What is role of content owners in internet?

Today I was reading a article in NY times, which basically discussed the plans of associated press (AP) to rein in on sites using its content illegally .This news reignites old debate about what is Right to Fair Use means etc .But what amused me is the fact that majority opinion especially in Blogosphere seems to be that Newspaper communities actions like the AP one are somehow wrong and they are fighting loosing battle instead of adapting to new reality. That’s true every one has to change with time but that doesn’t mean what AP is trying to do or other newspapers that are fighting for their content protection is wrong.
Basically there are 3 players in Content production and consumption chain of. Here content refers broadly to Music, news articles, knowledge based journals, books, Movies etc
1) Consumers : Who consumes the content and pays for it
2) Distributors : Who typically does many functions but at the core they bring the content to mkt place /reach of the consumers
3) Content producers: Typically are individuals who produce content (creative people).
I am of the opinion 1 and 3 roles has not changed and will not change (i.e. it is still human are required to produce and consume the content) .It is the second function that has come under severe pressure due to internet. Though I agree that this function needs to adapt to internet but I don’t agree the present way it is evolving is sustainable especially at least w.r.t to Newspaper .Here I am referring to the trend that is prevalent that majority of people pay close to zero for consumption of news media and not only that but other new players like Internet search engines ,professional blog editors etc are having a free ride on newspaper content and making huge amt of money with internet ad dollars at the expense of dwindling ad revenues to newspapers.
The core problem is Newspapers doesn’t only play the role of distributing the content produced by journalist but also play crucial role of employing journalist fulltime and which in turn gives them financial resources to produce the content .In the evolving new model internet search engines are playing the cost efficient role of distribution but they are not playing the other crucial role of financial support for the content producers. Put it in another way they are typically riding freely on newspaper content without having to bear the cost of producing it .Which is clearly visible in high margins these companies have ex: Google etc .
Moving fwd for the reason explained above there would be major changes in newspaper industry i.e. basically small, weak newspaper will disappear leading to consolidation in the industry with very few strong newspaper brands (ex: NY Times ,WSJ etc) left at the end of this cleaning cycle. This would lead to shift in power from pure internet based companies like Google etc to few branded newspapers which would in turn lead to a better understanding between the two regarding sharing of ad revenue .

Netbook vs. Smartphone’s

Netbooks in PC segment and Smartphone’s in Mobile Phone segment are two bright spots in this global economic downturn. .According to most industry analyst

Smartphone growth in 2009 is expected to be 31% when overall mobile phone mkt contract by 5%.

NetBook growth is expected to be around 15% when desktop PC sales drop by 5%

Above mentioned figures becomes more interesting when you compare that most part of developed economies are going to have 2% negative GDP growth.

The point of this posting is not to throw stats to prove that these 2 segments are growing, But to study why they are growing and also if these 2 segments address the same customer segment in which case they compete against one another.

Netbooks: A netbook is a very small, light-weight, low-cost, energy-efficient laptop, primarily used for internet based services such as web browsing, e-mailing and instant messaging. So in short Netbooks are targeted for customers who want to a device primarily for connecting to internet .These netbooks tend to be much cheaper than traditional laptops. On an avg you can get netbooks for 350$.so some one may ask how is it different from mini laptops that are out there the key difference is the cost and also features .mini laptops tend to be more expensive than laptops and tend to have all features like laptop (like graphics, memory capabilities etc) were as netbooks are though smaller than laptops then have much stripped down but net targeted features and subsequently they are cheaper as well. If you consider that most laptop or desktop usage is for internet access netbooks present success is not a surprise .So far netbooks in my opinion is not creating a new separate segment or mkt for PC but rather capturing the mkt for laptop and mini laptops. As customers see it as a cheap and perfect alternative for PC that meets their needs.

Two key players (Intel and Microsoft) in PC industry are backing up netbooks we can expect lot of new models soon in mkt .Intel has introduced netbook targeted ATOM processor which is much more energy efficient then PC processor (like Pentium and centrino family) which should extend battery life of netbooks allowing to be more mobile then present laptops.Microsft recently announce that they would continue supporting XP as long as there are mnf shipping them .MS previously had said that they would stop supporting XP as they wanted people to migrate to vista but due to pressure from Linux which was tending to capture large mkt share in netbook category backtracked its statement .Since most of netbooks if they run windows they run XP version and not vista due to technical HW limitation and costs this move by MS will help netbooks availability and sales .

SmartPhone: I have written lot about Smartphone in my previous posting so lets not get into basics of Smartphone key thing to mention here is that Smartphone are ever increasing becoming smarter day by day and also there screen size and resolution are improving drastically .Not only that their memory are quite high but also processing capabilities are high .For example N97 announced by Nokia as 32GB inbuilt memory. So with new players like Apple, Google entering this space I expect this segment to grow and also be very dynamic.

So some might argue that Smart can replace netbooks but my strong feeling is it wont at least in short term .Because I still believe that netbook buyers are typically PC/laptop buyers looking for cheap and targeted device alternative and Smartphone buyers are typically phone buyers who are looking for phone that does something more than phone functionality like access net, email etc especially when they are mobile and don’t have access to laptops.

So in short I don’t see them as substitutes but I do believe both product categories trying to address their limitations

• Netbooks boot time and battery time is not good enough to be truly mobile like Smartphone
• Smartphone form factor is not good enough to do extensive work on device like you can do on net book (like surfing or editing documents etc).

As these products tend to solve these limitations it would create opportunity for new players to enter these segments like Apple and Google entering Smartphone space .One interesting thing to note here is that as laptop/Pc players like Apple enter Smartphone does it trigger Mobile phone vendors to enter netbook segments .

Why did Nokia acquire Navteq?

Today Nokia announced it is buying Navteq for 8.1 Billion dollars. It is the largest acquisition Nokia (Market cap of 148 B$) has made till date .It also showcases that Nokia is very serious about its foray into service space and Location Services in particular.
Navteq with stock price of 78$ is trading at 53 P/E which is huge Compared to even Goggles 49 P/E, Navteq is priced quite high .so why did Nokia which is considered to be conservative company when it comes to acquisitions made this gamble answer according to me lies in 2 factors 1) Its clearly sees Location Based Services as huge opportunity 2) Most importantly it thinks with its ability to sell huge volumes of devices, is in unique position to exploit Navteq and hence justifies the huge premium .
Nokia would like to provide navigation and other location based services in its mobile device both as a way to differentiate from other mobile vendors and also as way to drive separate service revenue stream. Today Nokia already provides navigation services in its high end model like N95 but going further it would like to roll out these kinds of services in most of its mid-high end devices, which basically means that these services need to be made available in hundreds of millions of devices (125-200 million devices annually i.e. 50 % Nokia annual device sales).These numbers are huge compared to approx 30 million standalone navigation devices sold today. The key take way from these numbers is that the volumes and hence opportunity provided by embedded LBS in Mobile devices is very huge and hence its ability to change the present value chain of LBS segment.
Today Navteq and Teleatlas provide maps for all the navigation and map service providers starting from Tom Tom, Garmin (Navigation Device vendors) to Google, Yahoo, Mapinfo (Web Map service providers) .These 2 players not only provide maps to all players but also capture significant chunk of Value chain .TeleAtlas was bought by Tom Tom for 2 billon dollars recently so leaving Navteq as only independent map vendor but Nokia buy this acquisition not only made sure they get maps supply for its planned services in millions of device but also control the most important part of the LBS Value chain .Nokia last year made a deal with Trimble to get exclusive rights for Trembles GPS patent portfolio coupled with Gate 5 (Navigation SW maker ) acquisition gives Nokia all the pieces it requires to rollout LBS services in volumes at most cost effective way .
So it looks like Navteq is great strategic fit for Nokia but weather 8.1B$ is bargain or blunder would be determined by both Nokias ability to roll out LBS services in volumes and also most importantly consumers appetite and willingness to pay for such services.