Even as they try to be more nimble and experimental, Big Media strains to recreate what upstarts such as Facebook and YouTube have built. YouTube spent only $13 million to create the social-networking entity Google paid $1.65 billion for. Economic and structural legacies will inhibit many big media companies from casting a broader, more profitable net in the new digital arena--and it will lose them talented employees. Two visionaries have opted to build their own hybrid company: former AOL CEO Jonathan Miller and former Fox Interactive Media CEO Ross Levinsohn, the force behind New's Corp.'s MySpace acquisition.
Get over the stale notions of what you think convergence ought to be. It is becoming abundantly clear that every digital interactive device and platform will be driven by advertising, marketing and transactions. The digital era will invariably be about commerce before intellectual and altruistic pursuits. The connected consumer is the unifying catalyst. Accepting that realization makes so much about this chaotic and exciting transition easier to comprehend.
The broadcast TV networks' new prime-time season continues to be an expensive precursor to the real show, maximizing syndication profits from successful series. But any player not paying attention to the realities of digital content recycling is in for an economic jolt.
While Microsoft has the financial resources and strategic impetus to acquire a minority stake in Facebook or buy Yahoo outright, history suggests it may not know how to inventively monetize either. Such bold moves would require the software giant to break from its predictable pattern of organic and smaller-growth investments to gain footing in the social networking game. But the real test would be how Microsoft uses its resources to become more competitive with Google.
The broadcast TV networks are pursuing eyeballs for their new season prime-time series anywhere they can get them, including the Internet, mobile video devices and online social networks. But finding a way to reconcile and capture the economic value of their audience across diverse media platforms will prove a more difficult and financially risky task.
The international growth that media and entertainment companies have been repositioning for and must now accelerate, in order to offset turmoil and stagnation in domestic markets, could be threatened by the Federal Reserve's half-point interest rate cut and a rapidly weakening dollar abroad. It's time to go wide.
In an era of new media economics, that is slowly turning the broadcast TV networks inside out, news anchor Dan Rather and his longtime employer CBS deserve each other. Both are in a time warp. It's sadly evident the lawsuit is a byproduct of both Rather and CBS clinging to old-line value systems and economics that are being dismantled by new always-on, interactive media.
Media company chief executives participating in the opening day of Goldman Sachs' annual Communacopia conference widely acknowledged the vulnerability of conventional television and print advertising, while hedging big bets on online target marketing, which has the potential of generating more wealth and sustained value across all of their platforms and businesses.
It is surprising and disappointing that not enough of the digital interactive technology driving cell phones, iPods, laptops and game consoles has translated into a meaningful Internet interface for everyday products--save for a handful of cars, toys and kitchen appliances. This is a woefully underestimated void that underscores a troublesome technological divide.
Time Warner's failure to lift its fortunes with the spinoff, sale and alternative management of some assets has elicited a sour response from Wall Street, which is making the same demands when Jeff Bewkes succeeds Richard Parsons as chief executive, expected by mid-2008. Wall Street investors and analysts should be careful what they wish for.