Industry Leaders View the Web as Moneymaker

Disney’s Iger, Hulu’s Kilar, YouTube’s Hurley muse at digital-media panel.

Last Updated: September 9, 2009 @ 9:55 AM

Will an Internet business model ever emerge that’s as good as traditional old TV?

 

That’s the question asked by Disney chief Bob Iger, moderating a panel of top digital-media executives Tuesday in Century City.
 
Answers from the all-star luncheon panel, convened by the Hollywood Radio and TV Society, differed broadly — depending on who was asked.
 
Hulu CEO Jason Kilar, citing the success of 15- and 30-second commercials delivered before Hulu’s programming, thinks "yes." Sure, content providers may not be able to show as many spots in front of videos as they do on TV, but they’ll make up for it in the form of better viewer engagement, he said — which will allow them to charge advertisers higher rates.
 
“The question is, do viewers remember the brand — and when we measure the same ad on the same show on Hulu vs. (traditional television), we’re seeing results that are (two times more effective),” he told the crowd. “You make a conscious choice to watch on Hulu, and as a result, you’re more engaged from the start. We feel if we go Old School, and have a traditional “Alfred Hitchcock Presents”-type (business model), we can charge twice as much for that.”
 
Asked the same question, YouTube co-founder and CEO Chad Hurley said the ability for more precise viewer targeting by advertisers also will allow web content providers to charge higher rates.
 
“Look at Google — what drives their (advertising) business is relevance,” said Hurley, whose company was purchased by Google several years ago for $1.7 billion.
 
Naturally, some predictions were less optimistic.
 
News Corp. chief digital officer Jonathan Miller said studios and networks might have to curtail their ambition in an emerging media market in which ad rates are just not as good as they used to be. “It may be that the cost structures of creating content have to come down,” he said.
 
Wired editor-in-chief Chris Anderson went Econ 101 to deliver his dour message: As long as there’s no marginal cost to delivering additional copies of digital media, consumers will continue to get it for free. “In a competitive market, the price always falls to the marginal cost,” he explained.
 
Anderson, however, proposed that as content becomes free, more service-oriented businesses that make it easier to obtain and watch entertainment will emerge.
 
“The best example is iTunes,” he said. “Apple is not really selling music — they’re selling convenience. I think there will be a transfer from selling content to selling services that help people get content.”
 
Anderson also pondered a media environment in which some consumers pay for the same content others obtain freely. As an example, he cited the Wall Street Journal, which restricts its content to subscribers online but can be freely perused via Google search.
 
True, he said, those who don’t want the hassle of having to search for a Journal headline, then cut and paste it into a search engine to obtain the free version, will pay a premium. But “the market will be segmented by price-sensitivity and time-sensitivity. You’ll still need to use free distribution to get reach.”
 
Perhaps most depressing was the informal poll Iger conducted with the 500 TV industry personnel and hangers-on who attended the Hyatt Regency Century Plaza event.
 
“Everybody here reads Page Six of the New York Post; who would pay for it? Raise your hand,” Iger queried.
 
No more than five hands from the large group, which featured members of the TV trade press, were raised.
 
Hurley was quick to frame this loose study into its proper context: “I wouldn’t worry about it,” he said. “I don’t think this group pays for anything.”