2006 Review: In 2006, the web came of age, gained financial value

Tech Features

By Andy Goldberg Dec 28, 2006, 16:42 GMT

San Francisco - When Rupert Murdoch paid 585 million dollars in August 2005 for the social networking site MySpace.com there were many respected media analysts who thought that the world's greatest media mogul might be losing his marbles. But at the end of 2006, Murdoch is looking like the savviest, most courageous media baron of the modern age - timing his entry into the Internet waters with almost supernatural prescience. A year after the acquisition, RBC Capital analyst Jordan Rohan predicted that the site could be worth 15 billion dollars in a few years as it adds to its 100 million registered users around the world and leveraged its popularity to become the primary media distribution channel in the world. 'Fifteen billion dollars in a few years? It is possible,' Rohan wrote in a research note to clients. As if to back up the potential of this new breed of websites that leverage the internet's ability to offer consumers a plethora of content, Google paid 1.6 billion dollars for video sharing site Youtube.com while the Internet search leader saw its stock pass 500 billion dollars in value - giving the company a value of over 1.65 billion dollars - more than the combined worth of Time Warner and Walt Disney. While no-one should be gambling their pensions on Rohan's prediction coming true, its undeniable that MySpace and other so- called Web2.0 sites are finally embodying the lofty predictions of web hipsters in the first internet boom. That was way back in the infancy of the World Wide Web between 1996 and 2000 when everyone who could spell the word technology was predicting that the newfangled communications network would revolutionise commerce, media, social activity and every other facet of modern life. When the online market for pet food and other essentials failed to immediately yield the expected billions, investors pulled the plug in the year 2000, prompting the great dot com crash. But the true web evangelists never went away - they stayed busy boosting computer power, broadband access and wifi networks, inventing effective search engines like Google and advertising models that reached commercially valuable web audiences. At the same time a generation of teenagers and twenty-somethings adopted the internet as their first choice media and by the start of this year the revolution was in full swing. Sites like Youtube and file sharing technologies like Bitcomet achieved critical mass and enabled anyone who so wished to view whatever movies or TV shows they wanted without ever going near a cinema, video store or TV set. Communications technologies like Skype and Jajah allowed phone calls around the world for free, or next to nothing, while weblogs, podcasts and Internet news sites drastically eroded the position of old media. It was, as Murdoch correctly observed, an inflection point for mass media - the dawn of a new age of information to be ignored at one's certain peril. 'Power is moving away from the old elite in our industry - the editors, the chief executives and, let's face it, the proprietors,' Murdoch told a meeting of media executives in March. 'A new generation of media consumers has risen demanding content delivered when they want it, how they want it, and very much as they want it. Warning that these changes could not be underestimated Murdoch said that 'societies or companies that expect a glorious past to shield them from the forces of change driven by advancing technology will fail and fall.' Companies such as Sony would have done well to pay heed. Once the unassailable leader of consumer electronics, the company missed the iPod revolution, looked on helplessly as Korean company Samsung and Chinese company BenQ erased its lead in TVs and saw its problems compounded in 2006 by a laptop battery recall that cost it 500 million dollars. The long-delayed launch of its Playstation 3, which was meant to save the company from its other failures, was a barely unmitigated disaster. Though there was no quibbling with its processing power, the video game console was deemed too expensive, short of compelling new games and a far less attractive proposition than both Microsoft's Xbox 360, and Nintendo's Wii, which are both significantly cheaper. The battery recall represented perhaps the greatest cloud on the tech horizon - that computing power is increasing much faster than battery power. Lithium-ion batteries which still dominate the market are an old technology with inherent safety flaws, and insufficient power for modern devices. Thus we have cellphones that can double as MP3 music players, but if you listen to much music you will have no juice left to make phone calls with. Alternative battery and fuel cell technologies meanwhile are still a distant dream, says Carmi Levy, an analyst with Info-tech Research Group. 'We've just begun to turn the corner after decades of ignoring the power issue,' he said. 'There's still a long way to go.' © 2006 dpa - Deutsche Presse-Agentur

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Nicholas AlexanderDec 28th, 2006 - 20:43:22

This the only the second stage of the digital online revolution. It still has many changes it can make to our lives.

The so called dot.com boom occurred because the internet presented the same proposition and many people acted simultaneously to support nearly free advertising everywhere by everybody.

Google leveraged that most effectively and worked out that they could leverage the talent and hours of millions of programmers by paying them to place the google linked adverts after having well established search ranking as a google asset.

It seems to have worked year after year as part of the fabric of how the web works.

It developed its own video channels then it buys YouTube.com. It is repeating its successful formula. It still commands the majority of hits into MySpace as well and therefore modulates its relevance. Even its major competitors rely upon it.

Google made the internet relevant. Before Google if you searched for something you were very likely to find something else. Now all search engines have found ways to become relevant. Or they harness Google. (also posted on dtrends.org)

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2006 Review: In 2006, the web came of age, gained financial value

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