Innovation in Media: Global Meets Digital
Last night I attended "Innovation in Media: Global Meets Digital" at the Levin Institute. Marc Frons from the NYtimes; Betsy Morgan of HuffPo, Geoffrey Sands with Mckinsey, and Tom Phillips of Google sat on the hot seats and answered questions posed by MC Garrick Utley and the audience. The general discussion centered on a short list of key issues that the media industry is currently facing, namely: What does the future of the media industry look like? How does/will anyone make money? Will New York City survive as the media center of the universe?
Mr. Utley started the discussion off by asking the panel what works in the modern media business? Or, does “nobody know nothing?"
Mr. Sands explained that the deterministic 5-year plans that Mckinsey used to create for clients no longer work, because everything now changes too fast. He suggests that companies create a portfolio of initiatives and quickly shut down the initiatives that do not succeed. He also pointed to the explosion of independent artists creating music, films, etc., and innovations in advertising from mobile to behavioral targeting as evidence that things are not all doom and gloom.
Picking up on the innovation, expansion, and optimism note Ms. Morgan pointed out that HuffPo has doubled its staff in the past year to nearly 60 people. Their newsroom in NYC manages about 10,000 bloggers generating 300 posts per day. Nearly all of the editorial staff is under 30 and many are under 25 years old.
So how does HuffPo make the money and stay financially viable in these tough times? It’s the classic model, ad sales pay for operations. There are no plans to change this. It also helps that none of the bloggers are paid. According to Ms. Morgan, bloggers are mainly writing opinion pieces and accrue other benefits from blogging, which make up for the non-existent paychecks.
This makes sense, trying to make money from blogging is not easy, kind of a stupid idea, but getting those published articles on a known site like HuffPo will often bring the notoriety that leads to big money, at least enough to buy a coffee! Also helping the bottom line are the young editors, who are paid “competitive”, read small, salaries.
Mr. Philips, who made his way from Publisher of Spy Magazine to Director of Search and Analytics at Google, also had some cheery things to say about New York City and the media industry Vis-à-vis Google. He mentioned that 2,000 employees work in the NYC offices, 1/10 of Google’s total workforce. I knew Google had a major presence here, but the number was surprising.
The reasoning is simple enough, the major media companies, advertising agencies, and advertisers all have headquarters in New York, therefore it makes sense for Google to locate here. Also, lots of computer science graduates from east coast universities want to live in New York City and Google wants to be where the talent is. In fact, the majority of employees in New York are engineers, not sales and business people as you might expect. Yes, we know Google is great and creates lots of jobs... except when it is destroying the revenue model of traditional media.
For the story of the demise of traditional media the mic was passed to Mr. Frons, Chief Technology Officer for the New York Times, who admitted that print subscriptions had tanked and that the Times was trying EVERYTHING to see what worked. On a brighter note, online ad sales have held steady, so some money is being generate, but is it enough to support the 1600 strong editorial staff of the paper of record? I would bet that senior Times editors are being paid a lot more than the HuffPo’s young staff, so where does the money come from?
Mr. Frons pointed to partnerships with Google and explorations into leveraging the Time’s core assets, which include: its massive trove of talented editors and writers, vast database of articles, a strong brand, and newly developed IT infrastructure. In the end, however, there really was no answer to the looming questions regarding revenue. Mr. Philips acknowledged that from Google’s perspective the Times was doing everything right and it’s articles where often the most popular on any given news story. But, doing everything right has clearly not translated into enough dollars for the Times. Maybe there isn’t a business model for big Times style investigative journalism in our future. The question remained unanswered as the conversation moved into Q&A.
Q&A Session Notes:
Q: Is there a business model?
Geoff - As long as you can create something of value you will be able to make money, but not necessarily as much money.
Tom - Consumers like learning what to buy. The Media was the source of info on what to buy. Now people can get that info from other sources. Maybe, there is not a business model.
Betsy – Google has become a starting point for news. Readers can choose from a variety of sites. What does it mean that consumers have control of where they go for info?
Q: What about books?
Tom – Books are not as threatened as news. Printed books will likely experience a slower decline.
Geoff – Newspapers used to think that young would grow into reading newspapers. This was not the case.
Q: Will international media brands come to dominate in US?
Tom – No, media is local and largely consumed where it is produced.
Q: What is the status of brands in the global media space?
Geoff - Brands confer value. They are very powerful and they are not going away.
Tom – Clicks invariably go to recognized brands.
Q: How do we create news for global audiences?
Marc – The Times is developing a global newsroom to curate news from around the world.
Q: Scrutiny of local politics, judges, etc. is being lost. What will we do about local news?
Tom – Tough business model. Were does the money come from?
Geoff – Investigative journalism will have to make pitch to congress for money like PBS.
Q: What cool things have you seen that are not in NYC?
Marc - Guardian is publishing a data blog. http://www.guardian.co.uk/news/datablog [Pretty cool if you are a data geek!]
