IAC's Diller: The iPhone is our crystal ball
NEW YORK--Barry Diller doesn't want to predict the future.
"I'm not a great predictor of these things," the IAC/InterActiveCorp CEO said onstage at his Wednesday keynote for the Advertising 2.0 conference, when interviewer and BusinessWeek reporter Jon Fine asked him when he thought the depressing economic news would finally end. (His personal belief is that it won't get much worse.) "Not that, by the way, anybody's predictions are worth very much to anybody." And he was particularly wary of commenting on the macro economy. "Oh, you certainly don't want to hear from me on that," Diller said. "You've heard from every baboon in the world on the macro economy."
IAC's Barry Diller
Advertising 2.0 was co-hosted by IAC and held in the digital conglomerate's airy, glass-walled headquarters along the West Side Highway in Manhattan's Chelsea neighborhood. The building, designed by architect Frank Gehry, opened in 2007. Less than a year later, Diller announced plans to split the sprawling IAC into five separate publicly traded businesses. The slimmed-down company now focuses primarily on online media brands like Citysearch, Match.com, Evite, and Ask.
"What we thought was that agglomeration, putting disparate assets together was fine in the great building stage...where we started about 12 years ago," Diller said. "We built up a fairly large number of disparate businesses. All of them had some form of interactivity, but they were all from selling mortgages to dating...It wasn't giving investors or commentators or anyone else a clear picture of what the company was."
Then there was a battle for board control with shareholder John Malone of Liberty Media. The two now have a "good relationship," Diller said.
While much of the "new IAC" relies on advertising revenue, Diller declared at the conference that strictly relying on advertising as a business model is not sustainable. "I absolutely believe that the Internet is passing from its free phase into a paid system," he predicted (though, keep in mind, Diller did say he doesn't like to predict). "Inevitably, I promise you, it will be paid. Not every single thing, but everything of any value. Again, take commodity away from it."
The wealth of free content on the Internet was a matter of short-sightedness, Diller explained. In his opinion, it came out of the fear of piracy.
"People were so frightened of not being dinosaurs, and baring their heads, and not having what happened to the music industry happen to them, they just slapped everything up on the Internet for free," he said. "That's an accidental historical moment that will absolutely be corrected."
Diller doesn't believe that the poor economy will make it more difficult to get people to pay for things online. One of his subscription-based businesses, dating site Match.com, is doing very well right now: "It would not shock any of you that I think that of the things that, actually, people will do when enduring a storm, financial disaster, or otherwise, is want to hook up in one way or another with other people," Diller said.
Why is he such a believer in the triumph of paid content? Look at the iPhone, Diller told the audience, and the wild success of its App Store.
"The iPhone is a great example of what's going to happen," he pointed out. ""One of the greatest barriers to buying things is the steps that it takes, and we all know the difference when you go to Amazon and you just push your little thing and it's bought, paid for, delivered, billed, et cetera., instantly, and how much that has enabled or how much that has made the difference between just browsing and buying...that little thing, that in fact you scroll it, you do it, it comes, everything else is taken care of, is the answer to what's going to happen on the Internet when, in fact, we get the applicability of that broadly."
He acknowledged that media outlets' readership rates may drop, but that their profits will stabilize once again.
Another thing that Diller was willing to predict? His own demise. Sort of. Interestingly enough, he said he's of the belief that a modern media company is unlikely to outlast its original founder successfully.
"News Corp. makes sense because News Corp. is the absolute extension, to the fingertips, of one person," he said, referring of course to Rupert Murdoch. "I think (in) every case other than that, is that once that original founder has gone, for whatever reason, then the truth is it should all be taken apart because they make no sense. You can't replace with a suit somebody who's built the thing up and understands all of its bits and pieces in the rhythm of their heartbeat."
Interviewer Jon Fine wanted to know if that would be IAC's fate, too.
"I think that's true," Diller said.
Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos. E-mail Caroline. 
"Why is he such a believer in the triumph of paid content? Look at the iPhone, Diller told the audience, and the wild success of its App Store.
"The iPhone is a great example of what's going to happen," he pointed out. "
There's an App for that.
"This had NOTHING to do with the iPhone" emphasis mine.
Now I will repeat part of his statement in the article:
"Why is he such a believer in the triumph of paid content? Look at the iPhone, Diller told the audience, and the wild success of its App Store.
"The iPhone is a great example of what's going to happen," he pointed out. "
Yes, the article is a bit of click-bait, after all this is CNET and they make money by getting us to read articles. That being said Mr Diller did reference the iPhone.
I know that I, for one, would stop using it nearly as much.
Buying apps is one thing, since it's the same as buying computer software at a store, but paying for services (reading the news, and even using dating sites) is just ridiculous.
If you stop using "nearly as much" services that you aren't paying for, who cares? In fact, that might reduce bandwidth and support costs for the providers.
Nobody ever WANTS to pay for ANYTHING, not a single nickel's worth, right? Yet if you want them, you manage to. It's ridiculous that you'd think all these people would work for you for free.
He sapped money out of the profitable divisions like HSN and Ticketmaster, but he never put those profits back into those companies.
Why people revere this clown as a sharp businessman is unknown.
Barry Diller is about as out of touch with the real world as your typical congressman. As others mention, IAC is really a motley blend of trailer-trash Internet properties.
Carl Icahn is in the same genre. Again, a genius in the world of Wall Street finance from 30+ years ago. He almost totally unraveled during his aborted proxy fight of Yahoo; Motorola rebuffed his attempts at gaining a board seat a few years earlier.
These guys' worldview is about thirty years old. That's okay for my mom, but for people running large media-driven enterprises, nay, that doesn't work.
It would be foolish to listen to an old fool like Diller.
In less than a year, SoftBank has sold about a million units--despite being the smallest carrier in Japan. On opening day there was a line thousands of people long outside their flagship store, and sales have been steady ever since. The iPhone has lifted their profits and expanded their market share. Not as big a success as it was in the U.S., it is still very respectable for a country that was supposed turn it's nose up at the device.
My students here in Tokyo all instantly recognize the device (though they can recognize few phones by appearance and name) and state the desire to get one--but either have contracts that prohibit this, or are on family plans with other carriers, or need specific plans that SoftBank doesn't offer. Once the initial 2-year stretch is over, the iPhone should surge more, and stands to gain the same kind of success Apple has seen with the iPod Touch in Japan--another device predicted to fail as it went up against a range of high-tech Japanese competitors.
phones are not bought on Technological merits but on Usability
Typing asian languages on the qwerty touchscreen is worse than a touchpad
I'd also point out that advertising is working quite well (and is paying quite well) in certain verticals. It may not be enough to generate big profits at general news & entertainment sites or portals, but if that's the case, the problem is less with advertising than with the audiences those sites are able to deliver.
I strongly agree, although IAC (NASDAQ-NMS:IACI) rarely pays dividends to its shareholders and shares had been falling down since 2003.
Directors, CEO's, Chiefs Officers and Preferred Shareholders receive the cake and Common Shareholders receive portions of a biscuit, crumbs.
Regards,
Fernando Ardenghi.
Buenos Aires.
Argentina.
ardenghifer@gmail.com
- by nwlaurie June 12, 2009 12:40 AM PDT
- It's called serendipity ... I'd never hear of Diller until this (admittedly wobbly) link appeared.
- Like this Reply to this comment
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(19 Comments)Same reason I click a random Encyclopaedia Britannica article every day!