Net’s orbit still expanding

Music cabler reinvents itself once again as it chases the fast-moving 'MTV demo' into digital platforms

A network known for its parties, MTV didn’t celebrate its 25th anniversary on Aug. 1. Instead, the cabler’s top execs dined quietly that night at a restaurant in New York not far from MTV’s offices.

“We’re a bit anniversaried out,” says a spokeswoman for the cabler, which participated in only a handful of the dozens of newspaper and magazine articles recognizing the milestone.

Indeed, for MTV, 25 might as well be the new 40. Keenly aware that its relevance in the MySpace/YouTube era is being challenged — Forbes, for example, wondered, “Is MTV Aging Well?” — the channel insists these days on changing the subject from its birthday to its headlong plunge into new broadband and wireless platforms.

“Through the Web sites we have built and acquired, MTV Networks will become the digital hub for our audiences,” says MTV Networks president and chief operating officer Michael Wolf. “We want to give them access to our deep content libraries, recommendations for their entertainment choices, and games and other applications which enable them to participate in the creation of content and connections to other members of our audiences.”

As a brand built on serving the consumer base migrating fastest to digital platforms, MTV is under heavy Wall Street pressure to innovate its business.

Viacom shares have fallen more than 15% since it spun off its CBS unit as a separate company in January amid concerns about long-term growth in the cable advertising market.

MTV execs have been criticized for not making a big, transcendental move, notably one like News Corp.’s $580 million purchase last year of, today’s top destination for the so-called “MTV demo” on the Web.

They also have been accused of not moving fast enough. MTV’s music file-sharing service, Urge, for example, seems to have made a late entrance into a post-iTunes world.

“They’re starting the process of getting into new media, but they’re behind some of the leaders,” says Morris Mark of Mark Asset Management.

Quietly, however, MTV has strung together a series of smaller deals for more under-the-radar Web properties with rabid followings.

Earlier this month, for example, MTV Networks paid $200 million for Atom Entertainment, which specializes in short films and games and boasts 17 million unique visitors a month.

Earlier purchases included the viral video hub iFilm for $49 million, kiddie community Neopets for $160 million and vidgame portal X-Fire for $102 million.

Viacom also has the most robust set of broadband video channels of any cable channel operator, among them MTV’s Overdrive, Comedy Central’s MotherLoad and Nickelodeon’s TurboNick. Year-old Overdrive boasts 48 million video streams a month.

With these and other recent additions — including the launch of internal think tank Viewer Labs, which will explore new opportunities in digital media — Wolf hopes to increase MTV Networks’ overall online reach from its current level of 70 million unique visitors a month to more than 100 million over the next six months.

“They can’t replace MySpace, but these acquisitions are all potentially powerful vehicles for their content,” opines Jimmy Nguyen, a partner in Foley & Lardner, a law firm specializing in media matters.

Certainly, the cabler has already successfully evolved its business several times over the last quarter century to keep up with the rapidly evolving consumption patterns of the 12-34 demo.

An international conglomerate, now broadcasting to more than 442 million households on 100-plus channels worldwide, MTV Networks started as just a single cable music channel back in 1981.

The brainchild of then-producer Bob Pittman, MTV began as a joint venture between Warner Communications and American Express.

Members of its inaugural management team — including Viacom topper Tom Freston, MTV Networks CEO Judy McGrath and MTV network development head John Sykes — are still around today, having left and come back in most cases.

The first musicvideo, the prophetic Buggles track “Video Killed the Radio Star,” was played just moments past midnight on Aug. 1, 1981.

Musicvideos soon became the most powerful forces in the record biz, with labels lobbying aggressively to get their priority acts into “heavy rotation.” A video playing a dozen times a day could spur album sales of 50,000-100,000 copies a week.

Meanwhile, the channel’s first set of VJs became as famous as the artists in the videos. But MTV execs soon rotated the veejays out for fresher faces.

And eventually, the videos got rotated out, too.

“It’s funny, because the ‘M’ stands for music, but it’s getting harder to find any,” says a record label CEO, repeating the oft-heard charge that MTV has little to do with music these days. “It was better when it was called a channel. Now it’s a network.”

“The ‘Video Music Awards’ are about the only thing left on MTV that really helps sell records,” adds a label marketing maven who works closely with the channel.

However, while Gen-Xers voraciously consumed four-minute Duran Duran videos, it became questionable by the early ’90s whether such a music format — which was easily replicated by competitors — would continue to resonate.

“We quickly realized the novelty of musicvideos wore off and was not repeatable with thousands of viewings,” says Van Toffler, president of MTV Networks. “So we evolved into being more about TV production, yet still sloppy, live and organic.”

In the early ’90s, the music cabler moved into edgy episodic programming, launching raunchy toon “Beavis & Butt-head” and later hits like “Punk’d.”

The channel also pioneered a new programming phenomenon: voyeuristic reality. But today, MTV-style reality shows — first established with the groundbreaking “The Real World” and “Road Rules” — are widespread, and the cabler has had fewer new breakthroughs as the genre has become ubiquitous.

“The Real World” soldiers on, but high-profile skeins such as “The Osbournes” and “Newlyweds” have run their course. Meanwhile, as MTV-style reality programs have proliferated all over cable, the channel’s newer reality programs — like “Pimp My Ride” and “Cribs” — have a tougher time standing out.

Still, as MTV once again embarks on change — this time, in the very way it’s consumed — it certainly isn’t alone.

“Media companies are at a very experimental stage right now,” Nguyen says, “and everyone is trying to figure out how to repurpose content on all the new platforms.”

(Adam Sandler and Denise Martin contributed to this report.)

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