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Monday, January 31, 2005

Digital Scenarios For Media - Profitting Strategies

Eric Pfanner visualizes a future in which media consumers, empowered by new technology, demand everything for free - New technologies offer more opportunities than threats. The spread of broadband, for instance, provides video and interactive experiences of a quality unimagined a few years ago. Digital distribution of music and other media via the Internet creates a whole new business model, not just a vehicle for runaway piracy. Excerpts from various leaders views:

- Richard Gelfond , co-chairman and CEO of Imax : Imax licenses the technology for movie theaters with giant, wraparound screens and 3-D effects and provides films to show in them. In the past, these theaters tended to be housed in museums and were filled with schoolchildren awed at seeing wild animals seeming to bound forth from the screen. But with new technology, Imax is changing from the stuff of Tuesday morning field trips to Saturday night datesAn Imax theater used to cost about $5 million, Gelfond said. But a lower-cost system called MPX has cut the cost to as little as $1.6 million, allowing multiplex cinemas to upgrade their offerings. Another technology lets the company convert standard studio releases into Imax format, allowing theaters, on average, to charge a 30 percent premium.

- The Media Owner: Hubert Burda, publisher and CEO, Munich-based Hubert Burda Media: "The traditional magazine business will be flat from last year ... so we will have to take advantage of new advertising models." He says the company has seen rapid growth in keyword advertising on its news magazine site.

- The Middleman: Brian Wood, president of Columbia House: Owned by private investment firm Blackstone Partners, music seller Columbia House so far has avoided the online download business; the implication is there's no guarantee of profitability and no Apple-like hardware rationale. Says Wood, "The tricky thing is coming up with a sustainable business model at a time when everything is changing."

- The Futurist: John Battelle, author, He runs several Web sites, including a blog, and he plans to start a business that will sell advertising for other blogs : "Big media's revenue premise is based on the delivery of advertising on a platform that's no longer necessary." He thinks blogs can benefit from pooling ad sales by retaining editorial independence while offering target audiences for advertisers.

- The Investor: Glenn Hutchins, managing member, Silver Lake Partners, and stakeholder in Thomson: "Just as the DVD didn't ruin the content industries, neither will broadband.

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