This morning’s announcement that AOL is acquiring the Huffington Post is an important piece of news for Internet business. In the history of entertainment and media in the US, content has been a lynchpin in the strategies of the mega-companies, and ever since the Internet came into being, companies have struggled to find their place.
Looking backwards to the grand American industries, many made plays for the means of transmission – that is the ISP’s and cable networks. If you came from a world of movies and television, that made a lot of sense. And sure enough, Apple, Hewlett Packard, and Dell are amongst the Fortune 500. The content-providers are not really as large a force as they could be – and this seems to point to a great vacuum in modern business.
The Granddaddy of Movies
Thomas Edison’s major contributions to modern society came in many different areas – light, batteries, telephony, sound recordings, and cinema. Inventors in that time period didn’t have an easy go of it. Assuming they made it to the patent office before anyone else, they then had to fight tooth and nail for their rights under the patent. Edison’s light bulb, for instance, was contested in courts almost up to the year the patent expired, making it difficult for Edison to realize the full financial potential of that intellectual property.
Edison was what today we might call a “systems person”. He didn’t just invent a better light bulb filament – but the entire DC electrical system for providing lighting. In motion pictures, he did the same thing, inventing cameras, projectors, and starting his own movie studio. From the start he was engaged in battles over his rights, aggressively suing infringers. Edison’s legal propensities were one of the motivators for other movie studios to move as far away as they could, to a nice warm place called Hollywood.
Edison’s legal threats finally compelled a group of studios to form the Motion Picture Patents Company, which provided Edison and Eastman Kodak the ability to pretty much control the industry – excepting those studios that had moved out to Hollywood. In 1911, the trust was weakened, and finally, 1918, a federal court decision ruled that the MPCC ran afoul of antitrust laws.
Radio and Movies with Sound
During World War I, the US government suppressed various patents associated with the radio. The Navy basically helped GE (as it held some critical patents) and GE’s historic rival, Westinghouse, form the Radio Corporation of America (RCA). RCA went on to develop the RCA Photophone, one of four competing technologies to provide movies with sound. Warner Brothers also had a technology, call the Vitaphone. So, once again, the movie studios started developing cabals around technology. Owners of movie theaters, like Loews, worked to own the whole production stream, from inception to presentation – until they too were broken up by anti-trust laws.
Each of those major studios is still a major player in some form:
- Warner Bros Pictures is now part of Time Warner
- Paramount is part of Viacom
- 20th Century Fox is now part of News Corporation
- Columbia Pictures is part of SONY Corporation of America
- Universal Pictures is part of Comcast/General Electric
Each of these entities is developing internet properties to different extremes. Time Warner had merged with AOL, but spun that business of f in 2009. As reported in the Wall Street Journal:
AOL Inc. will be a slimmer, more focused company, preparing to battle against Google Inc., Yahoo Inc. and Microsoft Corp. in the $29 billion U.S. market for online advertising. It is betting on a strategy centered on becoming the top creator of news, information, entertainment and other digital content.
And with the acquisition of the Huffington Post, and Arianna Huffington as the leader of the new media group, things just might speed up. As Huffington wrote in her blog, “We’re still traveling toward the same destination, with the same people at the wheel, and with the same goals, but we’re now going to get there much, much faster.”
At lunch the other day, another internet marketer I know suggested that Social Media is a bubble – and while we’re all quite busy with it today, it’s going to pop. He might have been right about social- but in the grander scheme of online marketing, I’ve got a strong hunch that we’re still in the early days.