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The Future of Media


If I'm at the Forum for the Future, why is it happening today?


I came over to London to attend a conference for Online Publishers. It's a compilation of groups from around the globe that drive content development and syndication of media and content, both on and off line. It includes many of the top tier media companies like Yahoo! (YHOO), CBS (CBS), CNET (CNET), New York Times (NYT), Reuters (RTRSY), Dow Jones (DJ) and many more. I spent the first evening with the head of interactive marketing from Pepsi (PBG) and some of the top media buyers from the U.S., UK and Europe.

What has brought these people together is the excitement about the development, distribution and syndication of content around the globe and the requisite business models that are developing. What has become explicitly clear is the disparity between old media, or newspapers, and new media – Minyanville. There is a desperation to hold on to the old business models but at the same time focus on the new, understanding that current traditional media channels are dying.

Martin Nisenholtz, Sr. VP of Digital Operations for the New York Times opened by framing the prime challenge – what's the business model when distribution of content relies heavily upon trying to get paid or being the end of a search query on Google (GOOG) or Yahoo!? This is a challenge for all publishing companies.

Tom Glocer, CEO of Reuters opened with a keynote about the two-way pipe. Specifically this was about the consumer as editor and the power of community. Consumer created content in a new media world is the foundation of growth for media companies for the foreseeable future – think MySpace, Facebook or LinkedIn.

From an investment standpoint, all we need to do is look at the fact that Google is still valued at an incredibly high rate. MySpace was bought for $580 million with less than $20 million in revenue. Today they have 56 million users and 170,000 people are signing up a day. What does this mean for NewsCorp (NWS)? It means that they are building a discrete and rather large audience that they can connect with daily. There are other jewels out there that will spring up over the twelve months from an investment standpoint that will yield results and long sustainable growth.

I believe a core model for the future of business can be found in a web site called Craigslist. While their mission is pure, there comes a time in a corporation's development that going public, being acquired or some sort of "liquidity event" becomes too powerful to ignore. In 2004 24% of Craigslist was sold to eBay (EBAY). This was an individual shareholder's liquidity event, seemingly against the wishes of Craig and the staff of the company. However, it's indicative of the financial market's thirst for opportunities. Risk and speculation certainly aren't dead.

What's clear is as an investor, there is a seismic shift taking place. There is money to be made in old media today – at least on the short side – Dow Jones, Tribune (TRB), etc. But if you're looking long, look at the companies defining the new landscape – Google, Yahoo!, AOL, Comcast (CMCSA), Cablevision (CVC), NewsCorp, Apple (AAPL), Revenue Science, Tacoda, and dare I say Minyanville!

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