Richard B. Anderson, the man in charge of IBM Corp.’s media and entertainment clients worldwide, was in town to talk about new revenue opportunities in converging media. After a detailed panel discussion at Ficci-Frames 2007 in Mumbai, he spoke with Rahul Bhatia.
Why are companies reluctant to use new platforms such as content generated by users? Is it an issue of losing control?
I don’t know if the issue is reluctance. There are lots of subtleties in doing this. For example, let’s take YouTube. There were 15 sites doing video-sharing, but YouTube figured out how to make it very easy for you to upload. That’s what they did. Fifteen other sites didn’t get the mix quite right.
And then YouTube also got the network effect right. That’s the second thing. If they missed the network effect, they’d miss user-generated content.
There is a certain reluctance, but it’s hard to get it just right, and I think that’s what’s holding people back. I’m not even sure if it’s holding them back. I think if you look at it [their way], they’re saying, “Wait a minute, there are lots of people trying to do it, so why aren’t they getting it right?”
There’s this book by Nassim Taleb, called Fooled By Randomness, which says that sometimes you just get lucky.
[Laughs] Yeah. If it’s too early, too late, or if it’s not quite the right time—I think that element’s certainly there. So, then the question becomes: How do I improve my luck? I think there are ways to do that. I think existing companies need to proactively work at creating an environment that enables trying new business models.
So not only do they have to say that they’re willing to do that, they have to have their financial systems and culture in place, which allows them to do things very rapidly. And that’s not always the case.
One of the major networks in the US has been trying to move into new media and their challenge is they can’t do deals fast enough because they can’t make content available and get it out through their systems fast enough. So they are limited to only a few deals a year, and only because their systems don’t let them move faster.
We hear of Fox asking YouTube to take down content. Do they not understand how these new platforms could help them? Are they still struggling with monetizing things?
Sure. If you take a look at YouTube and see that it’s valued at $1.65 billion (Rs7,095 crore), and you look at the opportunity around it, and then you look at the content, of which the biggest draws are Comedy Central and MTV, which are Viacom properties, I think Viacom is right to say, “Wait a minute, shouldn’t I share this in some way?” The position now is: How do I share?
Part of it is about getting data. If there was real data that said here’s how much YouTube is being driven by Viacom properties, they could negotiate on something. But with no data, it gets very arbitrary.
How do you harness something that’s moving so fast? Today it’s YouTube, tomorrow it’s something else. The ground’s literally shifting under your feet with all these new platforms.
You have to be fast, don’t you? I think you have to move fast, but there are ways to make your systems and your culture faster.
And you have to be willing to do that. That’s a mistake that many existing companies are making. We just did some research on innovation and looked at what today’s most successful companies are doing. Do they innovate because they create new products? Do they innovate because they redo their backend systems? Or are they successful because they innovate with new business models? It used to be products and all, but today it’s about new business models.
So the most successful companies appear to be the ones that know how to create new business models within their business most effectively, and I don’t think that’s by accident either.