In the past month or so, three senior executives charged with running the interactive units of major media companies have either been shown the door, or have left on their own accord because they found their jobs no longer fit their character.
Jon Miller, who took AOL from death’s doorstep to a new model which stole a page from Google and Yahoo, was summarily offed in mid November. Ross Levinsohn, hailed as a genius within Newscorp for engineering that company’s purchase of MySpace, has decided that it’s more fun to build a new company than run one inside Mr. Murdoch’s empire. And Larry Kramer, until recently the head of CBS’s interactive unit, saw the writing on the wall when Les Moonves installed a new boss above him (Kramer remains an adviser to CBS).
What does it all mean? I know each of the three men reasonably well, and I’ve spoken to many folks around them, and it all points toward a trend that I’ve been itching to think out loud about: Major media companies are realizing that their digital assets are far more valuable than they initially thought, and they are reacting by putting folks in charge of those assets who they believe will protect the company. Not the *interactive* company, mind you, but the company that owns the interactive products. Why?
Let’s take each in turn. The general vibe on AOL is that Time Warner believes it’s time to treat AOL like any other major advertising-driven media business – put in someone who lives and dies by advertising. So they install Randy Falco, a respected television executive with deep relationships with major brand advertisers.
Over at Newscorp, the folks I’ve talked to say that Murdoch viewed Ross as an M&A guy, and not an operator. It’s time to *operate* these assets, now that Ross has assembled them, and the new guy – Peter Levinsohn, another seasoned TV executive – is more of an operator than Ross (they are cousins).
And at Viacom/CBS, head honcho Sumner Redstone was apparently livid over his lieutenants’ failure to buy MySpace. So they have installed Quincy Smith, a seasoned technology/media M&A banker in the media space, to run Viacom’s digital assets (and to buy their way to the table, as one can see from the recent hiring of a senior Yahoo corp dev executive). Kramer, who ironically is more of an operator (he ran Marketwatch for 12 years), apparently left because he didn’t want his job to be about buying companies, and he was not that pleased with having Smith inserted between him and Moonves, who had been his boss before Smith showed up.
One might argue that a supreme shuffle could have solved all of this – put Miller in Ross’s job (Miller turned AOL into an ad property, maybe he can do the same for MySpace), put Ross in Kramer’s job (he can buy stuff well), and put Kramer into Miller’s job (he can operate a big site like AOL).
But there’s more to it than that. All three of the departed execs are, in their own rights, extremely seasoned interactive executives. And while their replacements have some digital experience, it’s mostly in negotiating deals between traditional media companies and new the new digital world. And while I may get beat up for saying it, I must insist: Things are different running interactive properties. Deeply, importantly, significantly different.
In each case – Viacom, Time Warner, and Newscorp – the media moguls have installed folks who have no significant operating experience in the interactive world. (One can also argue that installing Beth Comstock as head of NBC Universal late last year – a very impressive executive who nevertheless came from a marketing background at GE – was a similar move).
What does this tell us about how these major media companies are thinking about interactive? Well, I’ll go out on a limb here. I think the moguls are thinking along these lines:
1. Interactive is now a very important, profitable, and growing business.
2. We can’t afford to not view this as strategic to our future.
3. We need someone running theses sites who is not an interactive “cowboy,” it’s time to grow up and treat it like any other major piece of our conglomerated business.
4. Therefore, I need “one of my own” running these businesses, and I expect them to deliver just like the folks who run my radio, TV, print, and/or other major asset groups.
5. “One of my own” is someone who lives and breathes my world – the world of Very Large Media Companies that Own A Boatload Of Intellectual Property Assets and have Massive Investments In Huge, Controlled Distribution Networks.
A perfectly logical and reasonable train of thought. And I’m not about to predict that AOL, Fox Interactive Media, or CBS Digital are going to fail because they’ve hired new blood. I am sure the folks who are now running these properties understand the depth and breadth of the shifts occurring in the Major Media Company businesses – but are they going to be empowered to do what they need to do to truly win in their respective markets?
What do I mean by that? Well, that’s the focus of my next TOL (thinking out loud) post. But the synopsis goes something like this:
There are two major forms of media these days. There is Packaged Goods Media, in which “content” is produced and packaged, then sent through traditional distribution channels like cable, newsstand, mail, and even the Internet. Remember when nearly every major media mogul claimed that the Internet was simply one more media distribution channel? They were right, but only in so far as it pertains to Packaged Goods Media. Over the past few decades, massive media conglomerates have built on the deep DNA of Packaged Goods Media.
The second major form of media, is far newer, and far less established. I’ve come to call it Conversational Media, though I also like to call it Performance Media. This is the kind of media that has been labeled, somewhat hastily and often derisively, as “User Generated Content,” “Social Media,” or “Consumer Content.” And while the major media companies are unparalleled when it comes to running companies that live in the Packaged Goods Media world, running major companies in the Conversational Media field require quite a different set of skills, and consideration of radically different economic and business models – models which, to be perfectly frank, conflict directly with the models which support and protect Packaged Goods Media-based companies.
It seems clear to me that the folks now charged with running the interactive assets of NBC, Viacom, Time Warner, and Newscorp – four of the largest Packaged Goods Media companies in the world – are charged not only with growing their own Conversational Media assets, but also with protecting the Packaged Goods Media assets of their bosses. And those assets are based on several heretofore unassailable pillars:
1. Ownership or control of Intellectual Property (ie content) by the corporation.
2. Ownership or control of expensive distribution networks (so that the content can reach the audience).
3. Established business models based on highly evolved approaches to advertising and subscription models – models which themselves are built upon the presumptions of #1 and #2.
Each of these three pillars – and I may stumble upon others as I keep thinking out loud – seem to be either irrelevant or significantly shifted in the world of Conversational Media. Note that I am not dismissing these pillars are they relate to Packaged Goods Media – far from it. But basing your Conversational Media business on these pillars is, frankly, entirely missing the boat.
In the next post, which I hope to complete sometime this week, I’ll focus on why. I’ll review the models of Packaged Goods Media and Conversational Media, highlighting the differences between them. As always, your input and criticism encouraged….
(note: I updated this on Dec. 16th, writing through it for clarification but changing no meaning/intent)