Magazine article Newsweek

A Second Dot-Coming; A Potent Combination of Online Ads, Broadband Speed and Loyal Customers Is Making Content Web Sites a Hot Commodity, and Media Giants Are Buying Them Up

Magazine article Newsweek

A Second Dot-Coming; A Potent Combination of Online Ads, Broadband Speed and Loyal Customers Is Making Content Web Sites a Hot Commodity, and Media Giants Are Buying Them Up

Article excerpt

Byline: Rana Foroohar

The scramble to entertain you has unleashed the second coming of dot-coms. This time the business plans are written on legal paper (not napkins), the prospects are measured in dollars (not hits) and the focus is on media companies (not Anything.com). Recent deals include Dow Jones's acquisition of MarketWatch.com ($519 million) and The New York Times's purchase of About.com ($410 million). But the biggest buyer is Rupert Murdoch, who recently declared that his News Corp. empire has "no greater priority" than expanding on the Internet.

Murdoch has spent more than $1.2 billion in recent months on three Web sites: Scout.com (a college-sports site); Intermix Media, which owns MySpace.com (a lifestyle portal), and IGN.com, which makes online games. Of course, the first dot-com boom also featured big buyers, but much has changed.

First, access to broadband has taken off, and is expected by JupiterResearch to reach 38 percent of Americans and 28 percent of Europeans by the year-end. Penetration in Japan and Korea is higher, which means that graphic-heavy media sites actually work for many consumers. Second, online ad revenue is growing 23 percent a year, and totaled $14.7 billion last year in the United States. Finally, Web users are now as important as the old media gatekeepers in producing online entertainment, and they are changing the market.

As with so many things on the Web these days, this couldn't have happened without Google. Formerly, only narrowly focused sites attracted big ad bucks. …

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