Media Summit

I’m at the over-jammed Media Summit at McGraw Hill in New York and the opening act is the same act you alwasy see at such events: Barry Diller. He’s always entertaining and compelling; that’s what makes him the opening act. Liveblogging….

He extols the virtues of Ask, his search engine, which has 6 percent market share vs. Google’s 47 percent. Diller says it can do double-digit share and that it’s a media model: “It’s not winner take all… By the way, God forbid it should happen…. If there is no other ad network than Google’s, we are all in some trouble.”

The interviewer, a Business Week editor, asks about Viacom’s take-down of video from YouTube. “The issue is availability,” Diller says. Music “stuck its head in the dumb sand for way too long” but that won’t happen in video. He says that Viacom’s video will be available somewhere, perhaps not on YouTube. “Everybody’s going to make everything available…. Perhaps media companies are now saying we’re not going to let you get so strong in distribution” that they will be like HBO was in the distribution on movies. He says Viacom is smart and that they will get paid on advertising, subscription, or micropayment. But what he does not address is promotion and distribution: free marketing.

Asked where he is on the social networking scene, Diller says: “Not.” He argues that is a form of social network. “A pure social network site, not that they’re not of value… no one has yet proved that it’s the easiest advertising” vehicle. He says that “pure social network sites are an upgrade from the Princess telephone that teenagers used to talk on for hours and hours and hours…. I’m not so sure that the interruption of that life to be sold something is such an easy trip.” He says as promotion “it is fantastic” but it is “not of interest to me.” He says there will be advertising but it’s not clear to him how vibrant that market will be. Talking about the turnaround of, he says it got into trouble because it added social networking; the problem was that “people handle themselves quite differently when they’re about flirt or about friendship and they don’t want to confuse the two.” It caused a drop 20 percent drop in subscribers.

Now to “user-generated content,” which Diller generally dismisses. “I got banged when I said there are only so many talented people in the world” [at Web 2.0 a year ago; link to my coverage later] and after you’ve seen cat videos “the professional talent pool is finite, it’s not very big: It’s not 100 people but it’s not a million people, I promise you.” He sees no middle ground: professionals who make good content vs. garage attendants who shoots skidding cars. “It will not be the long tail, it will be a very short tail creating very large audiences… which is the way it works.” He argues in favor of a content process that is “journalistically driven.”

“I think the most endangered is print publications and their transition. I sure would like to see more creativity.” He says news organizations are not going away but they “simply have to find a form factor that makes sense.” Well, and a business model and a culture and …

He says he bought college humor because they liked the team and what they built, including Vimeo, “a fantastic video-sharing site.”

But not just buying, he says that “we really want to invent product.” (At Foursquare, he said it is difficult for large organizations to invent and that’s why he buys. I’d say you certainly must do both.) He says he’s going to invent “certainly a couple of million dollars’ capital” in this invention. “So we think it’s the perfect time to begin… We’d buy something if it’s out there and rational but we certainly prefer starting things.” He adds: “We’ll buy anything that walks” but that he thinks most things are overpriced. And “particularly in the program areas” it’s better to do it through your own process, “in your own house.”

Michael Jackson, the head of Diller’s content creation, should be grinning ear-to-ear: a rousing endorsement.

Asked whether the future of TV is the internet, he replies that “the future of everything is digitized.” Everything will be “distributed through this, hopefully, net-neutral pipe.” He says this is the first time that we have a system based on plenty, not scarcity” and we should not ruin it.

He doesn’t call the current state of things a bubble but he does say there is “enormous froth” right now with lots of money fizzing. “Mostly, buying things for more than they’re worth doesn’t work out. [beat] General rule. [laughter].” He adds that “this is a much more practical time” than 2000. He says he doesn’t buy based on forward projections; “that’s dopey.” He asks how much he can stand to lose.

He talks about buying Citysearch — “we didn’t pay very much but it was worth less than nothing” — and pouring $280 million capital into it over almost eight years. “But then it turned and now it’s making money and it’s worth more than the value of our investment.”

Asked whether we will see the emergence of networks on the internet, he lists his companies and says “they’re all networks.” He says we will not see three giants.

“In a time when editorship is passing… no, sorry, editorship will never pass” because it is about giving people good stuff. “The control of it, distribution, is passing to the user from the pinched distributor of old whose job it was to sell scarcity…. The internet is this miracle. You push a button and you self-publish to the world with nobody currently, hopefully, between you and the consumer.”

He argues that we haven’t seen a great retail experience online yet because — as in media — there has not been invention and innovation on the internet side, instead still only replication.

Asked whether TV is a bad business, he says no. But he says it is challenged and there will be “an enormous amount of creative destruction” in the next few years. We are in a “radical revolution,” where there will be destruction and creation.