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i on digital content
...observations and links to news of note in the world of digital media

  • Murdoch finally closes in on Dow Jones: report
    The Business magazine today reports that Rupert Murdoch's News Corp. has finally clinched its $5bn deal to buy financial publishing powerhouse Dow Jones, and that a deal is expected to be announced next week.

    Apparently, younger members of the Bancroft family -- which controls Dow Jones, owner of the Wall Street Journal -- had been pressuring the family to accept the offer, a 67% premium on the company's stock price when the offer was made in April, because they didn't think a comparable bid was likely.

    The deal reportedly includes a legally-binding contract that will ensure the editorial independence of the WSJ. News Corp. can still hire and fire the top editors and publishers, but a five-member committee will be allowed to veto those decisions.


    In what may be a very telling anecdote, though, the story points out that a similar (but not as strong) agreement had been made when Murdoch bought the Times and Sunday Times in 1981. A UK lawmaker refers to that agreement now as a 'fig leaf' used to get the deal approaved by antitrust regulators in the UK.

    The scoop has some News Corp. pedigree behind it: it was co-written by Andrew Neil and James Forsyth. In addition to Neal's affiliation with The Business (he is editor-in-chief of Press Holdings, which owns The Business and The Spectator), he is a broadcaster who also once was very much also a part of the News Corp. stable, editing the Sunday Times for 11 years.

    Here's a link to the original story.

  • Sky's the limit
    A couple of notable news items today around the UK satellite TV provider BSkyB. In the morning, the Guardian ran a story that said Sky was in talks with Microsoft to offer its proposed DTT service over its new PC-based TV platform. The DTT service that Sky hopes to launch, pending approval from regulator Ofcom, will see the provider use MPEG4 technology to put four pay-TV channels into the spectrum currently being used by Sky to offer three free channels over the DTT service, which is sold as Freeview in the UK.

    If it happens, it will be an interesting step in the convergence of media in the UK. Although Sky, which is 39.1% owned by News Corp., bought a broadband service provider a couple of years back, it is using this asset in its consumer business primarily as a triple play bundle. Putting its channels on Microsoft's Windows Media Centre will be the first time that the provider actually attempts to offer its services to the PC.

    It also builds on the announcement Sky made last week that it would provide its premium channels to Tiscali for its IPTV service.

    Presumably both of these moves are being done for Sky to test the broadband waters rather than really hope for big paybacks for the services. Indeed, if reports from moneysupermarket are to be believed, there's such a speed gap between what consumers are being promised and what they are getting that it may be a while because PC/broadband-based television services really take off in this country.

    The other Sky story is that this week it launched a counter attack in its ongoing fight with cable provider Virgin Media over whether the latter was right to claim that Sky was really abusing its market position in negotiating over channels (or not negotiating, as the case may be). If the UK courts rule in Sky's favour after all, it will likely have a negative impact on Virgin Media's bargaining position in the future, not just over channels but for the price at which it potentially gets sold.

  • EMI: the latest on Terra Firma and Warner Music
    An update on Warner's other, ongoing story, its will-they-won't-they bid for rival music firm EMI: Terra Firma is only slowly drumming up acceptances for its £2.5bn offer for the EMI Group. Yesterday morning, the private equity firm said it would extend the offer period to 4 July after only 3.53% of EMI's shareholders accepted the bid (TF will need 90% to get control of the company).

    One Numis Securities analyst speaking to AFX said he thought most shareholders would not vote on the Terra Firma offer of 265 pence a share until Warner Music either made a counter bid, or officially pulled out of the process.

    But investors might not want to hold their breath for too long: A story in this morning's Daily Telegraph notes that Warner insiders think there is only a 50-50 chance of Warner Music Group finally coughing up an offer. Issues in the balance include WMG's assessment of EMI's balance sheets, which WMG has only recently started to examine; and of course whether the EU competition commission will the give the deal its regulatory blessing.

    If EMI doesn't fly in the end, it will make Warner's new business move into the Russian market (see my post from earlier today) all the more poignant and worth watching.

  • Warner Music: with EMI bid still up in the air, next stop Russia
    Is it possible to run a profitable, legit business in a market that's already established a thriving but illegal trade in the same item? If you look at the music industry, and how it's tried to make money out of Internet music distribution in the wake of successful sites predicated on piracy (and of course cheaper/free content), it's not entirely impossible. But it may take a very long time, if it ever happens at all.

    In the latest attempt by Big Music to create a market in a thriving but illicit environment, yesterday Warner Music and Sony BMG announced they would team up with Russian firm Access Industries to start a wholesale digital music distribution business in Russia and former Soviet-bloc countries.

    Digital Access, as the JV will be called, will aim to create a new distribution channel for legitimate digital music, including wholesale deals for full-track downloads, ringtones and video clips. It anticipates its customers will be online music portals, mobile operators, rights owners and other content providers; and it doesn't have plans to launch its own retail operation.

    The news comes at a time when the Russian digital music industry is thriving, but at a controversial cost. Sites like Allofmp3.com, owned by Media Services, have been hugely popular for music downloads, not just in the region but worldwide?it sells music by the megabyte, which works out to a fraction of what a track would cost on a site like iTunes. This has meant the site usually ranks as number-two or number-one for music downloads in different markets.

    MediaServices says allofMP3.com has a license to operate from the Russian government, but in recent months, it has come under a lot of pressure to close down its international operation. Major credit card companies will no longer allow payments to the site, and it appears to be blocked in many countries. (In London, where I live, I cannot access the site or its mirror domain, allofMP3.ru.)

    But like many a black market Lazarus, MediaServices has launched several other sites to siphon new business. Among them are the punny allTunes and mp3Sparks. These do allow credit card purchases and seem to work on the same business model as allofMP3.com. And I can access them in London.

    Big music's domestic partner, Access Industries, is an interesting company to watch. It may hold the key for Western labels to at least get a foothold in the market, rather than continue to be taken for a ride by the likes of MediaServices. Access Industries is controlled by the uber-influential Russian-American billionaire Leonid Blavatnik, who also has investments in oil, aluminum, coal and telecoms (ie the typical portfolio of Russian ex-state commodities held by most oligarchs). He is on the board of Warner Music and owns Russian music labels Soyuz and Nikikin Records, which will also join the venture.

    The plan is to launch Digital Access in the 4th quarter of this year.

  • UK: Google: pole position, Facebook: shooting star
    News today that Google has managed to hold on to its top spot yet again in the rankings for most visited web property in the UK, bringing in some 28m visitors to its web sites in May 07, according to figures from comScore. Microsoft and eBay were ranked second and third, with 27.4m and 22.2m respective visitors to their sites. Yahoo was in fourth place with an estimated 20.6m visitors.

    Interesting to note that Facebook had the biggest growth in traffic of all sites. Between April and May of this year, traffic on the social network went up by 30%, and comScore says Facebook's traffic has gone up by 2,123% over the last year. Despite this, with visitor numbers totalling 4.8m for the month of May, Facebook still doesn't make the top-20 rankings for the UK.

    Part of the explosive growth surely must be down to the company having recently opened the site to new members--in the past it was restricted to people with college/university email addresses. That makes me wonder whether its growth will be sustainable in the longer term.

    The way Facebook allows users to invite the entirety of their email address books in one click has definitely been used a lot lately. I'm not a high-volume Internet community type myself, but even I have had loads emails saying I've been added as a Facebook friend to other people's pages. (Each invite requires me to click in and approve the friendship, meaning more traffic for Facebook.)

    When Google bought YouTube in 2006, there was a lot of speculation over whether Yahoo or a big media player would buy up Facebook. Founder Mark Zuckerberg has said he doesn't want to sell, but if this momentum keeps up beyond the 'signing up' stage, I won't be at all surprised if this actually happens.


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