(Annette Moser-Wellman)

Our mission at TechScout is to provide a window to the things to come in the media marketplace. From interviewing academics about their cutting-edge research to checking in with CEO's in the tech industry, we try to give you a peek under the hood of a rapidly changing - and some say wholly unpredictable - industry.

An interesting glimpse of the future is also found in the venture capital community. These VC investments shape new media players and give us a hint on some potential winners in the media marketplace. I recently spoke with Paul Holland of Foundation Capital about the trends he sees and some bets his firm has made in the changing media world.  Their strategy: "We simply look and say what we think are the next major trends that are going to occur, what the technology needs around those trends are, and can we service them with startups?"

Clearly, business models for traditional forms of media are imploding and Holland admits "I have no dog in that fight," meaning no investments in old media. But he is keenly aware of the tremendous push of traditional firms to recapture some lost revenue through online outlets. Holland points out that the disintegration of traditional media revenue and the attendant interest in online is happening at a lightning pace few anticipated. While some traditional media outlets are making the transition better than others - he cites Forbes and The Economist - Holland believes the crossover to online has and will continue to be a struggle.

So what can we anticipate as the areas that have opportunity for growth? The first area Holland likes is Internet video. Broadcast quality viewing is quickly coming online. "We are going to see sporting events and other major news and entertainment available in real time in HD on the Internet," he says. "You are already seeing this with the British Open, the US Open, and others." Holland says youth markets are moving away from television and absorbing most of their content on the Internet, suggesting that that online video viewership will increase and that the quality of that video will follow. One of Foundation Capital's investments is a company called Conviva. This technology platform enables content owners from rock bands to producers of major programming to optimize the viewing experience in HD, as well as control and measure distribution.

A second trend Holland mentions is the explosion of ad networks, such as Rubicon and Quattro. Many more players are finding new ways to create advertising and help content producers monetize the Internet. One of Foundation's companies in this area is FreeWheel. FreeWheel has created a technology that allows advertising to be attached to a YouTube video. As that video gets propagated across the Internet in other forms, the advertising stays intact. "The next wave will promote the ability of content creators to find ways to support themselves off their content," says Holland.

I asked Holland to comment on our research with media executives who believe they are trading dollars for pennies in moving online, and fear the quality of programming will decline. "I think it's the exact opposite," says Holland. "The explosion of YouTube, Fancast, Hulu, and even Netflix [a Foundation Capital venture] is creating more content now than ever in the history of mankind, and that is going to continue every single day for as far as we can see in the future. As an independent creator of content, if you create the best content, you'll find distribution. The vast majority of stuff produced for network television is awful and the handful of things that aren't awful break through. They resonate with consumers. Producers will get some percentage of their revenue off network television, some off of cable. They'll get some revenue off of the Internet and some from DVD distribution. They just have to work a little bit harder on that side of it. Think of the opportunity as syndication times ten."

Holland is optimistic. He tells me that some ad networks are at 15 billion impressions a month from companies that didn't exist two years ago. The growth rate implied by the Internet versus the growth rate implied by older forms of media is compelling. He goes on, "My optimism is based on the fact that there is dynamism, and where there is dynamism, there is opportunity."


Annette Moser-Wellman is President of Firemark, Inc., an innovation consultancy, and author of Six Competencies of the Next Generation News Organization and Running While The Earth Shakes: Creating An Innovation Strategy To Win In The Digital Age, both published by the Media Management Center.

This TechScout article is part of a series of Moser-Wellman interviews commissioned by the Media Management Center to explore opportunities and insights at the intersection of technology and the news media. Click here to view other articles in the TechScout series.

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