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TheStreet Open House

The Digital Skeptic: Government Has Bad Forecast for Weather Companies

NEW YORK ( MainStreet) -- Hurricane Isaac may have taken a steep toll on New Orleans, but the big blow revealed a far deeper weakness in another dubious levee in the digital dike -- the lucrative business of weather information.

Believe it or not, the ancient ebb and flow of the wind, clouds and water has turned out to be a killer app in the bleeding-edge mobile Internet. Several multiplatform commercial digital weather operations, such as The Weather Channel and Earth Networks' WeatherBug service, compete with a larger hive of mobile weather apps to offer the inside scoop on what is happening inside the atmosphere.

No less than Mary Meeker -- the one-time superstar Morgan Stanley (MS) analyst who is now a partner over at Menlo Park, Calif.-based investment shop Kleiner Perkins Caufield & Byers -- says the weather market has become a critical cog in the mobile device market.

In her latest Internet Trends report, right there on slide 19, she pegs the leading category in so-called mobile eCPMs -- that's roughly what an advertiser is willing to pay to advertise on something like a smartphone -- is not in sports, or navigation or even business news.

But up in the clouds.

Weather is mobile money
According to Meeker, weather fetches a category-crushing $1.24 eCPM. That's 6% or so bigger than the next category, education. And a stunning 80% or so more than the median value of the top-10 listed categories -- mostly utterly mundane stuff such as health and fitness, education and utilities. Supposed mobile world killers including sports, media, and news -- the stuff investors hoped would pay off in the no-money Web -- don't even make Meeker's top 10.

Weather's critical position is not lost to investors. This summer, The Weather Channel companies, which counts some serious Wall Street backers including The Blackstone Group and Bain Capital, bought out Ann Arbor, Mich.-based provider Weather Underground -- in part to protect both companies from today's twister of online and multichannel weather operations. I gave up counting the number of weather apps after WeatherBug, GO Weather and the weather features in LevelUp Studio's  Beautiful Widgets suite of offerings.

But the scary thing is, that massive threat is just part of the risk established weather content companies face in this impossible-to-rationalize digital economy.

Just as the Internal Revenue Service's website has made much of private tax and accounting products obsolete, no less than the uber-geeky, government-owned National Weather Service is quietly remaking itself as a digital content powerhouse private investors must fear.

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