Rising threat of new media
London Times | November 1, 2006
By Dan Sabbagh
Andy Duncan's warning that Google is poised to overtake Channel 4 in advertising revenues is a wake up call for traditional media. Google now "extracts" in Duncan's contentious choice of words, 15 per cent of its revenues from the UK.
That's about £369 million in the six months to June, and on his estimate £900 million for the year as a whole. For the UK this is big money - C4 reckons it will generate about £800 million from advertising - and it was the second biggest generator of ad revenue in the UK behind ITV.
On one hand, Duncan is right to worry about what this means for telly and indeed media in general. While C4 uses ad money to make Big Brother and Dispatches, all of which have a greater entertainment and cultural value than a 3 second search for vets, pets or Pamela Anderson.
However, don't forget it's in Duncan's interests to hype up a crisis. Channel 4 is in the middle of a review of its financial future, which is being conducted by Ofcom. The begging bowl, a demand for some sort of support from the BBC licence fee, cannot be far away.
And is he right - are Google and Channel 4 competing from the same pound? After all, isn't Google just a replacement for newspaper classified advertising, rather than moving images watched by millions in between compelling drama? But, of course, if Google starts to find a way of making money out of video ads, then Duncan has sounded the alarm early.
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