Seattle: Bill Gates on Tuesday said that society is set for a dramatic shift to digital media—predicting that reading will ultimately happen “completely online” and that almost everyone under 50 will stop using the printed Yellow Pages within five years.
Newspapers must face “tough, wrenching change” to keep readers, Gates warned. And he promised that television signals delivered over the Internet, using technology known as IPTV, will totally trump the traditional broadcast model.
Bill Gates sees a bleak future for today’s newspapers and TV
“The end-user experience and the creativity, the new content that will emerge using the capabilities of this environment, will be so much dramatically better that broadcast TV will not be competitive,” the Microsoft Corp. chairman said.
Gates made the comments at Microsoft’s Strategic Account Summit, where the company is courting advertisers and other key players in digital media.
The company, which remains far behind Yahoo and Google in online advertising and Web searching, is trying to position itself to capitalize on the expansion of the market to mobile devices, Internet-based video and other new forms of media.
Microsoft announced advertising deals on Tuesday with Chivas Regal and Volvo to sponsor upcoming Web-only video programmes on Microsoft’s MSN. The programmes will be produced by the Reveille production company, which makes TV shows, including NBC’s The Office.
But a notable subtext of this week’s conference is recent news of partnership talks between Microsoft and rival Yahoo. The reports, which surfaced on 4 May, reflect how much Microsoft is continuing to struggle to gain ground against Google.
Gates didn’t address the subject during his speech, and none of the audience members quizzed him about it when given a chance to ask questions.
On 2 May, Terry Semel, Yahoo’s chief executive was the main speaker at the Microsoft conference. Semel has spoken at the event before, as has Google CEO Eric Schmidt, so an appearance by itself doesn’t necessarily mean anything.
Microsoft declined to discuss the situation. Despite initial reports that the company was talking about acquiring Yahoo, publications, including The Wall Street Journal and The New York Times reported that the companies, as of last week, were instead discussing a partnership, potentially related to advertising, to compete with Google.
Google’s advertising revenue of $10.5 billion (Rs48,300 crore then) last year dwarfed Microsoft’s advertising tally of about $1.5 billion for its 2006 fiscal year. Microsoft is trying to turn that around through its own advertising system, adCenter.
“We are open for business,” said Yusuf Mehdi, Microsoft senior vice-president and chief advertising strategist, addressing the audience. “We are open to work with you to redefine what the future of the Internet should look like.”
Despite Microsoft’s trailing position in web search and advertising, advertisers in attendance seemed willing to listen to the company’s pitch. In areas where Microsoft has been late to market, the company has a knack for being a “fast follower”, said Anne Hickey, vice president of marketing for The Clorox Co.
“They seem to really get into it and analyze it and come up with a better way to do it,” Hickey said.
The growth in online advertising underscores the shift to digital media. For traditional media outlets, that transition won’t get any easier, Gates said.
“The number of people who actually buy, subscribe to the newspaper and read it has started an inexorable decline,” Gates said. “People have found some combination of TV and the Internet as the way that they can get their news, even the local news that historically was only available in that print form.” Newspapers will “need to take a lot of their skills, a lot of their expertise and move it into that Internet world”, he added later.
Microsoft and Gates have significant interest in the subjects of his predictions. The firm has made major investments across a range of digital media and advertising, in areas including IPTV and online advertising.