of every 20 people has
created a blog, and 16% of all US adults are blog readers. To put this
into context, the number of adults reading blogs already equals
approximately 40% of the entire talk radio audience, even though Weblogs
have only come into prominence over the past three to five years.

Finally, since March 2003, the number of Weblogs has increased from less
than 100,000 to more than seven million, and the number of Weblogs is
doubling approximately every five months, according to Technorati.

Advertising

Since advertising dollars follow eyeballs, Internet advertising is growing very rapidly,
even though it still comprises only a small percentage of total
advertising spending. According to the Newspaper Association of America (NAA),
online newspaper ad spending grew 39.7% to $445 million in the first
quarter of 2005, compared to the same period a year ago. In comparison,
print newspaper advertising increased only 2.4% in the first quarter of
2005 versus the same period last year, but still represented over $10.5
billion.

A May 2005 report by Forrester Research shows that total US online marketing and advertising
spending will reach $14.7 billion in 2005, a 23% increase over 2004.
Contextual advertising, driven by the growth of paid search, is expected
to grow to $1.1 billion in 2008 from $300 million in 2005, nearly 4x the
growth rate of the overall online advertising market.

Additionally, a survey conducted by Forrester shows that 64% of respondents said they were
interest-ed in advertising on blogs, 57% through RSS and 52% on mobile
devices, including phones and personal digital assistants.

Advertising options for blogs and RSS, such as blog networks and contextual inclusion in RSS
streams, are rapidly developing. Media and information companies will need
to learn how to drive advertising dollars, as well as audience, through
these content delivery platforms.

Conclusion

RSS feeds and Weblogs are dramatically changing the delivery of content by
enabling the end-user to decide how, when and from where the content is to
be delivered. Similar phenomena are taking place in television with the
rise of digital video recorders (e.g., TiVo) and music with Web sites
(e.g., Apple's iTunes). In order to remain relevant to audiences in this
rapidly changing content delivery market, media and information companies
will need to incorporate these new technologies into their platforms. The
time to start doing so is already at hand.

"You cannot afford to close your eyes to them [blogs], because they are simply the most
explosive outbreak in the information world since the Internet itself.
And, they are going to shake up just about every business - including
yours." -BusinessWeek,
May 2, 2005

The M&A market will continue to be robust surrounding these new technologies, as traditional
media companies search for acquisitions to keep pace with changing
consumer behavior, particularly as advertising revenue migrates to the new
delivery platforms. "New" media companies, such as Google, will continue
acquiring these new technologies in order to quickly evolve into complete
online media platforms, with full content delivery capabilities.

Special thanks to Ted Doyle and Tom Maher of FuelDog, Inc.
for their contributions to this article. FuelDog is a trade media company
that helps a number of companies with their Weblogs.

By
11/30/2005







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