Welcome to the Second Internet Bubble


Yahoo in Talks for AOL Stake

NEW YORK (Reuters) – Yahoo Inc. has held early stage discussions to buy a stake in Time Warner Inc.’s America Online Internet unit, a source briefed on the matter said on Friday .
The source characterized the discussions as “informational” and said it was far from the level of depth AOL has reached with Microsoft Corp. or with Google Inc..
Google and Comcast Corp. are also mulling a joint investment in AOL.
A Yahoo spokeswoman declined to comment on “speculation or rumor.” Time Warner declined comment.
Reports of the discussions with Yahoo have appeared in various media reports since the New York Post first reported Microsoft’s interest in AOL in September.
The Internet media network joins a crowded field of suitors, which now view AOL as the prize that could catapult the winner into the leading market position on the Internet.

How is it different this time ’round? Hmmm, last time investors and big boys were queueing up to buy vaporware – non-existent or partially developed software and hardware that might catch on. Indeedy, a lot of the development in the ’90’s had fantastic potential but the technology and delivery infrastructure (remember Pointcast?) just wasn’t there to support it. Oh and yeah, entrepreneurs were all IPO crazy.

This time its, well, lets call it vaporcirculation – the potential that a service might catch on, or that sheer numbers will magically resolve all the issues regarding generating revenue. Which, because the advertising industry sticks to counting click-thrus of banner ads, will probably work in the short term. Ya know, the traditional media rationale – provide me with the circulation and I’ll advertise to them in a mass market way. So why a bubble? Cos some of the purchases, like Yahoo!’s of Upcoming.org are based on possible not actual numbers (only 16,000 subs). By integrating it into the Yahoo 360 development, they hope to increase circulation at a local community level. Will this increase site visits? yes. Will this in turn increase profits? Nope … Oh and second bubble isn’t IPO-frenzied, its Merge and Acquisition frenzied. Same silliness tho.

A certain major Australian portal (shared with an American company) could make sublime profits on all this giddiness – sell off parts to uber-visitor-numbers-aggressive major companies, use the smaller parts to create a proper online community, then buy the other (working) bits back later when the Yahoo!’s and Googles realise that you can’t build profit solely on circulation numbers. *shrugs* Well, why not? This Australian company has a record of selling major parts of its business high and buying back low, in another delivery medium 🙂 And at the moment, their portal has all the retention and stickiness of a dog’s breakfast.

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