Via Digitalis*

Discussed: Google, new and old media , boning a duck, hard facts not spin, moguls, business models

The following scene is by now fairly well known. It was recently excerpted in the New Yorker and has now been nicely built in writer Ken Auletta’s “ Googled ” book.

It goes as follows: back in 2003, Mel Karmazin, Viacom’s CEO, is trying to explain to the Google founders how advertising works in television. By and large, it’s fairly simple: backed by the ratings collected twice a year during a couple of weeks called the “sweeps”, you tell your advertiser that his commercial his going to be seen by x – number of people in prime – time. If he wants the slot, he’ll have to shell out a few millions dollars. Will he ever know precisely how many people have actually seen the commercial? For how long? No, admits Karmazin, but this is precisely the name of the game. And it has worked this way since the very beginning of television, or at least since P&G started advertising on electronic media  and paying for the “soap operas”.

Born challengers of the established order, both Sergey Brin and Larry Page have no qualms about showing Karmazin how fundamentally flawed, unethical and above all inefficient  they believe the model to be. For Google operates precisely on the very opposite model. When you advertise on Google, or simply on the net, you know exactly what you are getting. You will know how many people watch your ad, how many people clicked on it, how many people transacted based on the add. High-tech vs. high-touch, algorithms and hard evidence vs. approximation and spin. As Brin and Page are finishing their explanation, Karmazin blurts out: “You’re fucking with the magic!”

The scene and the words are worth recounting here as they are emblematic and illustrative of exactly what the authors of “The Curse of the Mogul” are strongly contemptuous in the (old)-media business. Their contempt is particularly directed at the people at the top, the moguls of the book and at all the toadies around them. But Jonathan Knee and his two co-authors have not penned  “une comédie humaine”. No, those three media economists have written an book about the economy of the media. In that sense “The Curse of the Mogul” might be one of the most illuminating book about the media in years for they resist the temptation to succumbing to the idea that those huge companies should be scrutinized and analyzed differently than say, the car industry. As a matter of fact, they very often compare examples of what as happened in other industries to make a point or drive it home.

In doing so, the book debunks quite a few myths, the biggest one certainly being that it is the rise of the Internet that might be the single most important reason for the downfall of the newspapers. Knee and his colleagues show quite clearly that the U.S media conglomerates were underperforming already before the Internet. Obviously, the case got worse because of the disruptive power of the net, but equally because of the blindness  – if not downright incompetence – of the moguls, so used to deal in “ magic “ that they never quite could understand the perfect storm that was building around them. The authors do not hesitate to convict the mogul of using “sham” attitudes to lure investors as opposed to what ought to be sound economics and good business.

Reading this book is not unlike watching Meryl Streep bone a duck in “Julie and Julia” The film and the book came out at about the same time and if you have seen it, you know what I am talking about. Julia Child takes a duck, bones it, and then saws it back together with the stuffing made with the meat. Jonathan Knee, Bruce Greenwald and Ava Seave, the three co-authors work with the same determination to remove the phoniness from within the object of their analysis.