Commentary
Control Freaks
- by June 28, 2001
Aram Sinnreich, Jupiter senior analyst, says in a new report that “media companies competing for the attention of consumers must consider that while the key barrier to online entry and success used to be infrastructure, it has shifted dramatically to advertising and marketing."
Jupiter Media Metrix reports that the total number of companies controlling 50 % of US user minutes online shrank 64 %, from 11 to four, between March 1999 and March 2001. Even more drastic was the drop in the number of companies controlling 60 % of all US minutes spent online: from 110 in March 1999 to 14 in March 2001, an 87 % decrease.
According to Jupiter analysts, three key factors are driving online media consolidation:
1. Mergers and acquisitions have turned already powerful companies into even more powerful media behemoths. Today, the merged AOL Time Warner is ranked number one in controlling user minutes.
2. Major media companies have significantly increased their ability to differentiate online offerings through quality of presentation, intensity of marketing and integration with off-line programming.
3. Economies of scale apply to online businesses as much as they do to off-line. Online businesses without self-sustaining revenue models or potential cost-savings for their parent companies have spiraled toward extinction.
Time and Control of US Online Usage Minutes (Home/Work Combined)
+----------------------+--------+--------+--------+ | |
Mar-99 | Mar-00 | Mar-01 | +----------------------+--------+--------+--------+ | | | | | | Total Minutes Spent | 50 | 73 | 107 | | Online
(in billions) | | | | | | | | | | Number of Companies | 11 | 7 | 4 | | Controlling 50% of | | |
| | all Minutes | | | | | | | | | | Number of Companies | 110 | 40 | 14 | | Controlling 60% of | |
| | | all Minutes | | | | +----------------------+--------+--------+--------+
Top 10 Online Properties According to Percentage of Total US
Usage Minutes March 2001 - at Home/Work Combined
+----------------------------+------------+ | Online Property | Share of | |
| Minutes | +----------------------------+------------+ | | | | AOL Time Warner Network | 32.0% | | Microsoft Sites | 7.5% |
| Yahoo! | 7.2% | | Napster Digital | 3.6% | | Juno | 1.9% | | eBay | 1.9% | | EA Online and
Applications | 1.6% | | Excite Network | 1.0% | | iWon Inc. | 1.0% | | Walt Disney Internet Group | 0.8% |
+----------------------------+------------+
Source: MediaMetrix, 2001
Media Metrix Ratings Definitions: Total Usage Minutes: The total number of usage minutes spent at the online property, Web site, category, channel or application during the course of the reporting period.
Read more at jup.com.
