What's Next in the Convergence of Media, Entertainment and Technology?
Online/Offline/On Demand

With Special Guest and Keynote Speaker:
Ted Leonsis, C’77
Vice Chairman and President, America Online
Owner, Washington Capitals
Philanthropist

And Distinguished Panelists:
Andy Bishop, C’91
Business Development Manager, North American Mobile, Walt Disney Internet Group
Tyler Goldman
Senior Vice President, Business and Corporate Development, Movielink
Stacy Jolna
Senior Vice President and General Manager, TV Guide Television Group
Scott Richman
Vice President, AOL Programming (Entertainment)
John Rosenberg, MSB’92
co-founder and Board Member of g-NET Media

Event Presented by:

and Supported by:

On May 10th, GEMA LA members left their computer screens, hung up their cell phones, took their iPod ear buds out and listened to some of Hollywood’s brightest technology minds debate the future of converged media.

The panel was kicked off by special guest speaker, Ted Leonsis, C’77, Vice Chairman, America Online and President, AOL Audience Business, owner of NHL Washington Capitals and philanthropist. Leonsis jokes that he has been in the convergence business since his senior year English project to analyze Ernest Hemingway’s novels with an early computer.

Many technological advances and more lucrative projects later, Leonsis says that the technological revolution is at a historic tipping point.

“The generation that grew up with computers has come of age,” he explains. Leonsis recalls that when he sold his first online ad to McDonald’s in 1993, the corporate office he visited had no computers on the desks. By contrast, he says his son is a “networked kid,” multi-tasking on the phone, listening to his iPod, Instant Messaging and watching television all at once.

As these technology natives enter the market and workplace, they have a profoundly transformative effect, he says. For instance, Leonsis points out that ad spending in interactive media versus traditional media has flipped this year. Currently buyers are directing more ad dollars to interactive than print. What’s more, he added, television is next.

“In two years, Yahoo, Google and AOL will get more ad revenue than ABC, NBC and CBS combined,” he predicts.

As the converged media grows, it assumes certain responsibilities, Leonsis says. “It all comes down to trusting and loving.”

“When we were courting, my wife told me, “If I can’t trust you, I can’t love you.”

“We have a responsibility to be better than radio and TV,” Leonsis concludes. “After all, we have more to offer.”

Shake-ups ahead for Hollywood
Moderator David Bloom, a writer and consultant specializing in the technology and media arena then kicked off a lively panel discussion with some tough questions. Right away, the heat was on.

Like all change, convergence is going to create winners and losers, the panel agreed.

Sadly for aspiring directors throughout Los Angeles, the first losers will be the local video clerk.” It’s the nature of content,” explains John Rosenberg, MSB’ 92, Co-founder of g-Net Media, a production company that creates content from video game footage.” Anything that can live as a digital file will be downloaded instead of bought at a store. So retailers that carry the analog versions are going to have the biggest challenge.”

Tyler Goldman, Senior VP of Business and Corporate development at Movielink, lists another group of potential losers. “Distributors who don’t add a lot of value or who can be commoditized are also in danger... Someone like Netflix, for example, could face pressure from a competitor that offers the same service at a lower price.”

Bad news for Blockbuster and Netflix means good news for the studios themselves. The winners will be the people that take advantage of the windows that digital distribution opens, Goldman says. “Integration is good at creating new windows then taking advantage of the inelastic demand curves of the various windows. The internet allows people to sell to targeted groups at the price they are willing to pay. In music, for example, the Internet lets consumers buy individual tracks or music in different formats. The same will happen to media.”

Rosenberg goes further “The retail side will disappear,” he predicts “and you [the studio] will become the retailer. Imagine that if you had produced Star Wars and could release it on Video on Demand. On one night you could get ten million viewers at ten bucks a pop. That’s one hundred million in one night, with no delivery costs. That’s going to drive revenue through the roof.”

Yo Ho Ho, and a Downloadable File
But all is not rosy for these producers of this covetable, instantly-deliverable digital content. For every piece of entertainment they digitize, a whole host of unsavory characters are waiting to steal it. In the converged future, piracy will continue to sap profits.

“There has always been piracy, on street corners. The goal can’t be zero. There need to be legal challenges, but you can only win for so long,” Goldman laments.

Rosenberg agrees with this grim assessment. “It’s a value proposition of time and energy. If it’s cheaper and easier to steal, it’s going to happen. TV shows and movies are a little more cumbersome to download… this week. It’s not likely that you’re going to watch them on your phone. But when they’re on your television, that may be the inflection point.”

All is not lost, though. Some music biz pioneers offer examples of how savvy content providers can turn rampant file swapping into a marketing tool, says Scott Richman, GM and VP of Marketing and Promotions, AOL CityGuide.

“The smart ones use peer-to-peer to their advantage,” he points out. “Studies have been done that show that a majority of an act’s fans often don’t know when that act has a new album out,” he says. “Leaking songs to peer-to-peer groups is a way to get the word out.”

Richman points at Wilco as an example of an indie band that lost label marketing support but sold a respectable 500,000 copies of their latest album by leaking singles onto the net to create a buzz.

A Word from Our Sponsor
Naturally, with all these eyeballs and eardrums seeking out entertainment, advertisers can’t be far behind with innovative ways to ruin, er, subsidize that content.

“Advertisers are so hungry for places to go,” says Andrew Bishop, C’91, Business Development Manager, North American Mobile, Walt Disney Internet Group. “They are looking at all platforms --- the mobile space, celebrity endorsements, and product placements.”

For example, Bishop says that to support their Chronicles of Narnia film, Disney recently placed the world’s first “roadblock” ad campaign (a campaign that blankets many web sites simultaneously to make ads nearly unavoidable) that included V-casting to mobile phones. Bishop also adds that Disney’s Herbie: Fully Loaded video game prominently displays sponsor Nextel’s logo onscreen while players pilot the Love Bug around.

Rosenberg agrees that this type of crossover represents a great opportunity for advertisers who get involved in the early stages of content creation. “Content will have a number of lives on all the different platforms. If you can attach your product, it will be taken to many points where your consumer lives.”

What’s more, these new platforms allow advertisers to do more than just hype their product and hope the customer shows up later. “A thirty second spot just allows brand-building,” says Stacy Jolna, Senior VP and GM of TV Guide Television Group. But imagine that you are watching TV and see a 30 second ad. If you wanted to watch that ad, you could pause the television and select it. Suddenly you are in a walled garden. After the ad, you could watch more clips about that product, or perhaps some branded entertainment. Then you could be asked if you want a brochure. Now you’ve become a qualified lead in a marketing database,” Jolna says.

“You’ve gone from shotgun to laser beam marketing. How much do think that worth to an advertiser?” Jolna asks.

It’s Not a Blog World After All
Lastly, no discussion of technology and media would be complete without mentioning blogs.

User created blogosphere-generated content, the panel agrees, is not likely to make movie studios, record labels or publishers irrelevant anytime soon.

“The ideas that users can create content that will draw isn’t going to happen,” says Goldman. “There was one Blair Witch Project, but we all saw that the second one wasn’t so good.”

But the aggregation of like-minded individuals into communities represents a huge opportunity, Jolna says for --- you guessed it --- advertisers. He uses the 40,000 strong, demographically covetable myspace.com membership as an example “Once you’ve aggregated likeminded verticals, you can advertise to these individuals. The mindshare, and therefore value, is enormous.”



Steve Schneider (F'95) has worked as a writer and editor in New York City, London, the United Arab Emirates, South Africa and Tulsa, Oklahoma. He currently lives and writes in Los Angeles.