The news that Google beat out Microsoft for a slice of AOL is sinking in and the reaction is interesting. But first: The New York Times’ Saul Hansell has an interesting piece that describes a priceless scene of last-minute negotiations yesterday, with Google execs in one room and Microsoft execs in another room in the Time Warner Center with Time Warner decision-makers walking back and forth between the two rooms.
Now for the instant reaction: most commenters zero in on Google’s willingness to give AOL favored placement in search results. After all Google is best known for its objective, mathematically derived technology and has built its empire on being better and more “pure” than other search companies. “So much for the purity of the algorithm,” Nicholas Carr writes. [Clarification: as one commenter on Carr’s blog notes, Google must be agreeing to give AOL preferred placement in the search ads and not the results — the more I think about it, the more it seems impossible that Google would muddy its actual search results.]
Carr also asks
The question is: How many more deals will Google need to cut with advertisers and publishers in the future? Is this deal a sign that Google is consolidating its power or losing it?
To answer Carr: Google probably has no other single network “member” that has AOL’s swack (AOL accounts for 10% to 14% of Google’s revenues.) Moreover, Google was in a defining fight with Microsoft and that’s not likely to happen again soon. I’m not saying other Google customers won’t get big ideas, but this situation is probably unique and the deal probably only further solidifies Google’s power.
One thing is clear: this is not good news for Microsoft, which lost perhaps its only real chance to compete with Google in the search business. As Hansell points out “Now Microsoft will compete in the search business as a distant No. 3 behind Yahoo.”
Posted by Cynthia Brumfield at 8:56 PM | Print | Comments (1)According to the Wall Street Journal, Google has triumphed over Microsoft in talks to gain a deal with AOL. The news is so fresh that the WSJ hasn’t even posted a full article, simply a news alert that says “Time Warner has entered exclusive talks with Google over a stake in AOL, apparently shutting out Microsoft and other suitors.”
That’s great news for the search giant — at stake for Google was the potential loss of around 10% to 14% of its annual revenues, or about $500 mil. (The timing is good — over at IP Media Monitor we just released a report on Google’s Television 2.0 efforts.)
More later.
Update: Here’s the full article on WSJ.com (sorry it’s behind a firewall). The deal purportedly calls for AOL to sell advertising on some of the search results provided by Google. Google in turn will promote AOL’s properties in its sponsored links. And Reuters has an item on the talks.
Update on Update: A more complete WSJ piece says that Google is paying $1 billion for a 5% stake in AOL, giving the online company a total valuation of $20 billion.
Posted by Cynthia Brumfield at 12:34 PM | Print | Comments (0)
Diane Mermigas at the Hollywood Reporter is looking at the new split-in-two Viacom, and has this in-depth interview with Tom Freston, who is heading up Viacom (the entertainment/cable arm that retains the name of its predecessor as opposed to the Viacom-CBS spin-off) and is on a high following his negotiations to buy DreamWorks. Freston lays out his strategy for growing the company in the new IP media world.
Viacom is poised to capture a big chunk of the new media marketplace and Freston is optimistic about a range of mobile and IP-based video initiatives.
Freston’s confidence also is buttressed by the fact that MTV Networks’ new-media ventures generate $500 million of the new Viacom’s more than $8 billion in annual revenue, with more than $100 million coming from global wireless services. Its new digital businesses are growing at better than 50% annually compared with the overall 14% annual growth of the new Viacom’s core businesses, Freston says. MTV Networks has 112 global channels (20 of which were launched outside the U.S. this year) and 95 Web sites, and broadband services operating in 160 countries and serving 430 million households. It also has 50 wireless alliances serving 700 million wireless users. Online revenue is headed toward $500 million a year worldwide. And that’s just the beginning, Freston says.
Two interesting heads-up items in the piece: Viacom is planning to launch a social networking service that ties together the company’s vast youth-oriented properties and an iPod-esque (if not an iPod per se) service for Viacom TV shows is in a “test mode” at the company.
Posted by Cynthia Brumfield at 10:52 AM | Print | Comments (0)
Like everybody else, the RIAA wants to clean out its in-box before the holidays really kick in — the record companies’ association dropped 751 more copyright infringement lawsuits in the mail yesterday, bringing the total number of legal actions against file sharers during the year to 7,000.
Of the total number of new suits, 105 were filed against named individuals. The rest were “John Doe” complaints, mostly unknown college students.
Posted by Cynthia Brumfield at 10:37 AM | Print | Comments (0)
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