It’s Crossover Season Again
Once in a while, the information industry goes through a period in which thresholds are crossed and balances tipped. This is one of those times. In recent weeks:
- Market research firm The NPD Group reported that 1.7 million U.S. households downloaded songs from iTunes in the month of March. iTunes and other paid music services such as Napster and the RealPlayer store have now reached parity with file-sharing services such as WinMX, Kazaa, and iMesh. Outsell noted long ago that the existence of a carrot in the form of a simple and well-priced alternative to illegal downloading would be more effective for the music industry than the crude stick of litigation – although the latter has certainly had some effect on user behavior. The same principle will increasingly apply to all forms of content. The “digital native” generation is big on simplicity and speed; yesterday’s complex pricing models are not the way to directly reach end users.
- BtoB magazine reported recently that Forbes.com CEO Jim Spanfeller expects revenues from the online Forbes.com operations to exceed revenues from the print edition of Forbes in about 18-20 months. It’s fairly easy to see the phenomenon spreading throughout the industry, as more advertising money is shifted to online properties. Watch for many more print publications to cross this threshold.
- Laptops have outsold desktop computers in a calendar month for the first time, reflecting the growing importance of mobility to a new generation of hardware buyers. Outsell's Chuck Richard says "show me your primary information interface and I'll guess your age." Desktop = AARP member; Laptop = Baby Boomer; PDA = Cast of "Friends"; Cell Phone = more than three body piercings and sooooo under 35; Internet-connected video game console IM'ers = 14-to-28-year-old single males. Watch for more Outsell data on wireless users coming soon.
- Another related crossover is our recent finding that Google and Yahoo! alone were responsible for as much new revenue in 2004 as the 10 largest companies in the Outsell 100 Company Monitor(SM). The top 10 traditional giants like Thomson and Reed Elsevier generated about $4 billion in new revenue in 2004 from a base of $56 billion; Google and Yahoo! equaled that feat with a base of just $2.5 billion. This particular crossover shows clearly that online is diverting revenue from many ad-dependent traditional publishers.
