Project Timeline 2005–2010

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Proof of Concept Phase – Interview L

Categories: Interviews, Proof of Concept Interviews, Support Material
Date: 21 April 2005
Contributors:

Andy Lloyd James: The other thing I should say, I’m sure I said it in my email, nothing that you say is attributable to you. It maybe used in the research but won’t be sourced back to you unless you go to [xxxxx]?

Female Speaker: Yeah, that’s fine.

So we’re off.

Great.

My business is… what I’m looking for is as I say is predominantly is to do – this is being done with technology through the communications authority. I’m really interested in content. What is going to be on television? What television will be? And who’s going to be paying for it, and what are the business models and all that kind of stuff. And I mean television in the broad sense. So what do you see as the key issues that are shaping between now and then?

Male Speaker: As an expert on…

FS: No, you go, you go.

MS: I think the first thing is what consumers would want. It has got to be the principal issue. And sort of… I think one of the issues within that is consumers don’t often know what they want. They’ll tell you on television they’ve got 50 channels and they’ve got cable, but there is still nothing on.

Yeah.

MS: And so that becomes an issue. So I suspect that where it nets out ultimately, this is more of their choice, is if you’re actually to able to benefit in some way, the technology has got to come back to you so that I can control it. So by this, the history of the surfing for the Arts, I should know actually after going through that program for myself, in some way, and then therefore the issue of where that content comes, the quality of that content and all of that sort of stuff becomes a bit of an issue. So it’s… in some instance, consumer and technology come together at some point

FS: Okay. Right. I think the government has got a role to play in the way that they kind of control television in the country, it has an affect on… the amount of content that we get, and how we get that content. So you have got obviously a very strong anti-syphoning…

Yes.

…laws in this country and what’s so different about foreign ownership in terms of getting it into this country. Up close there comes the big issues because the decision by the government to force people into high definition television, was probably a bit antiquated at the time.

Absolutely.

FS: Yeah. So I think the government kind of held back the development of television in the country, you can’t compare it to, you know what’s happening in the U.K. where you’ve got… you know in the U.K you’ve got… consumers are able to interact with content much more readily than you can in Australia now. So I just think their needs to be some way… one of the issues is the government’s role in the future and what that role should be. You know I think we currently need to define country, what they want in television, and I don’t know if that’s possible…that’s one of the issues.

It is.

The big issue.

Yes.

And yeah I think… you know we’d still want to have, you know I think competition obviously is still you know another issue that needs to be looked at. As well as efficient come back about that.

Does it exist in the real sense that…

Competition?

Yeah.

Yeah!

I mean it is heavily regulated competition.

Yeah it is, well that’s…

I’m sorry… you know I’m talking about free-to-airs?

Yeah.

Well free-to-air subscription, I’m not talking about the advertising [xxxxx].

I just look at Pay TV and I just think well Pay TV could potentially be a much stronger offering in this country, if we weren’t so regulated.

Yes, syphoning is [xxxxx] daily competitors, isn’t it?

Yeah.

And it’s going into the lower house today, I believe.

MS: Is that right?

I heard it on the ABC this morning.

FS: It won’t get up.

MS: Of course it’s not going to get up. It’s just going to extend the term probably. Make it more competitive for a long while.

Yeah. And…

ALJ: [xxxxx] in many regards the system was… the system it seems to me is kind of artificially, well not artificially… is partially competitive in as much as there is big players and then there’s subscription.

Yeah.

ALJ: When in fact these three big players have been very well protected from any external competition up until…

MS: What about the ABC though? The ABC is actually very competitive in overall ratings. So I would say that that’s competitiveness, but competitive to what? You know, because if you’re really about providing people with… and we’re talking about a non-revenue, non-dollar point of view here?

Yeah.

MS: Yeah, and I mean if you’re talking about that, then clearly is it based on the issue about having the cable guys have enough infrastructure or commercial infrastructure to be able to beat delivery innovation on the interesting things in the industry, it’s great. And until an anti-syphoning will absolutely stop that one, you see.

FS: Yeah I think that you know another issue is one of the business models that we need to have for tomorrow.

Absolutely.

FS: Is because you know there would be huge reliance on advertising dollars for them to invest in programming content. Overseas, I mean that’s probably not to say…

Same, I heard them.

FS: In the long term. I mean maybe if the content improved overall for consumers and tailored to what you were saying, and then maybe people might pay for that.

MS: Well I would, if I could have my sports, and my other interests collected in a nice little box so I could go and watch it every night. Be happy as a clown. But it’s interesting because we were talking about that, I met a guy the other day from Disney, and Disney are being told because it’s time to renew their deal with Foxtel, and he has been sent on a gather… on a market expedition to see whether the market would want to advertise on Disney, and we’ll have to get a sense of the degree of the advertising for that because they’re not going to get as much money moving forward from sales as they have in the past.

Really.

MS: So, Disney in this market, are saying it’s an advertising and a subscription’s model. And I reckon that that’s going absolutely the way things are going to go as a business model. Because you’d be happy to pay for what you want. I won’t want to pay for stuff I don’t want.

ALJ: How does that… how does that work in the advertising world? How do you… and I mean I suppose Disney is one issue, but for a lot of those channels on Foxtel they’re sitting on tiny little [xxxxx]? How does that work in an advertising sense? And can you aggregate audiences across…?

MS: The cost structure is nothing like in free-to-air. The cost structure with that, that would be the loading of something you know because they’re just… when you get into something like Fox 8, which is a long, long way and is the State’s top one on local production then you are talking an issue, and then the need for ad dollars. A decent share of it comes out of I think certain sports channels. So I don’t think that… the conversation, you have got to look at the content, from a commercial point of view.

Yeah.

MS: That’s all I’m saying.

ALJ: I’m interested by that consumers thing, because I think it does seem… people said forever content is king, but in fact I mean, I think it [xxxxx] with the switch through the internet and a whole lot of other business issues, if the consumer really actually has taken control. They’re [xxxxx], I suspect it’s very puzzling for free-to-airs because they’ve never had a really close relationship with their consumers.

FS: No, and they’re starting to. So they’re trying to change their relationship. It seems to be much more active.

Really?

FS: Well I think you look at programs like IVER and…

Oh, I see what you mean.

FS: Big Brother, I mean that and The Block.

It’s reliable. Yeah.

FS: It relies on active participation by consumers in that program, and I think they’ve done a lot to currently increase the branding of those properties by doing cross platform branding or licensing and I think they’re moving into licensing as well. So yeah you’d license with Telstra Mobile, the Australian Idol mobile phone in, and all that kind of thing, that’s the kind of opening up the commercial relationship between advertisers and television, but also changing the attitude of the consumers as well. Do you think that relationship in terms of with [xxxxx] TV is fantastic?

Yeah it was absolutely massive. But the… when you talk about that relationship, it’s interesting because the relationship also seems to be shifting sides from the relationship that existed between networks and the advertising industry and now a relationship exists between production companies and the advertisers.

FS: That’s true.

Is that a harbinger for the future? Is that…?

FS: Well, we’ve just started to do them.

MS: Well, I think the other…

FS: Definitely I think.

MS: I think there’s actually… the answer to that comes into whether or not in effect for the next 10 years we’ll see the demise of mass reduction, but from an advertising point of view.

ALJ: Do you mean me?

MS: Yeah. Or well not you…

ALJ: I don’t…

MS: I don’t see… I see [xxxxx]… We’re seeing some stuff that’s really alarming. Over the 24 year olds males, the ratings tell you they’ve dropped off 20% in 4 years. And this is for an alcohol client, so it’s post 8.30 but it’s now getting to the point where we can’t support their portfolio.

On TV?

MS: On television. And so we’re having to make some pretty fundamental shifts in how we are going to engage that consumer.

ALJ: Do you know why they’ve dropped?

FS: Because there isn’t… but…

MS: It never occurred to them [xxxxx] that the economy is shit… but nobody is programming for them.

FS: There is no advertising, there is no programming for like…

ALJ: Yes, you’re right. Yes. So much of it is [xxxxx].

MS: That’s right. Well the FMCG model, you know, but less closer to it.

Yeah.

FS: Yeah, you know I think and I-Pod shoppers, you know, that hasn’t dropped very much because they’re on it…

MS: We’re talking 25-54 if you like, it’s down 4% or 5%, so it’s very slow, but what’s interesting and what I think the hidden problem in that is the generation jump, because in 10 years’ time, the 24 year olds are in their mid 30s and what will they be doing? Well I mean I’m wondering and I… too early days I think to say that is over, but what you say with males in particular, where this whole thing is shifting.

FS: It just means TV has it to rethink what it’s doing to attract audiences over the next 10 years and [xxxxx] that older and sort of appeal to younger people that are… you know that are…

MS: There’s different ways…

Yeah, I can understand it…

MS: They will become traditions for looking at entertainment [xxxxx]. It’s like [xxxxx] a 17-year old watching TV online. So he is not going to feel he needs to go and watch it on television, because it’s no longer relevant and what…

FS: But there’ll be converters for both the [xxxxx]…

MS: Well here, that’s the tricky things that… yeah.

ALJ: But then, the networks themselves have always relied on their own brand. I mean Seven, Nine and Ten have always supported their own brand carefully, really what you are saying is that… or what you’re suggesting, or what you might be suggesting is… is… that consumers will follow content not the network brand.

FS: Brand and content, yeah.

MS: No, I agree. I don’t think they would… I don’t think that the networks are star[xxxxx], I think they’re a place where you…

ALJ: Anymore!

MS: No, and it works, It’s a possibility. The usual thing is [xxxxx], oh well you have it.

FS: But people follow brand content like Idol.

Yeah but that’s a…

FS: Or Big Brother, or Block

MS: Yeah. But this discussion is about the way you offer the Seven brand.

FS: No. No. No. I don’t think…

MS: And getting a hundred thousand people [xxxxx].

FS: No. I don’t think there is.

No. Well no.

FS: Were you looking for that? Were you…?

(Talking over each other)

MS: I never bought it, no. I give up… like golf. When I go and watch…

FS: You look at Channel Seven on [xxxxx], they were in a very bad frame on ratings, they’ve had two programs that have performed and used the [xxxxx] to scale up, and they’re up and running. So the first one month of the year. So, you have got to say, well Channel Seven brand is probably just bringing up a lot of…

Yes. And that’s what happens…

The same way [xxxxx]…

MS: See what happens is there is some really interesting lessons out of things like with the demise of Midday Show and out of all those sorts of things, we need a platform to cross from over [xxxxx] with your stuff.

Yeah.

MS: So you might be losing money on a particular product, like the AFL, look Seven let the AFL go. That was actually at the beginning of where they didn’t have that engine to sell products, and that’s why the news is such an important engine for the promotion of the evening. And so I think that that promotional vehicle is very different to the value of what could be perceived as a television brand because I think that I don’t think they particularly are. [xxxxx] just Packer [xxxxx]. You just take what you want.

That’s fascinating. Then when you look into the future, do you think the networks will be moving into… I mean in the way that they have with Big Brother and other things, that they will be moving into cross platform delivery or do you think that’s got to be the content providers that actually produce [xxxxx]?

FS: I think they’re going to both.

Yes, but…

FS: Yeah definitely. Yes because if you think about the technology and where that’s going, which is what Mark said from the beginning, you know there is protection for versions of all of that. So people that will have their portable lap… TVs, there will also be their internet, computers, I mean I think all that will kind of change and it will just kind of select what you want, when you want it. So people may not know when they grow up whether they’re watching necessarily TV or …

Yes, or watch just content on air.

FS: It’s just content and I think that will be… that converted for potentially [xxxxx].

ALJ: And in that world, this is a regression that keeps coming back.

Yeah.

ALJ: Where will advertising be? And the reason, for me the reason as far as I can read it and it keeps coming back is that in this country we start from a low base for Australian content of 55%. Commercials deliver 55%, the ABC delivers some of it, I think it’s 55 to 50, and SBS will give them a [xxxxx]… A mass of that is the current affairs and sport and daytime programming. So when you get into the high-end stuff of documentaries, the series, the dramas, the films, there isn’t much… you don’t have to lose much to lose it all for [xxxxx]. And yet current free-to-air global television through regulation and a whole lot of other things that are a big driver of it, what happens is the advertising dollars in that cross platform will [xxxxx]. Presumably they’d have to stay in their entirety with the networks.

FS: Yeah well… I mean… for us at the moment we’ve already seen a shift to like they’re creating branded content. So we’re doing combinations with advertising greater content. But I suppose that the thing that we need to think about is what are going to be the forms of communication by 2015.

Yeah.

FS: And whether we’ll actually still be making the thirty-second television commercial anymore, I mean…

Yes. For a whole lot of reasons…

FS: For a whole lot because of the way people gain information about a category or product.

MS: Because that’s… yeah a problem that they have is that PVRs which are launching in the supermarkets.

Yeah.

MS: And they’re… they’re not going to do much in 2 or 3 years.

Oh good.

MS: Because it’s going to be too expensive. But in the span of 10 years because we’re [xxxxx] earlier saying now the internet was invented in 1990. That’s 15 years ago, all right?

Yeah.

MS: And if you think that the rate of change is increasing, 10 years is an extraordinary long period…

It is.

MS: But if you think about PVRs as probably a conception whether they existed as I just leaned otherwise, as a repository that says, you can now capture everything.

Yeah.

MS: For the last week. You just duck your head whenever you want and you can have what you want on demand.

Yep.

MS: That’s is from a network point of view, it terrifies the market. I don’t know how they control that because it’s all concept.

FS: Yes they were supposed to more the ad content with that program pretty much.

MS: No the thing for me is actually getting to the point of what… how am I going to produce content that’s going to appeal, that makes it a must see.

Exactly.

MS: For me, that has got to be their primary question.

FS: Yeah but they’ll also find technology… the risk… technology is the regime around how that content, even ad content is viewed when you’re viewing that.

MS: Their first technology solution is to find that they reach John Howard [xxxxx]. Damn. No but it’s happening…(talking & laughing all together)

MS: [xxxxx] find ways to them getting that… that stuff together.

Yeah the other dark horse…

FS: And what we’re still… so that they’ll still be this [xxxxx] tonight, you [xxxxx] can’t get to see it. I know the PVR is suppose to cut it out.

MS: No, no, no, I don’t think they will be, but they won’t be allowing that because commercially the model doesn’t work. Like the PVRs here you can fast forward through it, but then you actually can’t cut it out [xxxxx] for doing something wrong. But TEBO you can but TEBO has only got the 4% and Murdoch is a digiti vote in favour of the ad friendly PVR on direct TV so, and that’s the way it’s going here.

Yeah.

MS: Yes, that’s exactly right, exactly right. So I think we’re going to be okay in that, but…

FS: But so many people can get to know…

MS: Yeah, but for me the question is, how do you get people to your program [xxxxx]?

Yeah.

MS: Because if you do that, you’re going to get the dollars, and if you don’t, well… And in the old days, well up until now, you’ve got the people that presumably only source for this solution, as an [xxxxx].

ALJ: Now there’s the internet, there’s wireless, and the other dark forces of DVD, I mean I don’t think the DVD will last all that long but the notion of a distributor distributing from a warehouse in the United States, electronically via computer.

Oh yeah.

ALJ: It must be absolutely [xxxxx].

FS: Yeah, [xxxxx] DVD and the networks.

ALJ: But [xxxxx] electronically now, it’s a… and they didn’t have to do anything. I was talking to someone the other day, that if you download the feature film you – I can’t believe that’s true – he said in 11 minutes.

Really?

ALJ: Yeah. Some new technology and some mad telephony going on, a wonderful person absolutely stoked [xxxxx] to be [xxxxx] 11-minutes for a feature film.

Geez.

I know.

That’s unreal.

ALJ: I mean that has to be as close as video on demand as you can get it, right now.

Yeah.

ALJ: So that’s why people keep coming back to me and saying, well it’s really going to [xxxxx] out [xxxxx]. I know the saying is true in reverse and the advertisers will be aware that [xxxxx] ways they are.

FS: That’s what they all say.

ALJ: And everybody’s trying to explore those business models down in [xxxxx]. Is that making sense of this business model or is [xxxxx]… advertising.

Well… yeah.

FS: I best [xxxxx] in online is frequent.

ALJ: As in a 100 times [xxxxx].

MS: Actually it’s costing them tenfold. [xxxxx] couple of million between [xxxxx] ago and now we’re talking of [xxxxx].

FS: Well no, we don’t [xxxxx].

MS: Yeah but I [xxxxx] and extend it.

Yeah.

ALJ: But that’s the [xxxxx]. And Telcos, the whole 3 numbers, the Gs and what have you…

FS: That’ the client.

Is it?

FS: Yeah. Yeah.

ALJ: When you see the figures and I’m saying not just about advertising but for content that is going to be the issues for all of those things, even if only for 10 minutes.

Yeah.

Mm, hmm.

Yeah.

And a wonderful [xxxxx].

Yeah.

ALJ: When… questions 2 and 3 of the opening [xxxxx]. Oh geez, sorry, can I just ask you one other thing first? You raised, as a lot of people raised, what the outcome of cross media machine might be, and what you might need? What is the outcome of the continuing globalisation of the advertising industry? That… am I right in thinking that there are a very small number of companies attracting overall an enormous number of advertising agencies and the rest. Is that about an exercise in cost effectiveness? Or is it in fact leading in the same direction that the ownership is leaning, which is towards globalisation and mass distribution for [xxxxx]?

FS: I think it would be in response to trying to service global clients, definitely to build internet, you know to follow it, international networks… because most of the networks previously had fragmented and it was a strong cut world of [xxxxx], so definitely consolidation, it helps them becomes strongly Asia, Europe to America, that trend really. So I think that’s one of the reasons and also to improve efficiency and definitely [xxxxx]. But interestingly a lot of our global clients that we have are looking for local best of market in the local areas. So not completely just [xxxxx] that ad, all that comes… All around the world they understand that consumer [xxxxx] relationship.

So smaller confederation…

FS: It is a bit more of that…

The giant ads?

Yeah.

ALJ: Yes, and the reason I asked the question is…

FS: But media owners globally… there are, I mean [xxxxx] Murdoch but not too many global that you can think of, that you can buy a different reach in each market around the world.

Yeah, yeah, yes. And they’re [xxxxx] must be mind reader for that world. At some [xxxxx].

MS: It’s a… none of our clients are able to do a global media deal with them.

ALJ: But it is the way of the future.

MS: I think there are four holding companies that would own what… about 80% of the agencies?

Yeah, probably.

MS: Yeah? And my understanding of what’s happening now is that clients, I think Samsung is an example because Samsung went to the forum and said, I don’t want to talk to your brand X, Y & Z, I want to talk to you because I know that I need to talk to you so that I… and I want access to the best that you have in whatever market rating, and that’s… I think that’s happening, isn’t it?

A bit.

MS: Yeah, oh but I think that’s a trend.

FS: They still want competition. My clients still want competition. So they can get the best that’s in the market, but Craig said that they, Craig stills looks for the best.

Yeah.

In that local market.

ALJ: So they would do that and they would say the whole group of them…?

We want all your best.

Yeah.

Yeah.

FS: But there’s various… but I’m starting to [xxxxx] into accounts that are doing true global communication.

Yeah.

Yeah, big clients.

Yeah. Very big.

Only a couple, but there’s not, there’s not…

MS: But, no – you’re right. And I agree.

FS: I mean everyone talks about that as a real threat, and I think it went there for awhile but then it has come back again to, I understand the local market.

Yeah I wondered if it’s like sort of like the European Union?

Yes.

That’s got that great hat sitting on top of it, but in fact underneath is [xxxxx] it’s own natural…

Community?

Yeah.

Yeah.

ALJ: It’s own natural community, more that. They’re awful questions but the best realistic outcome in 10 years time? I… which you’re welcome to respond to either as consumers or as players in the marketplace. And then the worst outcome in 10 years time? Professionally the best outcome in 10 years time. Sorry, the most realistic, best outcome?

FS: It’s a tough question.

Yeah, it’s a bugger.

MS: I think it’s inevitable there is going to be masses of more choice, and so I think that the way we conduct our business and the way we connect with consumers will be about aggregating piles of things whereas today you might get to do a deal with Seven and Nine. Then my [xxxxx] has 5 years, 10 years, 20 years… I don’t know, but I suspect that it will be coming into aggregation. I think what becomes really complicated from our point of view is the research that will allow us, there is today the quality of research that advertisers have at their beck and call is extraordinarily good.

Yeah.

MS: And I think that as things get more complicated, you know… a big flip side to that argument is you probably control costs, but then how do you get all your research? You probably don’t, so potentially, the business could be dumped [xxxxx]. And flip on… and flip itself, which could be a perverse tale, but it could happen, couldn’t it?

Yep.

MS: [xxxxx], like I said the funding of these things is incredibly difficult. So that’s interesting. I think you might see… potentially you could see our end product, the relationship market progress start driving movie strategies potentially. It’s quite possible you know.

ALJ: What if they ad… what about advertising actually paying their own in a direct sense for the programming and the impact [xxxxx]? And I don’t actually mean programming which is necessarily wall to wall with all of their material, but that’s….

Yeah.

Can you get a vehicle to carry it?

Absolutely.

Carry all the best like products and all.

Yes.

ALJ: The other one that interests me as the flip side of what you were saying is what’s taking place on the internet at the moment which you’d know probably better than I, is that growth [xxxxx] and people building their own profiles into a community a bit like [xxxxx] people across the world. And that I would assume might have some real attractions if you could, that idea would [xxxxx], taking your point about the sheer enormity of choices that exist, and if you took something like Foxtel, Foxtel actually decided to become a wall garden for Australian consumers. It could guarantee you, you know all the censorship issues were looked after, the privacy issues were looked after and deliver you all of these kinds of programming access and these kinds of things on the internet through the back channel on the box assuming [xxxxx]. They look after your credit card fraud, so you’re not [xxxxx] into that [xxxxx]. Some people around the world are projecting the growth of that kind of… that [xxxxx] of people being able to do exactly what you were talking about, aggregate it like [xxxxx] chunks of…. Are people thinking about that here at all?

FS: Not really, I think people are more protecting their own cache, so and I think that’s probably one of the most important probably outcomes that we would be looking for a lot more protectability about [xxxxx] from a business point of view. It’s quite restrictive to deal with television in many ways.

Really?

Oh, yeah.

Why?

Really tough.

ALJ: In what sort of… 15’s, 30’s, or even for 60’s, if you’re a good book?

No, that’s it.

FS: That’s the lot of… that’s a lot of imagination in trying to deal with content. And you’d have to say that, you know Channel Ten would probably be the most innovative of all of them, you know with what they’ve done with Idol and how they’ve enabled clients to integrate with content, relevant content, rather than seeing the product shot, you know what you want, great. The Garnier and Green Room [xxxxx] where people go and get their hair made up because they need to look good. You know if you’re going to go out and perform, I mean that’s kind of a nice way to start building content for a client. Rather than being a bottle on the shelf there, which…

Greens actually.

Which you know, doesn’t do anything you know you’ve mixed. You know and then they’ll just run spots on the billboards, and that’s not very innovative, and so I think we need to… to give the content we’re going to become so malleable, we need to be able to have ways to attach ourselves into content in lots of different [xxxxx] ways.

MS: See the whole thing could flip on its head as well, I mean if there’s Pay content, you know a client buy that product, collect the coupons, swipe the barcodes off all the products that you bought from me, and you get 3 hours of ‘Desperate Housewife’s’ for nothing, or alternatively you can buy it. You know that’s the sorts of things, like there is another thing that we haven’t talked about is the thing that’s driving our business forward is effectiveness for the investment. Gone are the day of building brand and going, well, what’s that or… tell me what’s so good about that? And ours well, what did that [xxxxx] actually do for business? What does it mean to the bottom line? What’s the share profits? So as you have to keep working with mega accountability and we’re at the very beginning of that level of accountability, so from their points of view, they’re saying, okay, all this challenging, interesting, different world… and we’re all going to have to keep in… connect to the consumer, but I want it done [xxxxx] market [xxxxx]. And that’s the …

[xxxxx] essentially into revenue.

MS: I guess sales ultimately, absolutely, yeah. They’re big enough in their own ways, in actual brand held for all sorts of natural things and stuff that…

Fundamentally that’s the critical driver, on every client that we have, isn’t it?

FS: Yeah, and they’re big brands.

Yeah definitely.

FS: They do big corporate as much as doing retail.

Yeah.

Yeah.

FS: But they want to know what the return investment is?

ALJ: Can I ask you what you’ve done on the question of, sorry there aren’t many people I can ask [xxxxx], how much does it matter that Australian content is Australian? Does that have a cachet [xxxxx]?

From what perspective?

ALJ: From an audience’s perspective. Well from an advertiser’s perspective about what the audience responds to? Does an Australian… does Australian content have a kind of cachet of its own in order to carry it slightly further into the audience, than the same product coming out of the United States or the United Kingdom or wherever?

MS: I don’t think that geography would be involved in a cultural issue. I think it’s the quality of the product.

That’s what I assume, but the reason I ask the question is because people always get back to Australian content and how Australian content will be funded. It seems to be that one of the arguments that has to be made is that Australian content needs to be funded. Why does it need to be funded? And how do you…?

FS: But if It comes to market, what needs to be competitive…

Yes.

FS: …the quality, yeah, you know the quality needs to be competitive [xxxxx].

MS: Actually, that’s a… that… you see I think that’s an interest, that’s almost one of those rhetorical things, isn’t it? Because you know we all want…

That’s right.

MS: A striving industry to consumers to be strong and healthy and grow. Because that’s the nature of our country. That’s what we want.

ALJ: Yeah. It is rhetorical, but in the long run somebody has actually got to start laying late because I mean to go back to your opening comment, I mean government has got a huge role to play in all of this and somebody has actually got to start laying them up… what they get is a lot of nice reasons about Australian content.

FS: Do you know what I think…?

MS: And somebody has actually got to start to lay them a real strategy for it.

FS: It’s interesting in [xxxxx] you know that they have a fantastic local industry…

Yeah, absolutely.

FS: …which is funded by the government; it’s also heavily funded by the television stations. By…

By cable television.

FS: Yeah absolutely, but you know they’re just not the same television stations, they [xxxxx] all [xxxxx]…

And also occupied in the [xxxxx] solely.

Yeah. So we need to look at things like that [xxxxx]

That’s sustainable.

That’s sustainable and you know…

Yeah.

[xxxxx] industry.

ALJ: The worst outcome?

FS: The worst outcome, that there’d be no change!

MS: I think that the worst and the best are pretty close together.

ALJ: It’s funny you say that… the most… the most response I’ve had on the worst is uncontrolled information because unfiltered, unaggregated I mean it’s just a great wall of stuff happening out here. A model for the kind of [xxxxx]. A whole lot of stuff to do with privacy, to do with crime, to do with censorship, and all of those things.

FS: Yeah. Okay. I mean that would never happen anyway.

That would…?

Never happen anyway.

Well good…

Because they’re so controlled.

That’s yeah.

FS: I mean for me I think that, I mean for us, for our business to move forward, the worst outcome would be that television industry wants to get back, holds the change back.

Which is its history.

FS: Yeah and they’re so protective of the revenue in the market that they’ve got now that they really worry about opening it up. That, that might actually… it might block them more.

Yeah.

FS: They might think [xxxxx] drop in their revenue, and…

ALJ: But I think that the… potentially for once, I mean I… to go back to your point earlier on I think the consumer has got the control now, which may actually permit them and the networks from having to go too far with that struggle.

FS: And you look at what’s happening with radio, recently with that extra licence that has been given, there was a huge push that it would kill the industry, introducing more licences.

Really?

FS: Oh, yeah from Austereo, you know from the big players, a bit like a Packer or a you know, a Kerry Stokes. So the big kind of radio players put in a big thing to the government saying that, you know, it would kill it… kill the business, that will cost you know… an estimated fragmented audience. So from what it has done, it has actually increased the [xxxxx] to radio interestingly enough. You’ve got new kind of radio stations, I don’t know that they’re making money but they’re certainly doing very well from the consumer point of view, attracting a lot of ad dollars, but they spend a lot of money on licences that they probably don’t need, [xxxxx]…

MS: but the selling thing is do you make money out of that because in time they’ll devalue that and public investments.

FS: I know but radio revenue has always gone up.

It has but look [xxxxx]…

FS: It’s an up brand that…

MS: Yeah, 780 million or something wasn’t it?

FS: Yeah. But it’s increased by 15 to 20% I can’t remember the exact figures. But DMG has less ads, you know it has hardly any, you know [xxxxx]…

Deliberate.

FS: Ads that they charge, so you know…

At the [xxxxx].

They do, so they’ve certainly introduced a new business model, which is about focussing on brand like NOVA, and you know really target that brand to young people and…

Yeah, it’s engagement in…

FS: Engagement in them, engaging their consumers, so that there is more active with them, so that when it came more for that active involvement.

ALJ: Yeah, if a fourth channel came in here. Would you like to see it doing something like that? Taking a completely different tack from the commercial four channels?

MS: Waste of time, it’s all [xxxxx], and the reasons for that is that when you’ve got Foxtel and all of these other things that are going to happen, a fourth channel in what is virtually yesterday’s technology.

Yes.

MS: You know and it’s what 2007 before they even put a master on, so…

Yes.

MS: So it will…. I don’t even see it, so it’s 2010 before it’s going.

So who cares?

MS: It’s game up for them.

It is, yes.

MS: Well it won’t get up, it won’t.

ALJ: No because that’s… that’s much the more likely outcome [xxxxx]. But I’m just behind… it would be interesting to see if somebody could make a serious argument with government about starting a completely different kind of broadband, or what could the government itself do about it. As you probably know in the United Kingdom, OFFCM is proposing to government at this stage that they should think about releasing all the commercials in England from their current public, you know they have got a set of public service responsible, releasing them from any of that, and just letting them run wild, but the quid pro quo being the start of another public broadcaster in the United Kingdom in competition with the BBC, to do all the inevitable niche risk catching stuff, that these other blokes [xxxxx].

Yeah.

AJL: I mean this could be an interesting one over here. When you look at the world, at this world, what needs doing mostly [xxxxx] to keep things moving along towards the kind of successful outcomes that consumer has to [xxxxx]? Is it government? Is it the industry itself? Is it regulation?

FS: I think the government has definitely a big role to play in pushing change, because otherwise the free-to-air networks will try and keep things [xxxxx], so I think putting that pressure on them to innovate with that by threatening to open it up more, or I don’t know what it would be, but the government has a pretty big role to play.

AJL: And then the many issues, how does one get that to happen, because there’s… again they’ve partly avoided responding to that in the past.

Mm, I know.

Of them having…

FS: All that lovely editorial content. So the government could get… and that’s definitely something.

AJL: But it’s also, I mean the arguments that they get are only resistant on as much as in a large part of the [xxxxx] argument is [xxxxx], this… I mean there is astonishingly little with public discussion in this country to go, again… and both of you said it earlier on, to go out and look at what long history in this country.

FS: And that’s it, I suppose… and technology would grow as well… I mean see I’ve spoken to consumers that push for it but we’ve got to cope with demand, get the consumers to want it and you know I think a lot of technology is happening overseas that gets brought here has kind of helped to push some of that. I mean look at, you know the I-Pod, which has come here, which is almost like creating your own radio stations on your I-Pod. Now the way that’s changed is creating your own little mini pod. Did you read that the other day? Yeah.

Oh, this is I-Podding.

podding-Podding!

Yeah, [xxxxx] they’re making content specifically for i-Pods?

Yeah.

Fantastic, yeah.

Well just…

You download it this morning, and then you just listen to it when you want?

FS: Yeah. So I think that’s showing that there’s something coming in. You know, the radio stations have… well what are we going to do to compete against this, [xxxxx] is dead!

Because again, it’s the consumer driving?

FS: It’s the consumer driving that change, you know that they’re doing that.

Yeah I think one of the things for…

FS: For broadband. For broadband that you discuss the forums, but if that gets much faster uptake over the next few years that will also push the ability to be able to do more things.

What’s holding it back?

MS: I think it’s just been priced too high.

ALJ: I mean is it price?

Yeah.

MS: But it’s now forging ahead in leaps and bounds, it’s next barrier will be the fact that most of it will be on ADSL and they’re… the comparison between that and cable, it’s not as good. And I think that it operates this… I’m sorry, so and we’ve spoken to people who have indicated to us that those upgrades are [xxxxx] the client.

Grease up, yeah?

Yep.

Yeah so, it’s even, even capacity.

Yeah, I mean, there was a guy from Primus that we were happy to drink with just fortuitous one evening, he was saying that they’ve bought some technology that will make their ratings 100 times faster, and he said that behind that is something that’s 300 times and behind that there’s something, and so as more people get it it’s going to be faster and faster. But I think from the consumer front, [xxxxx] technology, the hidden thing in this country is that we’re not a homogenic society, like we were once. And you’ve got like obviously the difference between the has and haves not happening, but you’ve also got the ethnic changes happening. And because they were 23% of people, if you’ve got to them flat out and all the way in. Now [xxxxx], so and within that there are going to be some pretty profound changes that have to impact exactly back to these.

Yeah.

And I think, that’s a fact I think it was Costello who said ‘demographics is destiny’

That’s very good.

I though it was fantastic.

ALJ: But I guess what you’re saying is, because I mean… there’s just so much change coming out from within.

MS: It was really interesting here, that a small story we done the other day, to make people aware of this and the Chinese New Year, which was Wednesday and they came around and they gave us a little thing and said you know, [xxxxx] wants to see you, what nobody in this building knew was that it was also Ash Wednesday. They all forgot, ‘Oh gee whiz!’ That was pretty funny.

That’s bad.

That’s so scary. That’s scary.

Where is Christmas and [xxxxx]?

Exactly.

ALJ: If you owned the world?

FS: Well we think that [xxxxx]!

MS: Get used to it. It’s all about us!

FS: What would we do?

Beyond what you’ve said, yeah, I mean I suppose really what… if there was something that you could do in the next 10 years that was going to make the kind of outcomes that you would hope for in 2015, it maybe stuff that you’ve already said, but if you genuinely did have the levers in your hand to make one, you know to make a big change?

Mm, hmm.

ALJ: Perhaps I [xxxxx]?

FS: No I think… I keep going back to the government thing, I think I’d probably loosen things up, make it more competitive, and open it up so other players could get in.

MS: It’s a bit like a free market situation.

FS: Just freer.

Yeah.

FS: You know and then I think that would create a lot of stimulants for creativity, well I think you know if you think about those companies that try to play Pay TV debate, but just lost so much money and it’s obvious with the big guys squashed if they do it that way, you know by having a freer market, you know they’re bound… there’s got to be more innovation and more things that will happen.

MS: Yeah. That’s it, because I [xxxxx] the really important thing to me would be on demand, I reckon, to get what I bought [xxxxx].

Yes.

MS: Because I think you know, one of the things that will be an ongoing problem is quality. And I just don’t think particularly in the current market size that we can continue to be pumping out all that stuff with fragmenting, the quality programming in a fragment environment. The numbers don’t work.

That’s the [xxxxx] of…

MS: And I think you know that would mean we look at ourselves as well are we part of the western world, with things like “Neighbours” continue to give us some sales in the U.K, you know, it would make you look… you’ve just got to find a space that generates, yeah. So I think there’s for me, on-demand becomes critical because then I get quality, I can get exactly what I want out of it.

ALJ: And the national notions then mean less. The national notions… well the notions that it needs to be Australian content because I’m not suggesting that there is anything wrong with this, but on-demand suggests that its going to be on-demand from anywhere…

MS: Absolutely. You know if I was the BBC, production terrific, I want to see a French film, great, you know. Now, if I want to see the Wallabies play, even better. You know, there just… when you want it! It’s fantastic.

AJL: In a controlled world so that you were able to take any… you weren’t being exposed to the years of porn, or the years of whatever.

MS: It’s an open question, I mean it’s a [xxxxx] but the difficulty with the on-demand thing, it’s actually quite difficult to throw walls around into… but I’ve made my choices.

FS: No I know what you mean, I think there still needs to be some rules around to protect the kids you know, and to protect that [xxxxx].

Inaudible (laughter)

But the realities are, I mean any kid with a dial up, [xxxxx] at home.

FS: I think that’s relatively easy now there’s limit on commercial content, you know for kids, in kids’ time. You know there is a limit as to what you can do, and you know over the whole thing…

Self regulation.

FS: It is self-regulation and there’s commercial [xxxxx], so I think there is… I think it’s possible to have a whiplash around [xxxxx].

ALJ: I’ll be back to you about April, [xxxxx], I think I said in my email I was going to Cambodia, Vietnam, my 30th Wedding Anniversary.

Oh really.

Good on you.

ALJ: But I’m back late March and we should have synthesised all of the interviews by somewhere around mid towards the end of April. I’ll come back to you with all of that, and then if you’d like to be a part of the industry panels that [xxxxx] that will be about half a day, or two half day, putting some focus on all of the issues and crossing out the ones which are unimportant and maybe focussing on which are the most important and what we [xxxxx].

Yeah.

And that kind of single phases is the end of the process, so you get all of that and get back to me plus you get the outcome of whatever those industries [xxxxx] and those other [xxxxx].

FS: Well I think I we’d be interested in that.

Yeah.

Yeah.

FS: Well, good to have [xxxxx]…

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