As of Dec.9, online holiday sales are 16 percent better than last year, according to a report from Goldman Sachs, Nielsen/NetRatings, and Harris Interactive's latest Holiday eSpending Report. Between Oct. 29 and Dec. 9, online shoppers spent $18.6 billion, which the report said is 16 percent higher than 2004. Shoppers spent $3.4 billion on apparel and clothing, the largest category, followed by consumer electronics, with $2.8 billion in sales; computer hardware/peripherals, $2.7 billion; books, $2.2 billion; and toys and video games, $1.4 billion. Analysts say aggressive discounting on items like PCs and laptops led to the surge in computer sales. …

As it turns out, many of us were wrong to believe Microsoft had the upper hand in Time Warner's ongoing pursuit of a partner for America Online. About two weeks ago, Microsoft had confidently told the Wall Street Journal it was on course to be Time Warner's chosen advertising partner for AOL, and many analysts out there agreed this was the right decision. Not to be. Tomorrow, Google will announce that it has renewed its search partnership with AOL and expanded upon it, by allowing AOL to sell advertising across its sites. This is bad, bad news for Microsoft, experts …

Small Internet retailers have figured out how to compete with the Wal-Marts and Amazon.coms of the Web, says The New York Times. Forrester Research predicts that some 45 percent of this year's expected $26 billion in holiday sales will go to the little guys, up 42 percent from last year. How have they done it? In a word, Google. Pay- per-click advertising on Google's search engine, which accounts for 45 percent of Internet searches according to Nielsen/NetRatings, helps the littler fish gain much- needed publicity--and they only pay for real leads that often end in sales. As local search …

The business of renting music is generally more profitable for both purveyors of music subscription services and the recording companies they license music from, says Ad Age, which is one reason why MTV Networks' digital chief officer believes MTV and Microsoft will be able to mount a successful challenge to Apple's iTunes. These services are a good value for consumers (some are as little as $5 per month) and they also provide recurring revenue for music labels. Among the major legit music players, iTunes is really the only online music store, while the others--Yahoo! Music, Napster and Rhapsody--are subscription …

The JibJab boys have done it again. In the vein of "South Park," their short online political films are funny, brash and irreverent, but like other broadband video content makers, they're still not quite sure how to make money from their product, according to Cnet. They've turned down several approaches for commissioned work in order to stay true to their original vision, but they've found that producing online content supported by advertising is "still a very shaky business model." Because of this, the Spiridellis have begun offering $1.99 iPod and mobile compatible downloads of their short films on their Web …

EMarketer Senior Analyst Deborah Aho Williamson is expecting big things from mobile TV and music content, but not for a few years. In a new report, "Mobile Entertainment: The Rise of the Very Small Screen," eMarketer predicts that U.S. subscriptions to TV content on mobile phones will rise from 1.2 million this year to 3.0 million in 2006, and then 15 million by 2009. "There are real opportunities out there," the report says, noting that some marketers are already taking them. On an episode of "CSI: New York" this fall, one of the main characters answered his cell phone to …

Merrill Lynch's media analyst Jessica Reif Cohen says splitting up Time Warner is "unlikely to drive significant operational improvement" at any of its divisions, but she does say that buying back shares would help the company redeem itself somewhat in the eyes of its shareholders. AOL's future is "the single most important strategic question facing Time Warner today," the note says, and the analysis that follows is quite interesting given Friday's announcement that it will be Google, in fact, who expands its existing partnership with AOL, not Microsoft's MSN. Merrill Lynch actually chose MSN as the more suitable partner for …

A new partnership between Yahoo! and a small Wilton, CT firm aims to bring marketers the holy grail of advertising: exact knowledge of the extent to which advertising affects sales. The giant Web portal has employed Aegis Group's Marketing Management Analytics, a research firm that employs econometrics analysis, to measure the effectiveness of advertising. Econometrics is branch of economics that uses complicated mathematical calculations to measure the relationship between different events. The company is able to weigh myriad factors such as weather, price cuts and advertising quality in determining how sales are affected. Under the agreement, advertisers will pay extra …

According to a new report from Parks Associates, a market research and consulting firm, online gaming revenues will increase from $1.1 billion in 2005 to $3.5 billion in 2009. Nearly half of this growth will come from so-called networked games, which include online console gaming, massive multiplayer online games, multiplayer Internet gaming, and mobile multiplayer gaming. Roughly a quarter of the total will come from digital downloads. The Parks Associates report, "Networked Gaming Driving the Future," states that "significant derivative revenue from in-game advertising" is something publishers can count on in the future. Meanwhile, the console video game business is …

Unlike most CEOs captaining the ship of a Fortune 100 company, Time Warner's Dick Parsons is well-liked by just about everyone--even his peers. The Financial Times reports that the likes of News Corp.'s Rupert Murdoch, GE's Jeffrey Immelt, and Sony's Sir Howard Stringer have called Parsons to wish him well in his fight to stave off the shareholder revolt being organized by Carl Icahn and Bruce Wasserstein. These fellow CEOs expressed their shock at Lazard's decision to advise Icahn in the proxy fight, as Lazard has long been thought to be an advisor of top CEOs, not investors. Icahn, of …