Now that NewsCorp is spending approximately $1.1 billion for the combination of MySpace and IGN, its strategy starts to get a little clearer. As usual, Murdoch is investing for the future — far enough into the future for Wall Street to misunderstand and undervalue his strategy (the part of that story which required subscription includes Prince Alwaleed Bin Talal Alsaud saying, “We believe the stock of News Corp is very, very much undervalued.”) Murdoch wants the average age of the NewsCorp Internet customer to be Gen-Y or younger, which makes perfect sense for a new entrant into e-commerce. Get the under-25s involved before their buying habits are fully formed; become the catalyst for their online relationships; and consolidate the major brands that they cleave to for a few decades. Plus, if Apple’s success with the iPod is any indication, MySpace’s and IGN’s customers may well find a way to recruit their parents into the mix.
NewsCorp’s challenge is not whether they can acquire companies for lots of cash, but whether a media company can avoid screwing up the innovative technology approaches of these companies. Scott Sassa’s bumpy ride at Friendster had nothing to do with his skill as a media executive — Friendster was (and is) simply not mature enough to be operated like a media company. Instead of owning the next-gen dating market as they might have, Friendster is two years into a $13M venture round and their traffic is declining. Semel is doing a phenomenal job at Yahoo, but notice that he showed up after Koogle — not before. Yahoo’s recent Flickr identity faux pas shows that even they must be careful not to screw up their acquisitions.
In spite of the obvious challenges, we love this trend at Wireless Ink. As you would expect, our user base is fairly young (34% 16-24 years old and 37% 25-34 years old). Our largest opportunities are serving the same crowds as MySpace, IGN, and Facebook as they mobilize their Internet use.
avoiding screwing up the innovators is the key scott - you nailed it…
good luck in your new gig - looks promising
That demo you note is critical and different in more ways than most imagine. For one they are not as willing to become static consumers of media. Not only do they want to share…they want to create. It’s why at my place we’ve refered to that group as the “content generation”.
So it’s understandable that most monolithic media companies don’t get it. Or if they do, they attempt to be as obstructionist as much as possible. It’s clear unless they evolve fast they will die. Maybe Murdoch is the exception.
My sense is that the future of media and content is decentralized, bottom up and collaborative. Swimming with that tide is the surest way to profitablity. But even the hippest companies and smartest politicians don’t get it. It wasn’t long ago that I sat in a meeting with one of the swingest mobile companies around discussing mobile and its future. We were trying to paint a picture outlined above but all they wanted to know was which corporate sites got the most traffic. They had no intrest in giving up the keys to the car.
And it wasn’t long after that that I had a few converstations with the head of one of the presidential campaigns about the inevitable impact of bloging on the election’s outcome and the ongoing democratization of media. Of course they dismissed our projections as fads…that was before the Dan Rather, 20/20 and Powerline “love triangle”.
Similar shifts are happening in Hollywood where the biggest threat is not from pirating but cheap technology and inspired film makers according to Glen Renyolds: http://www.popularmechanics.com/specials/features/1712111.html?page=2&c=y
Mobile will only accelerate the process of change. Companies that get on board will thrive while the others will wonder what happened to their world.
My bet is Wireless Ink will be one the companies leading the charge forward.
[...] In a comment that exceeds my post, James brings up an interesting point that I missed: That demo[graphic that] you note is critical and different in more ways than most imagine. For one they are not as willing to become static consumers of media. Not only do they want to share…they want to create. It’s why at my place we’ve refered to that group as the “content generation.” [...]
[...] But what could be the price for a deal like that? Somewhere between $25-$50 million at the very least. SIPphone is said to have 250,000 users and if you used the $200-per-actual-user price EBay paid for Skype, that works out to about $50 million. All this could just be loud whispers, and nothing more than that. No response really from News Corp’s PR department to my queries. I am still waiting to hear back from Michael Robertson. There has been a lot of talk about what News Corp will do next, promptly in part by a fantastic profile of the wily old fox in the latest issue of Fortune magazine. Murdoch wants to “get younger fast and to get audience fast,” the magazine says. And most of its recent purchases are along those lines. The second prong is to add web features, like video search, instant messaging, and Internet calling—or VOIP—that will theoretically differentiate his sites (though the competition is developing the same stuff). Murdoch has told Wall Street that he’ll spend up to $2 billion on Internet acquisitions, so he’s got about $700 million to go. [...]
[...] News Corp shareholders are always faced with the same problem. Rupert keeps picking Pride over Greed. He’s doing it again, so far on a limited basis, with the way that MySpace complaints are being managed. If these missteps become a trend, it will be just another story of traditional telecoms and content players showing up with too much money and not enough trust in their user base. Second-guessing your users is the perfect formula for losing your investment — even when the investment theory is sound. [...]
[...] Scott Rafer’s Mobile Chair « Dogster, Disney, and 80% Double-X Membership [...]