Web 2.0 Maybe Consolidating Even as it Expands

A few years ago, all the buzz in the advertising community was about media consolidation. A feeling pervaded that there only a few companies basically controlled all media. It was disconcerting to advertisers and activists because they felt there was a group monopoly.

These days, you rarely ever hear about media consolidation any more. It's sort of a moot point. After all, the word "media" is really expansive. Companies produce media. Individuals create media. At a media conference I went to a discussion broke out that one day smart devices like Roomba will become media. (Note that not all media is journalism - different discussion entirely.)

Amy Gahran at Poynter has a fascinating post up about Who Owns What v2.0. The image, above, shows that in reality only a few companies - Google, Yahoo, IAC, etc - control a vast number of the Web 2.0 platforms where we create, connect and share.

That's ironic, isn't it? The web is so expansive. It's like the Universe, which seems to have no end, not Earth, which has a finite amount of space. So how is it possible that online media is consolidating? However, you can't dispute the facts presented in the graphic above. The big media companies have been steadily buying up lots of emerging sites.

Still even if you buy the argument that Web 2.0 is falling into the hands of a few players, it shouldn't rekindle any of the discussions that we had back when the Telecommunications Act of 1996 was passed and media really did consolidate. There are two key reasons.

First, the barrier to entry online has been obliterated. Anyone can come along and start a social network or publishing platform fairly cheaply and easily and knock off a big dog. Globalization is certainly helping here. Tom Friedman chronicles the technological and social changes at length in The World is Flat - which is out now in version 3.0. I highly recommend the book.

Second, and perhaps more importantly, the web is extremely transient. Today's hot site is cold pizza tomorrow. Have you spent any time on TheGlobe.com or GeoCities lately? Audiences migrate. It happens.

So even if you buy that Web 2.0 is really in the hands of a few players, it's far from a monopoly in this era and nothing to be concerned about. The year 2007 is very different from 1997. (Disclaimer: Edelman works with News Corp and Microsoft, depicted above.)

Comments

[Colin Henderson]

Steve .. I would add that the transitory nature is based on months not years. 6 months ago where we all talking this much about FaceBook, and what about MySpace 6 mos ago.

I liked your post yesterday on the dirvers of change (mobile, social, and attention) and thats the theme we need to keep our eyes on, and see where it starts to net out.

[Erkko]

Good points on why consolidation will not be such a problem. I also wouldn't be too worried at this point. There is still so much that will evolve in the form and mode of information and media residing in the cloud and the way we interact with it. Many things will change before there is any risk of real consolidation.

[Zpirit]

Greetings from Russia. Great site! I found Your posts very informative.

[Amusis]

A little less regurgitation of trite buzzwords, and a little more original insight and analysis, please? I can't see a single original thought in this article.

[Valhallas]

There are some smaller companies/services that are fighting off acquisition and consolidation. Take a look at http://www.lyro.com for example. Great growing site that is staying independent. Same goes for the boys at 37signals.

[Mike]

A "group monopoly" would be an "oligopoly."

http://www.answers.com/topic/oligopoly?cat=biz-fin

[Mike]

You make good points, too, about many tools and sites within the "open" Web being owned by so few companies. The biggest difference between this consolidation and old-school media consolidation is that there's no such thing as "open-source television broadcasting." But in the Web world, we have WordPress, baby!

[Yuwie]

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LEVELS - REFERRALS - IMPRESSIONS - EARNINGS
1---------------3---------------3,000--- ------------$0.15
2---------------9---------------9,000--- ------------$0.45
3---------------27-------------27,000--- -----------$0.54
4---------------81-------------81,000--- -----------$1.62
5---------------243-----------243,000--- ----------$4.86
6---------------729-----------729,000--- ----------$14.58
7--------------2,187--------2,187,000--- ----------$43.74
8--------------6,561--------6,561,000--- ----------$328.05
9-------------19,683------19,683,000---- ---------$984.15
10------------59,049------59,049,000---- ---------$8,857.35

TOTAL------88,572 -----88,572,000------------$10,235.49

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[Yuwie]

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[Yuwie]

Yuwie

LEVELS - REFERRALS - IMPRESSIONS - EARNINGS
1---------------3---------------3,000--- ------------$0.15
2---------------9---------------9,000--- ------------$0.45
3---------------27-------------27,000--- -----------$0.54
4---------------81-------------81,000--- -----------$1.62
5---------------243-----------243,000--- ----------$4.86
6---------------729-----------729,000--- ----------$14.58
7--------------2,187--------2,187,000--- ----------$43.74
8--------------6,561--------6,561,000--- ----------$328.05
9-------------19,683------19,683,000---- ---------$984.15
10------------59,049------59,049,000---- ---------$8,857.35

TOTAL------88,572 -----88,572,000------------$10,235.49

[an again]

LEVELS - REFERRALS - IMPRESSIONS - EARNINGS
1---------------3---------------3,000--- ------------$0.15
2---------------9---------------9,000--- ------------$0.45
3---------------27-------------27,000--- -----------$0.54
4---------------81-------------81,000--- -----------$1.62
5---------------243-----------243,000--- ----------$4.86
6---------------729-----------729,000--- ----------$14.58
7--------------2,187--------2,187,000--- ----------$43.74
8--------------6,561--------6,561,000--- ----------$328.05
9-------------19,683------19,683,000---- ---------$984.15
10------------59,049------59,049,000---- ---------$8,857.35

TOTAL------88,572 -----88,572,000------------$10,235.49

[Golak]

Hey steve,
Its really a good piece. But dont you think consolidation is inevitable in every field once it matures. Not a single sector has escaped it. Web 2.0 is just 3-4 years old. It has to go for the inevitable consolidation. With M&A's the size of company increases and with it its revenues and resources. And then companies can be bold enough to venture and exploit risky ideas.

[Eric Eggertson]

What's interesting is the properties that are allowed to truck along as if they're energetic, independent concerns, even after they've been gobbled by a big corporation.

In some cases, it's a sign that the company knows enough not to mess with a good thing. In other cases, I suspect they're just trying to hide the corporate connection so they can still appear edgy.

[watch television]

Just like the media companies, these guys have horrible vertical integration towers that span not only websites, but media outlets as well.

[Al]

It's called oligopoly, not "group monopoly", btw.

d

[Dob]

Where is Flickr? It's a huge...

[dyl8n]

Yeah Flickr is a glaring omission - and as far as I can see the only one I support financially

[Seb Richer]

Web 2.0...

Make sure you know what it really means before using it that much. And clean up ur comments, it's full of spam.

Cheers...

[G]

The IAC list is also bad... its missing Social Shopping Search Engine Pronto and video sharing site Vimeo... as well as the cornerstone brands, FunWebProducts (Zwinky,Freeecards,etc), and much more.