Blog Post

The Fuzzy Math of Digital Revenues

A good story about how big media companies denote and report digital media revenues in their earnings statements and filings…”While each of the main media companies defines digital slightly differently, everyone seems comfortable projecting the same revenue: about half a billion dollars.” Of course that’s only for the top 3-4 TV-network owning media firms.
The story goes on to say that the problem for analysts is figuring out what is being counted as digital revenue. Is it video advertising? ITunes-download fees? Banner ads? Social-networking sites? Wireless? Online sales of ringtones and Bill O’Reilly coffee mugs? Of course, if they are significant, they will have to disclose.

2 Responses to “The Fuzzy Math of Digital Revenues”

  1. The fact is that media companies get a growth multiple on any "digital" revenue and a no-growth multiple on traditional sources. The unknown in much of this is how much "digital" revenue is totally traditional? This question applies just as much to the entrants as to incumbents, since quite a few of the newbies have been acquiring.

  2. I just posted some commentary on iSuppli estimates for 2010 digital music revenues. That very problem crossed my mind. What counts as digital revenue? Is it downloads as well as subscription revenue and ad revenue-sharing with the likes of YouTube? What about revenues from ad-supported P2P companies?

    From what I can tell, music companies lump it all together and call it digital. Mobile is digital. Wallpapers are digital (though I would consider those to be merchandise, like a T-shirt). Amazon.com CD sales are not digital, but any download sales at Amazon.com would count as digital. There are digital-related publishing revenues as well.