Power players

International media giants discuss the future of Arabic content.
Analysis, Content management
Rupert Murdoch, Chairman and CEO, News Corporation.
Rupert Murdoch, Chairman and CEO, News Corporation.
Eric Schmidt, CEO, Google.
Eric Schmidt, CEO, Google.
Hans Vestberg, President and CEO, Ericsson.
Hans Vestberg, President and CEO, Ericsson.
Tim Armstrong, Chairman and CEO, AOL.
Tim Armstrong, Chairman and CEO, AOL.
Etisalat chairman Mohammed Omran called on closer ties between telcos and the media.
Etisalat chairman Mohammed Omran called on closer ties between telcos and the media.
Robert Bakish, president, MTV International Networks.
Robert Bakish, president, MTV International Networks.
Jon Miller,  chairman and CEO,  Digital Media Group, News Corporation.
Jon Miller, chairman and CEO, Digital Media Group, News Corporation.

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The great and the good of the world’s media industry gathered for the inaugural Abu Dhabi Media Summit last month. Digital Broadcast condenses the key presentations from CEOs representing News Corp, Google, AOL and many more.

Rupert Murdoch, president and CEO, News corporation

The event was opened by arguably the most important figure in modern media history, News Corporation CEO and president Rupert Murdoch.

Murdoch’s empire includes more than 50 TV channels, four pay TV networks, more than 100 newspapers as well as 10 US movie studios.

News Corp has strengthened its ties to the region in recent years taking a 9.1 percent stake in Rotana, with which it collaborates on the region’s Fox Series and Fox Movies channels. News Corp has also announced that it will have a presence in the twofour54 media zone in Abu Dhabi with its NHNZ documentary production company opening an office. The regional arm of its .FOX (pronounced dot-fox) online ad business will move to the precinct. The playout and operations of some of its channels in the Middle East that are currently based in Hong Kong and other overseas locations, will move to a new facility based in twofour54.

Murdoch’s speech highlights the importance of encouraging the creativity and talent to populate the region’s growing roster of impressive infrastructure developments.

“The creative sector flourishes best in societies where governments intervene with a light hand,” says Murdoch. “When faced with an inconvenient story, it can be tempting to resort to censorship or civil or criminal laws to try to bury it. In the long run, this is counterproductive. Markets that distort their media end up promoting the very panic and distrust that they had hoped to control.

“Certainly every nation has the right to has the right to insist that the people they allow into their countries to do business respect their values and traditions. This is best administered, however, with a gentle touch,” adds Murdoch.

The News Corp chief also called for an end to protectionism in the Middle East media market.

“Creative protectionism is as destructive as other kinds of protectionism. It is expensive, unfair and it guarantees that local companies coddled by protection will never be strong enough to compete outside their own borders.

“By contrast, if you open your creative market up to competition your companies can challenge the biggest players. I have seen it done. News Corp is commonly thought of as an American company because we are now based in New York, but we actually started in a provincial Australian city called Adelaide. When I brought our company to America, we were still a small American firm,” said Murdoch.

Drawing on the value of content production Murdoch cites the example of Indonesia which has invested heavily in its creative sector which now accounts for 5.4 million jobs in the country and six percent of its exports.

“Right now the world does not think of the Middle East when it thinks of creative content. Even your own citizens prefer Hollywood movies and American television shows to local production. You can change this.

“So what do you need to encourage a creative sector? Obviously you need money. High quality content is expensive. The simple fact is that if you want quality content, you need to encourage a marketplace where money flows to those who invest in and create content. For example, television is still a young market in this region but the potential is huge. If you want higher-quality television, you need a transparent market that helps ensure that people receive a fair price for the value they create. A more transparent advertising market means having effective tools to measure who and what people are watching. Advertisers and creators need metrics that tell them who they are reaching and how effective their message is, or else they are simply throwing money in the dark.”

Murdoch also called for media buyers and sellers to compete for business to business within a transparent market rather than allowing a small number of companies to dominate.

“This may be a cosy arrangement for those companies but the nation pays a very high price for this cosy arrangement as it takes away the financial engine needed to drive investment in local content,” says Murdoch.

The News Chief also calls for the local market to be opened up to foreign competition saying that doing so would “call your people to their best and cultivate a world-class industry on par with the finance and oil giants that now dominate the region”.

Eric Schmidt, CEO, Google

The second keynote address of the summit was provided by Google CEO Eric Schmidt. The subject matter of the speech and the question and answer session that followed was as diverse as Google’s own activities. Ultimately, the two main issues were the effect of web proliferation on traditional media firms and privacy and censorship. Schmidt began by discussing the Middle East’s own position in the online landscape.

“When you ask people elsewhere in the world about what is going on in the Middle East, no one will mention the internet,” said Schmidt. “But in fact, this region has undergone the fastest web expansion for three or four consecutive years now. It’s been growing at 100 percent, which is incredible. Then you have to consider that one-third of the population in the Middle East is under the age of fourteen so in five years there is going to be a huge mobile internet market.”

As for how the propagation of online services will affect traditional media source, Schmidt is confident that the opportunities are also large.

“We will see famous TV producers, building their shows on the internet first to see how well they do, because that doesn’t cost very much,” claims Schmidt. “If it gains traction, then they can go to financers, advertising partners and distributors armed with this strong negotiating position and real numbers to back them up. The internet is not going to replace existing platforms – people still want to go to the movies – it will be used by the media in a different way, to learn and to test things. I like to think of it as internet first. You’ll start there, and then as your product evolves you will go for the larger more established platforms.”

Schmidt also sees the internet’s ability to offer targeted advertising as a huge bonus for media companies looking to exploit the platform.

“An advertisement that is more targeted is worth more money. A TV advert shown to me at home on TV is wasted advertising if the product is not relevant to me,” says Schmidt. “It would be better if these were more targeted. The internet can be used to target ads on TVs, mobile devices as well as home computers. Google is working on something similar for STBs. The principal is the same.”

Schmidt expects a period of change in the composition of the media and the way it operates with the internet and other technological innovations acting as the driving force.

“We tend to accept the structures that we grew up with as if they are completely fixed. So we will consider these laws, this set of regulations, that group of corporations and the resultant static outcomes, mistakenly believing everyone will behave in exactly the same way,” says Schmidt.

“Technology allows people to be enormously creative. Think about YouTube and Facebook, two of the leading brands in the online age that basically didn’t exist five years ago. Now there are several mapping application companies that are doing well, are they going to be the next Twitter? The point is there will be another one and another one.”

Google has itself turned its hand to several new markets as it has developed. The gigantic wealth of information that the company is now privy to has meant there are some areas of business that it has had to walk away from.

“There are lots of things that Google could do that it chooses not to. For example, one day we had a conversation about predicting the stock market, but we figured that would probably be illegal,” revealed Schmidt.

The company found itself the subject of ire with several governments – most (in)famously the Chinese – over regulatory, privacy and censorship issues, which continue to bubble away today.

Schmidt is well aware of the power the internet can have in politics citing the example of US politician George Allen whose re-election loss was largely attributed to a YouTube video featuring the Senator using an unsavoury racial epithet.

“Politicians are well aware that they are under the microscope with respect to what they say and what they do. There is a huge debate about how effective these tools are against repressive regimes, and fighting for free speech. Eventually, tanks trump the internet.”

Hans Vestberg, president and CEO, Ericsson

Telecoms manufacturer Ericsson is responsible for building much of the infrastructure that will increasingly be relied upon for media services.

The firm’s CEO and president Hans Vestberg is under no illusion regarding the size of the task involved in supporting the growth of data traffic, which is being triggered largely by new media applications and consumer devices.

“In a few years there will be three billion broadband subscriptions worldwide,” says Vestberg. “We are seeing people are now prepared to pay more for telco services than they were in the past – but there needs to be content for these services to access.”

Vestberg believes that the success of media applications offered on any telecoms platform will hinge largely on three factors.

“We need quality content and a fair pricing scheme. It is also important that the consumer experience is the same regardless of the device being used. We must also ensure that we use open standards as much as possible so that services can be offered to as many people as possible. If we use the same standards globally we can reduce costs in all markets. This includes the price of handsets. We want to see a smartphone for under US $100.”

Vestberg points out the effect that the iPhone has had on the telco market and calls for the closer liaisons with the handset manufacturers in the future.

“A normal phone will use around 20 Mb in a month, an iPhone will use around 400 Mb a month,” claims Vestberg adding that the upside for those responsible for upgrading these networks are safe in the knowledge there is a healthy consumer demand for data.

Tim Armstrong, chairman and CEO, AOL

AOL chief Tim Armstrong has been spearheading the company’s recent content creation blitz, which has seen it hire an army of editorial staff (from 500 journalists to more than 3000 by October last year).

Armstrong says that many advertisers are looking for a tiered online media with quality, premium content sources available for them to align themselves with, as they have done in the past with traditional media platforms.

He also believes that the creative potential of the internet has so far been severely under-utilised.

“I would argue that a page on the internet today doesn’t look that different to a page on the internet 10-15 years ago. I think strategically, the search companies have done a good job of dominating the internet advertising market,” says the former Google senior VP. “We now have to look at the distinct set of needs for online brand advertising. So for example when you talk to a brand manager at a detergent company for example, which has spent a lot of money on traditional media but now realises consumers have shifted platforms, they need to be provided with an alternative service – different analytics for example – that is one of the things we are very focused on,” explains Armstrong.

“We are maniacally focused on content as I mentioned earlier, but we are also very determined to change the way we use technology, and design new ways to work with it in the future. In this respect AOL will be risk takers during this year and into next year. We’ll be doing looking to brand and different types of online advertising.”

Earlier this year it was revealed that AOL has developed a new content management system that unifies many of its 75 online properties allowing a greater number of contributors to write for its sites and receive payment based on the number of ad impressions it receives and other monetisation systems incorporated.

In their own words…

Mohammed Omran, chairman, Etisalat

“A few years ago, telecom operators would not even be invited to a media summit such as this. There has been a notable shift in the importance of telcos to media.

We are enabling our customers to have a high quality fixed connection. Mobile connections have improved and LTE will soon allow speeds as high 100Mb/s.

Handsets have also improved dramatically in recent years. They now have better batteries with longer lives. They are much more powerful and smarter than in the past. This has enabled a lot of new services.

We still have a long way to go when it comes to local content. More is becoming available, but we need to more partnerships forming between telcos and media firms.

We are not experts on content so we rely on partnerships. Etisalat’s role is to customise and group content for our customer base. This means working with content partners. It does not mean going out and acquiring content providers.

Customer behaviour in this region has changed the equation. Just a few years ago people used to say 20 lines per 100 households was too many in Egypt. Today there are 70 lines per 100.”

Robert Bakish, president, MTV Networks International

“MTV Arabia is still relatively new and continues to be a work in progress. We are still big believers in international markets and we have shown our intention to continue growing our participation in this region.

We started internationalising our channels early – partly because it was economical to do so with MTV’s music video-based format. We realised that it was important to localise these channels for each market. MTV Arabia is an example of this with a mixture of global formats and local episodes of these international shows.

To make money, you have to create quality content that people will spend time on. Others have looked at things like unsigned bands, but it turned out there was a reason they were unsigned, they just weren’t that good. You have to create something that the audience can connect with in order to monetise it.

You have to offer content on multiple platforms. Some people will want to sit back and watch, some people will engage much more. Audiences are diverse so you need to offer something for all regardless of how technologically savvy they are.”

Jon Miller, chairman and CEO, digital media group, News Corporation

“When you consider the iPad and other similar devices that are scheduled to come in during the next year, they are going to enable a re-imagination of different kinds of content, especially newspapers.

We are going to see a re-invigoration of this medium. If people like us are going to invest in these forms of content and the journalism behind it then clearly there needs to be models that acknowledge the cost of creating this content. The terms of trade should support this and we are engaged in these discussions already.

We have a number of efforts to try and rein in piracy. The technical developments – particularly cloud computing – are going in favour of more secure environments, which is important for any entertainment business. One possibility being talked about in the US at the moment is the possibility of pulling together an international broadband treaty. There’s a few big hitters advocating this and trying to come to a global consensus.”

Raoul Roverato, EVP, new growth business, France Telecom/Orange Group

“Previously what the media did was reach out to the public but didn’t really know who was watching. Now it can reach out on a one-by-one basis. They give content creators a new way to tell their stories. We are trying to connect all screens, with the same story. When you put on TV you want to relax. We have seen that around 50 percent of our customers choose to watch TV in an interactive fashion. Content must be adapted for different environments however.”

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