Maggs on Media || Koos Bekker Part 1

Chris, if you look at the recent past of media, all my predictions were wrong. If you could have predicted Twitter, I certainly couldn't. Often the consumer reacts counterintuitively. I guess the best is not to try to predict the future but just to adapt to it when it happens.

I studied law. No one in my family had ever been in business, and I didn't even have a single business subject. I realized that I liked the field, and I went to advertising consciously to learn something about business. I think advertising people are actually quite good in their analysis of the consumer and the nuances. My first research project in advertising was to research the braai. We discovered the ladies of Seepunt like it sweeter and spicier than the ladies of Newlands, which is a fundamental human insight. I respect advertising people for that subtlety of distinguishing consumer tastes, and I think it helped me later in business and media also.

I think it's globally the same. If you sit in an agency in New York on Madison Avenue, or in Singapore, or in Ghana, your problems are exactly the same. Advertising is an interesting fraternity. It always struck me that the people are socially progressive — they dress in the most sort of zippy way — but they actually, as business people, quite conservative. They look at the past. They ask, how did you do, what are your statistics over the past 12 months, and then with a delay of a further six months they project it into the future. Advertising people are that curious bunch of guys that look as if they're preparing for the future, but their whole window is actually on the past. And the past in media has been a very poor predictor of the future. If you sat there and looked in your rear window in 2004, let's say, how would you predict Facebook coming or Instagram? It's pretty impossible. So advertising has that tension: you need to rely upon data, and your only means of predicting for your client where we'll be next year is by extrapolating those data forward. Recent history tells you that's not the way the world works. The world works with leaps of invention that are often counterintuitive and certainly unexpected.

I think it's pretty tough because the media houses are clueless. The average media company in the world is in a pretty poor shape. A few will survive. If you take newspapers, a few newspapers will make the transition from a print product to an electronic product, as the New York Times or the Washington Post or let's say Wall Street Journal have done, perhaps most successfully the Financial Times. In South Africa you might have a few electronic news services — News24 and a couple — making it. But most media houses are as clueless as ad agencies.

I think it's perhaps a little harsh, but approximately correct. The problem is they're grappling with existing media that still make money, a future which is uncertain and changing very rapidly, and trying to make the transition. Media24 itself is trying to move the print product online, but the moment you do that you realize it's not simply a transition — something happens. For example, online the consumer wants to talk back, participate more, also wants to contribute. When he's at an accident scene he'd like to send you the latest details and his pal would like to read it. It's like Facebook — the consumer generates information and consumes it at the same time. The problem with media: they have often a prophetic mission. You have the great editor who interprets the world and tells the world what it should look like. But that's not what consumers want anymore — they want to participate in this discussion. For a media house to make the transition to saying, the consumer out there is not just a recipient of my wisdom, he's a co-creator of content — that's interesting, but it's also hard to do.

Totally. I think the economics of print — if you take a newspaper, let's say you circulate at 100,000 copies, you have a fixed cost. As you decline — 90,000, 80,000 — when you hit a certain point, let's say 50,000, at that moment the business goes dead. You can't go to 40,000 because you're breaking through your cost structure. So what will happen is print products will progressively, each one after the other, reach that point and stop printing. But on the web there'll be a new generation of news interpreters. You will read the Financial Times in a physical copy, which I still prefer if I can get it in my hotel. If you can't, you'll default to the web. The web will become more and more useful, interactive; it'll start anticipating my needs. I might get to the point where my hotel stocks the physical copy but I think, I want to read it on my iPad. I think the iPad's more useful, both because the electronic side's usefulness increases all the time and because print will hit the point at which their fixed cost cannot be reduced any further and consequently has to stop publishing. I think in 10 to 20 years, physical print — at least newspapers — will disappear, and probably most magazines.

I think the regrettable reality is most media houses will simply disappear. It's like most wagon makers — when the car came around, they didn't progress to become car makers; they simply disappeared in the economy. And I think regrettably most media houses will disappear. Another interesting phenomenon is that our competitors now are global. If we as a company look at the scene, we're not thinking about Times Media or Caxton or whatever — we need to think about Google, Facebook, and these guys, Amazon in e-commerce. The same will probably happen in advertising: the advertising fraternity will worry less about the local names and more look at the global scene and say, how do I play my product in this context?