eMailbag: WebTV, PSINet and CDNow & Later
Page 1 of 1
"Is the ISDEX an official index? If so, how come I can't get a quote on it? Who created the ISDEX and on what basis were these decisions made?"
Reply: ISDEX was created and is maintained by Mecklermedia, producer of this report. You can get a value for ISDEX anytime on Yahoo! Finance or Quote.com ($isdex.x on Quote.com for subscribers). ISDEX is reviewed on a regular basis by Internet experts at Mecklermedia to determine its representative nature and to ensure that it stays as dynamic as the industry itself.
We have elected not to list it on exchanges since this would limit its effectiveness as the leading "pure play" Internet stock index.
Tuning In Or Out
"Do you think WebTV sales are going to increase or do you think the product has peaked out?"
Reply: Recent reports say that stores were sold out of the boxes over the holidays. Exactly the opposite of what happened in 1996. We think WebTV could become a major portal to the Internet but may also be two or three iterations and genuflections away from doing so. The TV and Web experience is much different than PC and Web.
The content is the key--all of it is designed for PC/Web today. TV and Web is a 8-foot away experience. PC and Web is a 2-foot away experience. That determines how content is displayed and used. There's also a lot of expectations that come with using a TV such as multimedia that the existing consumer dialup bandwidth cannot support for most users.
"Psinet has certainly gotten more attention as of late. What do you think about PSIX being "in play" right now? Will the bid from USI bring some needed attention to this continual underperformer and might USI soon come back with a higher bid than the $10 they offered?
"With PSIX being one of the last independents of its kind, what would you say a fair takeout bid might be?"
Reply: Fair is what anyone's willing to pay for PSIX. ISPs trade at about 1x to 2x sales. The question now: PSI, Cinderella or the other step sister waiting for the golden slipper or musty old shoe? We think there's still room for consolidation among ISPs themselves. The telcos prove they cannot do this type of thing on their own but they also have the cash and patience to wait for fire sales. This is getting close to Fahrenheit451 even as we speak.
"Your statements on @Home makes it look like a great buying opportunity. My ISP gives me poor service, and I am ready to move into the 90's for speed and access. I have the 56X2 in two computers and my 28.8 DSVD in the other, I feel like 3COM has sold us a bill of goods, so to speak, on new technology.
"The hook up speed is consistently better with the 28.8 DSVD. My understanding, limited I admit, is that @home (ATHM) will deliver up to 100 times faster service?"
Reply: @Home seems to have all the necessary ingredients to be huge: plenty of capital, good backing from major cable companies, media partners, etc. The only thing that bothers us is that if it already has high-speed wires passing millions of homes, why does it have only 50,000 customers? Somebody is asleep at the wheel here. @wake?
"Regarding ISR Jan 27, it really depends on what you mean by "control". There are millions of labels out there, and only a few distributors (like Interscope, A&M, Polygram, EMI). So aren't the distribs really resellers as well? What is it that they "control?" They control financing, marketing and logistics. They certainly don't control the artists.
"So, an interesting question is, in a networked world, is control over financing, marketing and logistics really valuable (you can obviously ask this same question about the book business which is "controlled" by a few big publishers, and owned by the same big media that own the major record labels/distribs).
"So, do EMI and A&M go directly to the Web? Would anybody care if they did? Nobody listens to an A&M record, the same way that nobody watches an NBC television show or reads a book published by DoubleDay.
"If the artists went directly to the Web, via CDNow, N2K and AudioNet, where would that leave big media?"
Reply: It takes more than $1 million to record a world-class album by a major artist. CDnow and N2K don't have the ability to hire artists the same way Virgin or Polygram do. If a tree falls and nobody hears it does anybody care? Similarly, on the Web, the best musician in the world can put up an entire CD's worth but if nobody comes to that Web site then it's moot.
Content is king but distribution rules.
"Your notes on CDNow lead me to comment for the first time. I have co-founded a company that allows music consumers to make their own custom compilation CDs, at www.EZCD.com, much like one would make a mix tape. My company, Volatile Media Inc., licenses music from various sources and then allows customers to browse the catalog on the Web, listen to 30-second samples, and then order up to ten tracks for $14.99 plus $3 shipping and handling."
Reply: Proof that someone will always take it to the next level. And that's the power of the Internet.