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media bear the brunt of internet onslaught

media bear the brunt of internet onslaught

One, now archaic, epithet for the digital revolution that struck business life in the 1990s was the "information superhighway".

Media companies, which live or die on their ability to get people to pay to digest information or to consume advertisements surrounding it, might be expected to be juggernauts on that superhighway. Most of them bear a closer resemblance to roadkill.

In truth, some established media companies now generate a sizeable proportion of their revenues from internet activities. Reed Elsevier already secures 50 per cent of its £5.3bn sales on the web and other B2B companies have made similarly smooth transitions to a converged world.

Pearson, the owner of the Financial Times, makes 20 per cent of its revenues from online businesses in its education, publishing and business-to-business data companies.

But while the internet's influence has been as significant as anticipated, it's progress has been far from predictable.

Back in 1998, Paul Ayres, the man who ran RealNetworks in Europe, said that "webcasting will become increasingly widespread". While that has come to pass, it has been a stuttering path through the decade as lagging technology and false starts made by both established players and start-ups choked progress. It is only in the past year, with the introduction of iPlayer on the BBCHulu, that the idea of television on the PC has become a reality .

In the meantime, start-ups such as Joost have found it impossible to make money out of online television , while established operators such as ITV and RTL's Five have also struggled.

Even now, the analysts Screen Digest estimate that web-viewing will be only 1 per cent of traditional "linear" television by 2012.

However, while the internet is no golden goose for TV companies, at least it is not a vulture. Which is more than can be said for some media sub-sectors.

In music , a research group called the Internet Underground Music Archive told the Financial Times in 1998 that records sold over the internet would account for 37 per cent of the market by 2007, with 63 per cent sold in shops.

What nobody predicted was that the record itself, either as a CD or a piece of vinyl, would become something of an afterthought because so much music would be downloaded from the internet. Downloads accounted for 20 per cent of all global sales and 16 per cent in the UK , in 2008.

Even more importantly, for every one song bought in this manner, 20 would be "shared" or "stolen", depending on your point of view. The music industry, Prof Clay Shirky of New York University says, is the "head on the pikestaff as a warning to others" of the dangers of getting internet commerce wrong.

Newspapers are close behind. In an interview with the FT 11 years ago, David Landau, the co-founder of Loot, the classified advertising newspaper, said that there were 1,000 websites in the US potentially threatening his business model, "but they aren't making it because they don't have brand recognition".

In the intervening decade, the picture has changed dramatically. Sites such as Craigslist.org, featuring community-based classified advertising, have developed into powerful brands in their own right, taking market share from US newspapers in particular.

While Craigslist has made slower progress in the UK, other sites advertising jobs, property and cars have built strong market positions.Johnston Press Trinity Mirror Some belong to newspaper groups, such as Globrix (News International) or Autotrader (Guardian Media Group), while others, including Rightmove, the UK's largest property website, are independent.

Some newspaper groups are suffering up to 60 per cent year-on-year declines in areas such as property advertising because of the recession. The swift migration to online sites means that much of that revenue will not return.

Overall, online advertising growth has probably dried up for now but, as Steve Ballmer of Microsoft said last month , the nature of advertising's relationship with newspapers and other traditional media has been reset for good.

No responsibility can be taken for the content of external Internet sites.


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