What’s in the Media’s Future?

By Jackson DeMos on September 28, 2009 2:46 PM

Two leading media architects visited the USC Annenberg for Communication Sept. 24 for a conversation with communication professor Jonathan Taplin about the long-term future of media in the digital age.

“The Art of the Long View: The Media Company of 2020 With Peter Chernin and Gordon Crawford” was the first in a series of discussions on the future of media. Taplin’s discussion with Chernin, former News Corp. president, and Crawford, managing director of Capital Group, attracted students, faculty and a live Internet audience for a discussion about the uncertainties of the ever-evolving American media industry and the business models that have and will define it.

“I’m really pleased to have our first two guests to really think about what the media company of the next 10, 15 years is going to look like,” Taplin said.

Chernin, Crawford and Taplin agreed that the constant improvements to the quality, speed and cost of digital media signal an obvious overhaul to the status quo.

“There’s enormous value creation going on,” Crawford said. “Google did not exist in January 1999 and next year it’s going to have $26 billion of advertising revenues go through their system. That’s more than ABC, NBC and CBS combined.”

The recording music business has been cut in half, he said, while Apple has thrived, in large part because of its popular iPod music devices.

“The money hasn’t gone away, it’s just been reallocated,” he said.

There will be vast amounts of news-related information, Chernin said, but The New York Times, CBS or ABC won’t be paying for 37 news bureaus around the world.

Crawford said the concept of a physical newspaper being delivered daily is outdated, but the need for journalism is not.

“We’re going to live in a world where the news is instantaneously updated, and it’s going to come to you on your Kindle or your Apple Tablet or your computer screen,” Crawford said. “Is it going to be the local news reporter, the sports reporter of the L.A. Times or is it going to be ‘ESPNLosAngeles.com’ that people get up in the morning and read?

“[Economic] models will evolve because people today are consuming more news than they ever consumed, they’re listening to more music than they ever listened to and they’re watching more video than they did,” Crawford said. “But the business models are going to change.”

Chernin said it won’t happen overnight.

“I actually think it is the most exciting time to enter the media business,” Chernin said. “And I think there will be more jobs than there have ever been. I think there will be more opportunities; I think there will be more challenges. I think it will be much harder than when I did it. I think it’s the most exciting time in the world to be 23 years old. I think it’s a world of limitless opportunities, of incredible intellectual challenges and a great many more jobs than ever existed. There’s so much more content being created and produced.

“There’s an entire world of new opportunities that are going to be created outside of these traditional media businesses. And I would suggest that this should be a time of incredible optimism.”

Crawford said journalism students should not get dour outlooks on the current media business model confused with their future jobs as journalists.

“What you do as a journalist is one of the most important professions that we have,” Crawford said. “You cannot have a functioning democracy, you cannot have a functioning democracy at all in a city like Los Angeles, which is one of the most multicultural places in the world, without the spotlight of great journalism. It’s critical - if the Los Angeles Times goes down or if the business model doesn’t work, we need somebody at the L.A. school board and at the [Department of Water and Power]. You need that in a democracy. And we need great journalism.”

Added Chernin: “Real journalists are critical to our society and models will evolve for your work to get out there, and it’s an extremely important function in our society.”

Crawford explained the differences between today and the time he entered the field.

“When I came into the business in ’72, the existing media business was an incredibly attractive business to invest in,” Crawford said. “From 1972 to 1995, it was pretty much like shooting fish in a barrel investing in the media business. There were really no threats to them.”

But he said times are different now.

“It’s critical when you look at the way people consume entertainment and information; it’s critical to understand technology,” Crawford said. “Technology has always been what’s driven these long cycles in the media-entertainment business, and it’s very disruptive. It creates enormous wealth for the new ways in which things are delivered, and it also creates huge value destruction. And this has been true. Every time one industry is hurt, another industry creates vast value.”

Chernin said in the last 10 or 15 years - because of new technology - media companies can no longer make huge profits by such tactics as charging people for an entire music album when they only want one song.

“The power has now moved to the consumer, and you cannot protect those nonconsumer-friendly business models any longer,” Chernin said.

Taplin said the changes in the tech world that have led to upheavals in corporate-driven media are not always well-received by these companies. Chernin concurred, saying big media companies protect their “nonconsumer-friendly business models” because of issues of self-preservation, but he added the world of such models may be forever changed.

“I don’t know whether it’s over - I think that may be slightly hyperbolic,” said Chernin, referring to the DVD industry. “Frankly, in some ways I think the bigger change than Netflix and certainly a bigger change than Red Box is going to be the transition from hard goods - from owning a physical copy of something - to electronic delivery of these things. I think the easiest way to look at that is, ‘When’s the last time anybody in this room bought a CD?’ I think it’s remarkable how quickly those things go.”

Crawford also said consumers would have more access to media content and that this evolution would be ongoing.

“It’s the inevitable, immutable march of technology,” Crawford said. “You’re going to have bandwidth that’s multiples faster than it is today, storage is going to cost nothing, and these issues are going to get resolved and people are going to have access to every movie ever made, whenever they want it, either on a pay-per-view or subscription basis and you’ll be able to get it on your television, on your Apple tablet, on your iPhone and it’s going to be a great world. And the industry will adjust to it, but that’s where we’re going.”

Taplin asked if the television world would look very different over the next decade, with niche networks, cable restrictions and pay walls facing off over revenue and audience priorities. Chernin agreed that it was “not going to happen overnight,” but that the matter should be studied closely.

“I think it is the single-biggest question facing the industry,” said Chernin, adding that huge companies such as News Corp., Time Warner, Disney and Viacom are essentially cable companies because that is where most of their profit comes.

“Are consumers going to go, ‘Wait a second. This $120 a month that I’m paying for 400 channels when I want to watch 10 or 15 of them?’ ” Chernin said. “Will that sustain?”

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