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>Is the purpose of online publishing to attract capital market speculation
>and earn revenues through a stock offering? In other words, is the purpose
>of this business to change its ownership? There is nothing wrong with that;
>it's a wonderful way to become a millionaire. Yet, isn't the true purpose --
>the ultimate and lasting business model -- of this business to earns
>revenues by providing a service. The difference is subtle, but generates
>false routes. This is why I think that we shouldn't use the success of
>initial stock offerings as the measure of success for online publishing
>models.

Influx of capital will shape the internet, which will affect information
delivery on the internet.

The scenario that I see: IPOs making a number of young adults
multimillionaires who, at some point in the future disassociate from their
current projects, who then become involved with and fund more experimental
projects.

That was one of the points of the New Milliionaires article. We may be
seeing the creation of new Rockefellers and Carnegies and Paul Allens, who
are in a position to support philanthropic causes in the future.

Spielberg went from Jaws to Shindler's List. Once you have money and fame,
then you can devote yourself to art.

What does this have to do with online news? Well, I think some online news
projects will never be profitable but should be supported anyway. And I
think bleeding the capital market to support the more commecial projects
will ultimately allow more experimental projects to be supported (if they
don't die before then). Use VC/IPOs to raise money. Then use that money to
support other projects which are not as marketable. Have these rich young
folks fund an innovative media lab where they all come in as visiting
professors.

I have been reading everything I can get my hands on about internet content
companies and venture capital to find out why some of these companies are
getting funded. What I have found out is:

1. The personality of the CEO is very important. According to several
reports Candance Carpenter of iVillage comes across so well that she raises
lots of money. She isn't particularly technologically savvy and her site
uses very little paid-for content, but it is seen as a hot company by
venture capital markets.

2. Growth seems important. The companies are losing huge amounts of money,
but as long as they show user expansion, investors seem to be happy.

3. Plans in flux. Many of these companies don't really have a permanant
vision. Their primary goal seems to be to raise money and then they evolve
as needed. The raising money part of it is significant, I think. Once a
company has gone public or has raised considerable venture capital, it is
unlikely to fold even if it isn't a successful concept. Too many people
have too much invested, so someone is going to try to make something work.

4. Media companies are in a buying mood at the moment.

The market right now is rewarding people who are putting together companies
to take public. It is not rewarding the most creative or even useful ideas.
(Of course this has always been the case in business. Innovation alone is
not sufficient. Without business sense, the project doesn't get done.)

I have been closely following financial trends since the mid-1960s. I've
seen schemes come and go. But I've never seen a time like this when great
wealth is so very accessible and barriers of entry are so low. There are a
lot of young internet entrepreneurs who are networking and looking for
deals and talking to money people. Since some of these web creations are
nominally information sources, how successful they are and how they are
perceived does influence online news. If Excite becomes your headline
source, you may not bother to visit your local online paper.

Further, I think today's marketplace determines standards of what is news.
Again, my SportsLine versus Nando.Net Sports Server example. Nando.Net is
the most content dense sports news site that I know about. No bells and
whistles but many, many articles. CBS SportsLine, on the other hand, uses
alliances (e.g. with CBS and iVillage) to boost its visibility. It uses
multimedia. It has polls. It has bulletin boards. There isn't nearly as
much information at SportsLine as there is at Nando.Net, but it has been
jazzed up. Sell the sizzle. And right now it sells very well to investors.

If sites  like SportsLine drive out sites like Nando.Net, it will be my
loss. Personally I think users do like Nando.Net when they learn about it
and when they get into the habit of visiting it. But not every sports fan
has put it on his/her radar.

Suzanne

_____________________________________
Suzanne Lainson
SportsTrust
Marketing: Integrated/Sports and Event/Online
P.O. Box 2071     Boulder, CO 80306
303 473-9884
slainson@sportstrust.com
_____________________________________
For a free subscription to SPORTS NEWS YOU CAN USE, send me an email.
For a free subscription to THE CREATIVE ATHLETE, send me an email.
http://www.sportstrust.com/sportstrust



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