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Very few people are as compelling as Morgan Stanely’s Mary Meeker in arguing that the transition of media and commerce dollars to the Internet is under way. For sure, she understands, and anticipates, the macro.

At the Web 2.0 conference yesterday, she delivered the state of the Internet's transition, circa late 2006. Her basic theme was, as always, that Internet categories work their way toward monetization. For instance, free directory information has evolved toward paid search. The next killer app to be monetized is video.

To Meeker, “Local” has finally become a rising part of this ecosphere (along with “Community/Social Media” and “Mobile”). Given such factors as Google's “Long Tail” and eBay Classifieds, which has 140 percent year-to-year growth, local has definite “traction.”

She pushes especially hard on the impact of eBay on local. Over nine years, the ratio of eBay U.S. listings to newspaper classifieds has moved from 1:35 to 9:1. But newspaper revenues still outpace eBay 25:1. That suggests there is tons of growth to be had  even though Wall Street has lately grown cold on eBay.

Of course, you’ve got to take Meeker with a grain of salt  and not just because her bullish pronouncements on Internet stocks led to millions of people losing their retirement savings during the dot-com crash. Meeker, of course, is a financial analyst. She works with what she's got.

But her numbers-driven approach isn't always right on. In Meeker's world, the revenues of Internet companies are applied in broad revenue categories that don't really tell the whole story. Who else could keynote a Kelsey Local conference and almost totally ignore the entire breakdown of local channels that we live by (newspapers, Yellow Pages, promotions, TV, radio, etc.). She did that.

To Meeker, big Internet stocks like Google, Yahoo! and eBay are catching up on “advertising.” There's much more to it than that. Still, I like her big picture.

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