A lot of people theorize or blog about the future of media. However, a handful of people actually walk the walk. One such person is Larry Kramer.
Larry spent 20 years as a reporter and editor at the San Francisco Examiner, the Washington Post, and the Times of Trenton. However, during the tech boom in the 90s, Larry seized the opportunity to become a successful media entrepreneur when he founded MarketWatch and managed the company as Chairman and CEO.
After turning MarketWatch into an incredible success, Larry spent time as a senior adviser at venture-capital firm Polaris Venture Partners. He has recently started teaching at Newhouse School of Public Communications at Syracuse and is putting the finishing touches on his new book C-Scape: Navigating the Future of Business– set for release by Harper Collins in early November.
Although Larry is on the Board of Wall St. Cheat Sheet, I thought it would be great to share some of his awesome insights with our audience. So, last week Larry and I sat down for a special chat about what Larry calls a “Gutenberg moment” in media, the incredible breakneck speed of change in media, and some of the key variables to watch if you plan to stay ahead of the curve …
Derek: Larry, you are currently teaching at Syracuse. What do you tell your students when they want the ingredients for success in today’s media business environment?
Larry: First, you must be incredibly open minded about the form factor of delivering media. You have to watch closely because everything is changing.
We’re in what I call a “Gutenberg moment.” This means everything is changing in dramatic fashion. The whole story telling process is changing. We’re creating an entirely new platform on which you can use video, audio, text, interactive graphics, and more in a single media which is very ill formed and just forming.
The habits of content consumers — news consumers, information consumers, entertainment consumers — are totally up in the air. So is how much they watch at home, how much they watch in movie theaters, and how much they watch on portable devices. When the iPhone came out it increased usage of the web on all phones by thirty percent. Now imagine what’s going to happen when the iPad comes out.
So don’t make your bets based on what people are doing right now. Pay attention to consumer behavior. Look at how people consume your content. Try to be proactive in how you design content for them … then see what works.
For example, play around with different things. It’s really an open and interesting time. The hardest thing to do is to understand which themes resonate. The things that stay the same are issues of journalism — fairness and news gathering. But then there’s this whole new set of rules that are forming and you must pay attention to those while understanding they could keep changing.
If you want to be successful, learn two things: journalism and entrepreneurism. That’s what I’m teaching. I’m teaching a mix of management and journalism at Syracuse because I think you need both. The percentage of journalism or media students who go into startups is getting higher. Part of the reason is there aren’t jobs at the traditional companies. There’s no reason that a start up can’t be competitive with any media company when the forum of media is changing so quickly.
Derek: That raises an interesting point about quality and quantity. In today’s world, anyone can put up a blog, write, and publish in the journalism world. How does someone become a legitimate journalist on the Internet?
Larry: It’s very hard. This is one of the roles that I’ve been trying to teach and is growing in journalism: curation. Meaning, it’s not just about what news you cover and what you publish, it’s also about helping your audience choose from all the information that’s out there. If there are ten thousand bloggers, you’re not going to read ten thousand blogs. So, you’re looking for help to decide which ones you should read and which ones are legitimate.
In journalism we have a very strong task which is to train and teach people the difference between a journalist and a person who posts information. Under what criteria does a journalist operate? What’s different between those worlds?
The hard part is to get the journalist to understand it doesn’t mean you’re better — it just means you’re different. A blogger’s audience wants bloggers because frequently bloggers have great insight. Bloggers are not generally operating under the journalistic umbrella where they have to be fair or look at the things journalists look at before they publish.
For example, there’s a lot of things going into consideration before you just give somebody the pages of the New York Times. However, a blogger has no such restrictions. So, a blogger can operate a blog lots of ways. You can simply be interesting or there are some who try to become more journalistic. Ultimately, if they get really good, they’re usually swallowed up by media companies who will pay them a lot of money.
So, I think journalism will survive and prosper, but it’s fairly different than years past. For instance, in the old days you wrote a story as a journalist and that was it. You wrote it, it got published. Now, that’s only the beginning of the process. When you write something it gets published, then the reactions start and you’re suddenly being gauged by people who have something to say about your story. They might even change your mind about it. Regardless, readers who comment expect you’ll pay attention and react.
I think journalism is a high calling. You must have a deep rooted desire to change the world — especially while we figure out how to fund it. We are still figuring out how to build new ad models and charge people for certain content. A lot of people aren’t optimistic we will find a sustainable business model for journalism, but I am very optimistic.
Derek: Can you talk a bit more about the business model shifting?
Larry: Sure. We pay for content now, but people don’t realize it. If you have cable TV, you’re paying for Fox News, MSNBC, CNN, and ESPN even though you don’t have a line item on your bill. People might want more control over where that money goes — and that’s part of the consumer taking more power — but they certainly understand they have to pay for things. So, if we build similar kinds of models around the other platforms, we’ll be fine.
Derek: Larry, in your new book you talk about how media is in a “tailspin.” How would you rate the pace of change we’re experiencing today versus when you started your career?
Larry: There’s no comparison. It is so accelerated right now, it’s almost frightening. I’m really serious about this whole Gutenberg moment. I really think we’re not even at first base for what form we’re going to be using for some of the devices that are already coming.
When people have the iPad, they’re going to have expectations about how journalists tell the story. For example, if we were telling readers that very moment about the Berlin Wall falling, the reader will want to see video of Kennedy’s speech or the wall falling at the very time we’re telling them about it.
If we’re telling them about a hot new car, they want to see the car, they want interactive graphics about the car. Basically, readers want things they would have never expected a couple years ago because now they are available.
What’s interesting to me is we’re in this era of a rapidly changing technology that allows us to be so much better at story telling — so much more efficient — and we don’t yet have a generation of story tellers who know this medium. So, the technology is kind of ahead of us right now. It behooves us in the journalism world to get our heads around it and start helping consumers understand how they can use it.
However, we’re nervous to do that because it’s changing so fast and so furiously. We start training to use one thing and then it’s, “Oh no … we don’t use that anymore. That’s old stuff.
It’s also hard to teach. So, one of the things I’m doing at Syracuse is bringing the case method to journalism because books are outmoded already. This is a Harvard Business School method of teaching. The books about journalism and the problems of journalism can’t be written fast enough.
This spring I’m bringing some students down and embedding them in three or four companies here in New York City. I’m having them deal with the issues companies are really dealing with right now because they’re so unique. They’ve never had anything like this happen. It’s a great experience for students.
Derek: Which begs the next question: what does the future look like for content publishers?
Larry: Good question. Again I’m optimistic. In my book C-Scape, I peg the shift that’s occurring in all media businesses and in all businesses to four different factors that will start with C: the consumer, curation, content, and convergence. We already discussed the first two. The next one is content.
In a world where buyers and sellers are getting maxed and middlemen are getting squeezed, the distribution model of television starts to fall apart. The people who still make money are those who own the content no matter how it’s distributed.
That’s why Comcast (CMCSA) is spending a fortune to buy NBC (GE). Comcast once had a great business because you had to use them or you didn’t get cable TV. Well that’s not true anymore. Now you can get a satellite dish. Soon you will get all those shows on the web.
The future is ownership of the content. So, the media companies which concentrate on good content will do well. It’s going to be painful as their business models change, but they will change and survive because people will still want good content.
On the other hand, if good content starts to disappear because people refuse to pay for it, then people will step up and pay because at the end of the day they want it. We just have to give them easy ways to pay.
Derek: So content is still King?
Larry: Absolutely. More so now than ever. What’s happened is we’ve made content very accessible by removing several of the barriers — so everybody wants it. Now we know more content exists regarding something that interests us. For example, if you’re a Cleveland’s sports fan and you live in Florida, there are thirty places you can go to find out about last night’s Cleveland Cavaliers game and Lebron’s performance. You might even be able to watch it for free on the web.
The bad news is this phenomenon messes with the existing business models where all the money was made from the network TV and then spread out here and there. But the good news is that more people will have access to the content. If they want it, they’ll be able to see it at whatever price offsets the costs.
Derek: How do all the new devices play into the tailspin? The 90s saw an emergence of desktops and Walkmans. The 2000s saw the emergence of laptops, iPods, and flat screens. What do you think will be the big trend of the next decade?
Larry: Mobility. The ability to simplify the process of seeing content while traveling and seeing it in a better way. Everybody will have some form of tablet like the iPad. Consumers will access all information wherever they are no matter what they are doing.
Every other device will still exist. There will still be phones and desktops. In fact, most people will engage content on multiple platforms — and hopefully we’re going to be able to simplify that by charging them according to this usage. For instance, if you pay for HBO, you get it wherever you need it that day.
Derek: How does advertising work in this new environment?
Larry: The advertising models are going to get better on the web over the course of the year. Advertisers will get better at controlling their platforms. Advertisers will target users better, give people choices of ads to watch, and do all kinds of things they never could do. So the ad models will get better because you’ll be able to charge more for the ads that you run and therefore run fewer ads.
Derek: And what do you think of the entrance of Google (GOOG) into the phone market?
Larry: Huge. I think it’s going to be a monster. Since I use gmail, my contacts and everything are now in the cloud. I could definitely see using a Droid phone because of that. They’re making the best applications to take their own tools to mobile.
Derek: Ultimately, do you think mobile phones and the innovation of these devices will compete with the iPad?
Larry: If the iPad remains a hard encased device that’s large and the size of a big book, or at least the footprint of a big book, then it’s not going replace phones. It is portable in how the technology works, but it’s not really truly portable if you’re just running around on your own. You can’t put it in your pocket.
Now that may change. I think the idea that you might just have a phone on you which will allow you to do everything is probably true. You now have one single device that covers you but it isn’t going to be the best way to do a lot of things including reading documents. So how quickly people have uses for a second device and have that all fit in is going to be important. I just don’t think everybody wants one device that does everything.
Derek: Do you think in your personal opinion the U.S. economy is currently undergoing a recovery? Do you think that the U.S. economy has reached a recovery point? Or do you think there’s still a lot that needs to be worked out in today’s business environment?
Larry: Well, I think they’re both true. Yeah we are seeing a recovery and I think the market place for ideas is high. We’re seeing lots of cool new stuff again. New technology is popping up. We’re seeing a lot of pretty interesting technology that has heated up and that’s great.
But, American industry has chosen the moment where we’re so scared of everything that’s happened, American companies haven’t really started hiring again. So, productivity is monstrous because as things are getting better, companies are doing it, but they’re not hiring people to do it. There will be a moment in time when we hit the exhausted button and we can’t do anymore.
For now, we are getting a lot more out of people and maybe just because they’re scared about losing their jobs. Until a lot more people come back to work it’s going to keep things slow, which is unfortunate. So it’s like a mismatch between the era of ideas and who can use them. But, it is a cool time and in my world, in the media world particularly, it’s a driving time of change. Like I said before, I think it’s a Gutenberg moment. I think it’s so big it changes the world.
Derek: Do you think newspapers or books will become extinct in this coming decade as tangible sales are declining?
Larry: No, I don’t think so. I think there will continue to be more elite products. Books are going to be the railroads of this generation. If the railroad had stopped and their business is moving people from here to there, railroad companies would have been in the car and airline business too. Instead, they were in the railroad business. So, if you’re in the book business you’re in trouble. If you’re in the ideas business, you’ve got a shot here.
Derek: Speaking of books, can you share some more details with us about your upcoming book?
Larry: The working title is called C-Scape. It basically started as a book about the media industry business models being in chaos because of all these new digital platforms, new forms of digital story telling, and how it’s going to change. It is changing the media industry, but more importantly it’s going to extend into every business.
Increasingly, all businesses must become more like media businesses because of how they have to deal with their constituencies, how they have to tell the story of their products, and how they have to basically get much closer to their consumers. This means listening much more because the consumer has so much more power.
I’m taking those four things I mentioned — content, the consumer, curation and convergence — and detailing how each of those words represent a fundamental piece of change that’s occurring. I’m showing how they’ve changed the media industry, but also how they’re impacting lots of other industries. And, some of those industries are already doing some really cool things to insure their survival … and others may not be. So in the book I exmplain who they are, what to look for, and some thoughts on what it’s going to be like in a few years.
Derek: Do you have an expected release date for your upcoming book?
Larry: The Fall of 2010.
Derek: Thank you for your time, Larry. I hope to speak with you again when the
book is released.
Larry: Thanks, Derek. Continue to keep up the great work!
This was less than half of my interview with Larry. If you are interested in how Larry started in his early career, the story of MarketWatch during the tech boom, Larry’s thoughts on other technology, and more, simply join the list for our upcoming book “Inside the Brightest Minds on Wall Street” …