Latin America Industry Partnership Strategists Meeting for Media, Entertainment & Information Industries Rio De Janeiro, Brazil 27 April 2011

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Industry Partnership Strategists Meeting – Latin America Industry Partnership Strategists Meeting for Media, Entertainment & Information Industries Rio de Janeiro, Brazil 27 April 2011

Content Creation in a Multiplatform World: Untapped Opportunities

Firestarters Marcelo Barreto, Editor-in-Chief and Anchor, Sportv, Globo News, Brazil Manoel Lemos, Chief Technology Officer, Abril Digital, Abril Group, Brazil Fernando Madeira, Chief Executive Officer, Terra Networks Brasil, Brazil Mark Penn, Worldwide President and Chief Executive Officer, Burson-Marsteller, USA

Moderated by Pedro Doria, Executive Director, Digital Platforms, Globo, Brazil

Summary

The landscape of Latin American media is rapidly evolving. Though traditional media remain relatively healthy for now, industry players recognize that change is approaching. Especially as Brazil leads the way in the social media boom, questions are arising regarding the impact of digitalization on traditional business models and consumption expectations. While consumer appetite for online content is growing, ad spending on digital media remains a small piece of the overall advertising ecosystem due to incumbent practices. Sustainable monetization of new formats remains unclear and a shortage of funding for entrepreneurial media ventures restricts innovative development. Traditional media will need to quickly understand the changes that lie ahead and adapt accordingly.

The session examined the changing shape of Latin American media, with particular emphasis on the impact of the digital revolution on traditional media in Brazil. Nearly all panellists agreed that change is coming fast. “If you hold this panel in two years, it is going to be very different,” one pointed out. Participants also discussed rising trends such as the social media boom in Brazil and emerging challenges in advertising spending, monetization and financing of smaller players.

Traditional Media Remain Healthy, but for How Long? Unlike in Europe and North America, the Brazilian newspaper and television industries remain healthy with largely stable newspaper and magazine circulations, viewing figures and advertising revenues. “Old media is thriving,” one panellist said.

That said, panellists agreed that change is coming fast, particularly in Brazil, which is now home to 40% of Latin America’s online population and represents the eighth largest online population in the world. “The Barbarians are at the gate – anything could happen,” one panellist commented, conceding that traditional media outlets need to embrace the digital age.

“The TV and print model is intact for now, but for how long?” a panellist questioned. Television networks are currently grappling with how to compete with online television services and integrate social media into their programming, although they are still at the beginning of a long transition process into new formats. An “explosion” of blogs linked to TV networks has provided part of the answer, said one panellist, admitting, however, that “the importance of this is not yet clear”.

Overall, representatives of Brazil’s traditional media outlets agreed that, despite their industry’s continued economic health, they need to focus on new forms of monetizing their content and pursuing the transition from traditional newsprint to new formats, such as tablets and smartphones.

Brazil Leads the Way in Social Media Understanding and pioneering the use of new media is particularly important in Latin America, where social media continues to take off. Twitter went from 2 million to 18 million users in Brazil in the last year, becoming Twitter’s number one market globally.

Panellists were divided on the impact that the upcoming World Cup and Olympic Games might have on Brazil’s media industry. One argued that the two events would boost online television services, whether live or on-demand, while another panellist argued that they would boost interest in traditional “citizenship” journalism, as citizens sought government accountability over World Cup and Olympic spending plans. “People will want to know exactly what is happening.” Regardless, the effects of social media on Brazil will steadily trickle towards the rest of the Latin American region.

Advertising Ecosystem Slow to Change While new formats are emerging, resilience in ad spending in favour of traditional media still exists, especially within television. In Brazil, the bonus-on-volume concept paid by traditional media is under question, as it partially explains the concentration of ad spending and the barrier to competition from pure plays and smaller players.

The Question of Monetization Panellists were also divided on how digital media could be made financially sustainable in an uncertain future. Some argued that partial pay-walls could be an answer. Others said they believed that younger generations would be reluctant to pay for content they have so far accessed for free. “It is hard to say to the new generation that you have to pay,” one panellist argued.

Another panellist said there is not enough incentive for traditional media companies, currently performing well, to migrate into digital platforms, particularly because monetization of new formats remains unclear. “It is hard to let go of a very profitable organization and all of a sudden to go forward to digital opportunities making much less money.”

Traditional media has not found a consistent and viable way to monetize its content besides its traditional business mode. One thing is certain – replicating the traditional model on-line does not work; in fact, it is value-destroying, especially for magazines and newspapers.

One panellist noted, “If I transferred all my traditional subscription overnight to the digital world, I would destroy a significant amount of value with lower ad spending and subscription revenues.” Traditional media are very good at controlling the distribution channel. That level of control has not yet been replicated online.

Challenging Environment for Media Innovation Several panellists addressed their concerns over how to best foster creativity and start-up companies that would help push Brazil into the digital age.

Financing for small companies was one issue raised. “It is easier to get a US$ 5 million credit line in Brazil than US$ 50,000,” one panellist claimed, pointing out that, while there is no shortage of good ideas about how to create new media platforms and forms of content, there are often barriers to developing such ideas. The same panellist pointed to a “global problem” in training, recruiting and holding on to digital-age content-makers.

Others argued that traditional news organizations also need to be more daring when experimenting with new platforms in order to foster innovation. “If it cannot fail, it is not an experiment,” said one, arguing that editors need to create the “right type of environment to let people fail more”.

Conclusion Ultimately, panellists agreed that Brazil and Latin America as a whole are currently experiencing “a collision of business models”. While the traditional media in the region likely has more life left in it than in Europe and the United States, many challenges lie ahead.