The Wall Street Journal’s WSJ.D Live conference brought three media executives who couldn’t be more different together Tuesday night: DreamWorks Animation CEO Jeffrey Katzenberg, Universal Music Chairman and CEO Lucian Grainge and SoundCloud co-founder and CEO Alexander Ljung. Each represents a very different part of the media and entertainment business, but they did all share some lessons that are worth repeating, as they apply both to startups like SoundCloud and legacy players like Universal.
Thanks to mobile, short-form is where it’s at
Jeffrey Katzenberg’s DreamWorks Animation may be best known for movies like Shrek and Kung-Fu Panda, but on Tuesday, Katzenberg spend a long time talking about the virtues of keeping it short. TV has helped people fill whole hours during their day, but now, it’s time for new types of entertainment to keep us busy for those few minutes we wait in line somewhere, he argued.
Katzenberg does have a stake in short-form content: [company]DreamWorks[/company] acquired Los Angeles-based YouTube network AwesomenessTV for $33 million last year, and may pay out as much as another $120 million if AwesomenessTV meets certain metrics — which may just happen: AwesomenessTV now has 100 million subscribers on YouTube, and a billion views a month.
Katzenberg was quizzed on whether he wants to leave YouTube so that he doesn’t have to give Google a cut of his ad revenues, but he didn’t seem in a hurry to flee the platform. Instead, he argued that YouTube will eventually make most of its money from the likes of AwesomenessTV. Right now, he said, YouTube makes 95 percent of its money with what he called “the bottom tier” — one-off hits and long-tail content. “In 5 years, 95 percent is going to be paid to the top 5 percent (of producers),” he said.
The transactional business is over
[company]Universal Music[/company]’s Lucian Grainge may not be the man you want to take business advice from right now — after all, 2014 is shaping up to be a pretty bad year for the record labels, as iTunes downloads and other transactional services are declining rapidly while the companies still have to make up for lost physical disc sales. But Grainge was upbeat about the future of music subscriptions, and repeated several times that the future of the music business will be in services and in monetizing every single play, as opposed to a single purchase.
Grainge was skeptical about attempts to build these services based on advertising, arguing that “ad-funded is not a sustainable business model.” But he suggested that there will be a lot more flexibility in pricing in the subscription space, where almost every service charges $10 per month these days. “We are in the experimental phase at the moment,” he said. Of course, some experiments are forced upon the labels by startups and big tech companies alike, and Grainge perfectly summed up the relationship his industry has with the tech world by saying: “We are potentially completely aligned.”
Consumers are creators
Alexander Ljung represents one of those companies where the alignment still is in the potential stage. SoundCloud has 175 million monthly listeners and more than ten million creators, but it doesn’t have a license from Universal Music. Ljung was asked if that mean the company’s service is something like a contemporary Napster, and he replied that Napster was about consumers sharing music. [company]SoundCloud[/company], on the other hand, is about creators sharing their works.
Of course, the lines between creators and consumers are starting to blur, and that’s exactly the point: The barrier of entry for people to make music is lower than ever before, argued Ljung, who said that he himself recently remixed a song Dr. Dre had published on SoundCloud as part of a remix contest. It took him just an hour, thanks to widely available apps. Making music used to be hard, he said, adding: “Now the tools are so great that you can do that in an instant.”
Photo courtesy of Startup Stock Photos