How Digital Technologies Are Transforming the Media Industry
Hello. Everyone, and welcome to the Columbia Business School executive, education executive. Webinar, series today. We're going to be discussing media in the 21st digital, century, with Professor miklós sorry, a few. Housekeeping notes before we begin. There. Will be a recording. Of, the. Webinar that, will be available after the session so we'll send out a link to. Everyone so you can see and review the content, for yourself if. You have any questions, please use the Q&A box in the zoom meeting window at the bottom and we. Will be taking, questions after. The content. Portion of the webinar and also. We'd love, it if you tweet about the webinar, using, the hashtag, CBS, exec, ed. Alright, today we're very excited to welcome professor Michael, oh sorry who is the Carson, family professor of Business and the faculty. Director for the media program at Columbia Business School his. Research focuses on media, and information, marketing, professors, are very great to have you with us thank. You for, this introduction. Good, day everybody I'm, very excited to be here and and, talk to you about, the. Future media landscape, landscape. We. Don't have that much time but hopefully, I can get across a couple, of interesting interesting. Thoughts feel. Free to ask, questions I, will try to, to. Leave a little bit of time for questions, towards, the end now. Just to warm up. The. Crowds I. Would. Want to ask you what does www. Stand, for and I am pretty sure that all of you will say it, means the world wide web and you, couldn't, have, been more wrong in that because, actually. Www. Was the first logo of Radio, Corporation of America about. A hundred, years ago not quite but almost a. Hundred years ago and, at the time it meant worldwide, Wireless, and, one. Of the key messages of, this next, 20 minutes that I would like to get across is that like. Every other industry media, is. Also, changing, in terms of. Discontinuous. Big revolutions, followed, by continuous, small, adjustments. And the, last big revolution. I mean. Arguably we are in a big revolution today with. The internet and the. Digital transformation of, media that has really. Shaken. Many. Of the industries think about the newspaper industry for example but. The last such big revolution, was, about a hundred years ago when the world transitioned, from print, media to the. Broadcasting. Media and you. Know if you think about it there's, probably not a single person. On the planet, today. That, can imagine, the world without broadcasting. Broadcasting. And in particular, it's, it's better known for mass television, is. The dominant, media, today. Or has been in the last I'd, say like.
Almost Hundred years maybe not before, the Second World War when it was radio but, even radio is a broadcasting. Technology. So, about a hundred years ago does a huge transition, from, print to broadcasting. And my, argument is that we. Can learn a lot from this, transition, to. Understand, what is the likely outcome. Of today's transition, from analog to digital media, and what, is going to be the. Internet. The. Internet medium. Like, in, the future so. But of course one, of the one of the main things is that, this. Revolution, one, of the main messages is that this revolution is pretty much over revolutions, of industries. You. Know like last, about two two-and-a-half decades, if. You think about the internet it, has started the beginning of the 90s, and by. Now we are pretty much the dust is settling down so with, all the innovation, that has happened in the last two decades we kind of like gotten used to the fact that there is always some new things coming out and my. Argument is that we. Probably will have to change. Your minds and and get used to a world where there's, not that much change happening anymore or even. If there is a lot of change happening it's not going to affect the mainstream, so. It is really a good, time to ask ourselves what. Is the, result, of this revolution, and and what is going to be media, looking, like in the next say, 50 years. When. I look. At this logo and, I said that you know we can go back to history and look at. And. Try to find some analogies, I'm. Always thinking about, the, US and and, the key reason why I am thinking about the US is that the, broadcasting, revolution, the, only place in the world whether. Where that Industrial, Revolution was. Decentralized. And was, driven by markets, rather than governments, was the United States in all other countries the, beginning of the last century a, broadcasting. Was brought to the general public by the government. Now, obviously the internet there. Is a global new medium is, very much responding, to market forces and governments, have a real hard time actually, regulating. It of course circulation is a big issue but there. Needs to because it's a global thing you, know governments have a hard harder, time to sort, of, coordinate. That regulation, around it so there is really a lot of lessons now, I don't want to go through the the. Analogies. Between the, internet revolution and, the broadcasting, revolution, there are many of them okay. And I've. Listed them here we. Could talk for about half an hour on each of these topics the, the fact that there. Was a paradigm shift in consumption, that it took quite a long time for people to understand, that, the. The, broadcasting, medium is not like the print medium, that that, you can reach, a. Really, huge. Number of people. At. The same instance, and. You know politics, had to adapt, to that and similarly you know like politics, and our. Social life or business life even is, kind of adapting, to the fact that now we don't have a broadcasting, environment, but we have an interactive, environment. And. Businesses, have to completely rethink how, they are organized, how they interface with consumers. And, how. They design, their business processes to be able to take, advantage of this interactivity, and, it, takes quite a long time if you think about how. Advertising, looked like digital. Advertising looked, like even ten years ago and how does it look now, you. Can sort, of like I appreciate, the difference of how long it took for advertisers, to understand, what interactivity. Means really in the space of odd in the area. Of advertisement, another. Important. Analogy. Is the role, of outsiders. And, both. In in, the case of the last century and and in today's internet, revolution the. The drivers, of this revolution were out complete, outside there's not the large companies, not business, people not nba's, but rather and sort, of entrepreneurs, really, young people in dorm rooms coming. From weird. Places and weird backgrounds, and they, have created sort, of like multi billion-dollar companies. That. Maybe by, now are taken over by professionals. And professional, managers, another. Very, important. Analogy. Is that content. Is not King and what do I mean by that is that in. One. Of the striking things in media is that people. Are willing to contribute content for free in. Unlimited amounts. And. That has been the case in the in the broadcasting. Revolution, where people would just, put up, music. Their, own. Lectures. And, all kinds of contents, on, radio, similarly. As people do put up tremendous. Amount of content on social media, or on, the web the. Key thing, in terms, of business innovation which. Is of course an interesting. Question as to you, know like how do you take advantage of this interactive medium the key question is is how.
Do You build a business that allows consumers, to access the good content, so. Instead business innovation, in media, has always been around finding. A way. To. Make money and in. The process, create quality content, that that. Consumers. Really want. In. Most cases we have seen over investment, there was a financial bubble in, the 1920s. Obviously. In 1929, was the biggest stock market correction I think media has contributed quite a bit to that and and. Also we had several. Internet. Bubbles popping at the end of the 90s, and you. Know many people say that maybe there is a bit of an overheating. Going on on the technology, front. Today. A huge. Issue was peasant Wars and corporate, rivalry, you know large corporations. Trying to grab sort. Of the benefits, of the of the, new environment and and, sort of getting at each other regulatory. Challenges, we have talked about these in the past there were many there, are a lot today think, about net neutrality privacy. And all, these other issues and, then, finally, as I said you know at the end of about twenty years two decades. There. Is generally, the, dust. Settles down and. We. Are finding. Ourselves for, the next couple of decades with, the dominant, interface. Both. Physical interface and applications. And with, a bunch of large companies, that are, you. Know chances, are we'll be around, for the next couple of decades maybe, even hundred years this, has been the case in the case of broadcasting, if you think about NBC. ABC. CBS. That. Were all created in the 1930s. You, know at the beginning of radio, they all transitioned, into television and they. Are still very very large companies, today you. Know having major roles in the, in. Reaching. Consumers and providing content to consumers but similarly you. Know in the last two decades enormous. Companies have emerged think about Facebook Google. Apple. All. Of these could be argued, are media companies in many ways they are living out of selling. Content, getting. Consumers. Having access to content for a fee or for advertising, revenues and my, argument is that these companies will, stay here for a really really long time now. Again. So. If we take this revolution, as, given, and you, know this slide is trying to show that that. Online consumption. In many ways in, terms of time spans or in terms of advertising revenues, is, taking, over any other media, sector, then. The question is what is the world gonna look like in the next 20, 30 maybe, even 50, years okay. And. A. Little. Bit of a hint you. Know, one, of the things I argue for is that there's going to be a dominant, physical interface, I will, breaking the news that it is going to be something like the, smartphone.
People. Are talking about a lot, of innovations. Going on in this space from variables, to, VR. And and AR, and and and whatnot I, would. Like to argue that, the. Smartphone. Is an incredibly. Successful product. Just. As television was, an incredibly, successful product, that hasn't changed really over 50 years it remained the same core product, in terms of people looking at screen, sure. There was a lot of innovation, from black and white to color from, your. Switching, buttons, and having a remote control, and, those, kind of things but the the basic, interface, ended, up being a large screen in front of which you are passively, sitting and watching, content, well similarly. I really believe that the. Smartphone, is. A. Product. That is. Really the sweet spot, that kind. Of integrates, the possibilities. That this technology allows, you to do namely, interactivity. And your, biology your, capacity. To sort. Of like consume this this content, it, turns out that, the smartphone is great because, it. Is an extension of your body you can even. Actually play with it it's always on you you, were kind of getting stressed, if it's not in your. Pocket or if you lost it but. At the same time you can put it away, and. So, this is the ideal compromise, and and if you think about all the innovation, that has been around finding, other devices. To interact with the internet they, have all failed and they have failed for good reason because there may not be on the sweet spot of this compromise so. So I really believe that the. The. Smartphone is going to be a band for a very very long time. There. Are going to be a bunch, of infrastructure. Firms that will be doing great that. Are producing, these interfaces, that are providing, the back ground. Infrastructure. For us to access this enormous amount of content that the internet allows. You to to have comcast is one of them. But. But there is a bunch of other cable providers, in the United, and, everywhere else so those people own the pipes for the data traffic. And then, a bunch of content platforms, Google and Facebook in particular that are probably. The largest media, companies, in the history of mankind there. One, unique, thing about them is that they are not national companies are there international companies, they are dominating, the. Entire planet rather than a large, country. Such. As some. Of the the, old media companies, now. Of course you will come at me and you will say well will, innovation, stop and and, this, is not what I'm saying there is going to be a lot of innovation there is going to be innovation, of NVR variables, and those kind of things just as, there was innovation in the last hundred years in the context of broadcasting think about video game think about cable networks, and so forth so, innovation, is not gonna stock but.
The, Mainstream, media. Consumption. The, vast majority of off of content. Is, going to be consumed. In. A very established, and stable, way in, my mind and around, that there is going to be niche technologies. Many, many niche technologies, that will take advantage of. Interactivity. For, very small groups of consumers who are very devoted to, this consumption, patterns. You. Will also tell, me well surely. Enough this revolution, even if it's a revolution, might be somewhat different from. What. Was the case in the in you know hundred years ago with broadcasting, and again I think you would be right and. Sure. Enough this, time it is different I think the major difference, is that, today's. Media. Environment, is extremely international. You know if you look at media consumption. Whether, it's content, or habits or whatnot it's. A very local business you know music for example there, are a bunch of, international. Hits but the vast majority of music consumption, is very local, just. Because of the language part well. This might, be changing, and in fact it is changing, if you think about these large media platforms, they're typically, international, companies large very large international organizations. Think about Facebook with, two billion, subscribers. You. Know pretty, much dominating, every planet. And then of course you, might also vary about the fact that this new medium, is going to be changing, providing. New. Challenges. For us like you know there has been a lot of things about, privacy. The famous. Issue. That has come out in the last u.s. elections, now. Here, I think, that you. Know people are overreacting a little bit if you look at the history of media broadcasting, medium in particular, you, find that many of the same issues. You. Know popped up when. Broadcasting. Came about for. Example there was television debates about US, presidents, on television. And for. The first time and and the public was completely outraged, that now you know your your. Capacity. To seduce, the audience, as an actor are. Going to be more important, than the the content, that a politician is is trying to convey to the public which is much. More thorough in a written, format there. Was all kinds of controversies, people were really. Forecasting. That the new media is going to be destroying, or political, environment, and or privacy. Or a way of living I think. All of these are a little bit overblown and and. And I think that the industry will take care of them there's great incentives, to do so so. This is really the. The. Gist of what, I wanted. To talk about. Basically. Convey this idea that, we, should kind of get used to a world that is a little bit more stable than what it was in the last. Last. 20 years and this is kind of good news because it means that we can adapt our businesses, to this new. World. If we analyze its. Its. Details, I had. A bunch of slides here to illustrate these points and I don't necessarily want to go through them, one. By one this is showing. How the smartphone, has been the single most successful. Consumer. Good in in, the history of mankind. This. Is another. Slide, that shows, you. Know the most valuable media companies, in terms of revenues, and, this, is 2014. If, you look at. 2016. So just two years later you can see, how, it, has changed now it's changed forever the numbers have changed quite. Significantly about. 30 percent in two years for. Every company but, in particular, for Comcast that is, sort, of like, controlling. In many ways the, amount. Of traffic most of these revenues coming from charging, for the pipes that, people are using. Who. Captures, the digital ad revenues, that are sort, of taking over all ad revenues, it's, basically two large companies, Facebook and Google around the world and actually it's this is how it looked in 2015.
This Is how it looks today, and. Maybe. You cannot read it but the idea is that they are in there capturing an increasing. Proportion. Of the total revenue so it's not that competitors, are coming in and they're you. Know taking them out it's rather the opposite, is that they are taking an increasing. Share of those revenues and, of. Course a couple, of other things happening in the background so these are some of the Google Data Centers. They. Are it's, it's, really important to appreciate, the, physical, infrastructure, that this company is building around, the world so each, one of these data centers, are quite, enormous and quite spectacular. And they, have about 50, around the world. This. Map shows you you know how many of these are are being built so they are essentially building a giant brain and again. You're like this is just to drive home the point that it's, very difficult to replicate this infrastructure. So. That is one of the reasons why some of these media companies will, be, so. Dominant for the next couple of years because they have tremendous scale economies, that. Are very difficult to copy for people, this. Is the this is the. The. List the number of subscribers, for. The different, social. Networks, you. Know X messaging. Services, and social networks around the world and it, you can see how Facebook is large but, actually, if you if you consider the, fact that Facebook actually, owns the second. The third largest. Social. Network, and also Instagram, then. You, really can truly appreciate how, concentrated this industry is how much bigger they are than anybody, else so when people are you, know saying that Facebook, is being left by teenagers, who, are more excited, about the new innovations. Which is I think snapchat. No. Way basically. Facebook, you know every teenager is still on Facebook and if, it's not Facebook they're on Instagram and. Snapchat. Has very little chance of taking over this large but by him all that that, dominates, so much of the advertising revenues, this. Is Facebook in 2013. This. Is how Facebook looks in 2016. Other than a couple of. Dictatorships. Where the government, is protecting a bunch of large industries, they basically dominate, dominate the world. So. Let me stop here for. Questions. Again. Innovation. Will not stop don't be worried about that but but. It is not necessarily, going to have such a huge impact on than on the mainstream. The. Major difference, compared, to the last time is that that, the. New media landscape is going to be much more international, and I think that creates a lot of challenges for firms, you. Know adapting to this new environment but also for governments, to regulate it and, don't. Be too worried about the alarming, news. Sort, of like forecasting. That that. The new media environment is, going to be dangerous for, people, I think that, the, industry will take care of itself. Together. Regardless, of course and let, me stop here and and. Allow. You to ask a couple of questions. All. Right just a quick reminder if, you have any questions please use the Q&A box at the bottom of the screen. All. Right so first off we have a question from motika, saying. Pace of change is much faster now than earlier, do you think this revolution, will last a hundred years or will it be short-lived, compared, to earlier times and some other revolution, will come faster. I. Don't, think it is faster actually, I don't. Think it is faster if you study the history of radio. It. Was an amazing. Revolution. It. Came incredibly. Fast and it. Was incredibly, violent to, the.
To. The times of of, the day. How. Could I in straight this to you actually, I have a bunch of slides that will that, will speak, to this so. Let. Me jump ahead a little bit. So. Here is here. Is a. Slide. That that kind of speaks to this so, at. The time in 1922. If you were reading about the the. Radio revolution because because broadcasting, started with radio just. To think about the internet didn't start with Facebook and Google it started with Yahoo and, it started with Netscape. And all these kind of like proto Internet, companies that have all disappeared now and and. Similarly, in the nineteen twenties radio. Came about but eventually it was television that ended up being dominating, the broadcasting, media in, the 1920s. People were talking about the euphoria, of the 1920. Of 1922. There. Was a total. Fascination. Of the public by radio. People. Would buy radio, at some incredible, rates so think. About, 748. Manufacturers. There. Existed, 748. Manufacturers. Of radio equipment. In 1926. And. All of them went bankrupt only, a tenth of them a year later only. One-tenth of them survived this, is very similar to the proportions, that you see in the the. The the. The. Innovation, cycles, in Silicon Valley today, and. You. Had an you had a a very very dynamic industry. There, were 3,000, broadcast stations sold by 1922. There, were about two million, broadcast, capable stations, in 1924. Two years later so, this is an explosive, change, that, by, the standards, of the time are very very comparable to today so, I don't think that it's really true, that today's, in innovation, cycle is faster. Okay. We have another question here how. Do you see this new media environment affecting. How people get their news and how should public relations, professionals, adjust their approach to leverage, these platforms, rather, than relying on traditional news, media. So. I have. Very strong views on this I'm doing quite a bit of research on news consumption, and, and my, forecast, is that people, pretty much will be using, Facebook to access those.
It. May, not be completely, the case today but if you talk to two. Publishers. Pretty, much all publishers, have, to be on Facebook and in the end they don't want to be because the advertising revenues don't look that great but in any case advertising. Revenues, don't look that great on the internet and, there. Is a shift back to our subscription, systems, and an, on Facebook, you, know you can actually reach, a lot of consumers, and get them to subscribe to your content so but, I really think it is going to be very. Much on Facebook, and. It's. Going to be difficult there is going to be a shakeout as it, has been the case in the last 20. Years a newspaper. The newspaper industry. And. The news industry in general is probably the one that has been hurt, most by interactivity. I think. The pain is not over. But. It's settling down given. How much time people are spending on, social, media, my. Forecast is that it, is going to be pretty. Much on social media I'll, give you a very good example I start I have an avid reader of The Economist, which. Is a subscription magazine. I have. Started it 15 years ago I only used the newspaper when I shifted, to their app and now. I am getting, served, the. The. Economist, articles, on Facebook, of course there is a paywall so, I'm not sure they are still making money of me. And, what, I what. I've discovered is that I, basically. Read 70%. Of it on Facebook by the time I get to the app to kind of finish off the the, weekly magazine, so. Just. Because Facebook is monopolizing, so much overtime social. Media is monopolizing so much over time I think. Eventually, news. Will have to migrate to, social. Media as well. Okay. Thank you and how we have another question here a few. People are asking about your, views on the future of advertising, and, as far as text. Audio, or video what do you think will be the the mixture or will anyone be, more prevalent, than than, the others so, I mean clearly video is is, doing. Great and. This is becoming more, and more. Dominant. Of course with video you can transfer, much much more information, to people in, particular when. You think about brand, advertising, which is usually, where. The big bucks are when you're building a brand you're kind of investing, in this equity. It, is the same case Intel in the case of television, you know a TV. Ad would be much more expensive than a than.
A Newspaper I usually and. So. I think that video is going to be the winner. In. Terms of format in terms of, of. Technology. We. Have an incredible. Infrastructure. Built. To. Serve advertising, to the right people. Pretty. Much all advertising, in my mind is going to be migrated into programmatic, advertising, meaning. That machines will be deciding. Who, should be served the ad, for. How long which, ad this, and that this, is the case of Google this is the case pretty much of most internet, advertising, if. You think about Facebook that captures 30%, of the total digital advertising revenues. They also have algorithms driving. This process and not people. Buying, and selling advertising, that it used to be in, the past so my forecast, is that on the back end there is going to be an incredible, programmatic, infrastructure, and on. The front end it's going to be contextual, advertising relevant. To you mostly, video. And. Rarely. Any text. Alright. I think we have time for just one more question here this one is from Dan Stoller who asks will. There be a backlash against. Automation, and recommendation, algorithms, and platforms, why or why not. That's. An interesting question. Platforms. Are producing, so much value, in my mind so if you if you think about Google. The. Fact that your, that. You have instant. And. Unlimited, access to all the knowledge of the world and. At. Your fingertips no, matter where you are on the planet. There. Is such an incredible, amount of value created. That. Even. If there is going to be backlash, there is a constant, backlash against. You. Know the lack of privacy, people are freaked out by the fact. That you. Know they send an email and they are getting advertising. That relates to the words that they have used in that email at the, same time you, know they are not going they're going to have a real hard time giving, up the benefits that these platforms are producing. For. All the, their. Sort. Of mistakes and and. And. Wrongs these. Platforms, are creating so much value to consumers that. I have a real, hard time to believe that there is going to be here that this backlash, is going to gain momentum and. To, the level where this. Industry's can get really hurt. Alright. Well I think that's all the time we have I want. To thank everyone for joining us today and a special thanks to Professor sari for sharing, his views with us so just one more reminder that, there, will be a recording. Of the, webinar sent, out after. The. Session has ended so. We look forward to seeing, you all again back. Here in the future thanks, so much.