When
the Telstra share price took a journey over the $4 mark last week, it
did so on the back of a rumour that T3 would include a rights issue to
existing shareholders. If the rumour was true – we won’t know that for
quite some time – then institutions would need to go shopping ahead of
the issue or be left out. So the rumour was enough to sucker some of
the institutional buyers into placing orders for Telstra shares, and
the price went up.

A rumour emerges, a share price rises, and
the ASX investigates? Not at the time of writing, which merely
demonstrates that the stock exchange is suffering one of those fits of
narcolepsy which seem to overtake it every half-hour or so. Nor was
there any visible scepticism among the press about the story itself or
the subsequent share price rise.

But we seem to fall into fits
of short-media-memory syndrome with depressing regularity. Another
story to get some air time last week was the launch of Yahoo!7, which
is going to be Australia’s great media portal of the future.

Australia’s
TV stations have a mixed history with the internet which runs the gamut
from embarrassing failure to utter catastrophe (Ninemsn might carry a
TV station’s brand, but its success rests on its internet content).

Somehow
the excitement of the introductory video was too much, and the story
was given the same depth of sceptical analysis that you might see
offering motoring journalists a test-drive of the next McLaren street
sports car. Wasn’t it Channel Seven that spent a few years pumping the
notion of an internet joint venture with someone from America? AOL?
Hell, the URL still functions,
even though it gets an immediate redirect to Primus, which two years
back relieved the TV station of a millstone around its neck.

And
here we are again: big media and the internet, marriage made in heaven,
portal plus TV content plus advertising equals big dollars, right? Not
on your nelly.

The TV industry, as I have remarked in the past,
has never accustomed itself to changing consumer behaviour, a general
erosion of leisure time, and the long slow death of novelty on the TV.
People don’t watch TV the way they used to – which of course is why
ventures like AOL7, sorry, Yahoo!7 look so irresistible to the TV
stations casting around for a new business model.

But a portal
isn’t so new a business model, and although Yahoo! is a successful
portal, the fact is that the main reason to go to a portal is that it
lets you end up somewhere else. Google’s name was made as a search
engine, but its money comes not from its status as a portal, but
because it serves advertisements to other websites – the destinations
people head for after they’ve been to Google.

In terms of
income, Yahoo! is bigger than Google, but not that much bigger; one
generated $US5 billion in a year, the other raked in $US2 billion. But
Google doesn’t need the eyeballs to rake in the dollars; and Yahoo!
does.

For all its faults, Google is one of the first companies
to learn how to make money out of the natural behaviour of internet
users: since users are heading somewhere else, we’ll make money out of
letting them go, instead of spending money trying to persuade them to
stay.

TV stations like the portal model because “persuading
users to stay” looks like something they understand. Hence the Yahoo!7
venture; which, I’m afraid, suggests that any lessons available from
AOL7 have yet to be learned.

Peter Fray

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