How can media firms keep pace?

HRTS panel examines ways industry can adapt to change

What started as a panel discussion about how media companies make money off the Internet evolved into a discussion of how entertainment companies -- even such recent entrants as Google, Hulu and YouTube -- remain relevant as the pace of change accelerates.

Tuesday's panel on the future of new media in the digital age was presented by the Hollywood Radio & Television Society. Moderator and Disney president Robert Iger framed the first part of the debate by questioning how to get enough money out of new media to keep paying the costs of producing and distributing television shows, movies, games and other content if consumers think they are going to always get everything for free online.

"Will we ever be able to monetize our content on new platforms as we did on traditional platforms?" he asked his four panelists, all of whom were from the cyber side of the equation.

Chris Anderson, editor in chief of Wired magazine, said the question implies that everything will always be free, but that isn't the case. "Free and pay are going to co-exist and compete," he said.

Anderson used the example of music. There is lots of it available free on the Web today, but many people still pay to download from iTunes and other sources. He said that is because iTunes is not just selling music, "It's selling convenience."

Iger asked Chad Hurley, CEO and co-founder of YouTube, how Google was going to get back the money it paid to buy his company. He said that it is adding new formats beyond just showing videos to find the answer. Hurley said YouTube also has added more new applications and formats -- including transactional sales -- in the first half of 2009 than it did in all of 2008 and that it fine-tunes its model daily, sometimes hourly.

One big goal has been to find ways to cut in those who provide them fresh content to keep the flow of new programs coming. "You need to make money for those partners," he said, "for the partners to survive at the end of the day."

Jonathan Miller, who six months ago joined News Corp. as chief digital officer and CEO of its Digital Media Group, cited the need to keep reinventing the business model without losing sight of who you are. He said it isn't enough to just react to change; rather, companies constantly have to leap forward to "stay ahead of the curve."

Iger asked Hulu CEO Jason Kilar what is going to take the place of the 30-second commercial, which long has been a staple of broadcast TV. Kilar said there will be both shorter and longer ads and, more important, a different emphasis on advertising.

"There's already something better than the 30-second ad," he said, citing research that fewer commercials are one answer. Kilar said Hulu has found that when it shows fewer commercials, viewers' recall is twice as great. That is because they have elected to watch that show and can't switch out of the commercial before seeing the program.

Iger asked Miller about problems at MySpace, which he suggested is suffering from "the next-best-thing phenomena" -- when a fad cools and is bypassed by something new.

Miller said MySpace forgot that the rule is companies "have to keep reinventing."

He said video game makers have shown how it is possible to evolve from a world of physical consoles to an online environment. It has been done by allowing those who design the games to make constant changes without waiting for permission from "what would be considered adult supervision."

Anderson also cited games for making the transition and said it was another example of a trend toward more "granular communities," meaning that there will be more specialized communities to serve ever more narrowly defined groupings.

Miller said the most important current trend is the "rise of the quality experience ... which will differentiate what we will pay for and not pay for."

That's great for traditional media companies that put an emphasis on providing the very best experience, he said, "because quality content will win out in the end."

Also Tuesday, HRTS said it has elected four new members to its board of directors and earlier added two new members by executive appointment.

New to the board are Christina Norman, CEO of OWN: The Oprah Winfrey Network; Jeff Wachtel, president of original programming at USA Network and co-head of content for Universal Cable Prods; Jeffrey Bader, executive vp planning, scheduling and distribution at ABC Entertainment Group; and Gary Marenzi, president of worldwide television at MGM Studios.

Board additions by executive appointment are Greg Lipstone, head of international TV and media at ICM, and Tim Spengler, president of Initiative USA.

The HRTS board also announced the launch of its Charitable Giving Program, which will support nonprofit organizations, starting with My Friend's Place this year.