“The argument is that in an important way, they are the same,” he said. “In fact, whether now or soon, Google will have more power than Microsoft did at the time. Google’s power will extend to more than one layer of the network.” Microsoft’s power was its ability to leverage its potent operating system to control the various applications that use the operating system. So Microsoft offered a free browser to knock out the Netscape browser and attacked Java software that might “facilitate competition with the underlying operating system.”
Google’s power flows from a different source, he said. “They have produced this amazing machine for building data, and that data has its own ‘network effect’”—the more people who use it, the more data generated, the more advertisers flock to it. “Everything sits on top of that layer, starting with search. Every time you search, you give Google some value because you pick a certain result. And every time you pick a result, Google learns something from that. So each time you do a search, you’re adding value to Google’s data base. The data base becomes so rich that the advertising model that sits on top of it can out-compete other advertising models because it has better data.... The potential here is actually that the data layer is more dangerous from a policy perspective because it cuts across layers of human life. So privacy and competition and access to commerce, and access to content—everything is driven by this underlying layer. Unlike the operating system, which couldn’t necessarily control the content that you got.
“The way they are different is that I don’t think there is any evidence that Google has misbehaved in the way Microsoft misbehaved when they tried to leverage the operating system to protect themselves against competition. So far, they’ve been good guys. But that leads to a question: Why do we expect them to be good guys from now till the end of time?”
Lessig, who benefits from the broad education and reading many Googlers lack, was nevertheless alert to how Google, like Microsoft, might become intoxicated by power and succumb to the same human failures. Of Google, he said, “I fear theirs is an old story about how good people deceive themselves. As Microsoft did in the nineties, you become so convinced that you are good that you become oblivious. I sense that is true at Google today. They’ve drunk the Kool-Aid.”
PART THREE
Google Versus the Bears
CHAPTER EIGHT
Chasing the Fox
(2005-2006)
R
upert Murdoch, the audacious and sometimes outrageous media mogul, made another move in July 2005 that unnerved his peers. He was in the habit of doing so. For four decades Murdoch’s News Corporation had been playing bold offense, forcing other media companies to defensively respond. Starting with a single newspaper in Australia, and then England, he build a newspaper empire in both countries, and forced the modernization of newspaper work rules in England. At a time when the audience for the three broadcast networks was aging, he had pioneered the Fox broadcast network, with its youth-oriented programming. He established satellite broadcasting that blanketed much of the globe. He eclipsed the once-dominant CNN in ratings with the Fox cable news network. Journalistically, his impact could be pernicious—spurring tabloid television with his syndicated A
Current Affair,
fomenting shrill, nineteenth-century press partisanship with Fox News,
The Sun
in London, and the
New York Post.
But even as he was disdained in certain quarters, he was always carefully watched. Media companies chase Rupert Murdoch as hounds do a fox.
Murdoch again shocked his peers when he acquired
MySpace.com
in July 2005 for $580 million. After just two years of existence, the youth-oriented social network and music site had sixteen million monthly visitors ; that number would quadruple over the next fourteen months.
Before Murdoch’s announcement, it was expected that Sumner Redstone’s Viacom would lay claim to MySpace. It was a natural fit with Viacom’s MTV, with its own youthful audience of more than eighty million monthly viewers. And it was widely believed that Viacom CEO Tom Freston was close to making the acquisition. But before he could, Murdoch swooped in with a higher offer, which Redstone refused to match. Within months, Redstone had replaced Freston, grousing to associates that had he been more aggressive he could have sealed the MySpace deal. Actually, what happened, according to a Viacom official involved in the negotiations and confirmed by others, was this: “Rupert made a preemptive bid. Sumner told Tom he did not want to get into a bidding war.” The parsimonious Redstone had flashed a red light to Freston.
By acquiring MySpace, Murdoch intended to instill in News Corporation a fresh Web-centric sensibility. By contrast, when Viacom tried to instill its MTV television sensibility online with a music site called MTV Overdrive, it stumbled. In early 2007, MySpace cofounder Tom Anderson announced to the German magazine Der Spiegel, “I think we have replaced MTV MySpace is more convenient. You can search for things, while MTV is just delivering things to you. On MySpace, you can pick your own channel and go where you want. That’s why TV viewership is dropping among the MySpace generation.” MySpace had the traffic and the buzz. MTV had the profits, of course, which MySpace did not have. But Murdoch was nonetheless perceived as once again having set the pace for media companies.
IN THE YEARS SURROUNDING the MySpace deal, Internet visionaries began to dominate discourse in the media, and the prospect of new online challenges attracted some of old media’s most creative minds. New media was invading the entertainment business, becoming a magnet for talent, for those wanting to stretch their muscles or pad their wallets. Believing that new media would define the future, more than a few executives fled old media. Viacom lost one such prominent executive, a man named Albie Hecht. After successfully creating music videos earlier in his career, Hecht oversaw the creation of MTV Network’s Spike TV, which pitches its programming to young adult males, and then was president of Nickelodean Entertainment. But in 2005 Hecht, then fifty-two, suddenly stepped down, saying he wanted to get back to creating products rather than managing them. It was seen as a blow to Viacom. “I left because one of the lessons right now is that the small, fast-moving company with a specific mission can strike. The Viacoms and the rest of them are having a hard time. They take entrepreneurs and make them executives. They take authentic brands and turn them into their brands. And they put bureaucracy into place and reduce the risk taking and speed to market. That’s a killer combination.” Big companies, he said, are too impatient because they can’t explain to public shareholders how they will quickly get a return on start-up investments. He wanted, again, to be a fox.
Hecht, a full-throated enthusiast partial to T-shirts, khakis, and white sneakers, set out on a “vision quest” similar to the one Barry Diller took when he left as CEO of 20th Century Fox in 1991, purchased a PowerBook laptop to explore the new online world, and embarked on a ten-month odyssey to decide where to stake his future. Diller decided that cable would dominate the media’s future. Hecht came to a different conclusion. He had visited studios, directors, writers, producers, digital animation studios, anyone who set out to create programming for the Web. “What kept coming back to me,” he said, “was that the most exciting people, the most exciting work I saw, was all on the Web.” One night as he watched his seventeen-year-old son, his thinking congealed. “He was up in his room,” Hecht said. “He’s on the phone. He’s watching TV He’s playing a video game. He’s IMing. He’s reading—thank God he reads! All at the same time! You look at that and you go, ‘This is a new world with new media and new audience behavior. You have to capture that audience by capturing the way they are engaged.’” His son was not just receiving information or entertainment. He was interacting. This audience wanted different modes of storytelling.
Hecht’s son was typical, according to a 2005 study of media usage among eight- to eighteen-year-olds by the Kaiser Family Foundation. The study reported that young people nationwide spent a daily average of six hours and twenty-one minutes with media; when multitasked activities like reading or listening to music were included, the daily total is eight hours and thirty-three minutes, more than “the equivalent of a full-time job.” Nearly four hours per day was expended watching TV, videos, DVDs, or prerecorded shows, and 40 percent of this time youngsters were multitasking, usually by simultaneously going online. Outside of schoolwork, sixty-two minutes were spent on the computer, forty-nine minutes playing video games, and only forty-three minutes reading. School homework consumed an average of fifty minutes per day. A later study by the market-data firm, Forrester Research, found that Americans between the ages of eighteen and twenty-seven spent nearly thirteen hours per week on the Internet, nearly two and one half more hours than they spent watching TV
When he left Viacom, Hecht established a company, Worldwide Biggies, in a brownstone office not far from Times Square. With venture capital funding of nine million dollars, and a staff of twenty-two, they create interactive Web shows and video games and other multiplatform activities. “I use the word
engagement
as the new metric, as opposed to viewing,” he said. “Some people call it leaning forward as opposed to leaning back.” In the products they produce, they look for “six levels of engagement.” The audience must be able to (1) watch (on any device); (2) learn (by searching for information about it on the Web); (3) play (games); (4) connect (social networks, IM); (5) collect (microtransactions involving money on the Web); and (6) create (user-generated content). “If we have four of the six, we put it into development. If we get six out of six, we think we have a hit.” He has since created successful Internet games and a popular mockumentary series on Nickelodeon called The Naked Brothers Band.
The new hits will differ from the old ones, he said. Storytelling will have to change. “We’re learning that now. Some of it is that a story isn’t necessarily a story. Facebook is a story. What’s the story? ‘I’m going to look at what Albie is doing now. I’m going to go on my Facebook page and it said that Albie is now doing an interview. And just yesterday Albie posted seven pictures.’ That’s a story.” Hecht, like many a high-concept Hollywood executive, thinks in formulas, but his are broader (in a business sense). He said games are about “experience,” TV about “character,” and movies about “stories.” In the stories Worldwide Biggies is working on, he said, “If we can move someone so they love this character, and they’re moved through a story, and they’re playing a game, and they’re connecting with their friends about that game, and they’re collecting objects in that, and at the end of this experience they have created their own video of this experience, we’ll have moved them into a different type of storytelling.”
He believes the Web is not just a distribution platform. Rather, because of its interactive nature, he believes, “The platform itself is content.” Hecht feels like an entrepreneur again. “It’s all about the new Wild West for me,” he said.
JASON HIRSCHHORN WAS ANOTHER Viacom refugee. He grew up in Manhattan wanting to be a music entrepreneur. When he was fifteen, in 1986, New York City bars were lax about checking the IDs of teenagers, until the “preppy” murder case. A teenager, Jennifer Levin, left an East Side bar with Robert Chambers late one night in 1986. Her body was found that morning in Central Park. Bars cracked down on minors, and kids could not easily congregate.
Borrowing his father’s empty briefcase, Jason approached the owner of the old Fillmore East, where he had been bar mitzvahed, and made this offer: on nights the place was closed he would fill the hall with teenagers, in return for half the gross. No alcohol would be served. The owner agreed to the experiment. Jason called all his private school friends and asked them to call their friends; this extemporaneous network became viral. Seven thousand teenagers showed up. “We grossed seventy thousand dollars the first night,” he said.
When Jason was a senior at New York University, he discovered the wonders of the Internet. “You could ask questions and find things,” he marveled. He started building a music-trading site. From his East Ninety-sixth Street apartment, and with an assist from his sister, he built a site, the CD Club Web Server, that offered users advice on how to work the CD clubs and catalogues to get the most for their money. Consumer Reports described it as a great resource, prompting Columbia House, a music catalogue, to phone to tell him to take down their trademarks.
“Why don’t you just advertise?” he asked, half joking.
Instead, they proposed to pay ten dollars for everyone he signed up. “All of a sudden,” Hirschhorn said, “I’m making thirty thousand dollars a month!” With this money he built
Musicstation.com
, which linked to other music sites. He created a music search engine that scanned the Web and television to find music, place it in categories, and fashion a music index. Not long after, five media companies got into a bidding war to buy his company. A lifelong MTV fan, he chose Viacom in early 2000. He was twenty-eight and “I was the lone digital guy.” Over the next six years, he was promoted six times, becoming the youngest senior executive at Viacom, the chief digital officer of the MTV Networks. Soon after Viacom pulled back from its bid to buy MySpace, a bid he had instigated, he resigned. While he won’t criticize the failure to acquire MySpace, he was frustrated. “I was an entrepreneur who came into a big company and tried to treat it as a start-up,” he said. “Big companies don’t innovate. They operate. Frankly, I think MTV should have owned the Internet.”