Communications Day - the weblog

When the Telstra share price took a journey over the $4 mark last week, it did so on the back of a rumour that T3 would include a rights issue to existing shareholders. If the rumour was true – we won’t know that for quite some time – then institutions would need to go shopping ahead of the issue or be left out. So the rumour was enough to sucker some of the institutional buyers into placing orders for Telstra shares, and the price went up.

So: a rumour emerges, a share price rises, and the ASX investigates? Not at the time of writing, which merely demonstrates that the stock exchange is suffering one of those fits of narcolepsy which seem to overtake it every half-hour or so. Nor was there any visible scepticism among the press about the story itself or the subsequent share price rise.

But we seem to fall into fits of short-media-memory syndrome with depressing regularity. Another story to get some airtime last week was the launch of Yahoo!7, which is going to be Australia’s great media portal of the future.

Australia’s TV stations have a mixed history in the Internet which runs the gamut from embarrassing failure to utter catastrophe (Ninemsn might carry a TV station’s brand, but its success rests on its Internet content).

Somehow the excitement of the introductory video was too much, and the story was given the same depth of sceptical analysis that you might see offering motoring journalists a test-drive of the next McLaren street sports car. Wasn’t it Channel 7 that spent a few years pumping the notion of an Internet joint venture with someone from America? AOL? Hell, the URL (www.aol7.com.au) still functions, even though it gets an immediate redirect to Primus, which two years back relieved the TV station of a millstone around its neck.

AGAIN: And here we are again: big media and the Internet, marriage made in heaven, portal plus TV content plus advertising equals big dollars, right? Not on your nelly.

The TV industry, as I have remarked in the past, has never accustomed itself to changing consumer behaviour, a general erosion of leisure time, and the long slow death of novelty on the TV.

People don’t watch TV the way they used to – which of course is why ventures like AOL7, sorry, Yahoo!7 look so irresistible to the TV stations casting around for a new business model.

But a portal isn’t so new a business model, and although Yahoo! is a successful portal, the fact is that the main reason to go to a portal is that it lets you end up somewhere else.

Google’s name was made as a search engine, but its money comes not from its status as a portal, but because it serves advertisements to other Websites – the destinations people head for after they’ve been to Google.

In terms of income, Yahoo! is bigger than Google, but not that much bigger; one generated $US5 billion in a year, the other raked in $US2 billion. But Google doesn’t need the eyeballs to rake in the dollars; and Yahoo! does.

For all its faults, Google is one of the first companies to learn how to make money out of the natural behaviour of Internet users: since users are heading somewhere else, we’ll make money out of letting them go, instead of spending money trying to persuade them to stay.

TV stations like the portal model because “persuading users to stay” looks like something they understand. Hence the Yahoo!7 venture; which, I’m afraid, suggests that any lessons available from AOL7 have yet to be learned.