John Motavalli: 'The Internet Caused Paradigm Shifts in Media'
The author of "Bamboozled at the Revolution" says that after losing billions on the Internet, media companies are discovering "part of what they once did has been usurped by the Web."

I Want Media, 10/03/02

John Motavalli is the author of "Bamboozled at the Revolution: How Big Media Lost Billions in the Battle for the Internet," a captivating and detailed account of major media companies' largely unsuccessful forays into the Web during the new media mania of the past decade. Motavalli, a media consultant and former reporter for the New York Post, Adweek and others, had a front row seat to many of big media's missteps.

I Want Media: What essentially caused media companies to be "bamboozled" by the Internet?

John Motavalli: Basically, the Internet operates on different paradigms than media. Big media is produced by people in New York or L.A. and dispensed to the public who then purchase it, and it's not hugely interactive. The paradigm of the Internet that works the best is one that is based on not just consumer input but consumer operation.

A successful Internet company, like an eBay, is completely operated by the consumer. It's not about editors or producers supplying content; it's about the consumer supplying the content and the company providing the tools to enable that to happen.

So, in the very hierarchical media-type situation in New York and L.A., [media executives] simply didn't get it. The Internet was just not set up to do what they do. Even if they had understood this, I don't think they could have set up an eBay. It would have had to come from someone who was a geek because you'd have to know how to create the software for it. That kind of expertise did not exist in any media company.

IWM: What is to prevent big media from being "bamboozled" again?

Motavalli: I don't think anything like the Internet is going to come along again soon. The main worry for media companies now is that media won't go back to the way it was before. But I'm not sure it will. Because part of what they once did has been usurped by the Web.

IWM: Like what?

Motavalli: An example would be B-to-B. You can now get a lot of information off the Web that you previously would have got from trade publications. If you want to get information on almost any subject, you just go to Google and type it in. That wasn't possible before [the Internet]. Previously, if you needed to get widget information, you'd have to buy Widget Weekly. So the Internet caused a number of paradigm shifts. Trade publications have to be competitive on the Internet; otherwise they'll be left behind.

IWM: What can a B-to-B publication do to keep from being left behind?

Motavalli: They have to have a good Web site. One of the problems a lot of media companies had with their sites was that they were not working with their print people. You have to integrate that somehow. The more self-important the magazine, the less likely they were to have a Web site. Vanity Fair doesn't have a Web site. Why is that? For one thing, they don't necessarily own the electronic rights to all of their material. There's also the idea that something like Vanity Fair doesn't feel a need to have one. But on the B-to-B level, you have to be on the Internet because someone else will supply that kind of information if you don't.

IWM: You mentioned that media companies had a problem with print people not being involved in producing their Web sites. Why did that happen?

Motavalli: Editors are self-important people who are paid a lot of money because they supposedly know a lot of things, like who their audience is and how to make magazines that sell. Imagine that you're a big-name editor asked to figure out the Web, and you're in a meeting with some underling who brings up a technical term you don't know, like HTML. And then you're supposed to say, "What's HTML?" to this person who's, like, a 20-year-old? That's not something you would want to happen if you're a big editor. You wouldn't want to risk looking like you don't know what you're talking about.

The Internet created this environment where those who were franchised became disenfranchised overnight. For the most part, editors at the big magazines stayed away from it. So the major DNA that went into producing the magazine didn't have much to do with the Web product. When I worked at Hachette New Media, I never once saw an editor from any of the magazines set foot on our floor.

IWM: Your book explores several media companies' disastrous escapades in new media, but the focus is on Time Warner. Why?

Motavalli: Because they took it far more seriously than most other companies and they're by far the biggest. I thought they were the prime example of getting "bamboozled" because their [former] CEO, Gerald Levin, preached fidelity to interactivity very early on. He was constantly saying that they were well-poised to reap huge benefits, but they never did.

IWM: Why did Gerald Levin sell Time Warner to AOL?

Motavalli: If you go back to '93, Levin promised that he would deliver a huge amount of value from interactive media. He said they would spend $5 billion on the Full Service Network [an interactive television service], and he staked his career on it. But it failed, so he wasn't in a position to deliver on what he had promised. He had to replace it with another vision that was equally valid, so he jumped on the Internet. He then put editors at some of his magazines in charge of trying to figure out the Internet, which began a long, torturous process that ended up yielding them exactly nothing.

So here was the most well-thought-of editorial team in America laboring for years and achieving nothing. That was a paradigm that frightened them considerably. And while all these much-publicized 18-year-old Internet millionaires were running around, here you had Time Inc., which never created anything of value [on the Internet]. All they managed to do was put their magazines online, which was a totally Pyrrhic victory. Remember Pathfinder? It wasn't something they could sell or capitalize on in any meaningful way.

IWM: Your book quoted Disney chief Michael Eisner joking, "If you put two 18-year-old kids in a warehouse, they could probably make more money off the Internet than [Disney] can." Although his remark was in jest, he probably was not alone with that outlook. Why did young entrepreneurs seem to profit from the Internet early on while media giants could not?

Motavalli: In a given industry, you do a certain thing, and the whole company is geared up to do that. If you're a magazine company, and you're told that you have to produce a TV show, you probably wouldn't do it very well. Your company is geared to do a magazine, which is a process that's not at all like producing television.

At a typical monthly magazine, like Vanity Fair, every little cog in that machine knows what they're supposed to do. If you went to [Vanity Fair editor] Graydon Carter and said, "Figure out the Internet for me," what guarantee is there that he would know how to do that?

Even today I couldn't tell you what a Web site for Vanity Fair should be like. Should it be a bunch of articles? Or some sort of community bulletin board? Even after all these years it's hard to figure out what it should be. And that leads you to the conclusion that there isn't any reason to do a Web site at all, which I support. If Conde Nast hired me and asked me to describe what they should do with Vanity Fair, I would say don't do a Web site, just put up a subscription page, which is what they've already done.

Just because a media company is hot in one area it doesn't mean they have any traction online. The Internet took away many years of advantages that media companies had built up. This was especially worrying to newspapers because they were mostly monopolies in many communities by the time the Internet came along. These papers totally ruled, and then suddenly any guy with a server could compete with them. They hated that.

So why would Jerry Levin sell Time Warner to AOL? He was afraid that there wasn't going to be any more "old" media; that it was going to be totally supplanted by the "new." That's what magazines like Wired were proclaiming. The thought of the moment was that you didn't need all of the old stuff anymore.

IWM: In the last chapter of your book, you likened the Internet to public access cable TV. What did you mean?

Motavalli: In public access television, you have cable systems all over the country giving consumers the ability to create their own programming. There was the belief early on that it would be really creative and develop all kinds of innovations. What it evolved into was mostly bad religious shows and school plays. Just because you have access to a channel doesn't mean you can create anything compelling on it.

With the Internet, there are millions of Web sites, but only a few of them get any significant traffic. The rest of them are mostly sites people do for hobbies or to promote their businesses. While there are more opportunities for providing content, it doesn't mean that many of these new services are going to be any good.

IWM: In your opinion, are any media companies doing well on the Internet?

Motavalli: I would argue that the Wall Street Journal is one of the only products that works on the Internet for a media company. The subscription model works for them because readers can justify putting subscriptions on their expense reports.

IWM: In your epilogue you concluded: "Web content is dead as an independent business." What did you mean?

Motavalli: I think the Salon- or Slate-type concept has proved that it is not viable economically. And I don't see anything replacing it. I think the stuff that will survive online will be things like the Wall Street Journal and the New York Times because they're part of huge corporations that could support them if they're having problems. They don't have to create their content from scratch, and they already have huge name recognition worldwide.

What's an example of a successful independent content site? Maybe I missed it. Bill Gates hasn't been able to turn Slate into something competitive. What seems to work online are things like eBay. I think eBay is an amazing achievement. They essentially provide a template and users simply pour money into it. What an incredible concept. There is nothing in media like eBay.

IWM: The Wall Street Journal just reported that America Online is planning to launch a new eBay-like service. Do you think it will be successful?

Motavalli: If AOL is attempting to duplicate eBay, they will fail. There have been many attempts to trump eBay, by Yahoo, Amazon, UBid, you name it. None of these have ever gotten remotely the traffic that eBay does. I find it hard to contemplate what kind of thing AOL can come up with that can actually compete with eBay. Also, eBay had a lucrative deal with AOL for years, in which AOL sent traffic to eBay, so I think that AOL has been helping make eBay unassailable.

IWM: While working on your book, what was your most eye-opening discovery?

Motavalli: That AOL Time Warner would fail as significantly as it did. I don't think I figured it out until sometime in 2001 when I noticed that they were turning AOL into a sort of promotion machine. Why would someone pay to have that? It didn't look like AOL was going to deliver on everything they had promised, so I started to get wary of it. That's about when my editor and I renamed the book. The original title was "Worlds Collide."

IWM: Well, worlds certainly did collide, I guess.

Motavalli: To say the least.



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