Traditional media companies have to wise up. Their businesses are not going to be as profitable as before, now that the transfer of profitability moves from owners to consumers, declared Sir Martin
Sorrell, CEO of holding company WPP, at a panel yesterday.
"The Digital Media Revolution," hosted by newsmagazine The Week and The Conference Board, featured Sorrell and three
other top executives trying to negotiate their way through the new media landscape: Mel Karmazin, CEO, Sirius Satellite Radio; Dan Rosensweig, COO, Yahoo; and Michael Wolf, President/COO, MTV
Networks.
Topics ranged from what keeps these executives up at night--China and the rapidly changing Internet--to whether there's a new tech bubble. (The experts see a possible overvaluation in
the stock market, but the field will not contract again as old and new media converge). Another big issue is how to define Google--a "frenemy," in Sorrell's words, meaning that it's both friend and
enemy. And finally, how can old media monetize new media.
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The panel was marked by ongoing sparring between moderator Sir Harold Evans, The Week's editor at large, and the panel. Evans, a
loyalist of the old regime, was particularly vocal during a discussion of the digital-media revolution.
Sorrell even mused that Evans probably wasn't the right person to moderate, because he acted
as if "information is the privilege of elite members of society"--a position he can't abide. "I have a real problem with the point of view that you or I know better than any of our consumers," said
Sorrell.
All the executives gave reasons why public companies were having a hard time keeping up with private companies in the new media world. Karmazin chalked it up partially to a bottleneck of
older talent looking to make more money while atop larger companies that were keeping young talent at bay.
Rosensweig also noted that old media is not savvy enough about the capabilities of the
Internet to be spending its ad budget there.
Wolf said MTV Networks' ability to grow organically was the model that others should emulate, pointing to online gaming space Nick Turbo as an example
of cross-platforming that was accomplished without acquisition or stifling young creatives.
Everyone lamented the continuing decline of print publications, particularly in the area of news, where
immediacy is increasingly important. But Rosensweig said there will always be room for the No. 1 magazine in a category--particularly in the area of long-form analysis or glossy celebrity and style
categories.
A magazine brand can continue to prosper, Karmazin added, as long as it concentrates on the brand and not the print publication itself. It must be available whenever the consumer
wants it. He pointed to two Sirius partners--Cosmopolitan and Nascar--as good examples. Cosmo has branched out into radio, products, online and other outlets; Nascar strikes race
coverage, news and feature deals across a variety of platforms: satellite radio, terrestrial radio, Internet, cell phone.
Nobody suggested that traditional media was going away. TV is still the
best way to get the largest amount of people in the shortest time for the least money," said Sorrell.
But a movement is coming. For now, ad budgets don't reach the level that corresponds with the
amount of time people spend online, Rosensweig said. He cited a car example: 70% to 80% of car sales are influenced by Internet research, yet only 10% of car companies' ad budgets are placed there.