Software as media

04 February 2008

With Microsoft’s unsolicited bid for Yahoo! it looks like the media industry and all those who feed it and feed off it – like advertising, and to a lesser extent PR – will have another predator to fear. Not only is Google eating their lunch, but Microsoft and Yahoo!, in whatever form, look set to help themselves to breakfast and dinner too.

Nicholas Carr reckons it’s because software, and particularly software based on the Internet, is becoming a media business. As he says, “the Net is not only a universal medium… it is also turning into a universal computer”.

He points to the way in which young people in particular buy software nowadays. Rather than popping down to PC World to lay out for packaged software, they’re going online and using the software already running on the Net like Facebook, Flickr, Gmail, etc. Even word processing suites are being offered for free by the likes of Google.

And it’s free that is making software a media business. The media industry has long understood the power of giving utility away (or at least at a very low cost) and subsidising this with advertising. And that’s basically what the like of Google and Yahoo! have always done. Having made its billions relying on people like you and me to buy software to install on our PCs, Microsoft now realises that the only way it can compete with the likes of Google is to acquire online scale, and acquire it fast.

The media industry should be quaking in its boots. Imagine another Google, just as large and just as powerful – taking more and more of the advertising budgets. It’s time to rethink the business model, and that might not be a bad thing.

Note that Yahoo! is a client of Hill & Knowlton, but I have no involvement with that account.

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