Here are some rough notes from today’s Forbes
MEET conference in Beverly Hills. (The acronym stands for “Media, Electronic Entertainment, and Technology.”) I wrote a short piece on the conference that is now up on the
Variety Web site, and will run in the paper tomorrow.
Forbes publisher Rich Karlgaard opened the conference, noting that when he and VC
Roger McNamee began planning it two years ago, YouTube didn’t exist.
He went on to contrast the fortunes of “old” media with new. The same week that Google bought YouTube, Karlgaard said, NBC announced lay-offs. Google’s stock is near it’s high; the NY Times’ stock is at a five-year low.
Dennis Kneale, the managing editor of Forbes, picked up the thread.
“The tech world and Hollywood don’t trust each other,” Kneale said, recalling that Hollywood studios sued Sony over Betamax, and then took Grokster to the Supreme Court, too. Kneale observed that many tech entrepreneurs feel that copyright no longer has any reason to exist. The MEET conference “is here to bring [Hollywood and Silicon Valley] together, because their futures are intertwined like never before.”
Kneale said he didn’t think digital media (YouTube’s $1.6 billion price tag, with no profits) represented the new Internet bubble. He said there are “fundamental differences” between this bubble and the last one, but didn’t elaborate.
Then, on to the afternoon’s main event: a conversation between Michael Eisner and Barry Diller, with Kneale serving as “facilitator” (he mostly sat there and watched as Eisner interviewed Diller.)
Eisner began by asking Diller, “Will major media companies absorb most of the new media companies – the track that Rupert is on, and Disney, to a lesser extent?”
Diller says that being a media company, in the old sense of the word, meant being a distributor. And distributors controlled scarce resources, like a national chain of theaters or TV stations. “They were the ones who originally owned the radio licenses, which then begat the television licenses, which then had those groups take over or be taken over by old-line movie companies,” Diller said. “They were all scarcity distribution systems.”
But now, the Internet enables self-publishing, Diller continued, “which means that the distribution leverage – the chokepoints – is going to evaporate.”
The result of this, Diller said, is that “it doesn’t matter who buys what – new audience is going to be created somewhere, by somebody, that you can’t buy.”
“I don’t believe that just aggregating these [new media companies], without some central through-line, makes any sense,” Diller said.
And consolidation causes problems. As media companies get more diversified, “they get less well-managed,” Diller said. It’s hard for them to even continue doing what they used to do well, “much less master this new form of plenty, rather than scarcity.”
Traditional media companies, Diller said, “were based on being dictatorial, and telling people how they’ll do business with them, and exercising every point of leverage at all points in the process.”
Diller tossed a compliment to Rupert Murdoch for his “remarkable grasp” of new media, but said, “I don’t think [Rupert’s approach] is replicable by all the people who are paid executives at all these very large, diversified media companies.”
Eisner asked Diller who wins the copyright squabble – the media companies who want to protect the value of copyright, or the tech types who think that copyright is an outmoded idea.
“Anybody who says there is not copyright – to me – it is a mad concept,” Diller said. It is an unappealing notion “if you don’t have the ability to say, ‘Well, if you’re going to use this in some form, I’ve created this, and I’m going to be paid for it.” If there isn’t some sort of copright protection, he said, “then all of these [content creators] are going to have to get day jobs in restaurants.”
Diller said he didn’t think Google’s purchase of YouTube was as big a deal as the mediaa made it out to be. “YouTube is valuable because they created a place everyone went,” he said. “Google didn’t pay anything. It was a tiny slice of their stock value. That part of the dilution of their company is infinitesimal. If you have that kind of paper [Google’s stock], you can buy almost anything until they take your paper away”
Eisner observed that Diller’s company, InterActive Corp., owned sixty brands, but no one knew it’s name. “It’s always ‘Barry Diller’s this’ or ‘Barry Diller’s that.’” Eisner teased him, saying he could’ve been worth more if he’d focused on one thing, and built, say, YouTube, for example.
“We are an inter-related conglomerate, and we like that,” Diller said.
Eisner asked a question about whether Diller would rather buy NBC or YouTube, and Diller dodged it. Eisner said he was interested because, “I’m looking. I want your advice [on what to buy].” A joke?
Diller said he thought local television stations would have enduring value, but “if you asked me whether a broadcast network has enduring value – I’m not so sure.”
“In a world of not only plenty,” he continued, “but the eventual time-shifting – everything will be time-shifted – you’ll be the editor and the master of your own stuff. The single channel, general entertainment approach [isn’t valuable].”
Eisner then turned to user-generated content, asking Diller whether he thought the user-generated world was going to continue to “escalate,” or will Web video get more professional? Will we have editors, instead of computers, deciding what’s best? (I’d argue that humans are already selecting what shows up on the YouTube homepage.)
Diller said that IAC is already involved in user-generated content – though not yet for video. Match.com, he pointed out, already has 60 million registered users who post content.
“If you’re talking about narrative form,” Diller said, “I believe that there is value in editorship – the more plenty you have, the more editorship.” Sites and channels will be narrow and well-defined. That’s not the case with TV networks today, Diller said – but it was when he launched Fox. “It was edgy and young,” Diller said.
Diller repeated his belief that “there aren’t that many talented people” who go undiscovered by the current network/studio/record label system. (He hit this same note at the
Web 2.0 conference in San Francisco last fall.)
“But the Internet has opened it up,” Eisner said.
Diller said he though “it’s perfectly rational to think that this talent pool – capable of producing content that will resonate with a lot of people – is finite. And it’s found through an editorial process, some kind of process.”
Diller said he thought that content produced in a garage “isn’t going to continue to be as big a slice of where people spend their time.”
Eisner countered that talent agencies have been spotting and signing content on the Net.
“I believe talent does out – somehow, somewhere,” Diller said. “I don’t think there are great singers, musicians, writers – in garrets somewhere – doing great work that no one finds. I just don’t believe that.”
Eisner changed the subject, talking about linking the Internet to the television: “Steve Jobs is out on his next mission – to connect the laptop to the television set,” he said.
“He ain’t alone,” Diller answered.
“No, but he wants to be first,” Eisner said.
“I don’t know if it’ll happen in two years, and I don’t know if Steve Jobs will do it, but there’s no question that there will be a system in the home that receives all this data coming in on the pipe – a wired or unwired pipe – that will throw what comes in to any form-factor in your house: a small screen, or a big plasma screen. It’ll be easy to use, and of course will have a remote – an execute button. You’ll push it, and it’ll make the transaction do whatever you want it to do. That really is the final convergence,” Diller said.
They then both agreed that Net neutrality is something that ought to be preserved. “We have lucked into a system that is currently neutral,” Diller said
They ended by talking about IAC’s new headquarters in Manhattan, designed by architect Frank Gehry. Diller said it wasn’t going to cost them much more than “as it costs us to be in midtown now… it’s relative cost neutral.” Besides, “what is wrong with building something that has some hopefulness in it? We’re a young company in the capital of the world…let’s build something that is as new as we are, and as aspirational as we are.”
I didn’t take notes on the panel on “Next Generation Video,” mostly because I didn’t feel the panelists covered much ground that was new. But there were some good tidbits in the panel on “User-Generated Content,” where the panelists included Roger McNamee of Elevation Partners, Ross Levinsohn of Fox Interactive Media, Gregg Spiridellis of JibJab Media, and Joel Hyatt of Current TV.
McNamee: The vast majority of people on MySpace don’t care how many people are in their audience. They’re just majing a point.” Posting to MySpace is a better use of their time than playing a videogame or watching a movie. “User-generated content is mostly people who don’t value their time highly,” he said, not meaning it as a put-down – but just an observation.
Spiridellis: “The audience is your distribution network. If you can leverage your audience, they can do great things for you.” JibJab had a list of over 100,000 people, he said, when they launched their first viral animated clips in 2004.
“I think user-generated content, in a lot of ways, is a commodity product,” Spiridellis said, when you can find the same video on lots of different sites.
Hyatt: “We think of Current as the television homepage of the Internet generation.” Unfortunately, no one else does.
McNamee said his current investing is focused on people 35-plus: “They have a lot of money, and no time” – unlike teens.
Levinsohn: “Network television is still the greatest reach medium in the country today.”
The future, he continued is “not all about professionally-producted content. It’s about how we bring user-generated and professionally-produced content together [when appropriate.]”
Hyatt talked a bit about the potential of viewer-created advertising, which Current is exploring through a program called
VCAM.
Levinsohn closed the panel with a quote that echoed
William Goldman's famous Hollywood maxim that "Nobody knows anything": “Nothing makes sense. Either you embrace that, or you reject it.”
