Internet Publishing and Services
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Industry Overview
The Internet publishing and broadcasting and search portal industry includes about 2,600 companies with combined annual revenue of about $35 billion. Major companies include Google, IAC/Interactive, and Yahoo!. The publishing and broadcasting segment of the industry is concentrated: the top 50 companies account for more than 60 percent of revenue. The search portal segment of the industry is highly concentrated: the top 50 companies account for more than 90 percent of revenue.
Companies that specialize in providing Internet access are covered in the Internet Service Providers profile.
Competitive Landscape
Demand is driven by consumer and business needs for information and entertainment. The profitability of individual companies depends on their ability to deliver relevant information to consumers and to offer advertisers desirable target markets. Large companies enjoy economies of scale in marketing and in their ability to develop and maintain multiple websites. Smaller companies can compete by focusing on niche markets. The industry is capital-intensive: average annual revenue per employee is about $450,000.
Companies in the Internet publishing and broadcasting and search portal industry compete with other publishers and broadcasters and with the Internet-related businesses of leading technology and entertainment companies.
Products, Operations & Technology
Major products are search portals and websites devoted to news, sports, entertainment, gaming, networking, and other topics. Advertising is the primary source of revenue.
Search portals serve as users' gateway to the Internet. The portal used determines the type of advertising a user sees, and the websites that a user ultimately visits. Portals operate through proprietary technologies that search for web pages based on the keywords and phrases entered by users. Effective web search technology returns the most relevant web pages based on the keywords entered. Google uses a process called PageRank, developed at Stanford University in California by the company's founders, that displays web pages based on their popularity as measured by links from other sites. More than 50 percent of searches are conducted using Google sites, making it the most popular web search portal. Other search companies use their own technology.
Many news and publication sites are "aggregator" sites, meaning that they collect and display news stories from multiple other websites; this is also known as "in-licensing" of content. News sites are typically updated several times per day, and may include multiple news stories that rotate or scroll across the screen as users spend more time on the site. News and other sites that include graphics, pictures, and video, and change content frequently, use simple computer languages such as Java to allow even nonspecialized staff to easily update pages.
Game sites offer users access to online games that may be played against the host computer or against other online players. Many of the games can be variants of traditional computer games adapted for network and multi-player use. Some sites offer unique formats such as nostalgic games, which appeal to older generations who grew up going to arcades.
News aggregators, Internet publishers, and other entertainment sites rely on a value-added approach to content. Since they often do not create the content available on their sites, they must add value to the products; the most popular way to do this is through advertising, as sites can offer advertisers the opportunity to target messages to specific consumer groups. Aggregators in particular can add value by organizing information in a certain way or by offering unique search capabilities for premium content.
The industry depends upon technology for nearly every aspect of its operations. Most companies use a combination of readily available ("off-the-shelf") software products and proprietary search algorithms to find and deliver content to users. Additionally, companies must rely on multiple third party technologies, such as Internet access providers and routers, in order to be successful. As a result, technology is a primary expense of Internet companies, and it requires continual updating in order to remain competitive.
