Sees Business Streaming News At Work

Greg Lindsay

Brown calls video on web a viable business despite ad downturn

On July 15, 1996, MSNBC flickered to life on cable television and the Web simultaneously–the first and still the only old-media/new-media entity of its kind. A joint venture of Microsoft and NBC, MSNBC gave NBC a 24-hour outlet for its news division. For Microsoft, is a tent-pole property of the MSN portal and the most popular news website in the world. Inside’s Greg Lindsay spoke to editor in chief Merrill Brown last month to discuss how the site has become a staple of Web surfers’ news, how MSNBC works as a business and what the future holds.

Inside: When launched five years ago, we consumed news online through HTML displayed in a Web browser. Despite the hype about “push” technology and Java or whatever, we still use the Web the same way. So how has the fundamental experience of using the Web changed in the last five years?

Brown: A number of things have changed. The scale has changed–when we began, our monthly audience was measured in a few hundred thousands. Today, our daily audience is close to three million on weekdays. The storytelling dynamic on our site is vastly different than it was five years ago. The integration of applications, video and different writing styles–when it’s working and when we have to work on it–is very different than five years ago. And I guess the most important thing is that we’re an accepted part of people’s news diet, and we were a bit of an oddity then.

In 1996, that was far technology, today it’s common, if often kludgy and unwatchable at slow speeds. How is streaming video being used and consumed on the site?

Video on the site is working on a number of different levels. At its most basic, we are NBC News on demand. If you don’t see the Brokaw program on a given night, the best of it is on our website that day.

Also live programming. Live video on the Web, especially for the office marketplace, opens up an entirely new market to video. That’s a very interesting phenomenon both from the point of view of how people get their news–also as a business opportunity. That audience isn’t measured yet. It’s capable of being huge in the event of big, breaking news…. The television-industry implications of that have not been addressed, but it’s going to be a huge business opportunity–for us and others–that only now is being thought through.

What about the business opportunities right now? Advertising on the Web is cratering, there are more severe doubts than ever that any website beyond Yahoo! can scale sufficiently to be big and profitable.

Well, it’s hard to assess our business model today in light of the uncertainty about the national economy. It’s our point of view that as the national advertising marketplace improves, so will we.

We have a viable video business. It’s becoming almost a norm for lots of people, and it’s a very comfortable experience today. If you think about the video experience in 1996 and today, it’s night and day. So the whole thing is starting to work on a scale that makes a lot of sense.

But one reason the video experience is so much better today is Microsoft’s pouring millions of dollars into video software development. Microsoft CEO Steve Ballmer made waves recently when he told Reuters that if Microsoft had to do it again, it wouldn’t have started MSNBC because it’s a software company.

What Steve is saying is that Microsoft had a different worldview and was willing to put its toe in the water in a way they’re not willing to do today in light of the way the world has evolved. They are not in any way, shape or form unhappy with their investment in MSNBC. They consider news and information a core of their now successful MSN strategy. We have been a great driver of traffic for them. We have been at the cutting edge of everything they’ve tried to do with Windows Media Player and in fact have developed technology applications for it.

Will we have margins like Microsoft? What products do? They don’t look at us and say “When are you going to get to our margin levels?” They look at us and say “Be a self-sustaining profitable business and we’ll consider it a home run.”

So what’s the plan for in the near term? You’re the market leader in news, but online advertising is still shot for at least the moment. Where do you grow from here?

We have a few priorities for the next few years. One is to become a player in sports and business news to the extent we are in general news. We’re growing significantly in both those areas and in the case of sports need to add additional content relationships. We’re going to do that in concert with NBC Sports.

We also–and this is vastly different than in 1996–are a production and distribution company on a scale that we didn’t foresee.

We’re also in the platforms business, producing for handhelds and all other sorts of devices. We’re increasingly thinking about ubiquity and what it means. So, we’re thinking of ourselves as not just an editorial company in the news business, but as a production and distribution company that’s in the video and platform game in ways we never considered in 1996.

MSNBC battles identity crisis, Page 20.

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COPYRIGHT 2003 Gale Group

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