How to Win Web 2.0

Want to Survive? Find a Way to Monetize Video

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SAN FRANCISCO ( -- If the term Web 2.0 means anything at all to major media companies, it's that having a potent way to get video content in front of consumers-and pull in a growing pile of ad bucks-will determine the winners from the losers.
Google Chairman-CEO Eric Schmidt got a loud round of applause for Google's decision to resist subpoenas from the Justice Department.
Google Chairman-CEO Eric Schmidt got a loud round of applause for Google's decision to resist subpoenas from the Justice Department. Credit: James Duncan Davidson

Haves and have-nots
Last week's Web 2.0 Summit, probably the highest-profile annual gathering of media and tech bigs, demonstrated that the answer to a single question determines a media company's worth to Wall Street and advertisers: Does its digital strategy include a way to distribute both copyrighted and user-generated clips? The haves: Google and News Corp. The have-nots: pretty much the rest of 'em, from Yahoo to the New York Times Co.

The prevailing sense that Google is winning its arms race with Yahoo and Microsoft is calcifying, all the more so since its $1.6 billion acquisition of the popular video-sharing site YouTube. Google, whether because of that deal, its dominance of the search market or its success in turning that dominance into revenue, permeated just about every topic. Even Yahoo's Bradley Horowitz, while suggesting that Google's lead was a media-made creation, admitted his company hasn't made as much money as it could have off the world's most popular web destination.

"We have not done as much as we could have to monetize it," said Mr. Horowitz, VP of Yahoo's product strategy group.

Sitting pretty
On the other side was Ross Levinsohn, who, as the man largely responsible for News Corp.'s decision to buy MySpace last year, was in cat-that-ate-the-canary mode. The $580 million pact was widely criticized at the time, but naysayers were muted a bit when Google forked over $900 million to be the exclusive search engine for MySpace. Mr. Levinsohn's interlocutor, journalist and conference chair John Battelle, noted that the acquisition has already paid for itself. Mr. Levinsohn quipped, "Can I give you Rupert's number for bonus time?"

He said MySpace "adds a Buffalo every day," and time spent with the site has increased 30% in the past six months. "The engagement story continues to be outstanding," he said.

Beth Comstock, president of NBC Universal's digital media and market development, said her ambition is to make hers a $1 billion unit by 2009, which would require it to more than triple current projected annual revenue. She pointed to the "liberation of video" as a key driver of that.

The three-day confab was marked by bullishness around the potential market for video. Morgan Stanley analyst Mary Meeker claimed that about 60% of peer-to-peer file sharing is video, much of it unmonetized. She showed a list of top web retailers, mostly operations that were originally bricks and mortar, and compared it to top overall destinations, a list dominated by pure-play internet companies. "Why shouldn't media companies be in the same spots with that mother lode of video and the opportunities to monetize?" she asked.

'N.Y. Times' vs. Google
Perhaps more interesting than any trend is how quickly the media tables have turned, as demonstrated by both Google Chairman-CEO Eric Schmidt and New York Times Co. Chairman Arthur Sulzberger Jr. Each man's company could claim to be the Western world's most important organizer of information. The Times' case rests on its excellence in agenda-setting reporting. Google hasn't done any journalism -- or produced any content, for that matter -- but it has a lock on how people find stuff on the web and has reeled in advertisers of all sizes by the hundreds of thousands.

In a one-on-one with Mr. Battelle, Mr. Schmidt was quick, pointed and, as when he spoke of company co-founders Larry Page and Sergey Brin, funny. Asked who wins arguments, he replied, "They always win -- and if you ask them, they'll give you a different answer." He got a loud round of applause from the hundreds of onlookers when mention was made of Google's decision to resist subpoenas from the Department of Justice.

Who controls 'Times' content?
A few years ago, that applause may have been reserved for someone like Mr. Sulzberger, who has backed his share of First Amendment struggles. But good fights like the Times' publication of its National Security Administration wiretapping story over White House objections apparently rate less than things his company hasn't done: namely, loosen his large, expensive corps of journalists' grasp on Times content and hand over the slack to schleps with camera phones.

During a question-and-answer, Mr. Sulzberger was strafed by a few of the squadrons of bloggers covering the event for not employing "more citizen journalists." His reply: "We're looking at ways that we can gather information from the amateurs we trust," he said. "At the end of the day, our name is on it."
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