Consumers in control

Q. What has online video meant for your business?

A. It's great for our business. We're content providers. We have been forever. It could be a feature film. It could be TV shows. Could be corporate communications or commercials. It's all content for the pipeline. What's interesting is the pipeline is changing radically.

First of all, control is changing. In the old media world that I grew up in, there were three major networks, one or two daily newspapers, a handful of radio stations. And they pretty much determined what content the great unwashed would get.

I've seen this kind of channel proliferation happen already. When I was at WLS in Chicago in the early '80s, it was the most profitable single TV station in the world. They had 95 percent of the market and didn't even care about the other 5 percent. They would kill for that 5 percent now. ... All of a sudden the ground had shifted under their feet.

Now we're seeing the second wave of that. Where it's another wave of channel proliferation and fragmentation. The interesting thing now is that the control has shifted to the consumer. You're at home, you can watch Letterman or you can DVR him and zap through the commercials or you can get up in the morning and watch him on YouTube without any commercials. And if you're not interested you can jump off of it right away and go to something else.

So all of a sudden now, with iTunes and TiVo technology, the consumer has the control. ... It's also had a profound affect on attention span. People multitask more when they're in a media environment. If they are bored, they can go to something else immediately. That's not the way it was a generation ago. That is having some profound effects on businesses and brands and companies who heretofore have used the old media model.

The good news is that it could be an era of brand liberation because now the brands can be more targeted. That's why I think Web video is going to be a big opportunity. In the very near future, corporate Web sites are going to become like mini cable channels. Instead of spending $100,000 on a 30-second spot on Wednesday night primetime, where they're going to hit 80 percent of the people who aren't even interested in buying a car, now they'll be talking to people who are very interested.

Q. How has that shift forced you to adjust your business?

A. With the advent of cable, there were a lot of lower-priced, lower-production value alternatives. And I think for a while it's going to drive down production costs because the technology is more accessible. So with YouTube, everyone is a producer now. But pretty soon that language, just like MTV music videos where there was junk flying through the air, gets old fast. So the constants will (survive). And that will be content, writing, and good acting.

What I like about what's happened with the rise of Web video, and this kind of egalitarian production content world we live in, is that for decades the networks and feature film industry and others and advertising, hid bad concepts behind big budgets. And so now you see this flurry of viral videos that people haven't spent a lot of money on, but are very clever. So it's elevated writing and concepting and execution. We've been doing this for a long time and I know for a fact that some of our best concepts were when we didn't have a big budget because you really are forced to be clever and smart.

Very often, an agency would get a big-time, million-dollar director and fly to Corsica and shoot for three weeks. They would spend more on the craft services table than you spend on a commercial now. Then they come back with something that sometimes was good, but often it was not.

Q. What will the effect of lower production values have on your business?

A. We're fine with it. I think it forces us to be more smart and cost effective. But just as the cost is being driven down, we're also being given more technological tools with online clip resources and still resources. With more sophisticated graphics, we can still provide good content and maybe not have to shoot for a week. Although there are still people that want to do that and people who need to do that. That part of our business won't go away. ... What I like is that it has elevated the concept proposition and the writing proposition. Even though every teenager in America can now input video and cut it on his or her laptop, you can also give a chimpanzee a laptop but it's not going to write a novel. There's still craft and proficiency and experience that come into play.

Q. What do you think will happen to old media?

A. American media culture is additive, not reductive. People thought that movies would kill radio. Radio is still around. They thought TV would kill movies. Movies are still around. They thought that VCRs would kill primetime. And primetime is still around. But everyone gets a smaller sliver of the pie. But interestingly enough, each sliver then becomes more valuable. One share point now is as valuable as 10 share points were a generation ago. ... I think American industry is very good at figuring out how to make money. The issue will be: Can old media adapt quickly enough to keep a healthy share of their profit in the long term?

Q. Do you think they can?

A. I think some will and some won't. I don't think it's about which industry will. I think it's about executive leadership. Newspapers, for instance, have really struggled. They're losing one share point per year for 20 years. Because, I think, historically newspapers have been all about protecting the franchise. So they have been a little innovation averse. It's been more about protecting your turf and being the august media barons that they would be. To a certain extent, the networks have been that way. The networks are a little more comfortable with the technology. If you look at the way they've marketed The Office and (American) Idol, they've made (the Web) part of the programming proposition. I think the newspapers haven't figured it out as much. But newspapers and magazines do have one advantage that television and the internet doesn't have, when someone is consuming that content, they actually have a greater share of mind than someone who is watching TV. You know people who watch TV and are online and downloading music. When you're in that digital realm, you can multitask a lot more. But a newspaper delivered to your door, the nature of the content experience kind of demands a greater focus from the user. ... I think you're going to get more smart advertising, more branded programming and more pin prick advertising.

Q. Do you think that will change the content of advertising?

A. It's a different content proposition, absolutely. You're not going to get that on broadcast though. You're going to get that on the Web site. You're already seeing it. Advertising isn't going to go away. Advertising agencies aren't going to go away. Thirty-second commercials aren't going to go away. But more and more, I think those spots are going to drive people to Web sites. And they can have a longer, deeper conversation with a more qualified or interested consumer.

Q. So what does all this mean for advertisers?

A. You don't have to be a major national brand now to talk to your consumers in an effective way. Look at the realty companies, they're already doing it. They have virtual tours now and they're at the forefront. ... The flood gates have opened for every kind of brand, including local and regional brands, to talk to their consumers directly. That's the story. The old model is going away and the new model is arriving and it's coming faster than people thought.