Acquisitions

Tech bloggers everywhere have been talking and throwing out predictions over the failed Yahoo Microsoft merger.

I’ll keep it simple. Google is a data company. Yahoo is a content company. That difference is night and day when it comes to focus and performance.

Content is a fine business model. Long term, a “be everything” model it is destined for failure. Niche publishers and aggregated feeds will grind away at their audience and profit margins.

Short term, the mis-focus has caused Yahoo to fail miserably by screwing up Panama. Also, for far to long they allowed garbage traffic access to the same PPC feed as high quality publishers and domainers. And thats just the beginning of the list. These are mistakes data companies don’t make. Google sure didn’t.

Microsoft has submitted a $44.6 billion bid to buy Yahoo.

This is the only scenario I can see as someone becoming a serious threat to Google. Yahoo attempted to become a content company rather than a data company, as Google is. They made a lot of mistakes, going entirely in the wrong direction, in my opinion.

This business is all about sending traffic to the most valuable source. Google understands that. Yahoo didn’t, or doesn’t. The question now, will Microsoft?

1. Stupidly obvious wins. Filesharing caught on because people wanted to download music for free. Youtube was the obvious next step — share video.

2. Push the rules. More than a few people have said Youtube is a copyright infringdement honeypot. Neither Napster nor Kazaa had the law on their side. Why should Youtube?

3. Social networking is very profitable. At least, it can be profitable for you if you can exploit its traffic stream.

4. Sometimes it pays to be a big loser. Youtube has been footing a bandwidth bill big enough to rival a mega-yacht’s fuel bill at full power. Hosting videos when no advertising is displayed compounds the problem.

5. The big three rivalry can be your gain. Google wants to be first. So does Microsoft. So does Yahoo. The worst case scenario for a company looking for a buyout is having one company being in the market to buy you. Three companies with obnoxiously deep pockets? Home run.

IAC/InterActiveCorp the owner of Ask.com, LendingTree.com, Match.com, Hotels.com etc. announced today that it has purchased a 51% share of CollegeHumor.com’s parent company. An exact price has not been released but it is believed to be in the 8 figure range.

This is a good example of the added value recurring traffic has. CollegeHumor has built up a site where loyal readers come back again and they tell their friends. A large portion of their traffic is eBaumsworld-style movie clips and pics — certainly not unique. CollegeHumor has been able to build a presence and mindshare online, targeting a specific demographic and adding unique content (daily “blog” posts from multiple authors.)

My strategy for internet publishing has been to establish niche traffic streams and then build online communities around them. It is hard, it takes a long time, and you can make a lot more money sending the traffic elsewhere — and that is why established, profitable web sites are worth so much money the the big players (Fox Interactive Media/News Corp and IAC at this stage of the game.)

Here we go again, News Corp just bought out 2 more internet companies, kSolo.com and Newroo Inc. Prices of the two aquisitions have not been disclosed.

On Monday Time announced that it purchased Golf.com. While no price was publically announced, it may be made available in future in SEC filings. Golf.com is perhaps one of the largest golf sites on the web with a Alexa rating of 32,000.

I just read an astoundingly good post by David Card over at JupiterResearch’s blogs who comments on two stories from the New York Times today. If you read this article News Corp’s purchase of MySpace will make even more sense.

The articles about the generation of millenials and the impact technology is having on their media consumption. Its no secret that newspapers are in serious trouble, but television is too. They aren’t reading newspapers and they aren’t watching much TV either.

It sounds a little wierd to blog about another blog post about a newspaper article (usually I just comment on the article itself) but David makes a very good conclusion at the end of his post — “Somebody has to create what everyone talks about. And facilitate the talking.”

This is it guys — this is the business to be in. I fully expect website buyouts by major media companies to continue at an accelerating pace for the next 5 years, at least. And may be, just may be, a young web publisher will turn into the next Bill Gates.

Here is another one from Paidcontent — Yahoo just bought social bookmarking site del.icio.us. No word on the price. But, judging by the fact that Yahoo had tried launching similar services themselves with minimal success, I’m going to guess they paid quite a bit.

On an interesting note — its pretty obvious they have an absolutely wierd domain name. The question is, did the domain name hurt, or help them?

From Paidcontent.org — Daily Mail offers $83 million to buy the company that owns Primelocation.com. The market for online real estate sits has been on fire lately. I suspect that print publisher’s concerns over the drop off in classified advertising is playing a big motivating factor here.

From Paidcontent.org, economy.com has been bought out byMoody’s for $27 million.