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.'"

Television Increasingly Covered With Brands

At some point, it becomes all clutter. We have to be really careful.

-Laura Caraccioli-Davis, executive vice president and entertainment director for Starcom USA.

She was referring to the growth of "branded entertainment" programming. The activity is booming and includes integration of products into program plots as well as crawls at the bottom of screens and even (on the Bravo cable network) L-shaped bars that cover the bottom and side of the TV screen with commercial messages. Participants at an industry meeting on branded entertainment did not express a sense of when viewers would begin to rebel against this in-your-face commercialism. Caraccioli-Davis noted that cable networks seem to do more deals. "They are more apt to shill their shows," she said. "Maybe cable networks are not all that protective of [their programs]."

In Wayne Friedman, "Branded Entertainment Offers TV Ad Bonanza, MediaPost's Media Daily News, April 28, 2008.

Branded Entertainment a PR Trend

Edelman Studios is a milestone in Edelman's ongoing expansion of the traditional public relations model.

-Nancy Ruscheinski, President of PR company Edelman USA.

The new division is part of a new push by the company to create branded content for its clients. In a DVR era where advertisers fear audiences don't attend to ads, many PR firms are taking this route. The aim is to integrate clients' content into programming from TV shows to film shorts and webisodes.

In Rupel Parekh, "PR Edelman Ventures into Branded Content," Advertising Age, April 24, 2008.

Alternative Marketing vs Traditional Television

Americans are spending more time outside their homes, online at work, communicating via wireless devices and multitasking with various media, which has created a generation of elusive consumers for brand marketers to try to reach. Alternative marketing spending is growing at multiples of traditional advertising and overall economic growth. There's real big money being moved out of broadcast television that with the writers strike may not be moved back.

-Patrick Murphy, PQ Media CEO

In Gail Schiller, "Brand Spending Grows Nearly 15%," The Hollywood Reporter, February 12, 2008.