Traditionally, the first day of the Software & Information Industry Association’s (SIIA) Information Industry Summit (IIS) ends with a panel of executives looking into the future. This year, Jim K0llegger, CEO of Genesys Partners, moderated a panel that included:
- Dick Harrington, Chairman and General Partner, The Cue Ball Group (and former Thomson Reuters CEO)
- Andrew Lack, CEO Multimedia Group, Bloomberg
- Mark Anderson, CEO Strategic News Service
- David Eun, VP Strategic Partnerships, YouTube
The panel covered all of the major topics: business models, advertising, user behavior, device convergence, and a bit of history. Jim started the discussions by asking Dick Harrington how he came to the conclusion that he should sell off Thomson’s news business in the late 1990s (when it was still able to fetch a price of $4.4 billion).
According to Dick, they made that decision in 1997 but “it took a year to get nerve up to tell the board we were selling news.” Dick and his management team saw the potential for Web-related advertising to erode their business. They also looked at eBay and felt it would impact classified advertising sales in such a way that Thomson could not compete. Dick reported to the board that content was no longer king and that Thomson needed to drive everything toward an electronic model. The real story would be information, software, and solutions. “We needed to focus our business . . . [on] activity-based workflows and the content and tools that could drive that.”
Andy Lack’s experiences at Bloomberg were quite different. Andy described a “journalistic army” of thousands of reporters that feed the 300,000 global professional subscribers to Bloomberg terminals. Content is most definitely king at Bloomberg.
In yet a third, and very different situation, David Eun described how he has been charged with working out a business model for YouTube. At the time it was acquired, YouTube was losing $500 million a year related to servicing its ever increasing volume. To put that volume into perspective, David quoted some statistics: 1 billion views a day, 20 hours of video viewed every minute, every two months more video is uploaded to YouTube than has been broadcast by the top three US television networks in the past 60 years.
The first order of business was securing the infrastructure and making sure YouTube continued to be accessible and easy to use.
Now, it’s time to figure out a business model that “stimulates the ecosystem. We want to get money into people’s hands so that they can produce more content.”
Mark Anderson was definitely the futurist of the group. He started his introduction with the question, “If you ask your kids if they are you going to pay for media in the future, they’ll say no.” Admittedly, you could feel the audience cringe at that. He went on to say that those kids will get to the place in their lives and work when they’ll have a different attitude about paying. As they come into the workforce, they will pay for value. At least, that’s what many publishers are betting. He went on to say that we’re now witnessing a move from free to paid. “The trend is unmistakable – it’s a way from free.”
David had a slightly different view. Ultimately, he said, everyone pays “either with your money or with your time – your attention.” He believes that advertising can work, and that the opportunity is there to put the right ad in front of the right person at the right time.
David even commented on the fact that there are different cost structures and different business models. Organizations need to allow a choice of what content falls under which business model. It could be that one content offering is free to the user and supported by ads, another version is available for rent for a certain period, and still another version is available for direct purchase or as part of a subscription. There are no easy answers.
The panelists seemed to agree that the real key to a business model is that you have to have the right product to service the segment. Once again, in what appeared to be the unspoken theme of the day, this panel came back to customization — give me what I want, when and where I need it, and be able to anticipate those needs accurately.