Diller Promises Big Investments in IAC Digital Originals

Pragmatic Web mogul Barry Diller said IAC/InterActiveCorp will invest several hundred million dollars in original content ventures over the next two years. The IAC chairman and CEO warned of the repercussions of a future in which Google further distances itself from competitors in the areas of ad volume and monetization.

Diller addressed his comments to an audience of media professionals during a keynote interview at the McGraw-Hill Media Summit in New York this morning. IAC’s properties include Ask.com.

In outlining the company’s plans to develop original content products, Diller took a modest jab at user-generated content. “We shouldn’t all go crazy about this. I got banged [before] because I said there are only so many talented people in the world.”

Diller noted nearly all of IAC’s products, from Citysearch to Match.com, have user content components. But he said professional programming, produced by those who “have the ability to make people laugh” is the future of content, online or off. He added truly amateur content gets a little old “after you’ve seen a cat have bad relations with a giraffe…100,000 times.”

“It will not be a long tail,” he went on. “It will be the very short tail, creating very large audiences on occasion, where people make things that resonate with people.” He argued the commonly referenced trend of audience fragmentation is not actually happening in a big way– not yet anyway. “Sites that have traction gain audience….You will see fragmentation inevitably at some point.”

The lynchpin of IAC’s near-term designs on the short tail is a humor and satire site called 23/6, a spoof on “24/7,” launching in the next two to three months. Diller said he prefers to build rather than buy, in-part because, “Valuations have gone nuts.”

“How could it be rational? There’s a ton of money flowing into this…and media companies that are desperate.”

Diller sounded another curmudgeonly note on social networking, which he said still lacks powerful ad monetization. “There is definitely going to [be] advertising. It hasn’t yet, to me, been evidenced how vibrant an advertising medium it’s going to be.”

A longtime proponent of the interplay of search and content, Diller sang the praises of IAC’s “resident geniuses” of search engine optimization, and said SEO’s contribution to the firm’s traffic acquisition efforts can’t be understated. When the company transferred an SEO expert from its Expedia division to Citysearch, he claimed the site’s unique user count jumped from six million to over 20 million per month “without spending a nickel. That’s great value.”

When it comes to search and content ad networks, he believes Google is close to having no competitors. If that continues, Diller said, “We’re all in trouble, except the shareholders.” But he quickly said market dynamics are working against such a scenario. “I think that would defy gravity.”

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