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Media Industries Face Challenge in Harnessing Web-Based Markets


The astonishing growth of the Internet is not the first techno-revolution that the media industry has had to face. But the speed at which it is occurring is creating potential challenges to fair competition and freedom of speech, according to an industry expert.

“The world of the Web is impacting . . . print newspapers, publishing, magazines and also telephone companies, TV and radio,” said media observer Ken Auletta on April 3 at Fordham University. “You cannot talk to any one of those traditional media companies and not realize how frightened it is.”

Ken Auletta, left, takes questions from Everette Dennis, Ph.D. on the media. Photo by Patrick Verel

The author of 10 books and long-time contributor of the “Annals of Communication” column for The New Yorker magazine participated in a keynote Q&A at “Media Industries in Hard Times,” a symposium on the Lincoln Center campus that attracted 200 media executives, commentators, scholars and students.

Auletta, who was among the first to popularize the idea of the “information superhighway,” said it took television decades to reach 50 percent of the American population; it has taken the Internet only ten years.

He pointed to young, innovative Silicon Valley Internet company founders as leaders in a digital revolution that has left the hired management of traditional firms scrambling for market share.

“Many people in the Valley are founders in the way William Paley (founder of CBS) was a founder,” Auletta said. “They’re entrepreneurs, and they think differently [than traditional media managers.]”

For example, Larry Page, who co-founded Google in his mid-20s, was “inspired” to digitalize the world’s books while sitting in his office playing with his Lego set, Auletta said.

In the past few years, Google, the world’s largest search engine, has entered into agreements with several university libraries to digitalize their collections. It has also collaborated with the Library of Congress to digitalize some of its works, and, through other company acquisitions, is becoming an Internet industry giant.

“Here’s a guy sitting in his office dreaming big,” Auletta said. “He’s not thinking of all the obstacles. He’s not thinking of copywriting, or the author’s guild, or publishers. He’s just thinking, ‘Wouldn’t it be a cool service, and what would it do for search?’

“On the other hand, it has tremendous consequences for other industries.”

Looking forward, Aluetta said the newspaper industry will face its toughest times in the next decade trying to move from print to a subscription-based Internet model. Moving newspapers online would save roughly 70 percent in costs, and yet investors do not necessarily view it as a growth industry because search engines like Google make a “commodity” of the news. The California-based company reportedly accounts for 60 percent of the world’s Internet searches, and links to 25,000 newspapers and magazines.

“If you accept the fact that the Internet commoditizes news, then it is inevitable that it increases the value and impact of the brand,” said Auletta. But brands like The New York Times and the Wall Street Journal, are “driven crazy” by the search engine’s algorithmic approach to site ranking, which bases its rank on which sites are most frequently visited and not necessarily who produces the best news product.

“How do you extend your Times or WSJ brand in a world where that brand matters less because users just want the information, and in a world where twittering has a 140-word limit? It’s an enormous challenge. But it’s also an opportunity.”

According to Auletta, traditional media managers should “lean forward” to understand the Web’s participation-based models that offer thousands of venues for consumer feedback and cross-communication, such as blogs and Twitter.

“They’ve thought about it with a sense that it’s just an extension of our current tradition. It is totally different. It’s participatory.”

The conference was sponsored by the Graduate School of Business Administration’s Center for Communications, and the Media and Entertainment Alliance.


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