Thursday, July 24, 2008

Google's CEO Challenges Hollywood to Create New Business Models

They won't just copy the old models; they'll come up with new ways of both making money, but also building brand. Seth is a good example.

- Eric Schmidt, Google CEO

In Claude Brodesser-Akner, "Entertainment Will Be 'First Through the Gate' in Digital Economy," Advertising Age, July 17, 2008

Schmidt was referring to Seth MacFarlane, creator of the Fox series "Family Guy" and reputed to be the highest paid TV writer in Hollywood. He recently made a deal with the firm Media Rights Capital (MRC) to fund a new online animated series. In turn, Media Rights Capital, which is funded by Wall Street and Madison Avenue, will make money every time people access the video, and wherever they access it online , through a deal with Google. The reason: Media Rights Capital bought advertising space from Google's Adsense service, which places ads around videos and text on websites. MRC it then resold those ads to advertisers, keeping the difference as its profit. And unlike "Family Guy," Mr. MacFarlane keeps the rights to the online series.

Schmidt was highlighting a development that he hoped would replace the approach that a number of Hollywood actors (such as Viacom) have taken: to sue Google for not adequately policing its YouTube video site for their copyrighted products. By contrast, the McFarlane-MRC approach is, he said, "a perfect example of how Hollywood needed to change to adapt the 'anytime, anywhere consumer model,' vs. what he derisively termed 'the lawyer model.'"

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