According to a report from the Center For Media research, Jupiter analysts say in a new report that “media companies competing for the attention of consumers must consider that while the key barrier to online entry and success used to be infrastructure, it has shifted dramatically to advertising and marketing.”
Mirroring reports on the Australian market (see
Forecasts), Jupiter reports that a small number of companies are now controlling the majority of net access in the US with four companies controlling 50% of user minutes.
Smaller ISPs suffered the greatest loss though, the number of companies controlling 60% of net users fell from 110 in March 1999 to 14 in March 2001, an 87 % decrease.
The Center For Media Research reports that Jupiter analysts cite three key factors are driving online media consolidation:
1. Mergers and acquisitions have turned already powerful companies into even more powerful media behemoths. Today, the merged AOL Time Warner is ranked number one in controlling user minutes.
2. Major media companies have significantly increased their ability to differentiate online offerings through quality of presentation, intensity of marketing and integration with off-line programming.
3. Economies of scale apply to online businesses as much as they do to off-line. Online businesses without self-sustaining revenue models or potential cost-savings for their parent companies have spiraled toward extinction.
