Science and Technology Panel - Clip 2: Transcript
What is happening in the Media and New Media in New York?
NANCY PERETSMAN
…the advertising market, the marketeers, had historically used information and entertainment as their organizing principle from which to market.
Well, all of a sudden technology introduced a whole new concept, which is what I call services.
And we said services are the new media, because that, too, whether it's search, whether it's instant messaging, whether it's the ability to organize your photographs -Â all of you have teenagers who are spending an extraordinary amount of time on Facebook - these are, in essence, services that are available, which, again, aggregate eyeballs, now very identifiable to the marketer, because we can go one-to-one through the technology, and, as long as the time is spent on it and the attention is spent on it, isn't necessarily all that different than watching a television show, not distinguishable in a marketer's eyes.
I'm going to pause for a second and divert, and tell a small story because I think it'll put New York in this context.
Years ago, the other center, obviously, for media entertainment is Los Angeles, and the question is how did Los Angeles end up as the hub of really the film business in the United States?
And it turns out that Thomas Edison had a patent on what was the camera, the movie camera. And the people who were first making movies were violating his patent. Edison's idea was that he was going to, it was a razor, razor blade. He was going to sell these movie cameras, and, in essence, you were going to have to license based on a percentage of the ownership of the film you were creating.
And most of the people making movies at the time didn't think that was a very good idea, so they decided - I mean, they could go to Florida. They wanted a warm climate, so they could have gone to Arizona, they could have gone to Florida. Why did they choose Los Angeles? They chose Los Angeles because what they did is they set up temporary film studios where they could take pictures.
And when the marshal showed up to try to implement the patent violation against Edison's contracts, they would load all the machinery into a truck and go over the Mexican border [LAUGHING] so that they couldn't be prosecuted. Now, so we ended up with [LAUGHS] Los Angeles just out of circumstance.
Why did it stay? It stayed because of the people. And that's my full lesson. What has existed in New York City isn't necessarily just the aggregation of the folks who are making content the way we historically knew it in the media business, but, as you duly noted, it's the advertising agencies and it's the groups in the middle who have taken the major marketing dollars that are spent by companies on a worldwide basis and tried to place them, translate them, organize them in a way as they get distributed on all the different ways by which attention is gathered. Content.
So those people are here. So of your 44,000 people, the thousand people that now work for Google in New York City are in that number. And the thousand people that work for Google in New York City, why are they here? They're here because they're all working on the advertising side of Google and they didn't exist anywhere else in the country.
Google never thought they were going to end up with a thousand people here four years ago, but as they realized they had to hire people who had competency in that monetization of eyeballs, if you will, where did those people exist? They existed here because they came from the advertising agencies or the advertising services.
GARRICK UTLEY:
Just to follow up on that point - in terms of media and advertisements, it's important that you have brought in advertising as part of this, because it's affected by technological changes, as is media itself. For New York City, then, does this come under the heading of growth industries? You seem to say yes with advertising.
NANCY PERETSMAN:
Yes.
GARRICK UTLEY:
What about media itself?
NANCY PERETSMAN:
To the extent that if you take my definition, I think there are two things going on. To the extent that services are a new form of media, competing for attention to be monetized, those are disproportionately created outside of New York. They tend to be stepped in an engineering culture and they tend to be produced by engineers rather than writers, graphic designers. So I would say on the origination of services, less so in New York City.
What does exist in New York City, however, is what I'll call the second order effect. So let me give you a good example of - you know, there are a handful of start-ups I'm going to use illustratively.
A gentleman who had a long-term interest - he worked for Macmillan in the major publishing industries - light bulb goes on. He says, hmmm, there are these books that are practice tests, so if you're going to be a nurse or if you're going to be a policeman, there are practice tests, and they're distributed through Barnes and Noble.
Now, it turns out - again, to the segmentation and granularity - if you go into Barnes and Noble, you're going to buy a practice test before you go for certification for what is New York State, because it's not an efficient publishing model to make it for Westchester County, New York City because they can't print those small runs and distribute them efficiently. But, in fact, the tests are actually adjudicated much more locally.
So this gentleman says, hmmmm, new business opportunity. I left the publishing business - only he would understand the new business opportunity because he came from understanding how the information was organized - and said, let's put it all online. Let's organize these practice tests so they're electronic because on an electronic it's better business. It can actually end up with much more productive outcomes because the practice tests can truly be created against the level of specificity in each region that gives a different tests.
Then he goes one step further. He says, so he gets his business up and running. He licenses to libraries, community colleges. Very successful. This business actually was based - it's now based in Lower Broadway and it got one of the Grants on Economic Development to stay in New York City, again, based - as they grew, they needed cheaper and cheaper real estate.
And then he said, hmmmm, this is really interesting because it turns out that the intellectual content underlying a practice test to be a fireman or a policeman is based on - you all maybe sit in your seat while you tell you this - I don't know whether Ray Kelly is still here - it's based on eighth grade math and English competency levels. But because the level of the practice test is based on that, these people said, hmmmm, guess what? With all the testing now in the school system on eighth grade, we've now created something that's online - we can start selling this into the school systems.
And, in fact, two of probably the most innovative young companies that I know in New York City are online education companies. And why are they here? Because their biggest possible client is the New York public school system.
And so, they're here as a function of that, and they're here because the people who worked in educational publishing, who are going to use their competency that used to be in the traditional bricks and mortar and are going to be online, are here.