Disney's CEO, YouTube's Founder, and Wired's Editor Debate the Future of Monetizing Content

"The Digital Chiefs," a lunch panel earlier this week organized by the Hollywood Radio & Television Society, was one of the best conversations about digital media I've been to in a long while.

That was primarily due to the organizer's choice of a moderator: Disney chief executive Bob Iger. Having Iger asking the questions offered a really interesting window into what's on the mind of at least one major media CEO.

And that was mainly how Disney and other media companies will earn money from their content.

Iger's panelists were Wired editor Chris Anderson, YouTube co-founder Chad Hurley, Hulu CEO Jason Kilar, and Jonathan Miller, chief digital officer at News Corp.

I'm posting some audio (a little quiet, but listenable) below, along with a few rough notes from the discussion.

My notes:

Iger opened by mentioning that TV took thirteen years to reach 50 million people. It took Facebook nine months to get 100 million members. 400 million videos were streamed on Hulu last month. YouTube offers more than 100 million videos (there are 526,000 search results for "Disney.")

Chris Anderson noted that iTunes succeeds in getting people to pay for content by selling convenience. While you can get music for free, the iTunes version saves you time, and ensures you're getting something of good quality.

Iger said he was "mildly encouraged by that -- not giddy, but encouraged."

Chad Hurley said YouTube is introducing more ad formats to help the site's partners earn money, so they can continue to create high-quality content. Iger wanted to know if there will be ad messages online that can sell a product as well as a 30-second spot on television. Hurley didn't have a forceful answer, noting that online there are multiple formats, from text ads, graphical ads, and 5, 10, and 15-second video ads. What's important, though, is that these digital ads can be targeted and relevant, unlike typical broadcast ads.

Iger said that monetizing social networks remains a big question mark. He asked Jonathan Miller whether MySpace fell prey to a "next-best-thing" phenomenon (being supplanted by Facebook), or just didn't stay on top of its game. Miller conceded that MySpace forgot that there is a continual need for reinvention.

Picking up the theme of targeting, Miller suggested that advertisers will pay more for online ads as behavioral targeting increases (targeting ads based on what you do online and interests you express), though he admitted that online ads may never achieve the same prices that network television commands.

Miller touched on the idea that the costs of content creation may need to go down in this new world, if advertisers aren't paying the prices they once did. (That's a point we discuss pretty frequently here at CinemaTech.)

Jason Kilar said that Hulu has been finding that people remember brands in the ads on its site better than they do on TV, even when it's the very same ad placed in the very same program. People are simply more engaged online, he suggested. They've made a conscious choice to watch that piece of content. By virtue of placing fewer ads in a show on Hulu (relative to the same half-hour on television), Kilar said, they can charge more for them.

Kilar also said that when Hulu's team designed the site, they didn't want it to look like "Tokyo at night," with lots of features and buttons and teasers. They very deliberately focused visitors' attention on the shows and the ads.

Miller pointed out that on Hulu, 70 percent of the ad revenue goes to the content creators. Iger followed up by saying that 70 percent of much fewer ad dollars than television generates may not be enough money for media companies to continue to invest in high-quality content.

Talking about paid rentals and downloads, Hurley said that YouTube will begin experimenting with both with its content partners.

Diving into some of the topics covered in his book Free, Chris Anderson suggested that for digital products, free samples are becoming a replacement for advertising. "The products sell themselves," he said.

Jason Kilar said that the content that will do best in this new world is stuff that is unique, totally original, and can't be substituted with anything else. He offered NBC's "30 Rock" as an example.

Toward the end, Iger asked his panelists what new things they're following. Anderson said he was watching videogames, iPhone apps, and "more granular social networks" like Ning that bring together groups with narrow interests. Kilar said he was following changing consumer tastes using search.twitter.com, mostly related to Hulu. He said that Hulu makes changes to its site based on what people are saying on Twitter.

I left a bit before the panel was over to head to a meeting, but here's more coverage of the panel from the LA Times' "Company Town" blog and from Variety. (Seems like I didn't miss much...)

And here's a 30-minute audio segment from the panel (just click play below, or download the MP3 file.) Bob Iger is the first and last to speak in this clip.



Photo of Chad Hurley and Bob Iger, above, courtesy of Getty Images.

CEO Hired for NBC/News Corp. 'YouTube Killer' ... and More on NBC's Future Plans

I hate to keep using the term 'YouTube Killer' to describe this venture, since it really sets it up to fail... but you probably know the project I'm talking about: the joint venture between News Corp. and NBC to create a new video site, in partnership with AOL, Comcast, MSN, and CNET.

They've just hired a CEO: Jason Kilar, a veteran of Amazon.com and Disney.

The upside: he is young (36). The potential downside: the venture will be based in LA, and it won't launch until "later this year," according to the release. That's sorta vague. (Update: the internal goal for launch is September.) And Kilar's experience is mostly in e-commerce: selling actual physical goods like DVDs and CDs. Clearly, though, he must know how to manage software developers after almost a decade at Amazon.

We'll see how this goes. I'm sure it will be, uh, fun to report to a board of directors that includes Peter Chernin of News Corp. and Jeff Zucker, CEO of NBC Universal.

More from PaidContent. Om Malik reported yesterday that the joint venture is trying to raise $100 million, and not having much luck so far.

From the release:

"As a team, we have a unique opportunity to create great customer experience through the combination of innovative technology and high quality content," commented Mr. Kilar. "In the process, I believe we can play a significant role influencing how consumers find, discover, and participate in premium content over the web. This is a big, inherently fun mission with which I'm proud and very excited to be associated."

Mr. Kilar began his career at the Walt Disney Company, where he spent two years with Disney Development Corporation (1993-95).

He received his M.B.A. from the Harvard Business School in 1997...

Update: Coincidentally, just after I posted this, I had a chance to sit down for a quick coffee with a PR exec from NBC Universal. She mentioned that NBC is getting ready to open a "product lab" out here in Silicon Valley, with the goal of developing relationships with interesting tech companies. It'll be staffed by just one person to start with. NBC also may take a minority stake in some companies through its Peacock Equity Fund; one early investment was the ad serving network Adify.

She noted that the NBC/News Corp. joint venture site, which is yet to be named, will eventually sell shows (a la iTunes), but probably not at the launch. Right now, iTunes is the only place where NBC sells its content.

Another interesting tidbit from our conversation: while NBC is the fourth-ranked network right now according to Nielsen, it occupies half of the spots on the iTunes list of top 100 TV shows. ('The Office,' and 'Heroes' are well represented.)