Microsoft CEO: traditional media will never completely recover

Posted by Liz Webber on June 25, 2009 at 4:46 PM

The advertising slump for traditional media is here to stay, according to Microsoft CEO Steve Ballmer. Speaking at the Cannes Lions International Advertising Festival, where he was named "media person of the year," Ballmer described the current economic situation for media as a "reset" not a "recession." That means media companies must completely rethink their business models to keep up with the changing landscape of publishing.

Ballmer also faulted newspaper publishers for not doing enough to make money out of their online ventures, adding that Google is the only digital company with a track record for earning significant revenue. And traditional media will have to figure out how to squeeze out revenue from online content soon, as Ballmer predicted all content will be digital in the next 10 years.

The Google comparison seems a bit of a non sequitor, since its search site has nothing to do with publishing. If Ballmer was referring to Google News, that also is not a good model for the newspaper world because the site is an aggregator, not a content producer. Some print publications complain that the ads on Google News unfairly make money off of the repackaged content.

As for the prediction that all content will be digitized "in one, two, five or 10 years," that brings to mind Newser chief Michael Wolff's claim that 80 percent of newspapers will shutter in 18 months. In other words, perhaps somewhat too extreme.

In a commentary of Ballmer's speech on Brand Republic, Gordon MacMillan asserts that the current economic climate had the positive effect of impelling publishers to rethink their ideas about paid online content. He adds that realistically speaking traditional media companies are still in the experimentation phase in terms of what will or won't be successful revenue models in the digital age, with subscription-based mobile applications and the Amazon Kindle being two possible routes.

Charging for news delivered via mobile phones is certainly a hot topic these days. This week the New York Times Co. announced plans for a subscription-based service, and Bloomberg Multimedia CEO Andrew Lack believes such models will be the way of the future. The potential to make purchases within applications on the new iPhone 3GS opens up possibilities for newspapers to charge for mobile content.

All in all, Ballmer's ideas are not entirely new to those within the media industry. It's just a matter of whether or not publishers will be able to come up with a feasible revenue model before the situation goes from "reset" to "rescue me."

Source: The Guardian