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APAR's WORKING WEEKEND: It’s Good to Be Kingmaker

2 Nov, 2001 By: Bruce Apar

As New York power breakfasts go, it was megawattage. About 100 people packed a room in the Conde Nast headquarters at Times Square to hear AOL Time Warner c.e.o. Gerald Levin and Vivendi Universal chairman Jean-Marie Messier chat about the business of mass entertainment with celebrity media-journalist Ken Auletta of The New Yorker (one of many prestige publications in the Conde Nast portfolio).

Levin, one of the most earnest and frank c.e.o.s in the world, spoke almost solemnly about the burden of responsibility that comes with wielding an incalculable influence on popular culture.He did not apologize in the least for occupying that enviable perch, nor should he. Rather, he succinctly recounted the logical laws of commerce that result in such an omnipotent position as that occupied by AOLTW or Vivendi: Seven companies command the lion’s share of supplying entertainment. “That’s the marketplace at work,” observed Levin, adding a company needs “global reach” to market its assets “and that gives leverage. It’s hard to deny that as a marketplace fact.”

The topic at hand, “Who Is King: Content or Pipe?”, was presented by Syracuse University’s Newhouse School as part of its Newhouse in New York series, under Dean David Rubin’s stewardship and sponsored by business consultants Booz Allen Hamilton and The New Yorker.

After quipping that “at one time, cash was king,” the erudite Levin advised the room of Wall Street media analysts, entertainment execs like Sony Corp. chief Howard Stringer, journalists, and staffers of Levin’s far-flung media empire (CNN, HBO, AOL, Warner Bros., Time Warner Cable, etc.) that “there’s something else that should be king, and that is not cash, content or distribution, but values.”

Levin didn’t stop there either. “It’s important to train the new breed of c.e.o.s now in our universities to understand that there’s a public trust and not just the interest of shareholders. I’m sorry, but that’s my answer to the use of leverage. It couldn’t be clearer since Sept. 11 that our obligation is to not just inform but give insight to what’s going on. I absolutely mean that. The public trust, no matter what it costs to have that, is more important than shareholder value.” Vivendi’s Messier chimed right in, noting their companies have a “huge responsibility in promoting cultural diversity anywhere in the world. Entertainment companies have a specific answer to the terrorism that is happening.”

There was talk, too, about the digital future of entertainment.

“You have to recognize that wireless is becoming media,” Messier declared. “People tend to look at it as a voice pipe. That’s untrue, that’s unfair, that’s not what’s happening.”

The executive described the one-to-one relationship marketing model that Vivendi’s new Universal Music Mobile service employs in France. It uses telephony such as cell phones.

Using Warner Music artist Eminem as his example -- cutely calling him Levin’s “favorite artist” -- Messier said when Eminem’s new album is within two weeks of release, a Universal Music subscriber with a stated preference for that artist will be offered “pay-per-hear” preview tracks, at about 70 cents apiece, with an option to purchase the entire album. Since Universal will know where the subscriber lives, it also will transmit messages to the mobile device saying, “We have pre-reserved two seats for Eminem’s concert in your city. Do you want to buy them?”

To top it off, the Eminem-specific subscriber also can receive video clips of the musician.

After establishing definitively that “my favorite artist is not Eminem … it happens to be Enya,” Levin agreed that “the ability to get targeted messages to the customer is extremely important.”

“Online gives us tremendous flexibility to know and adjust to what consumers want,” Messier said. Concluded Levin, “What we find out about consumers, we find through distribution. New forms of content have always arisen in response to new forms of distribution.” He used as a prime example the metamorphosis in the past three decades of HBO, from originally offering recycled content as a premium-movie service to its current role as a premier network of original programming.

Then there’s Levin’s own experience with his favorite artist. He cited her No. 2-selling album, Only Time, relating how he sent a 30-second card version of the title song to his family. “But you have to buy the album if you want to hear the whole thing.”

Comments? Contact Bruce directly at:bapar@advanstar.com

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