Can Big Media companies truly innovate from within? Publishers need to get more entrepreneurial but global advertising overlord WPP CEO Sir Martin Sorrell is not convinced.
“[Being an] entrepreneur means taking risk, taking risk with your own money. What people in big companies like is taking risks with other people’s money.
“The issue is co-investment, putting your own money at risk in a truly entrepreneurial environment.”
On the same panel, Bertelsmann CEO Tom Rabe, who was more optimistic that the large corporate players can invoke the spirit of Silicon Valley:
“The level of entrepreneurial freedom we have is not on a parallel (with startups and smaller companies) but is very significant. And as a private company we can be very flexible in working with entrepreneurs.”
Joining them was Time Warner CEO Jeff Bewkes argued that his company also an example of innovation happening within a huge corporate beast. He his firm’s innovations from its first satellite broadcasts through to the first video on demand subscription services developed by its HBO division.
To pay or not to pay
But one thing both Sorrell and Bewkes agreed upon was the need for charging for content.
The Time Warner boss told the conference: “The thing I would stress, and it is more important in the US and will become so here, is the subscription payment element is a vital part of supporting the content. When everything was supported by advertising, it equalled the lowest common denominator.”
“We were making shows for Kelloggs and Procter & Gamble, not for you. As the model evolved and people could pay for the TV product they wanted to see, it made more powerful the ability to make something surprising.”
Sorrell reiterated his belief that failing to charge for content was a poor business model, and went further in saying that “in order to preserve journalism there will have to be some sort of subsidisation.”
Part of the reason Sorrell believes in charging is because the free model is open to disruption, and he has some pretty bullish views on the future of perhaps the biggest disruptor – Google.
He says the amount of media WPP buys from Google is second only to News Corp and it will be the biggest if not this year then next: “There are only two things that can stop Google, its own size, and regulation.”
Sorrell also reiterated a point he made during WPP’s recent results presentation (which Patrick covered here) that ad spend should be redirected from print to online and mobile because it is currently out of sync with where users actually spend their time consuming content.
For more on what makes the company tick, you can read our analysis of WPP’s investment and acquisition strategy over the last five years, here.