Internet Playing Field Tilts Further Toward Big Names

The total number of companies controlling 50 percent of the U.S. online user minutes shrank 64 percent, from 11 to four, from March 1999 to March 2001, according to Jupiter Media Metrix. Remove all the numbers and what does this mean? That the myth that severe market dominance would be impossible online is just that — a myth.

Not only are the biggest of the big getting bigger, but even more drastic were the numbers that show consolidation continues to trickle down. The number of companies controlling 60 percent of all U.S. minutes spent online fell from 110 in March 1999 to 14 in March 2001, an 87 percent swing.

“The Media Metrix data show an irrefutable trend toward online media consolidation and indicate that the playing field is anything but even,” said Aram Sinnreich, Jupiter senior analyst. “The Internet may provide an opportunity for new players like Microsoft or Yahoo to become serious media companies, but so far a major share of the market is being absorbed by a handful of companies, with those same companies continuing to direct traffic across their own networks of sites. 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.”

Much of the consolidation of the online media has been driven by mergers and acquisitions that turned the big into the really big. In March 1999, AOL and Time Warner were both among the 11 companies controlling 50 percent of all user minutes (ranked No. 1 and 11). The product of their merger, AOL Time Warner) is No. 1.

A substantial gap has also formed between major media companies and their Internet-only competitors. This gap has been widening since major media companies began to significantly increase their budgets and resources they direct toward Internet projects. The ability to differentiate online offerings through quality of presentation, intensity of marketing and integration with offline programming have all contributed to helping large, traditional media companies build their lead in the race for eyeballs.

The third reason for the consolidation is directly related to the burst of the Internet bubble. The evaporation of funding and stockholder patience over the last year has forced online businesses without self-sustaining revenue models or the potential to save money for their parent company to evaporate.

Top 14 Properties and Share of Usage Minutes
U.S. Home and Work Users, March 2001
Property Share of
AOL Time Warner Network* 32.0%
Microsoft Sites 7.5%
Yahoo 7.2%
Napster Digital 3.6%
Total contribution of top 4 properties 50.4%
Juno 1.9%
eBay 1.9%
EA Online and Applications 1.6%
Excite Network 1.0%
iWon Inc. 1.0%
Walt Disney Internet Group 0.8%
Lycos 0.6% 0.4%
Flipside 0.4%
CNET Networks 0.3%
Total contribution of top 14 properties 60.1%
* Two-thirds of AOL Time Warner’s minutes come
from communications services (email, instant messaging, etc.)

Source: Jupiter Media Metrix

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