Thursday, December 29, 2005

The Business Story of the Year.


Parnell: Yo where’s the movie playin’?
Samberg: Upper West Side, dude.
Parnell: Well let’s hit up Yahoo Maps to find the dopest route.
Samberg: I prefer Mapquest—
Parnell: That’s a good one too.
Samberg: Google Maps is the best!
Parnell: True dat!
Both: Double true!
Samberg: 68th and Broadway—
Parnell: Step on it, sucka…
—“Lazy Sunday” video from Saturday Night Live


The business story of 2005—if I may be so presumptuous as to declare it myself (and, since this is my blog, I will)—can, I think, be summed up quite neatly in the following URL:

http://www.youtube.com/watch.php?v=oZOsgQC8qqM&search=SNL%20

That URL takes you to a web site called YouTube (“Broadcast yourself. Watch and share your videos worldwide!”).

YouTube contains almost any kind of video you want to see—from Ashlee Simpson’s lip synch unmasking on Saturday Night Live to OJ Simpson’s car chase and the Beatles’ final gig on a rooftop in London—and many you don't, particularly the bizarre and highly personal videos posted by individuals you’d rather not have your daughter bring home for dinner, if you catch my drift.

The video you will see at the above URL is a Saturday Night Live-sponsored “digital short,” called “Lazy Sunday,” and it shows two earnest young white Manhattan-ites rapping earnestly about going to see “The Chronicles of Narnia.”

And for those of us who have failed to find anything funny coming out of Saturday Night Live since, oh, Eddie Murphy or Martin Short left, the video is hilarious.

What does a YouBet video have to do with the Business Story of the Year?

Well, it was created, produced, filmed, edited and uploaded digitally, very likely without the use of a single product from Microsoft. Furthermore, it was searched for and downloaded by hundreds of thousands of individuals likewise without the expenditure of a single dollar going to Microsoft.

Finally, and not surprisingly, not one of the products shown or rapped-about in "Lazy Sunday" mentions a Microsoft product.

Which is why, in the category of “Most significant business story of the year 2005,” I nominate the undermining of Microsoft’s monopoly by a band of mostly anonymous individuals who did it with nothing much more than ideas in their head and lines of code in their computers.

Which is, I think, pretty cool.


Jeff Matthews
I Am Not Making This Up


© 2005 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations.

16 comments:

tahoe kid said...

Dear Jeff-

Your software license agreements for Microsoft Office and Microsoft Windows XP have been CANCELLED EFFECTIVE IMMEDIATELY. Happy New Year.

Sincerley,

Bill Gates

Andrew Schmitt said...

Does this mean that we citizens of the world can be spared more repetitive Microsoft bashing? I hope so. Two years from now you'll be kicking google around the block and wishing Microsoft was back.

Don said...

What a shock. Another slap at Microsoft. It just never gets old.

dj kan said...

2! No 6! No 12! BAKERS DOZEN

Jeff Matthews said...

Don & Andrew: Lighten up. I suspect Microsoft will survive my remarks.

And if you have anything useful to contradict my observations, please share.

css said...

I think what's even more significant are the viewership economics.

2 million views (as of 2 days ago - probably much higher by now) on YouTube, and undoubtedly many more via iTunes. See Paul Kedrosky's post at http://paul.kedrosky.com/archives/002287.html

7 million - optimistically - on NBC.

No Microsoft - but soon no network!

Miggs3 said...

All I know is that when I received a new IPOD as a gift, first thing I did was visit Itunes and downloaded that video (it was free). Next I located free software to convert DVDs of the kids, moved on to find free DVD decrypting software to convert commercial DVDs. I now have a multimedia IPOD. The software forums have been buzzing with IPOD inductees. I know I am not alone.....

Oh wait, I do still use IE to browse!

Anonymous said...

Jeff,
This is more than the story of the year. If you believe that a major portion of our economy is driven by media then a fundamental shaping of the media landscape may mean a fundamental reshaping of our economy, which is exciting when you think about it. This means there will be many investment opportunities on the long and short side for quite some time.
Another example of how Internet media is altering the landscape: Knight-Ridder. Consider how the economic pressure of the Internet is forcing this well-established company to put itself up for sale in a desparate attempt to fight the tide.
Interesting plays based upon new Internet media channels:
- Interland (INLD) now known as Web.com as of about 12 minutes ago. Super low valuation with new management that may know what they're doing.
- Internap, an IP traffic provider/servicer. Superlow valuation that may change if the pricing pressure for traffic providers changes based on demand due to increasing media requirements.
- Navarre, a DVD distributor that just threw an ugly hail mary to move into Anime publishing that is still bobbling the ball in the end zone. If it lands in the receiver's hands, this is an easy double.
Just some thoughts.
Happy New Year!

Ed said...

yeah...uh...except I watched the video on a PC running windows XP with the office suite installed...and sent it to my family, who watched it on multiple PCs running windows XP...with microsft office...and most of my friends...who also have PCs using windows...

you're right! microsoft is toast!!!

what about viacom, NBC/GE, etc - all the major content producers who would lose out if people could easily find free and entertaining content on youtube instead of watching the crap that passes for comedy on SNL, etc?

rkb said...

XBox 360

Neil said...

Jeff,

This IS the reason why tech doesn't deserve anywhere near the multiples it's currently selling at. If you have a company selling at 40x earnings and a few ideas and a few lines of code can errode and destroy their business then it's not worth that much - simple.

There is little long term competitive advantage in tech and eventually this truth will sink in. I said the same about satelite radio and it applies across the tech spectrum. Would you rather own google or a company with 50 years of oil reserves and a single digit PE!

Aaron Koral said...

Jeff:

YouTube is the business story of 2005? C'mon, now - surely you can't be serious (and I won't call you Shirley).

Seriously, though, I think a more interesting business story in 2005 was/is Verizon's buyout of MCI back in February of this year. The story I think should make for lousy economics in 2006 for landline telecom services (think SBC, now know as AT&T) at the expense of other communication providers (i.e., cellular, internet, etc.)

Here's hoping your next trade is a profitable one.

Jeff Matthews said...

Aaron: No, the story of the year is definitely NOT YouTube, which I hoped was clear in the post.

The fact that popular digital content is being created on non-Microsoft equipment, edited, uploaded, downloaded, searched for and stored without a single new dollar going to Microsoft--that, in my mind, is the story.

As some readers pointed out, the implications go far beyond Microsoft and target the mainstream media players as well.

As other readers pointed out, I could be wrong.

Have a good New Year.

KC said...

I viewed this on my IMac G5 - according to the Wall Street Journal, the "the gold standard of desktop PCs." And while at work, I'll view it with Firefox rather than Internet Explorer. Why? Because I'm fed up with Microsoft. Increasingly, I'm not the only one. I doubt Microsoft will lose its monopoly anytime soon, but if product quality ever replaces the herd mentality that dominates computer purchasing decisions, it eventually will.

seamus said...

The other business story of the year might be that SNL managed to eke out its first funny bit since Will Ferrell became a movie star.

Its_strange said...

James Altucher over at thestreet.com wrote 2005 was the year blogs gained acceptance , that some of the smartest analysis & commentary can be found in blogworld. The NY Post did a story about how online advertising was figured to grow 32% in 2006 and it was coming out of TV , radio and print advertising ...I say a satellite radio business blog / TSCM website subscription combo just might be the business story of 2006 . ..I ask you all this...Did the internet change the coverage or rating the sellside gave a OSTK ? A TTWO ? A TYCO ? A Enron ? Did the WSJ or NYTimes cause any serious inprovement in the way Wallstreet works ? Did CNBC ? Did Yahoo ? Cramer's piece on naked shorting is right. The shorts exposed many of the scams. When i go to the computer and read TSCM , a satellite radio business blog should come on automatically. It should come over the internet as well a satellite radio signal .....Ask Altucher to edit the blogs . .....And he is right. Some of the smartest analysis is found in blogword and yet i have to drive to work every morning listening to boilerplate...I have to listen to nothingness when i'm hanging around the internet...

Its time you bloggers and media people change that. I will pay and i don't care if you have advertising