Print Media in Digital Age Discussed at Milken Global Conference

Former Wall Street Journal Publisher Gordon Crovitz  phrased the problem facing newspapers succinctly: "Print revenue has declined much faster than online can be built up," he told the audience at the Milken Global Conference. "We’re trading newspaper dollars for online nickels."

The newspaper business is a microcosm of the dilemma faced by all traditional media: How do you move to a new medium you know is your future, when the financial model isn’t worked out?

Philadelphia Inquirer Publisher Brian Tierney, for example, told how he traded a $700 two-day ad in the newspaper ad for a $300 online spread for a week — and explained that it was the right decision because the client and readers were better served.

So how will he stay in business?

First, "focus like a laser beam" on costs. He’s cut 40 or 50 journalists from the staff as well as a number of ill-defined positions, eliminating about $40 million in costs along the way. (I wonder, though, if that’s an example of curing the problem and killing the patient).

Second, know his market and push it aggressively online. "When you read about Philly, we want to dominate that market," he said.

By being that kind of local resource, he estimated, the Los Angeles Times has generated more than $100 million in ad revenue. It’s "not a pipe dream" to push the Inquirer’s online ad revenue from $25 million to $75 million.

See Also

• The Future of Print Media: How to Adapt to the Digital Age

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I read just now that liberal agitator MoveOn.org has attracted 3 million people to vote online for its "Obama in 30 Seconds" contest to pick which Obama advertisement gets picked for national TV.

And I suddenly realized that the long-predicted democratization of content distribution may finally be underway. As I see online contest after contest (See my posts this week on Filmaka.com and Massify.com and others to come on songwriting and comic book contests) bring in hundreds, thousands, millions of ordinary folks to vote on their favorite content,  submit themselves to the will of the masses and create hits, I’m thinking perhaps we have reached the cross-over point, where we’re finally at the cross-over point — where  advertising executives, record executives, studio chiefs, publishers are only one piece of the content food chain, not the sole arbiter of what content the public sees and hears.

The extraordinary success of American Idol — with its millions of fans who create a built-in audience for home-grown stars like Kelly Clarkson –is clearly the original source for this contest craze. But it’s now clear that the model can translate into virtually any medium some segment of the population cares passionately about.

We already know user-generated content on sites like YouTube can attract millions of viewers. Now we know users can also determine what Hollywood or Madison Avenue create.

This doesn’t mean the suits go out of business. It actually means they may have a much less expensive way of figuring out who’s a star, what content sells and creating an audience. And, in true Hollywood fashion, you can bet the studio suits will take credit for the idea once they’ve watched the smaller guys flounder their way to success.

See Also

• Horrors! Online Auditions!
• Filmaka: Vetting Filmmakers on the Web

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Filmaka promises to create A-list directors out of ordinary people who submit videos online. Massify.com is pulling the same stunt with actors, urging its community to vote on who should get the top 20 acting slots in a horror film.

In a contest ending today (Friday), aspiring actors uploaded auditions to the site that were then judged by their peers. Whether those votes actually count toward who gets cast is a question I can’t yet answer; as I write, the site is down to "tally votes" and I haven’t yet had a chance to interview the founders.

 Actress Deborah Geffner ("All That Jazz", "Monk", "ER", "Infestation", among many others) heard about the site when her agent told her she should audition for a horror movie called Ghosts in the Machine. The audition, which was filmed, went like any of the dozens of others she’s done. Then the casting director told her an online community would vote on whether her audition was worth considering — and she would have to upload the video herself.

"I thought that was the real horror movie," she said. "It took me four days to do it."

Check out her audition below.

See Also

• Vetting Filmmakers on the Web

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I’ve been writing the last few days about the Hobson’s choice faced by TV networks and other content providers: either cannibalize the revenue from your TV programs  by airing them with less profitable ads on the Web; or keep them on TV — and watch users copy them and post them for free on the Web.

At the 11th Annual Milken Institute Global Conference on Monday, I’ll have a chance to flesh out the paradox on a panel with Eric Feng, Senior Vice President of Audience and Chief Technical Officer, Hulu.com; Albhy Galuten, Vice President, Digital Media Technology Strategy, Sony Corporation of America; Andres Jordan, Vice President, Innovation, T-Systems (Deutsche Telekom North America); and Gene Meieran, Senior Fellow, Technology and Manufacturing Group, Intel.

Hulu.com – NBC Universal and Fox’s joint venture that offers full-length episodes from more than 50 broadcast networks and more than 250 TV series, from The Simpsons to Miami Vice – has clearly decided a good offense is better than a play-scared defense (a la record labels). 

Sony’s Albhy Galuten –probably the only Grammy-winning songwriter who’s equally at home in high technology – knows better than most the trade-offs content creators must consider to survive in the digital age.

You can sum it up as surfing: put out enough free content to make sure you have a stake in whatever business model comes down the pike; but not so much that you destroy your core business.

A suitable analogy for a Southern California conference.

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Apparently, pulling new episodes of "Gossip Girl" from the Web didn’t hurt CW’s re-launch of the show on Monday, although whether the show benefits in the long-term remains to be seen. CW said the freshman show’s Nielsen ratings were 25% ahead of its season average and its third-best showing ever on Monday night. CW decided to pull new episodes of the show from the Web in an effort to bolster its TV audience, where its real advertising dollars lie. The experiment is being closely watched by other networks such as ABC, NBC and Fox, which have largely made their hit TV shows available for free on the Internet.

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Nokia and Sony BMG’s announcement today that buyers of select Nokia phones will get complete access to the Sony BMG’s entire music catalog is a model that’s likely to be repeated over and over in the years ahead.

Financial details weren’t disclosed. But presumably Nokia — which signed a similar deal a similar deal with Universal Music Group earlier this year — is paying a hefty licensing fee for this interesting marketing vehicle: $20 (my number) for every phone sold? Not a bad idea.

Traditionally, music executives have decried the idea of allowing their songs to be "loss leaders" for other products, arguing that music is "devalued" if customers don’t pay for it. They’ve now suffered enough pain that any payment mechanism has to look attractive.

This one still has holes: users can’t burn the songs to CDs or iTunes, the two most popular ways of listening to digital music. But they do get to keep the music they download after 12 months.

If you think about it, there aren’t too many consumers products that wouldn’t work for free music downloads, so long as consumer products companies are willing to pay the freight — and the labels take the plunge.

See Also

• Sony BMG joins Universal in offering catalog on Nokia phones

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Filmaka, the filmmaking site run by former Fox TV chief Sandy Grushow and "Bend it Like Beckham" producer Deepak Nayar, plans to announce its first contest winner on Monday, according to a spokeswoman. The winner will get financial backing to make a film and representation by the William Morris Agency. More in earlier blog .

See Also

• Filmaka: Vetting Hollywood Content on the Internet

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The Motion Picture Association of America, tireless in its attempts to educate  youngsters about the evils of stealing movies, has adopted a unique new approach: DVD-sniffing dogs.

Lucky and Flo, "the world’s first-ever" DVD-sensitive canines, paid what the MPAA termed a "fun and exciting" visit to Clover Avenue Elementary School in Los Angeles.

If children are entertained by the notion that Hollywood dogs will rip their faces off if they download films, we’ve got a problem in society more serious than piracy.

See Also

• Dogs Track Down DVDs

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With TV pilots costing millions of dollars, why not test the product and your directors first on the Internet?

That’s what Filmaka.com, launched today by former Fox TV chief Sandy Grushow and "Bend it Like Beckham" producer Deepak Nayar, aims to do. And along the way, it aims to build an audience for the website by hosting online competitions for directors and writers for TV pilots and online series.

The site plans to announce its first contest winner on Monday, according to a spokeswoman. The winner will get financial backing to make a film and representation by the William Morris Agency.

While in beta, Filmaka has amassed a community of more than 3,600 aspiring filmmakers from 95 countries and started production on about 40 Web series, according to the Los Angeles Times.

The beauty of the approach is that even if Filmaka doesn’t find any talent (and there aren’t many examples yet of online recruiting launching TV hits), it still captures a big Web audience of consumer hopefuls. FX may be thinking the same thing with its "You have an idea for a TV comedy; we have a TV network" on Filmaka.

Filmaka’s model closely follows the one developed by Veoh.com, the video-hosting site backed Michael Eisner, Goldman Sachs and other A-list Hollywood and media investors. United Talent Agency signed on to that deal.

An interesting potential payoff for Veoh and Filmaka: move web content to  TV. D-Link today announced a new device that allows Veoh users to stream their favorite Web shows through their TV sets.

See Also

• Website aims to shine light on moviemakers
• D-Link partners with Veoh Networks to bring Internet video to the TV

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You can bet every network in town will be carefully watching Gossip Girl’s ratings when the show resumes on Monday.

That’s because fifth-ranked CW is doing the unthinkable: pulling the web-spawned show’s free Internet stream for this season’s remaining shows in an attempt to boost the number of viewers.

Behind CW’s move is simple math. The U.S. networks reeled in $42.3 billion in TV ad revenue last year. By contrast, total Internet ad revenue – that means networks, newspapers, dedicated websites and everybody else – was about $21 billion in 2007. Up 25%, yes, but still apparently not enough to counter-balance the cannibalization of TV shows on the web.

Translation: if CW adds a million viewers for Gossip Girl on TV, it will make a lot more money than if it adds a million viewers on the Internet.

The move by CW, a joint venture of Warner Bros. and CBS Corp., comes as the other networks fall over each other to make their fare available for free online. Hulu.com – NBC Universal and Fox’s joint venture that opened to the public last month — brags of offering full-length episodes from more than 50 broadcast networks and more than 250 TV series, from The Simpsons to Miami Vice. Most major TV networks stream at least some prime-time content for free on the Internet.

Whether CW’s move is more than a finger in the dike — or even works at all — is anybody’s guess. But everyone in Hollywood undoubtedly is applauding CW’s noble experiment in reverse logic, and thanking their lucky stars they’re not the ones taking the bullet.

See Also

• CW to stop free streaming of ‘Gossip Girl’
• Online ad revenue over $21B in 2007
• TV ad revenue to grow despite economic woes-report

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