MEDIA NYC 2020: NYC as a Global Media Center

Garrick Utley: All right, good morning everybody! We want to get going. We've got our coffee, our bagels and all the essentials. First of all, I want to welcome you here. I’m Garrick Utley, the President of the Levin Institute of the State University of New York, and we're happy to be collaborating today with the Economic Development Corporation of the City of New York. And also welcome our panelists who are here: Seth Pinsky, who’s President of the EDC; and Martin Kon, who has been working on this project of future media in New York City; Peter Price, who has a long and storied career in, I know we call it traditional media, legacy media or whatever it is; but we have a further introduction and Jon Klein, who runs CNN, USA and therefore has covered a lot of bases; and most of all, all of you who are with us here today.

The subject is, as you know, Media New York City 2020. Looking ahead although no one can profess perfect vision as to where we're going to be in 2020 or even a couple of years from right now. And, as Seth will explain, this is really a larger public conversation. We feel it's something that we all want to do and be involved in and really foster. Each of us, I think, is involved in media; in the future, in one capacity or another; large organizations, small organizations, entrepreneurial, et cetera and we talked amongst ourselves. But the idea of this whole exercise is we're going to hear about Media NYC 2020 is how are we going to get better interaction and how we're going to really bring these perspectives together. And so today's session is really aimed at that, learning some of the work the city has been and others have been involved in and how that may enrich our own experiences and our own future. But, most of all, we want to hear it from you.

What I would also like to do in welcoming you here is just give you 30 seconds of advertisement. Many of you may not know who we are. In addition to working with the EDC, it's no coincidence this is happening during Internet Week. Media is a big part of what the Levin Institute does, Global Media. We are, as I said, a free study institute within the State University of New York. We're the new kid on the block. We are focusing on key issues of globalization and New York's position in this; so that involves the financial world; that involves the media world and a long list of other topics. Our Board of Directors as chaired by Paul Tagliabue. We have a good board, the New York City centric and they welcome you today and some of the members are with us this morning. I would also say that we are in our global classroom and this really epitomizes what we are both as a metaphor and in reality because we believe, as nice as this facility is, all of us today know full well that it’s the public outside any four walls that is crucial to the future as compared to the public that is within the four walls as much as we like the public within these four walls this morning in early June.

What we would like to do is hear a bit about what the project, what the city's concerns are, what is been found in some research that has been going on in a very detailed and careful way over the past several months then broaden the discussion to get the perspectives. And at the end of the day, at least have a better understanding of where we are and where we are headed up in this effort.

I would really like to start welcoming Seth and we've been collaborating on so many things, aspects. Seth, you are the President and CEO of New York EDC. Give us an idea for those who don't know what EDC does. We read about it in the papers, there's more than this on your plate, but particularly, with the focus now on the media and what the role of media, why is it of interest to you and to Mayor Bloomberg who really has launched this initiative.

Seth Pinsky: Thank you. First of all, can everyone hear me? Great! I wanted to take just a couple of minutes. I will first answer Garrick's specific question about what EDC is and why we're interested in the future of media and the future of media in New York City, in particular. And then I wanted to throw out a conceptual framework that I have developed in reading through the materials that have been produced so far in our study of the media industry as much to see what people's reactions that are as anything else. But so, let me start first with EDC. EDC is a 501(c)3 that technically is independent of city government. But we work very closely with city government. We work under contract with the city. We're basically a consulting firm whose only client is the city. Most of our board is appointed by the mayor, senior management is appointed by the mayor. And we're charged with developing the city's economy, creating jobs, creating tax revenue.

Over the past several years, our focus has largely been on real estate development, neighborhood revitalization and things of that nature because, frankly, the city's economy was growing robustly on its own. And in the last six months, with the shift in the economic environment, EDC, in addition to continuing the work that it's been doing on the real estate front, has now sought to increase its strategic presence and to try to analyze where the city is going on a number of different fronts and to come up with actionable strategic initiatives that are meant to address the challenges that various industries face.

We've come out with a set of initiatives, for example, relating to the financial services industry. We're now working on studies relating to fashion, the arts, bioscience, education and a number of other areas and, of course, media is one area that we're particularly focused on. And the reason for that is that the media industry in New York accounts for somewhere around 300,000 jobs. It generates about $30 billion in revenue. We're home to major corporations. I don't need to tell you what those are, Time Warner News Corporation, NBC, Viacom and the list goes on. And we also account for a very significant share of the revenue that's generated in entire fields: publishing, television, film, radio, newspapers, et cetera. But as we know, the city's position is I don't want to say under threat but it is being challenged, the city's position as the global media capital. And so, what I just wanted to do if I could is take a minute or two to throw out my understanding of how New York got to be where it was and why it is that the changing environment is challenging that position, and what the opportunities are that presents for the city is that okay with you?

So I think that the key to the traditional model, and again I probably don't need to tell you this, is the fact that content traditionally was costly to produce and reproduce. And the implications of that were that distribution and production that works were key and that companies that control those networks were in turn able to control the revenue model. There was an imbalance of negotiating power between consumers and producers, and the companies were able to determine exactly how and when consumers were required to pay for that content. What that in turn led to was that companies' scale became an asset to companies. You needed to have capital. You needed access to markets. And so, what that then led to was concentration among companies. So you get larger companies and then you get those companies that in turn would come to a geographical center. Companies would gravitate to the largest markets because that was an advantage to them. Companies would gravitate to centers of capital because capital is the key to growth. Companies would gravitate to centers of talent because the talent obviously was producing their content. And then when you had a series of companies that were all located in one place, a place like New York, you develop clusters around them. So, companies move to centers of talent, talent in turn would come to those centers because that was where they also get commercialized. The capital providers would be attracted to where their clients were located and in increasing concentration. And the support services that supported these companies would in turn come, lawyers, accountants, advertising agencies, et cetera.

Also, what I think happened was that to the extent that those clusters that developed were located in larger national or markets like the United States, they became advantaged relative to clusters that were located in smaller markets because they were able to attract more capital. If you're in the largest economy, then you're going to be able to attract more capital. The markets that they serve were larger. And, in turn, the production value of what they produced was greater which allowed them in turn to compete better internationally. And all these led to New York's becoming the world's center of media. And I think that what has changed now is the fact that with the rise of digital media that the cluster production and, more importantly, the cost of copying content has dropped significantly.

And so, as a result of that the barriers, the entry has fallen. The relative bargaining power of producers of content has declined and legacy networks, the things that gave the large companies their advantages are now almost a drain on those companies. They have so much of their assets tied up in technology and equipment that's just no longer needed or not as important. So the consequence of this is that you're seeing dispersal or at least a potential for the dispersal of the industry. There's less reason for concentration to occur on and with the relative decline or at least the rise of economies outside of the United States, what you're seeing is that to the extent that there is concentration, there's less need for that concentration necessarily to be in the United States or its media capital, New York.

But I think there are still opportunities for New York and those opportunities are several fold: 1) Because of history, there is a large percentage of the people who would be interested in capturing the new opportunities who are already in New York. There is an enormous legacy talent pool that's located here in the city. In addition, because of demographic changes and taste changes that have occurred over the last several years, big cities are a place where the creative class wants to locate. And so, again, to the extent that there are opportunities to exploit the people who would exploit those opportunities are here in New York. Also, I think that it's important to remember that history, the shifts in history are never as complete as people expect that they're going to be. You know, a few years ago everyone said the key to the future is portals. And you got things like the AOL-Time Warner merger. Now, the model has shifted and yet we still have large corporations that are doing what they’ve been doing for many, many years that are located here in New York. They haven't disappeared off the face of the planet. It’s likely they won't disappear off the face of the planet. They also, with their large reserves of capital, have the ability to acquire start-up companies and to leap frog into new areas.

So, and lastly, the last trend that I think favors New York is the trend towards internationalization. Although, you know, the United States I think will never be as dominant relative to the rest of the world as it has been over the last several decades. Again, the fact is that internationalization also helps the city in that there are now a whole host of companies that are developing outside of New York that have never been located in New York that may set up New York operations, that employ New Yorkers, pay taxes. There's also the opportunity for New York companies to exploit new markets that previously didn't exist. And I think that, you know, there are some promising signs that these trends are more than just aspirational and in fact are happening.

One of things that we found in our study is that about half of the media jobs in the city are located in new media and in start-up companies which I think is surprising to me but also a very promising sign. We've also had notable successes in the start-up area, companies like, for example, The Huffington Post which is a symbol of I think new media. Most of their operations are located right here in New York and even some of our legacy companies, New York Times. For all the problems that you read about, the company, newyorktimes.com is often cited as one of the most successful websites on the internet. And I think that all of these presents an opportunity for us. But we can't just assume that future growth is going to happen here and that's really why we're undertaking the study that we are with Oliver Wyman. We want to make sure that we understand or at least have a theory for where the market is going, how it's going to affect New York so that we can come up with a series of initiatives; and one of the things that I hope to get out of today is to hear some feedback from you and from the other panelist about what they see the trend is to make sure that we're really addressing the problems that the city faces.

Garrick Utley: All right. Thank you, Seth. Let's move on to Martin because you've been working on this research project. So I think you can tell us the number of people and the scope and the depth of this. And to that, Martin is Head of the Media Practice of Oliver Wyman here in New York City. You focused on media for a long time. And also, it says in the bio, because we live in an era of globalization can this be true, you're a citizen of Canada, Great Britain and Germany?

Martin Kon: Yeah.

Garrick Utley: How? How is that? Just out of curiosity.

Martin Kon: Good fortune of birth, I think, it was in terms of place which was Canada and my parents who are German and British.

Garrick Utley: German and British.

Martin Kon: Yes.

Garrick Utley: You got the best of all worlds then.

Martin Kon: Best of all worlds.

Garrick Utley: And you got a green card, I imagine?

Martin Kon: I don't yet. Anyone who has any friends in Washington maybe they can help me out with a--.

Garrick Utley: Okay. Anyway, you are in here--.

Martin Kon: It seems to be reasonably tolerated in this country which why--

Garrick Utley: We believe in working across borders and cultures and you're certainly an example of that. Tell us a bit about the study you are conducting and the things that are emerging because I think this will help to prime the pump for our discussion.

Martin Kon: Sure. It's a year long initiative that the EDC and Oliver Wyman are collaborating on. And a sense of the idea is to start with the understanding what is happening to the media industry and what will or could likely happen going forward. Well, I can answer the question saying, "This is the future of media." I think that would be quite presumptuous of any of us plus we occasionally like to get paid for things like that from a lot of the people in this room and elsewhere. But it really is to understand what some of the scenarios are, what are some possible outcomes are going forward and really the perspectives of many of the leaders in the industry.

So, the initiative has an advisor group of about 60 media CEOs, thought leaders, venture capitalists, folks from the education sector including the two on my left here, really are the leaders in New York based media and companies that have very significant New York presence. We've even got a couple of big studio heads from Los Angeles who, of course, produced a lot of television and film here in New York and thus New York City is extremely relevant for their businesses. And through a series of panels of workshops, of interviews and conversations as well as a lot of background leg work behind the scenes to feed these discussions, we're understanding what the consensus view is or the lack of consensus view is on several different themes. So, I can share a couple of them with you. I'm not going to go through everything that has come out of the study. This time wouldn't suffice. But there are some quite interesting, potentially provocative findings that are coming out, that could be quite relevant for people in the room and for New York City.

Our focus really is on customers, on consumers because that's the most important place to start. How well consumer behavior and preference change going forward? That's obviously the place where we should always start. And there is a major technological shift going on or that has been going on in terms of physical or analog to digital. What does that mean? Many have said this is the death of media. No one's going to pay for anything. Everything is going to be free. Everything is going to be pirated. We've heard a lot of this in the past, also with other technology shift. It's interesting to see what happened. Think about radio back in the '30s and '40s, it was ubiquitous. Everyone crowded around the radio to listen to shows in the living room. Then television came along. It once said radio is dead, it's not going to survive. Well, it did. It just--the transistor shifted into the car and to a lesser degree to the workplace and grew and was much bigger and became much bigger and more valued generatively than it had been previously. It changed business design to reflect the new technological opportunities and consumer behavior being in cars a lot, in meeting and so on.

Something, same analogy happened with the film industry back in the mid '70s. The famous quote when the VHS and video recorder was invented by, I'm sorry it wasn't invented by the Head of the MPAA but the quote was by the Head of the MPAA at that time saying that the advent of the video recorder would do the same or would be as dangerous for the American film producer and film consumer as the Boston strangler is to the woman at home alone. That was in '76 when global revenues of the big Hollywood studios are by $8 billion a year.

Fast-foward to the mid '90s after the, you know, the home entertainment growth and VHS when revenues were about $27 billion and I’m probably not to be exactly right with the numbers but more or less right. Then the DVD came along in the mid 2000s. Revenues of Hollywood are about $45 billion plus; so from $8 to $45 billion after we were told this is going to be the end of the industry because we're just going to copy stuff and give it to their friends. Again, it was that business design shift that was enabled by or maybe necessitated by a technological shift.

What's going to happen now? Some could argue that this is much more transformative and it probably is, just given all the things that are changing; but the point is those companies and entrepreneurs and talents who can understand and anticipate how consumer behavior and preference will change and adopt in trade business models that will reflect this will end up winning. Now, through the work, we've spent time. Edward Portlett, who has been managing the work with Christie Sanjaya from the EDC told me this morning we've spent time with 123 executives from 111 companies over the last few months in workshops, panels. These are CEOs and Presidents as well as a lot of thought leaders from major media companies and entrepreneurs and venture capitalists and talent to understand their perspectives on what's going on. So I wouldn't say it’s necessarily, you know, statistically-representative sample of the entire world but it is a very educated perspective on potential scenarios.

And some good things and some interesting things and provocative things came out. One was there was consensus really that going forward consumer time spent and revenue, money spent on media will go up. It will go up. You might not spend it in exact same places or on the same things; but, overall, this technological shift will be "growthful" going forward both in terms of time as well as in terms of revenue, which is good news. We then talk more in details about what's going to change over the activities. There are a lot of changes in terms of what people will do, the traditional activities of spectating, listening, reading, watching, playing, et cetera. Let's say, traditional activities will remain maybe in different formats but people won't stop reading. They may read “The Huffington Post” as opposed to only reading newspapers, but the activity themselves will stay. But initially, there is a growth and there will be continued growth in hybrid activities. So, not just one specific thing; I'm either reading or I'm watching as it was historically. But, for example guitar hero, are you playing or are you listening? Well, actually, guitar hero is probably as relevant for the music industry as it is for the gaming industry. That's a sort of hybrid activity. You think about, you know, John's cnn.com, a very successful portal. Is that watching? Is it listening or is it reading? Well, it's all three of those things which is very different from the traditional broadcast CNN or a newspaper or an audio broadcast like an interview with the world leader. So, a lot more hybrid activities are happening.

And in addition, new common horizontals that cut across all the traditional activities, producing which is something that just didn't exist before. But producing as an activity, whether it's Flicker and uploading photos, whether it's YouTube and filming either bulldogs and skateboards or even more professional videos is something that's new as well. And all across that activity change people are producing and spending time on it and spending money. They're buying Apples. They're buying software. They're buying coffee mugs and so on with their friends' pictures on them. Those are brand new activities that have been created. Another one that we just termed, for lack of a better word, mobiling to mobile because we don't even know what that means yet; whether it's walking around seeing a beautiful building and being able to dial a number and get, you know, an architectural tour of that building while standing outside it because, you know, the service knows where you are; or whether it's a location-based game scavenger hunts which allows people to play games with others who happen to be in the same area and go and find clues. Who knows what they'll be but these are brand new activities that haven't existed before. So there will be growth in new areas that we haven't seen.

The second interesting discussion was around the difference or the relative value of blockbuster mass market content and brands and offerings that are sort of more niche mid-market and then used it to generate content. Are we going to see movies in Hollywood and CNN and other big ubiquitous brands go out the window because everyone is going to be watching YouTube or blogging and so on? And again there was actually surprising consensus and this is in a group remember. Remember in San Francisco, we had one round table with a couple of Hollywood studio folks and a couple of executives in the leading blogging sites and games manufacturers complete opposites in the spectrum, who basically agreed that the blockbuster will remain or even increase in importance because of the hyper-connected and very distracted consumer of today and tomorrow. The need for commonality and blockbuster they can all understand and talk about is going to continue whether that's Dark Knight, whether that's CNN, whether that's Desperate Housewives. But at the same time, this very activity will grow in importance, but in a symbiotic relationship.

So, yes, as a consumer, I do want to understand and read about what someone on the street in the Gaza strip is writing about what is actually happening. But, at the same time, I also would like to hear the exclusive interview with Hillary Clinton, what the State response is or what the Chinese think about what's going on. And for that then the blockbusters, the brand leaders are even more important but in a more symbiotic way. And that was a very interesting concept we haven't thought about, but these are not necessarily competing. The challenges potentially than more so in this middle professional mid-tail content, you know where does that go given that there is a clear value on each side but that was a quite interesting perspective. Then there's lots of other interesting and to some degree provocative findings that, you know, apart of this work and obviously would be available to the public from EDC.

But what does this mean for New York City? What it means is that there is a lot of opportunity out there. Yes, there are a lot of threats, a lot of challenge but a lot of opportunity. And for New York City, there are three groups that could take advantage of these opportunities and three groups for whom being in New York has been and should continue to be very valuable. The large incumbent or the large media corporations like CNN, like films, news and newspapers, because of so much interaction and hybrid activities going on being in a place which is a mono aligned sort of city like Los Angeles or San Francisco or Austin, Texas which is quite important for the gaming sector, becomes more of a challenge because you have to be in a place where there is gaming and music; or whether it's news and television and other elements of that activity change.

For entrepreneurs, what’s the value proposition for entrepreneurs coming to a place like this rather than Silicon Valley? And I think it's very clear that media advancements will not just be technology driven, they're going to be great engineers in Silicon Valley. It's tough to compete with Stanford and tough to compete with MIT in terms of just raw number and experience of the engineers. But you need also to understand how media works and what consumer wants and that again is something as Seth said that New York has established and will continue to be relevant for. And the third group, for whom there should and must remain a very clear value population is the talent. Talent will go to where jobs are, of course. A talent will also go to where they want to live and for a lot of creative talents including creative talent linked with technology which is where a lot of the future will come. New York City is a very attractive place because of the 96 museums. I can't remember all the numbers but because this is the place where you can go and be around other creative people. So those three groups are very, very important because they will drive the future of media and capitalize on what people are seeing as a growth in time spent and a growth in money spent by consumers and by business customers which, you know, are left a little bit out with what I was saying, but obviously business is the same or in a similar kind of perspective.

Garrick Utley: Okay. We will come back because I'm going to Peter and John but when I come back because he spoke with more of these 100 senior executives and media organizations and really the bottom line is what do they see New York's future has been? Yes, there are challenges. Yes, there are opportunities; that's why we're all here but I'd like to come back to that. Maybe we can also pick up on that with Peter now. Peter Price, National Academy of Television, Arts and Sciences Foundation and also one of the co-chairs of the Advisory Committee or board working on New York Media 2020. Peter, you have a wealth of experience even in print, television, et cetera. I don't know what the proper terminology, what politically correct is this old media, traditional media, legacy media but give us your perspective on a lot of what's happening. We heard you have a very good analysis for Martin. But were you really see New York City coming out in this?

Peter Price: I think it's a combination of sort of bad news and good news and really builds upon what some of my colleagues here have said earlier. Just a note about the people who are ruminating in this hut to come up with all these ideas and observations, it started with a request that I pull together a group of presidents and CEOs of media companies to get involve in this dialogue with the city. And I recall a few months ago, I think it was sending out an email on a Friday to this set of people I've been dealing with over the years and I think there are about 50 emails and by the close of business on Monday, I heard from 49 of them who said yes who are to participate in this exercise and they were mainly people based in New York but also from film studios in Los Angeles and ad agencies in London. So it's been a wide deep dialogue and the people involved have been in the electronic games business, running companies of that sort. They have been the people running newspapers, magazine companies, television networks, cable networks. So, it’s quite a powerful voice that we’re getting in these rooms in these various sessions we've had. I think that what I felt, as being of kind a sort of a legacy media guy, is my role here this morning.

Looking at what’s going on, I think what’s happening is that essentially the generation I grew up in that last century of legacy media were or became to be a group of, let's call them, digital immigrants. And my colleague in here and I sort of learned the digital business about the same time in New York when we were both working in digital media, learning our way into the business and that transition from that analog century into the new century where you got the first group of, let's call them digital natives as opposed to digital immigrants. And they’re not learning it they’re sort of growing up with it. It’s not a matter of figuring it out. It’s a matter--it's part of their life experience. So they come out of it in a way that I think it's difficult for us to imagine and, I think, that's why it is important to get the collective wisdom of a room like this because there are digital natives in this room and there will be more of them who are really going to shape what happens.

Now just a note on the legacy or whatever that terms means media and it relates to something Seth said earlier about the nature of whose, what the tools it takes to be successful in the business. When I got into the business, I guess my first job was after city hall where I worked for awhile, was at Time Life, then called Time Life before it was Time Inc.; and at that point, in the magazine business, for example, people would always say, “Oh, well, you have The Life Magazine. It has six million circulations. That’s great!” What people and I learned quickly there they didn’t quite understand is you don’t sell circulation, you buy circulation. Distribution is everything and you’ve got to go out and buy distribution from, basically, people who control distribution networks.

That’s true in the print business as well. It was more so then because wholesalers were bottled neck and they were very monopolized and to get into those wholesalers you had to have some market power or you had own networks of racks and supermarkets to get access to those new stands which were precious outlets. And if you couldn’t get a rack or you couldn’t get a wholesaler to put your magazine in the front of the store or in the location you couldn’t sell anything even if you have the greatest magazine in the world. This was also true having been a newspaper publisher, even more so in the newspaper business. Well, the distribution networks were less monopolized. They were, in a sense when newspapers began to disappear, you only had one or two often now less than one in a major market. That publisher, including USA Today, very important way or means to their success was that they had their own distribution network. They didn’t have to rely throwing their bundle on to a truck along with everybody else’s distribution and having to meet that truck. They control and still control their own distribution network. A very and a few didn't. It was very tough to get to market.

I was publisher of a start up called the National Sports Daily and what killed us was not the content because everybody thought it was brilliant. It was the cost of getting to market. Television. Television was a broadcast medium then and you had to have a license. And there were only so many VHF licenses that were available in the market and you had to pay a lot of money to get one of those stations, and if you did, you basically control the signal in all of that market. And if you were a station owner, a network paid you, just like Sports Illustrated would pay distributors, the Publishers Clearing House, to get to market. So, if you wanted to start television in a market, it was almost impossible without a federal license the cost of which is like a medallion on a taxi cab. It was controlled by the numbers that were out there and supply and demand. So this was the nature of the marketplace in that analog world where you depended upon these distribution networks.

It was tough to start a company. So entrepreneurs, although I succeeded a few times, the cost of getting into the business was great. You’re required a good deal of luck and a good deal of fortitude to survive in those marketplace. In this digital world that the natives are now growing up in, a lot of these distribution monopolies have been eliminated and one of those monopolies back then was even the motion picture business. The studios owned theaters, and were it not for the Feds they would still own the whole vertical chain of distribution. That was not adapted so even the movie business was highly monopolized. So today, where you have digital distribution, for the first time, there’s oddly enough a surplus of distribution. The distribution is much cheaper than it ever was before, and there’s a demand for quality content.

So if you can come up with quality content, you can get it to market evidenced by some of the pure digital place we’ve been talking about. What it’s going to take, and this gets back to New York to be successful, if you're not, if controlling distribution is not the key to success, sort of buying your way into the market with capital or control, then what is the key? Is it content? Content is keying all these old saws or new saws that you heard about. I’m not sure it's content per se although The Huffington Post, it’s brand. If you get among all those websites, brand yourself is something that's absolutely necessary to check in with everyday, whether it’s that or DailyCandy or whatever that lifestyle habit is that you have, you don’t have to be rich to create a good brand. It helps to have some rich partners who will help you let people know it's there. But, I think, back to the New York story, the talent that it is attracted to this electric and electronic environment in New York these days will find their way to create brands where they could have never been a creator before or at least a creator that didn’t rely upon the kindness of rich networks to get to market. So, I think, that’s the good news about the old media story and the new media story where we live.

Garrick Utley: We just follow up and push you on one point and go on to John. Again, we’re getting and this is very important to pick up the conversation, excellent analysis on what the situation is. I’m going to keep coming back again and again to the impact on New York City. The big legacy media companies are here. They are doing all kinds of things. They’re online. They’re buying, you know, Facebook, MySpace, and what have you. They just said GM yesterday. There are cultures and organizations. In your opinion, in your experience, Peter, can these legacy big media companies adapt to this new world? They can buy. Can they really prosper in this new world or are they, pardon the expression, many GMs in the future?

Peter Price: I could answer your question. I think one of the reasons the response to the invite to join the dialogue of the invite to the CEOs was so great there is what's called an urgency of the moment that's being felt at the parent company as well as entrepreneurs getting into the business. So there is a sense in the largest companies that unless they find a business model that works as advertising becomes less reliable and this when people are unwilling or at least reluctant to pay for access to things that they have found for free, the large companies are struggling with this. They are challenged like New York is challenged and equally, financially as well as conceptually about who they are and what their name is and what they stand for. But, example, The New York Times can be augmented. You have an even more traditional company in New York than The New York Times, the Hearst Corporation, known for some Good Housekeeping and Cosmo and some titles that have been around for ages. And there was an article in The New York Times I think it was Monday about Hearst has found a way to be very successful selling magazine subscriptions on the internet in a way that it is now accounting for most of their magazine circulation in a much more effective way.

And the other thing the article alluded to, which it really didn't go into it, if you look carefully on what Hearst is doing, they’ve got an incredible investment in digital media. The realage.com which has got millions and millions of people attracted to is a Hearst enterprise. And I just picked the Hearst Corporation among many others. Time Warner has and John can talk to this, a huge investment as well and I think they have in fact a head start because they have the resources that's sort of been there and done that. And I think they will--they are reconfiguring themselves including the motion picture business who will rely more upon digital distribution because you will see it's taken awhile; but those reels in the canister bicycled around the theaters will stop shortly as that signal goes right to the theater electronically and gets that film, gets captured there. So, the oldest forms of media are now moving to the forefront of the newest form of media.

Garrick Utley: John, you’ve been waiting patiently but we put you in there as the cleanup hitter because you've covered so many bases: CNN, presently CNN USA; part of Time Warner, Global Media Corporation with headquarters over here on Columbus Circle. CNN started in Atlanta, still there; but somebody said that CNN was the news from everywhere in the news from nowhere. In other words, it was just there. That was a compliment. And yet you've moved your operation and a large part of CNN to New York City in an age when places are not suppose to be all that important. You’re on the web which is as important if not more important than practically on the TV side. So you put all these together and give us your thoughts on where again New York City, your home, your headquarters is going to be?

Jon Klein: Speaking beyond where Time Warner, I have no doubt that Time Warner is going to remain in New York City and CNN will continue to have a big presence there. We've started to build up our presence in New York several years ago because this was where talent was. That’s what drove us to significantly expand our presence. It’s funny because we now have probably about a thousand people or so in a company of four thousand, you know, based in New York. But we still are referred to by the folks in Atlanta as the Bureau.

And the other day, they had to--because our main headquarters of CNN is still Atlanta. So my boss is in Atlanta. I go down to Atlanta every other week and our news gathering operation is located down there. Our DATCOM is located down there as well. But, there was a meeting that happened in this big clunky companies, also there was some HR or we-go meeting that every employee in the company has to go to and so they set up a New York session for New York employees. And instead of having me or somebody else who sort of got, kind of macro oversight of all that, they have the New York bureau chief, that is, there’s an actual bureau among the many hundreds of people who were there, there is a New York news gathering bureau of few dozen reporters, assignment editors and others, et cetera and this person oversees that bureau, they had him put out the note to the entire New York constituency that, "Hey, you've got to show up for this such and such meeting."

And I wrote down to Atlanta, I emailed, I just said, “Is this for only the bureau people or you know everybody.” And they said, "Oh, well, we thought you all were.” Now that’s not everybody coming in, but it is a legacy just in people’s mind. So we’ve gone to coffer and the reason was, as these guys have noted, the various advantages or the basic idea being the sizzle, the presence and the talent, both the producing talent and the reporting talent. Now, is that still necessary? I don’t know. You know, I think talent appears in a lot of places and there are talented producers in a lot of places. I think the challenge for New York City as a whole, separate from whatever CNN or Time Warner face, the challenge is it mirrors the challenge that these big legacy corporations face which is we understand the intellectual aspect of this and, intellectually, we understand the needs to be nimble and to act like an insurgent even as we’re an incumbent city and economy.

But can we actually emotionally get there? Can we actually live that way? You know, I ran when repeaters are referring to our digital walkabouts, I ran an online video company based down on Hudson Street. I wanted to be located, this was from 1999 to 2004, it’s called The Feedroom and we wanted to be located in New York again because of the confluence of talent and the atmosphere and I thought I found the city to be very welcoming toward entrepreneurs, part of our funding came from the partnership, New York City Investment Fund, and they're very helpful in a lot of ways.

But when I think back to those days, the company’s entire mission was innovation. You didn’t ever have a meeting about the need to innovate. It's what we are all there for. It's what we were scared to death about. It's what motivated us every morning, noon and night. That's all we are doing. At a big legacy company, you spend so much time maintaining the very successful line of products that you have and keeping all of that talent engaged in what they’re doing; that innovation can suddenly become a walled off, separate area instead of something that permeates the entire organization. Now we know intellectually, as the managers of the company, that that bifurcation can exist and we work really hard to make sure that everybody feels a piece of that urgency and the need to constantly innovate even as you’re maintaining. And, I think, that's the challenge that the city faces.

Garrick Utley: Good! Let’s follow up on this and also get the conversation going. A couple of things that you've mentioned struck me particularly. You mentioned about whether the legacy companies, Time Warner, CNN included, can really adapt beyond the intellectual recognition and understanding on what is happening to something more very significant which takes us back to Detroit and the GM. I mean, just throw out a couple of ideas of clichés if you will well known. One is the idea of a global village. Here we operate on the belief that there is no global village. We live in a world of an infinite number of villages connected globally. And if you look at it that way, there is a different dynamic. One of those villages is New York, a very large village but it is--a known if you will.

Second, we had a session on media awhile back and the question was raised, “Are we at the tipping point in this legacy to new media?” How ever you measure that in terms of market share, public interest, generational shifts and technology advancements. And somebody said we're already past the tipping point. Whatever that slope is. Now, we can define it in any way you want to.

And the third question that always comes up, I'm sure everybody in the media industry in this room is asking this all the time, “What’s the new model?” And I ask the question in this session. What if there is no new model? We operate on the assumption that somewhere out there, between now and 2020, there’s going to be. Obviously, patterns or structures will evolve. Some companies will grow, others will disappear. But is there what we call the need, like the newspaper print model, the network TV models, onlines, the Google model today, et cetera. I'll just throw that out of the air.

Get your questions ready. Put your hands up; just give us your name. Please keep your questions brief or directed to one or more of the panel members; and if it’s a comment or an insight, be that brief, focus to the point but we really want to hear from as many as possible today. While you are getting ready for that, come back to what Martin was saying on New York's and Seth, too, on the study and your interviews to the bottom line of New York City. All these executives, they know what's happening and they're dealing with it. What do they see New York City’s future and viability and competitive position be a decade from now?

Martin Kon: Good question! Before I get there, just your last point, I think it's a great one about the model. The way that is very important to think about this is not about what is the newspaper model, what is the television model, what is the print magazine model. But what are the business designs that are going to speak to address consumer needs, preferences and requirements. Example of what I mean there is the music sector. People right now are spending more on music than ever in history.

But you have to include what they're spending on iPods as part of that. From a consumer’s perspective, you know, how many people in here don’t have an iPod? Or how many people haven’t bought probably five of them in the last five years? And each time it’s 400 bucks, 300 bucks, whatever it is and you have three different ones; one for jogging, one for, you know, putting in your car, and one at the cottage or whatever it might be. Apple makes make 65 percent margins off their hardware which is unheard of because it's electronic business. And don't make a ton of money at all off iTune store.

So, when we think about what the music labels make and what’s the revenue being paid for music, that's only one element of it. The point is there's a business design around digital music that is extremely lucrative for the whole value chain of all the other players. It’s just that a couple of very, very bright innovative people thought about an innovative business design; not just a product, not just a price point but an entire business design.

And it is the same thing for newspapers or news generally, you know information. There’s some very interesting discussion with John about the role of CNN going forward not being just about creating news, but about vetting and curating news that may be others create which is a very different way of thinking about news but very valuable to the consumers. So I think that give a business designs for consumer needs is important. But back to your question that you actually asked me as opposed to the one that I decided do, sir. Going on--

Garrick Utley: Go on the road.

Martin Kon: I think there are three themes or three elements that came out of all the discussions about why New York or not. One is cost. One is, you know, where's the talent or the people that you want to work with, and where is innovation going to happen. On the cost side, obviously, New York is somewhat of a disadvantage. Not as much as a lot of people think but there is going to be a bit more expensive than going over the river to New Jersey or, you know, going to Oklahoma or wherever it might be or to Bangalore. And there are a lot of functions that already have been moved out many years ago and that make sense. More than, let's say, lower-value added things or more generic functions that don’t necessarily have to be right in Manhattan or the other four bureaus. And a lot of that has already happened and that is, you know, still enabled New York to grow more of the higher-value added things. So cost is obviously an issue.

Secondly, where the talent and the buzz is and so on and those together is an interesting discussion we have with CEO of one of the very large publishing, both paper and web publishing groups, who was actually looking at moving to New Jersey and the CFO as well as the business case looking at how much we would save. In the end, the decision was what we would say which is actually, you know, really black and white on paper. He said, “I don't-- that is just not worth the-- or does not make up for the intangible value of being in Manhattan and having my editors, having my, you know, web journalists, whatever they might be, be here and be able to walk down the street and see other people, be able to attract to the right people, be able to interact with the right people." The decision was made to keep the business or the high-value elements of it in Manhattan. In fact, he even made a bigger investment in some new space that they're building.

There is an interesting anecdote that another executive mentioned which is one of the companies had to move some operations over to New Jersey and they had an empty office building because all of their people spend all their time in Starbucks in Manhattan on WiFi and just basically, you know, said, “Fine, the office is there. I’ll go there every Friday to give my expenses but otherwise, you know, I’m in Manhattan in Starbucks because this is where stuff happens. So I think those, too, there is a trade off and it’s a business case that every company will do. What is the value, which is really harder to calculate and put, you know, be very, very clear about, put value of being in the right place for talent and for interactions as I mentioned before given that a lot of more of media is happening between and across the various original activities. You know, being around others is that much more important.

The third point about innovation is an interesting one and it comes back to your point about GM to some degree. Historically, when innovation happened? Well, it happened at Bell Labs. It happened at Texas Instruments; huge companies that have massive resources to be able to invent new technologies because that’s the only place where you have that kind of resource and capability to do things. With the advent of the internet and the barriers coming down and Seth talked about them and the cost coming down, a lot of innovation happened at the other end of the spectrum. You know, three guys and gals and their dog in a garage. You know, the Googles, the Yahoos, and the Facebooks and so on which are just people with ideas and being flexible and innovative and nimble enough to come up with great ideas and be able to nurture them and bring them to the market. Going forward, there seemed to be maybe not a complete consensus but at least an understanding that a lot of innovation going forward will happen at the intersection of those.

So companies that have the assets that are required, it might not be distribution but still cable companies and Tacos still have tens of millions of customer relationships which are important. Maybe they don’t control what goes through the pipes but having those relationships are important; or the content that the brand, the journalistic capabilities whatever it might be. Walking with a lot of the entrepreneurs, people who are in this room and others who have great ideas but is at intersection point that many think will drive a lot of innovation for the future.

And one character, GE for example, one of the biggest innovations, I think correct me if you think I’m wrong, in television is Hulu and Hulu came out of two pretty massive conglomerates; and now a third has joined them. So I think there is an issue with the incoming dilemma of “do we want to kill our lucrative core business?” But I think more and more you're seeing that a lot of the big conglomerates are seeing the future. They are not going to make the same mistakes as some had made maybe in the past and proactively doing things like Hulu but Hulu was set up as a little bit of a, I don’t was to say skunk work, but it wasn’t a division of the other TV businesses. It was set up as a separate business to say, "Okay, let's get some healthy competition and let's have the advantages of being nimble and entrepreneurial but with all the assets that the parents could bring the bear on making it a success."

Jon Klein: By the way, Garrick, to your question about the model, they had no model before it.

Garrick Utley: Yeah.

Jon Klein: They still don’t know how much money they might make from it but they knew they had to do it. So there's a lot of that going out on the limb.

Peter Price: But, Garrick, a very quick answer to the question that should have supplement what Martin said in a different way about New York is that I think there is general agreement right now that the most successful media business is going forward with certain exceptions like Google, who is an internet company. Is it a media company? Is it the internet Google? So that aside, the most successful ones appear to be those who enjoy both subscriber and advertising income; that's why cables are doing better than broadcast right now. So if you look at that, even a company like Google which has this huge constituency in the West Coast than around the world has two thousand employees in New York City, three thousand employees. Why are they here? They’re here, not because to go to the theatre, they’re here because I believe the advertising business is here. And even WPP in London, one of the largest advertising companies in the world, has most of its major subsidiaries guess where in New York City. So, if you really want to enjoy two revenue streams and you’re pretty good at producing good content but you want to make sure it’s attached to ad stream then New York is probably a pretty good place to be.

Seth Pinsky: If I can just jump in with one other response to your question about what the new model is; there has to be a new model. And I think, that the key that everyone is wondering, “Well, is the internet going to be able to go on forever without ever producing revenues or making profits?” and the answer is, it has to be no. There's no business in the history of the world that has survived for a lengthy period of time without ever being profitable. And I don’t see, personally, that changing going forward. And I think what's important to remember are two things that that leads to: one is that innovation even though it’s less expensive to innovate now. One of the reasons why it’s less expensive to innovate is because other people created tools that required significant amounts of capital to create. You know, people are able to work at home, to edit films and to produce music on their Apple computers because Apple put a lot of money into creating these computers. People are able to distribute their content cheaply over the internet because the Federal government of the United States created the internet. And so going forward, for innovation to continue someone is going to have to have capital to invest. So, I think, that's one important thing to remember.

The second thing is that I do think that the fact that there will have to be a model and I don’t know that anyone of us knows what that model is going to be, but the fact that there will have to be a model gives some advantage to New York. We are meeting yesterday, some of us from EDC with a private equity firm that's active media in New York. And someone raised the point that there are a lot of new media businesses coming out of the West Coast and someone else jumped in and said, “There are a lot of new media technologies coming out of the West Coast. There are many fewer new media businesses coming out of the West Coast and that what they've found is that many of the new media businesses are actually located here in New York because of New York’s business orientation as opposed to its technology orientation.

Garrick Utley: Which is the point that to what extent is New York City a media capital or global media capital or global media headquarters capital where decisions and investments are made? We're living in the interactive age right now so we really want to get inputs. So, we'll start right up there.

Bill Sobel: Thank you, Garrick. My name is Bill [1:00:09 Sobel]. My question involves tax credit. I'm sorry that Commissioner Oliver is no longer here. She left a few minutes ago, but I know Connecticut offers something along the lines of a 30 percent across the board tax credit. NBC is moving a number of their Universal Shows to Stanford. I believe Disney is moving a certain shows to the Connecticut area whatever. That obviously could have a major impact on the production here. What about New York? What is New York doing as far as offering significant tax credits to producers here to stay, keep and grow their businesses here?

Garrick Utley: Seth that's for you.

Seth Pinsky: Well, I think that the bottom line is that we in the Bloomberg administration have always understood that New York is not ever going to be the low cost production center and that we're never--it's a losing battle for us to try to compete for business based solely on cost. We put in place the film tax credit that you're describing originally because what we found was that the premium that people had to pay to be in New York was more than the market was willing to bear. But that people were willing to pay a premium. And the analysis that we did showed that, for example, it’s 15 to 20 percent cheaper to produce films in Canada at that time than it was in New York. But our tax credit made up maybe five percent of the difference. But what happened was by lowering the cost just that small incremental amount we generated a substantial amount of new activity in the city. We also invested, as importantly as the tax credits, in new facilities for the city; new film studios, for example, the Steiner Studios in the Brooklyn Navy Yard which were, I would argue, as important in growing the film and television production over the last several years as the tax credits were. We are continuing to work to extend the tax credit program that we have. I know that the state has done the same in this area. But we're not going to seek to match what Connecticut is paying. What we're going to focus on is what I mentioned earlier which is making New York a place where creative people want to be.

And, you know, there are always going to be stories of companies whether they're film production companies or television production companies or any other type of company that leaves New York in spite of the fact that we have our talent because of the cost; but what we've seen over the course of the last several years is that if the people are in New York, as was described earlier with CNN, the companies are going to follow the talent. And so, the best investment that we can make in keeping New York competitive is not a tax credit that gives money to an individual production but it's collecting the taxes that we collect and deploying them for things like keeping our street safe, improving our schools, creating new parks, keeping the streets clean. All of those things are the things that have drawn people to New York and if we can give away money all day long to companies to induce them to come here. But if we suddenly no longer have the revenue in order to do those things, it won't matter how much we're paying companies to stay here because the talents are going to leave which is exactly what we saw in the 1970s and the companies will flee with them.

Garrick Utley: Okay. Thank you.

Karen Levine: My name is Karen Levine.

Garrick Utley: You just push the button on the left to your microphone there.

Karen Levine: This one?

Garrick Utley: Yeah and push.

Karen Levine: Can you hear me? Okay. My name is Karen Levine and I'd like to delve a little more deeply in two sectors.(question inaudible)

Garrick Utley: Okay, two parts; cable and newspapers. So, who wants to pick? You want either Martin or John?

Jon Klein: This is the cable guy here. Well, on the cable front, the one advantage that cable operators have is that precise point of contact with the customers Martin was referring to. Eric Schmidt, the CEO of Google addressed Time Warner Group a couple of years ago and at that time, the company included Time Warner Cable which is now spun off and he was asked, "What part of this company do you value the most, do you most wanted to do business with?" He said that the cable part, the cable operator part because you have the data from the consumers and it's the data that's going to be most powerful. What the companies do with it is going to be the challenge for them but, I think, that gives them a good poll position.

Martin Kon: I think that on cable, I think, I'd agree because that's an interesting anecdote because there was talking about moving to Connecticut. They're probably moving into Time Warner Cable offices because Time Warner Cable office just moved to Manhattan so those things are already going both ways without tax incentives. But, I think, the cable subscriptions are going down. I'm not sure whether that is in fact going to happen. One of the topics we discussed with the hundred or so executives and there's actually a move in business value capture part of the business design. There'll be away from a lot of a la cart payment and pay-per-use payments, and a little bit more to mega subscription bundles and, of course, advertising based.

Mega subscription bundles in two ways: 1) things like the triple and quad play where, you know, you can play it with your mobile phone, your internet connectivity, your television service and content, and your home telephone if you have one. And those are, you know, things that people are paying more for and, in fact, some work that we've done shows that in the recession the last place the consumers will cut is subscription packages of internet and mobile phone, and so on. The first place they’ll cut is generally delaying hardware purchases or eating, unit purchases of content.

But also there's bundled subscription and device models as, you know, some things like Nokia is working with. So the cable operators, I think, have a potentially very exciting position of having a lot of customer relationships, having a lot of innovation about how consumers will interact with content, program guides and a lot of the new on-demand features and so on that they're providing as part of the subscription package, not paying for each HBO film that you watch on demand; it's part of your subscription. And, of course, with advertising, the fact that they have, you know, interactions with eight-and-a-half hours a day with each households and it could potentially do some quite exciting things on the advertising side with Google, with WPP, with others that they can work with.

Peter Price: And also, it's a fact that when you have more than one cable operator in the market, you have greater penetration of the marketplace. So, when there was just largely cable available to get subscription television in New York, you had ex-penetration when you had DBS (Direct Broadcast Satellite) from two or three companies and then you add new competition from the [1:08:16 telecos]. Your cable penetration of the 10 million marketplace around New York goes from 60 percent up to an 80 to 90 percent, so you're going to have more engagement that way.

Just a brief comment on newspapers, you know, non-profits are generally set up that way to avoid their income getting taxed. Well, if you're in the newspaper business and you're having trouble making any money, having your income taxed is not really the most pressing problem you have now. So, you could say, “You'll save on real estate taxes and other things” but then again you get the government as a partner. You get the Attorney-General of New York as your partner in the business since oversight is severe and I'm not sure that journalist would welcome government as their partner in the enterprise. So, while it's been thought of, I don't think that's going to be the direction, that's a personal opinion.

Seth Pinsky: I will add also. I'm sorry just to throw out that theory on newspapers and other. The competition between pay content and free content which is that, I think, we're at a particular point in time right now where people are able to access quality content without paying for it. And as long as that’s the dynamic, I think it's going to be very difficult for somebody to charge for it. What we're seeing though is that the providers of quality content are in decline or going out of business altogether. And my theory would be that at some point they're going to reach a point where the quality of the content would decline so much and that there would be someone who will say, "Look at the difference between what I offer and what you can get for free and we'll charge for that." And that there will be a market that will develop for that but it may take a significant continued decline in the quality of the content before that happens.

Garrick Utley: And the way Newsweek and what they're trying to do now is one indication of that. But we’ll come back to Peter because of the newspaper issue. Everybody talks about The New York Times, what's going to happen, its difficulties. But, I think, we should focus on it from a different perspective. At some time between now and 2020, perhaps sooner rather than later, The New York Times is going to change in some way. And you can--a lot of us, generally, loves to get its hands dirty reading the paper editions seven days a week, et cetera, et cetera. We know the difficulty of getting the revenue on the Times website. Or whatever is going to happen, if The New York Times ceases to exist not as a company, not as a service of news or deliverer of news, but in its traditional format. The psychological or image impact that could have on New York City because there is New York's name right on this newspaper, how does it make that transition? And even if it makes it in a business way, if paradigm, can that be occupy the same mind space let's say, not only here but globally that The New York Times has today? Peter, you work in newspapers. You are publisher of The New York Post for awhile, weren’t you?

Peter Price: I was indeed.

Garrick Utley: Okay. A competitor, so, what do you think?

Peter Price: I think it has really happened; it has been happening already because look at the name newspaper. People used to get, I grew up in Philadelphia, The Inquirer and that nearly everybody in Philadelphia read The Bulletin that was their slogan. Now, there is only one newspaper and that is in jeopardy of going away. The newspaper model, not unlike the magazine model, depended upon the circulation income of paying for the distribution which was very expensive and the advertising income being the real profit generator for the enterprise. And that was the--turn it back to the model question. In the new world, that distribution is the man in trucks is still pretty expensive way to deliver news especially if everybody had it on television the night before or on their Blackberry, you know, instantly.

So, I think, newspapers especially big papers like The New York Times that have enriched their content to the point where they're more magazine-like than they are really news-like. So, even the page one is no longer the breaking news, it's more a report upon the breaking news or a commentary about the breaking news. So, I think, what you will see the trend being is newspapers raising their circulation rates, their subscription rates. And The New York Times just did this I think last week or announced it. And depending more upon circulation revenue, lowering the circulations so they won't be able to afford to buy circulation in outlying areas; they’ll reduce their circulation as my guess down to that core of people who are willing to pay more for it and they’ll depend more upon the circulation revenue for smaller circulation than upon boosting, buying circulation to sell more ads.

Jon Klein: By the way, they're in an enviable position of having not one but at least two billionaires who are interested in, you know, taking a piece. So, there's something there that's still of value.

Martin Kon: I think, Garrick, there's the idea of having a newspaper or hundreds of newspapers seems to be something of the past as we see a lot of the local papers are going away. But, we would say there's still a real value of having a smaller number of very, very valued and trusted global potentially or at least domestic, brands like The New York Times, like the CNN, you know, maybe The Economist, a team that people still trust to vet the news, to curate the news even if it's being produced by someone else or it's being sourced through Citizen Journalist or whatever it might be. It really depends upon what the value proposition is that you are giving to consumers. There's this similar funny analogy I just thought about like the GM example. You know, a hundred years ago, people bought a lot of bicycles to get around and then the car came along, and people didn't buy bicycles to get around any longer. But, today, I think we're buying more cars than ever and we're probably also buying more bicycles than ever just for very, very different things. And, likewise, there will be a concentration of may be the big news leaders. I don't the paper is relevant. I think news is relevant whether it's video or online or audio or written or on a tabloid or wherever it might be. And then you have a very, very many other smaller specific value propositions like a mountain bike or a treadmill or whatever it might be.

Peter Price: And just this one footnote before you go on to that point. I think, it’s relevant, and John referred to it earlier about their bureau in New York which goes out and collects the news. There is a difference between news gathering and news reporting. So, there are some three very successful organizations right now: the AP, Reuters and Bloomberg, who are all doing quite well in the news gathering world and have bureaus around the world. At the same time, the traditional organizations like The New York Times and NBC and people like that are closing their bureaus. So, they're getting, relying upon the people, the organizations is specialized in gathering news and are good at that versus themselves who are reporting, messaging and commenting on that hard news.

Seth Pinsky: I'm sorry. If I can just make one very, very quick point which is that I think it's important also to remember one thing about the difference between the news and the rest of the media, which is that the news isn't just a business but plays a very important role on in a democracy. And, I think, another layer of this discussion which is not something that we need to get into today but is worthy of consideration is the fact that a democracy cannot function adequately without a robust news business or at least a robust news industry whether it's a business or non-profit or whatever it is. And that's something that, I think, we haven't completely internalized as a nation just what the implication of the difficulties that the newspapers and other news gathering organizations have been.

John Lee: My name is John Lee and in terms of the study mentioned based on your discussion, you’ve stated very established, very important people but they stem mostly from the digital immigrant. And last, how would you bring in the digital natives?

Patrick Price: I think we may be have used some of the names that people might recognize but actually it's a wide cross section from all the way from Jeff Bewkes, CEO of I think still the biggest media company in the world, Time Warner, down to where cross or upper sideways to some of the most interesting and innovative entrepreneurs. I spent some time with one of the founders of Facebook who is involved in this, Chris Hughes. He is here in New York City, not at West. All the major VCs in New York were the ones that are looking all the time at dozens or hundreds of business plans and deciding where they're going to put their money. They're very much involved in this. We had a San Francisco panel which included a lot very successful entrepreneurs who started their own companies which are either still running or they have folded into a Google or Yahoo or other businesses. And we've got to the educational side of the business as well. So it really is a very, very wide cross section.

Garrick Utley: Between here is a cross section also here. Question right there.

Elvin Thompson: Hi, Elvin Thompson. The discussion as far seem have been focused on the entity, on New York Times, on newspapers. Maybe let's switch the gears a little bit, let’s talk about the consumer, what the consumer wants, where the consumer wants it, how they want it. Fred Wilson and Jeff Jarvis and I'm a believer in this thesis as well as, “The news is important and it will find me if it's important as opposed to me going to The New York Times or going to cnn.com.” Maybe you can talk a little bit about how the transformation is taking place and how you see it taking place because, frankly, I could be honest I don’t care anything about The New York Times if I get the same information somewhere else. The title of the mast, that means very little to me.

Garrick Utley: John?

Jon Klein: Yeah. We get an awful lot of our traffic from Google or referred from portals or what have you. So, yeah, there's no question that people are more able to get their hands on whatever information they feel they require through any means. And one of the big initiatives that are under way at our company and many others is to optimize the odds that are material is going to find you even if you don’t come to us. That requires a degree of letting go that big companies aren't used to practicing and yet, I think, everybody is getting a little more zen about that because we realized that we have to and that good things can still come that's the better way to get our brand in front of your face than it’s in our interest to do it. So I think that's a big function but this “letting go” idea it speaks to a lot of the issues that we've raised here. The whole idea of New York City as a place that you must be in because the levers of control are here, I think, is an old idea that's going to have to change; that you’ve got to be in New York because you want to be in because it helps you and there's as much to be gained in Williamsburg, in Astoria as there is in Midtown Manhattan.

Garrick Utley: First time the word control has been used and perhaps that's an outdated term in this world. We have allowed 15 minutes, 14 minutes and 59 seconds to go. Set your clocks. There are a lot of comments. This usually happens in sessions like this. Seth, you have a very good point in there, you're just going on.

Seth Pinsky: I just want to take exceptions of one thing that you said which may be controversial but I don't think it matters whether you get the news from The New York Times or CNN or another organization but I don't believe that you can get the information that The New York Times has historically collected or that CNN has historically collected from just anyone. The collection of news in particular is costly, time consuming and requires infrastructure still. And I'd come back to this point that news is different from the rest of media and that we are at this moment of time where it seems like you can get the same quality of information with the same depth of analysis for much less and from lots of places. I question whether that will continue to be the case forever if those organizations or some other organizations doesn't figure out how to make people pay for that at some point.

Jon Klein: Okay, that’s a healthier burden on us though that the bar is raised like that. There are more people that get more of a vote on how good we are everyday and that's important for us; that helps us to look alive and stand the balls of our feet.

Garrick Utley: Okay, here in this side.

Garrick Utley: But you're not clear-- so let's just go around here, here, and we'll come down here. Go ahead, talk. Put your mic on.

Question: {Can't be heard}

Peter Price: Well, I don’t think that Mark can talk to New York but I don’t think that it’s a New York matter because you’re talking about a national service that's in the hands of regulators who are not New York City regulators. And in that sense this term "going over the top of cable" is very fashionable now where people would simply get the internet on that screen in their apartment or their house and it won’t necessarily rely upon one distributor whether it’s a teleco or a cable company and they will simply pull the internet up on that screen, television screen, clearly whether it is just a monitor. And therefore you’re really not relying upon any one distribution service because you can always "go over the top". The question of the regulatory issue, I think, that's more in the crux here-- the cost here right now is can those distributors charge more for premium, rich content, a lot of video going over their network and charge more for that and have tiers of distribution rates for the programmers trying to get their stuff to market.

Garrick Utley: Okay, first here

Hank Wheeler: My name is Hank Wheeler I was one of the e-people in-charge with... Back then, we had three principles that we looked at digitially.. Two, we looked at where was the money being, who was placing it out the advertising agencies. And we realized that at that time in 1991, people from IBM, Microsoft didn't know people. I mean, that is as we looked at 2020 and the digital ages that follows, the same questions that we had in 2020. Where will the content be aggregated because as CNN they’re buying innovations or are the innovators bypassed? How did they get scale with the advertising and on [incomprehensible]... But now the New York Stock Exchange that has been there are now being replaced [incomprehensible]...

Garrick Utley: Let’s take that as a comment and a good one rather than a question so we can move ahead. We certainly can.

Unidentified Audience 3: Garrick?

Garrick Utley: Yes.

Unidentified Audience 3: [incomprehensible]...

Martin Kon: I can say actually on the first point about advertising. I didn’t read the studies and I’m not sure where that’s based on but we have several people from the ad industry involved in this effort. One of the executives that we spoke with, older gentleman, he was probably one of the most visionary people I've ever met in the digital space even though he was and his companies were responsible for placing about a third of all media in the US through traditional formats, which is also a sort of cash calibrated business. But a lot of the advertising agencies are placing a lot of bets and thinking a lot about the future and making some very interesting strategic investments or buying start-ups or smaller company and doing things like much more targeted advertising. A lot of interesting work together with the cable, more of the cable operators I would think, like Time Warner Cable and Comcast and so on about understanding viewer patterns and set up box data in the same way that some things we do on the PC internet and being able to target ads much more effectively.

One example of maybe what might happen in 2020 that he mentioned which was fast and steady is if you can tell that someone who is watching television is their car is about to come off lease because you can link him to DMV records, they just had a baby served them a Volvo SUV ad. Volvo would pay a hundred times more for that than they would for 8pm trying to hit, you know, 18- to 34-year-old males with a specific show. So, there’s a lot of innovation that's going on where with anecdotal evidence would make differ maybe with what the study said. But I think there are some very interesting thinking going on, not in throwing away the traditional ad model but in thinking about where things are going or what is now possible and how can advertising be made more relevant to consumers. Maybe made more attractive to consumers and if it is relevant and therefore more valuable to advertisers.

Peter Price: It was also announced, I believe just yesterday, by CableVision that they’ll be the first among the cable companies to launch this new Canoe Ventures, they call it, where the cable companies will be able through the set-up boxes to give you a specific age or a demographic type of buyer that you can point your ad to, which is in response to what the ad industry wants to do.

Jon Klein: And as far as the news as commodity issue, which is a hot point with us. Raise your hand if you think that “60 Minutes” is a commodity. It’s obvious now. It’s the most popular television show, not just news show; television show in history of the media. Nightline, same thing. First 20 minutes, The Today Show, same thing. Our election coverage on CNN last year where everybody was covering the same event, but people make choices, right? They chose us more than they chose anybody else. Generic views coverage can be a commodity. It's available to everybody to cover and to package and to bundle; but that’s not all people want. They then want to drill down more deeply and how you present it matters, how easy you make it, the overall experience because you could say the same thing about downloading music. It was out there but why does everybody do it on iTunes instead of on the other services? So, it is what the people want.

Garrick Utley: People watch your election coverage: (a) It was good; (b) You were that sexy [1:30:06 incomprehensible]

Jon Klein: That’s the thing! Nothing generic about that, right?

Garrick Utley: But Today Show--50 years ago, had a chimpanzee and you got the right thing today. We're really running out of time. There are a couple of questions here and here and we promise to wrap up, and if you want to ask the panelist, you can do that when the session is over. I wanted to raise one question. We start to get on to this and the question of the advertising, the financial foundation of all these. We are charged, perhaps guilty of being New York centric. We love to contemplate our neighbor. We're the global capital et cetera of the United States door. Let's look globally at media, demographics, China, India, whatever New York City is going to be in the future in media by 2020, the fact is, as these demographics hit the marketplace, as viewership goes up, as consumption of media goes up and just mentioning India and China alone. Inevitably, advertising dollars or rupees or whatever are going to flow there, inevitably, advertising agencies are going to be making buys and focusing on that and that's something that we really have no control over in New York City. And I think this is something that rarely really comes into the conversation. So Martin, because you've dealt with media on a global brand, to what extent do you see this happening and where are the other media centers which could become advertising centers even if they are companies based in New York; they are going to challenge New York? Where is it coming from?

Martin Kon: That's a good question. First, I'll change slight the word you used. You said advertising dollar would flow there, which insinuates that it's coming from somewhere going to somewhere. I think advertising dollars would grow there, but not necessarily at the expense of what's happening here. That topic of the international perspective was another one that we discussed at length and there was a general consensus that media spend and advertising would grow with inflation in the United States, in terms of domestic production and domestic consumption. That foreign markets would still, you know, be more important for growth for domestic producers to sell overseas; but what's happening now, overseas a lot more local production of media, is happening because there is much more purchasing power in these countries and therefore they can afford to pay more for media. And secondly because of that increase scale and because the cost of production to some degree has come down; it is possible to create high value, high quality content elsewhere where before, I mean, if you want a great blockbuster Hollywood movie, it had to be from Hollywood because they had the scale to do that. It’s now possible in other parts of the world to have, you know, content that's approaching the quality.

And so, there’s a lot of growth in these local, China and India and even in places like the Middle East where a lot of people are investing in media local, wealthy people investing in media to have a positive impact on culture and their, because it’s what they call, politics. And some of that is, which is important for New York, some of that is going to find its way back here because the audiences here are more multinational, multicultural. The distribution is more open and the discovery is more open in terms of the local Chinese communities or Bangladeshi communities or Canadian communities to find things that they want from outside.

So for New York City and for the US, it is potentially a competition but it also an opportunity. I think Seth may have mentioned at the beginning, you know, New York really should be the number two HQ for all of these companies. And many of them are doing that. You know, Google is here and Microsoft is here and from these markets. But then for the Bollywood studios who want to appeal to the US market, for the Chinese media companies who want to appeal the US market. New York should be the place that they come because, you know, that’s where everyone is here in this marketplace is. So, there is growth everywhere, potentially more overseas; but that could also be an opportunity for New York. It does not necessarily mean as a flow.

Garrick Utley: But there’s still part of the shift in dynamics and balances of influence and power in the world. It’s no accident again that today Tim Geithner is continuing his meetings in Beijing and of course the tone is much more accommodating since we’re mutually dependent. And an hour-and-a-half ago, President Obama just landed in Saudi Arabia. First stop, where else on his trip to the Middle East. We're really wrapping up the hour now. Seth, any final thoughts because the point of this session was to get this public conversation and dialogue going for everybody, here, to know what you’re up to and for you to get some feedback here. How do you see this going forward now?

Seth Pinsky: Yeah, I think, first of all, I appreciate everyone’s coming out today and it's very helpful to hear, to receive input from people here today as well as all the various executives who have given very generously of their time to us. Encouraging thing, for me, is that to see just how many people really care about the future of the city and want to see the city maintain its central role in a number of different industries, but in media in particular. And, I think, that is perhaps the most hopeful sign that we have. Our process going forward is that we’re continuing to collect information and we’re synthesizing that, working with Oliver Wyman and our advisory committee. And our hope is that some time in the next month or so that we’ll be announcing the results of our study on some of our preliminary theories about the direction that the industry is going, the role that New York will likely be playing with challenges that New York is facing, as well as a set of very specific initiatives that are meant to address some of the challenges that inevitably the city will face. And then we will continue thereafter for another six months or so to continue to gather feedback and to hone and expand upon those initiatives. And working on really rolling those initiatives out and making sure that, even as the rest of the world grows and other economies expand in importance relative to United States, that New York maintains its role, hopefully, as the world’s media capital but if not the world media capital, an important and crucial media capital of the world which we think New York is actually, extremely well-positioned to view; but it will take work from all of us to get there and the Bloomberg administration really is determined to put that work in.

Garrick Utley: Well, thank you very much! And I just close. Those who have been in similar sessions before and maybe you’ve heard this but I love to repeat it because journalist or former journalist loved to do it. If we go back from our uncertain world, exciting world, dramatic world of media about 70, 80 years, the 1920s when the BBC went on the air, the then general director of it or Director General, later Lord Reith held a news conference and the journalists assembled and he said, “We are going to go on the air with the BBC and we are going to offer news and information. We are going to offer music. We are going to offer entertainment of a popular nature." And the leadership of the BBC, meaning, he will determine what the mixture and balance of these ingredients would be. He spoke from the position of a total monopolist. One journalist dared to ask the question, “But, sir, is there going to be a market for this?" And the later Lord Reith have looked down the nose of this impertinent journalist and said, “We will offer the supply and that will create the demands.” Those days are gone. They did not last but they lasted for decades. What we're sailing into we don’t know but we're all sailing into it together and there maybe a perfect storm in media; but we're going to ride it out. I want to thank the panel for being with us here, today, and all of you for being here and we’ll keep the conversation going.