Now on his own, Chernin is doing the same thing: He’s producing TV — Fox’s “Terra Nova” and “The New Girl” — and movies — “Rise of the Planet of the Apes” — and he’s making digital investments in highfliers like Flipboard and Pandora. And last fall, Chernin made a strategic move outside of the U.S. by opening up CA Media, an operating and investment vehicle focused on China, Asia and Indonesia.

8:57 am: Good morning from Hong Kong. Peter Kafka takes the AsiaD stage and after a few introductory remarks is joined by Peter Chernin.

A bit of patter and then the first question:

Peter Kafka: So you were the chief operating officer at News Corp for many years. A couple of years ago you left, you’re in TV and movies — seems to be doing quite well. What are you doing in Asia?

Peter Chernin: Well, I had been in the same job at News Corp. for 13 years. So when I made a decision to leave, I started thinking about — what I really spent most of my time thinking about was, where do I think growth is likely to occur? And what I set out to try and do was build a company in — you know, I had the luxury of starting with a blank piece of paper, and I decided to use that luxury to try and build a company that really focused on areas of the media that I thought had growth potential.

So it ended up in a couple of buckets. So I’m clearly in the premium content business, I’m producing –

PK: And you left with deals in place with News Corp.?

PC: I left with deals just for movies and television, so I produced movies, I produced television shows. I’ve been doing a fair amount of investing in digital, which is an area of growth. And then the other big area of growth, I believe, in the world, is going to be the developing world. And so one of the things I did was I hired a colleague of mine, a gentleman named Paul Aiello who had run STAR TV for me. And our thesis was that, between the two of us, we probably had more media experience in Asia than just about anyone else, and we felt that this is likely to be the sort of nexus of growth in both the immediate world and the tech world in the years ahead. And we thought there was an opportunity to bring sort of our — a combination of our expertise and at the same time not having any other legacy issues that come with these big companies as it relates to regulation, as it relates to partnership, etc.

So we started a company called CA Media about 10 months ago. We’ve opened offices here, we opened an office in Mumbai, we’re about to open an office in Beijing and we’re going to open an office in Djakarta.

PK: You’re not the first Western media executive to go, “There’s going to be a lot of growth in Asia; I should get over there.” Does your thesis differ from the NBCs of the world, Warner, Fox, lots of people who have tried to put stakes in Asia?

PC: Well, I guess I’d say, immodestly, the thesis differs in the sense — you know, I’ve had 15 years of experience of businesses, you know, we essentially built the largest media business in Asia in STAR TV. So I’m not sure the thesis is all — I’m not sure it’s an act of genius to say there’s going to be growth in Asia, and I don’t take credit for that; but I do think hopefully our thesis is different in that we have experience in there.

Paul, before running STAR TV, he’d spent 15 years in Hong Kong running T&T Banking for Morgan Stanley. So we’ve got a pretty deep experience base here.

PK: And this is the AsiaD conference, but obviously, territory by territory, things are radically different. So give me an idea of how you’re going to approach China differently than, say, India?

PC: Well, I think — look, so we’re going to approach all these places opportunistically. I’d say, on a superficial basis, I think the opportunities in China are likely to be more digital; there are more regulations as it relates to traditional media: You can’t own a platform, you can co-produce but you can’t own a content business.

On the other hand, there are much looser regulations on the digital side, although the first deal we’ve done is we made a deal to buy a significant portion of a sports business in China. We bought a mixed martial arts business in China.

India, I think, is likely to be more of both. India, there are big content broadcast platform opportunities, and also very significant digital opportunities there.

PK: And to be clear, this isn’t about exporting content that you’ve made in the U.S.

PC: No, this is trying to buy local businesses, buy and build local businesses.

PK: And do you think about — well, obviously you do — so in terms of the way that your customers are going to consume this stuff, do you assume that mobile is going to be more important in one country versus traditional TV, or is this all sort of up in the air?

PC: Well, I think that these are arguably the two most significant mobile markets in the world. They both have a little over 700 million –

PK: It’s India and China?

PC: India and China, they both have a little over 700 million mobile customers. And I think the interesting — the very interesting thing, particularly — I think the big difference beyond that is China has a pretty decent Internet infrastructure; India does not. India probably has 10 or 15 million broadband customers today, probably going over 100 in the next several years, but still, on the basis of population, very limited broadband distribution.

So I think what you’re going to see in both these places is the real growth of the mobile Internet; on some level leapfrogging the traditional Internet. And, I would conjecture, probably setting a standard for the growth in mobile Internet. And I think, in my mind, one of the questions that’s going to be very interesting is, traditionally, I think people have thought that the digital businesses here have largely taken U.S. models and copied them. I think the really interesting question is, are we going to see developments — particularly in the area of mobile Internet — from this part of the world, which ends up getting copied in the U.S. because it has so much more of a dominant presence in people’s lives.

PK: And you weren’t here earlier, but this has been sort of a running theme, sort of the idea at this conference, that China in particular, but lots of Asian territories are sort of replicating stuff they’ve seen in the U.S. and the West, and iterating on it versus creating new stuff. And we haven’t seen much of the latter, but you think some of that’s coming?

PC: I do think some of that’s coming.

You know, I think the other thing that’s fascinating is India. India is a fascinating place because, as I said earlier, low Internet penetration, right? Huge mobile penetration, launching 3G right now, supposed to launch 4G at the end of this year, and what does a country look like that has 3G/4G distribution and cheap tablets? And they are about to launch a $50 tablet, $45 tablet in India, subsidized by the government to $30 for students. And there are 700 million people with cellphones there, so there’s clearly a lot of mobile connectivity. But what does a country look like that’s got 300, 400 million low-cost tablets, and that becomes the dominant distribution infrastructure?

PK: And you think a tablet can be a dominant form — a primary form of media consumption, of video consumption? In the U.S., so far the iPad seems to be ancillary; it’s something you hold while you watch T.V. Maybe it’s a remote –

PC: [Interposing] Well, I think — what’s really interesting to me and — it’s a little esoteric, but one of the dominant things about the Indian television business, and there are 105-110 million paid television households in Indian — probably up to 150 — but the average Indian home has one television set. So if you look — to me, I think the really fascinating content question is, if you have a country with one television set — generally controlled by the mother in the family — you have a country with 350 million people under the age of 15 all about to sort of become teenagers, clearly not dying to watch T.V. with their mom and dad and low-cost tablets. What does that say about a potential distribution infrastructure? So I do think — and very limited Internet infrastructure. So I think — it’s a recipe, I think, for absolutely a very different content delivery experience.

PK: Let’s go back to the U.S. for a minute — for a bit. You are one of the key architects of Hulu, back when you were at News Corp. And, if anyone doesn’t know, Hulu is perhaps the most successful media company formed by a giant media conglomerate.

PC: It’s a low bar. [Laughter]

PK: It’s a low bar, but a genuine success. I think this year they are on track to do $500 million in revenue. And in some ways you can argue that Hulu became too successful and now there’s a lot of flux around it, but — bring me back — when you were kicking around the idea for Hulu with Jeff Zucker at NBC, what was the original thought? Why did you guys want to create a video Web site?

PC: You know, I had several thoughts in mind. One was, I felt that IPTV was going to be a big phenomenon and, you know, I didn’t want to see a replication of, essentially, HBO, where a third party had built a dominant business on the back of the studio’s content. I felt like we should build it ourselves.

PK: Are you speaking about YouTube specifically, or a player to be named later?

PC: A player to be named later. Secondly, I was concerned about YouTube, although the Google-YouTube acquisition was sort of in the middle of our thought process of — so I wasn’t concerned about it at the beginning, but — and what I was concerned about was I didn’t want to have one dominant video distributor, I felt it was really important to have a second. And then the third thing I was concerned about was — it felt to me, you know, one of the dominant issues in the television business in the U.S. is PVRs. You have 50+ PVR penetration. You have people skipping ads, and what I felt was, that’s in some way the least valuable … sort of chink in the value chain for traditional media, and I felt like if we could get people so that rather than PVRing things and skipping commercials, if it was all available the next day on an online platform with limited commercials, we would monetize, at higher levels, DVRs. And so I thought that was an important part.

PK: So you guys built this — so you hired Jason Kilar and a team, and they built a very successful service — very successful, out of the gate — and one version of the narrative is it almost became too successful right away and that it caused the studios and the networks to go in it and were actually going to pull some of the eyeballs away from our own viewing. And the other part of the narrative is that while this was happening, you guys were starting to see real money from the MSOs and cable operators in terms of retransmission — they were starting to pay you for stuff they hadn’t paid for before, and the idea of giving it away for free over Hulu became a lot less attractive. The third part is that you left Hulu — you left News Corp. — and the chief advocate for the company sort of went away, and Jeff Zucker sort of left NBC. Does that narrative — all the narrative … First of all, is that the correct narrative? That all those three things happened at the same time, and that’s why the people who own Hulu are no longer as excited to own it?

PC: Well, I think — first of all, I have a different point of view. I don’t have a different point of view on that narrative, but I have a different point of view than — which is that — I think that sequential IP distribution of product is a huge opportunity for the studios.

PK: Explain what you mean by “sequential.”

PC: Well, I think that you can figure out ways to window it in ways that you don’t destroy your existing businesses, and I think the DVR example I used is the right … The stuff is available the next day on a platform anyway with zero monitorization, so the idea that you are giving — this notion that you are giving away stuff for free, is free anyway. Eighty-five percent of Hulu viewing is stuff that was on for free for broadcast television the night before. So this notion that you are going to put it in a bottle and somehow — I think is silliness. The other thing you’ve seen — it’s out of the bottle and it’s available, and I personally believe the media companies ought to monetize it. I also genuinely believe that more distribution has always been better. You know, I will give you a very good example: Fox did something — which I thought was very smart and I take no credit for it, they did it entirely by themselves — which is, we premiered a new comedy series, that I produced, in September, called “The New Girl.” Fox gave away the pilot episode for free on iTunes, and on Hulu for a week or 10 days before. Most people inside the broadcast industry said they were crazy. Why give it away for free — all you are going to do is take away ratings from the pilot. By the time it came on it was — something more than a million people had downloaded or streamed it — it was the highest-rated new comedy in 10 years on Fox, and it’s clear lots of those people watched it again, talked about it again. So I am a big believer that don’t put it back in the bottle, number one. I think you are competing with PVRs, and I think you can figure out a way to sort of sequence the distribution that maximizes it. The other thing, to be fair, is — and the media companies, I don’t think want to talk about this that much, unless they have a viable, legitimate means of distribution — consumers are going to steal the stuff and, nobody may like that, but there is not a single episode of television, not a single movie, that is not available on a pirated site.

PK: It’s still harder to get to it than it was to get a song from Napster in 1999, but it’s not very hard.

PC: It’s not so hard that if you don’t — look, I think historically piracy has always been the same thing, which is the bulk of people, if you give them an easy, straightforward way to do it legitimately and at rational costs, they will do it legitimately. If you don’t, they will steal it from you.

PK: I was surprised that — as an experiment, I am not endorsing it — but I was able to start watching a pirated stream of “The Daily Show” while “The Daily Show” was still being broadcast live in the U.S. I mean, it goes up that quickly now.

PC:: So the idea that media companies should put this away and make it so it is not available, I think is a recipe for disaster. To be fair to them, I think that, you know — they just took it off the market; so they decided to keep it now so they seem to be this month back in the “embrace Hulu” mode.

PK: If you were there, if you were running News Corp, if this was one of your properties, what would you want to do with Hulu now? They have now split the business into a free business, where there is really going to be less content available and it’s going to take longer to get there … In business –

PC: [Interposing] I would want to do everything I could to support Hulu, and the reason I said that is, I think — you know, I am sure most people … it’s not easy to build one of these things, and Jason and his team have done a spectacular job of building a significant business in three years. But secondly, I think if you’re the studio, what you want more than anything is you want an important and significant competitor to Netflix. The last thing you want is for there to be one dominant online subdistributor, because right now, you know, there is huge money being spent, but if they own the world, the money is going to come down –

PK: But you were specific. You said Netflix. You didn’t say YouTube, you didn’t say Apple, you didn’t say Google.

PC: Well, right now it’s Netflix. I think Netflix, in terms of the IP distribution of studio content, they have a pretty big leadership. In terms of IP — streamed IP distribution and studio content.

PK: Netflix had a very rough summer. They raised prices. They’ve moved back and forth in terms of some strategy. The stock price is down 60%, and a lot of people say, alright, they had their moment in the sun, they are knocked out. You seem much more optimistic about their prospects.

PC: Well, from their prospective, yes. You know — I think they’ve built a terrific business and they have reached a point of general critical mass. They are approaching right below 30 million subs. That ‘s a lot of cash being generated; a lot of cash to spend on the content business, and they are out there making big aggressive deals, buying exclusive content, and so I think they are a real source.

PK: They are buying some exclusive content, and then primarily what they are buying are repeats from the big studios.

PC: I meant, but they are buying those repeats exclusively. You know, they are out there buying those “Mad Men”s of the world — they just did a big WB deal exclusively, they just did a DreamWorks.

PK: And from the network’s perspective, this all seems like found money. These are repeats, we have extracted all the value we can, you are going to give us more money that falls to the bottom line. We win if you want to buy our repeats, great. Do you think that’s shortsighted on their part?

PC: I don’t think that’s shortsighted. I think what’s shortsighted is, I think they should be doing everything they can to make sure there is a competitor, because if there is not a competitor, at some point the amount of money they are spending will come down. And I think their best hope for a competitor is Hulu.

PK:: So you spent a lot of time at a very big media company; you pushed a lot of the digital efforts there in addition to Hulu; you did several … You oversaw Myspace, and News Corp. in particular seemed to have unwrapped all of those investments. They sold off Myspace for spare change. They bought a company called IGN; they are spinning that off, and Hulu they seem to have boxed off. Do you think News Corp.’s uncomfortableness with digital properties is specific to them or do you think that’s reflective of all of the established media companies?

PC: Look, I think these things end up being a combination of both. I think there is an overall discomfort on multiple … there are specific issues going on.

PK: We will leave it there. Speaking of digital — I said this yesterday and it’s still true — everyone who was on stage with me has either worked at Yahoo or wants to buy it. Your name has come up several times as a potential Yahoo buyer. Is that still something you are interested in?

PC: I heard Jerry [Yang] yesterday say it’s not for sale, so it’s kind of a moot point.

PK: I think he said all options were on the table.

PC: Look, to be honest, I spent a fair amount of time looking at it a year ago. I’ve done very — and it seems so confusing to me, at least, right now — that I’ve spent very, very little time in recent months on it and, you know, I don’t want to rule out anything. On the other hand, I’m not — you know, it seems like such a confusing situation, it doesn’t seem like right now it’s worth … investment.

PK: Can you see putting energy and time into building a brand-new digital asset? Could you create a new all-digital distribution channel in the U.S.? Is that possible for someone like yourself, sort of standing outside the … companies?

PC: Well, I think there are numerous different ways, you know, one of the things I — I am certainly very interested in the area of digital media distribution, and I think that, you know, you’ve seen the Internet create dominant players in so many areas, you know. A dominant search business. A dominant e-commerce business. A dominant social networking piece. And I still think that media distribution is fairly fluid and wide open, and so that’s appealing to me. I think some of the investments I’ve made are absolutely playing that. I think Flipboard — which is an investment I made a year and a half ago, almost two years ago — is a fascinating model for digital distribution of content. You know, I just made an investment in Tumblr, which I think is a really interesting model. So I think those things are interesting.

PK: Can I ask about those two before we go any further? Because Tumblr — I’ve used it and seen it grow, and the best I can tell it’s sort of a dumbed down, in the best way possible, version of Blogger. It’s a blogging platform. It seems hard to understand what they’ll do with that business. They’ve made no real efforts to monetize that in any way. But you, obviously, seem comfortable with that, you’ve put money in there. Where do you think that company goes?

PC: I think that — what interesting about it to me — first of all, the growth trajectory is … It’s astonishing right now, the growth trajectory that we’ve seen with Facebook, we’ve seen with Twitter, etc. And to me, what’s interesting about it is a couple of things. One is, it seems to fall in between Twitter and Facebook, which is that it’s an opportunity to — it’s Twitter-like in its ability to express yourself, but without — and I don’t say this negatively — without the sort of restrictions in terms of number of characters and the ability to add photos and video and to add a much deeper, richer level of self-expression. And it’s Yahoo-like in the ability to communicate as your real self and express yourself. I think what it says about the content distribution business is that — what’s most interesting about it is that it is ultimately a way of — it’s a self-publishing content business, and I think where it has really gained traction is people retweeting, resending tweets, resending other people’s blogs, resending other people’s photos and resending other people’s videos. And I think this notion of self-publishing just in content is very, very profound and significant. And so I think that I look at that as being interesting.

PK: So you’re fine with that notion — build the service, build the platform; we’ll figure out ads as we go or monetization as we go. And Flipboard is a different take on this — it’s sort of a shell for existing content companies to distribute their stuff via tablets.

PC: Well, I think, to me, what’s most interesting about Flipboard is two things, which is, one, in a very much Steve Jobs sort of sense, a most beautiful content interface I think that we’ve yet seen created. I think it’s an absolutely beautiful interface to present content, and I think products matter. I think people want — the products that deliver a service are absolutely critical to people, so I think that’s one. The other is, I think it’s a very interesting sort of proxy for social distribution of content. The ability to sort of tie in your Flipboard feed to your Facebook feed and ultimately… You know, to me what feels extraordinarily interesting is –

PK: The progress …

PC: There’s so much content available right now, and I think that consumers are and will become more interested in organizing principles that allow them to figure out ways to navigate through all that kind of — it’s a sort of next generation of portals, which is, portals were early on … I think that what consumers are really looking for is, how do I wade through all this stuff and how do I discover this stuff?

PK: And you want to make those choices, as opposed to having stuff served to them.

PC: I think that they want to — they want to have stuff served to them in a … targeted way. So I think whether you see it — Pandora, which is another company I invested in –Pandora has clearly figured out a way to serve music content in a very specific way. Flipboard is using your social network as a way of doing that. I think that you begin to see that there are other targeting things, that are other recommendation engine things, but I think that beginning to put these technological tools around products that deliver content that’s relevant, is meaningful to consumers and has a lot of potential.

PK: So these are investments in other people’s digital projects that you’ve made. Could you imagine creating — I mean, is there opportunity to create the equivalent of a digital HBO, given the new distribution channels?

PC: I think there is certainly next-generation original video distribution platforms. I think it’s challenging, it needs serious work and I think that part of the issue in my mind is that what you’ve seen in Web -based original video product is that, for the most part, it’s been low budget, low-risk stuff, and I think the key is to do stuff that (a) feels like it specifically takes advantage of interactivity, etc., and (b) to start delivering premium content because, you know, consumers are very, very sophisticated and they are not interested in cheap, they are interested in better.

PK: There are lots of people watching very crudely made stuff. They seem happy with it but one of the reasons it’s very crudely made is there’s no ad budget that supports …

PC: Well, one of the other investments that we’ve made is that we’ve backed a gentleman named George Strompolos, who was in charge of all the content relationships at YouTube … really an attempt to aggregate some of the key individuals sort of, these guys who are getting 10-15 million views of low-budget content. But I think it is a way of trying to aggregate additional advertising resources, allowing them to promote each other, almost to think about … dirty word but network-izing them.

PK: And YouTube is trying a version of this themselves, they are going out to Hollywood and trying to seek content. What about the idea of going to someone and saying, alright, we are going to give you original content, it’s only available on the Web or digital distribution — we would like you, the consumer, to pay for it. Do you think people are willing to pay for that stuff?

PK: I think — I personally believe people will be willing to pay for it, but it needs to be genuine premium content. Look, the interesting thing I would think about is, HBO spends about $500 million a year producing original content. They spend a huge amount of stuff, you know, the core HBO series that we all think about, they probably spend about $200 million or $250 [million] because they are doing being movies and miniseries, they’re doing sports, they are doing kid’s programs. One of the interesting questions is, could you get 10 million people paying you $2 a month for HBO original content? For $200 million could you create a suite of content that is of that level of quality, and could you get 10 million people paying you $2 a month? I think you could.

PK: So why not do it?

PC: I think there’s a lot of chicken-and-egg things in there. It’s something I have sort of been playing around with and thinking about but, look, I personally am a big believer in –

PK: I think you would have people flocking if you could say, here is HBO-like stuff that’s $2 a month. There are lots of folks. Just anecdotally from my readers that say, I would love to get HBO but I don’t want to get a cable subscription, or I don’t want to pay $15 a month.

PC: And I think if you — HBO is not my business, and I’m by no means putting them — I don’t think the movies are why people are buying HBO at this point.

PK: What about sports … you were at News Corp. when they broke … Fox via the NFL. Does the NFL or any other sports league, is it worth overpaying a premium to create a digital window?

PC: Yes.

PK: How much would you pay for the NFL?

PC: Well, given that ESPN just paid $2 billion for “Monday Night Football,” you would be paying probably $3 billion.

PK: Could you make that work though, on an all-digital platform?

PC: Well, you certainly couldn’t make it — first of all, nobody can make NFL work other than the NFL on a standalone basis. I don’t think there has ever been an NFL contract that has been profitable on a standalone basis for the person doing it. So you have to look at it as a strategic weapon. So, you know, if you look at Direct TV, it clearly looked at Sunday Ticket as a weapon to sell overall subscribers. They are not making money selling Sunday Ticket for … they are making money selling that many more Direct TV subscriptions. You know, at Fox we never made money on the individual contract, but it allowed us to significantly rejiggle our affiliate base, it allowed us to start Fox Sports, it gave us tremendous leverage in the cable channel business. So I think that if you are an online distributor, you need to look at it strategically, and that’s a big bet.

PK: So it seems pretty clear, Google and YouTube ought to buy NFL rights? That’s my theory.

PC: It’s a big bet.

On to questions from the audience …

Q: Yes, good morning, Peter. My name is … with … Communications, we are a mobile Internet operator in Malaysia. So, two questions. The first one is, programming grid: In light of all these new ways to discover content, is there still a role for programming grid? For the linear notion? Those days are numbered, right?

PC: By programming grid, you mean what show follows what show. I think those days are highly, highly numbered. I’ll give you an example. We premiered this “New Girl” show, brand-new comedy, historically very difficult to launch new things. We premiered it behind “Glee,” No.1 drama on Fox, probably the No. 3 drama on television and, you know, I was thinking about expectations the night before and I kept saying, if we can hold 75% of the “Glee” audience, I would have been thrilled. And we did 30-40% more then “Glee” on a brand-new show no one had ever seen before. Is the grid as important as it used to be?

No, I think the grid is no longer as important as it used to be. That show was clearly quite capable of — an audience, and you see the same thing on the other side — which is shows that come after the No. 1 show on television, which lose 40, 50, 60% of their audience — and I think that the grid becomes less important every single day. You know this is really sort of silly jargon but, you know, as in relation to the media business, the one truism I have always felt is, no one can predict where technology is going to go and no one can predict … what I can tell you with absolute certainty is the effects of technology and the effects of technology are, consumers have more choice and more control. That’s what happens with every single piece of additional technology — there is more fragmentation and more choice and you have less ability to control them to get them — and in that sense, the single most overwhelming piece of technology for the television business was the remote control. When they didn’t have to get their ass off the couch and go change the channel, it really changed the amount of control that broadcasters had … and every single step gives you less control. And the grid was about control.

PK: This season is the first season that Fox has started window content online. For the last couple of years, you could watch any Fox show the day after on Hulu; now they have made that only available to Dish TV — it’s called authentication. As someone who is putting on new shows — you’ve put on “Terra Nova” and “The New Girl” this year — can you see that effect one way or another on your shows?

PC: Yes, I would prefer they didn’t do it.

PK: You would prefer your shows be available on Hulu or —

PC: Well, certainly for a new show you would prefer as much circulation as possible. Look, I think that they have their own reasons which is, you know, they have a gigantic multibillion dollar distribution infrastructure which they are trying to protect. But speaking as the producer of a show, I would rather –

PK: You think you lost eyeballs.

PC: I would rather it be ubiquitously more available, so more people have a chance to sample it.

Q: My following question — just a quick following question. So, digitalization of broadcast TV … hasn’t created much new business models or innovations in the Western Hemisphere. In the emerging markets in Asia, do you see digitalization of … opening up new business models and innovation opportunities, and if so, how?

PC: Well, I see it opening up more innovation than it did in the West because, you know, the West’s digitalization came into an existing, enormously rich and vital distribution infrastructure. It was a world in which there were already 200 or 300 cable channels, satellite distribution, cable distribution, and so digitization wasn’t offering anything that spectacular to consumers. I think in a less-developed television ecosystem, digitization means more. I think one of the most significant things that’s going to happen in the television business on the globe in the coming years, in the next two to three years, you are about to have — there is no digitalization of cable content in India. India is about to go digital on the cable business. One of the fascinating things is most — 85% of the average cable subscription never gets up to the channel or the cable operator. It is kept by the local operator, who just pretends … operator will have 200 subs and it will tell STAR, well, I actually have 80 subs or 200 subs and pay for very few — and pay for 10 or 15% of the subs. With digitalization you are about to have a huge influx of capital coming back up the chain, which is going to lead to clearly more money to be spent on content, but also the beginning an explosion of niche channels, an explosion of additional content. So I think digitalization in this part of the world where a West-developed television ecosystem is going to be quite meaningful.

Q: You talked a lot about how Netflix needs a competitor like Hulu. I am curious — Amazon didn’t come up, I mean, and they obviously are going to be a big player in the Android tablet business and what they have done in books. How do you see them as a factor or nonfactor in terms of movie/TV content?

PC: Well, I think that there is — there are several people who have an opportunity to play a meaningful, meaningful role. Clearly Netflix is already there. Amazon has an enormous opportunity. It’s very powerful, has hundreds of millions of credit card accounts and people already going there for content. Less video content now, but — clearly, Apple is a very, very important player and is going to continue to be an important player. YouTube — whatever the current number is, a gazillion video views, so an enormous amount of people — the dominant video distribution platform on earth, not yet for premium content, but a huge opportunity. Microsoft, currently today the No. 1 premium online video should be 50 million Xbox Plus subscribers. So I think there are a number of players, all of whom can be significant. So I don’t think Hulu is by any means — and I think if you are sitting in a studio, you hope that they all get aggressive about it.

Q: And the follow-up questions, in the previous discussion with … and Sony … some discussion on Internet TV, there was also a lot of discussion on Apple and what others can do. How do you think about Internet TV, both in the developed and the developing market? More in the developing market here?

PC: Well, do you mean from a hardware prospective, or do you mean from the distribution platform?

Q: We’ve got all these hardware folks in Asia creating all kinds of … T.V. The problem is there is not as yet a cohesive content strategy, and then you’ve also got this emerging competition from tablets and so on, and then the whole lean back, lean forward — I was just curious, if remote control was the biggest innovation for controlling the previous generation of television, how do you think that Internet TV becomes a real business?

PC: I think, clearly, the hardware guys are going to ship lots of connected television sets, and I think the point you raise is exactly the right point — it needs a content services layer and whether — and I think the question is, does that layer come from the hardware guys — you know there are three or four places it can come from. It can come from the hardware guys, particularly if they ever figure out a way to form a consortium.

PK: Samsung, Sony, LG.

PC: Right. It can come from the pipes, you know, AT&T, in the U.S. AT&T, Verizon and the cable guys could decide we are going to be the ones to figure out our way … It could come from the big tech players, and ultimately the content guys could play a role. So any number of those people can play a role in it. I believe –

PK: Who’s got the most leverage there?

PC: Everybody — every one of those players has got some real leverage and a real position to play from. I think it takes leadership.

Q: My question is about the Nielsen rating system in the States that has historically been what … defines success. With the digital age, with people watching content online and the Nielsen ratings doesn’t actually count that into their statistics. How would you … update themselves and track those things, because a lot of shows that are good and have a big following online … doesn’t get counted, so the shows get canceled. Should they really start being a little bit more proactive in following the online site viewers?

PC: First of all, let me say two things. The guy who runs Nielsen is one of my best friends, and we went to war with Nielsen and Fox. We had a big public war with them three years ago, so we have been as aggressive about their shortcomings as anybody. To me the issue — first of all, they have started to count these things. I think the question for Nielsen going forward is the following, which is the sort of hardware to collect viewing information which was originally Nielsen’s platform, they were able to deliver … and then they were able to deliver meters in households. That’s no longer an issue. You can ultimately track ratings exactly from set-top boxes, from IP addresses. There would be absolutely perfect rating information and Nielsen has started to get quite aggressive about measuring other screens. I think the real challenge and the issue for Nielsen or anybody else is going to be the analytic side. And there is going to be so much data available; I think the real question is going to be the level of sophistication on the analytics of all that data because the days when — 50 years ago when Nielsen got started, that data was at a real premium. Nobody else was capable of delivering diaries and extrapolating that. The data right now is the easiest thing in the world to obtain. Every set-top box in the world knows exactly what each person watches. It will get even more sophisticated with IPTV and individual devices, but there will be so much data, the analysis of that data will become that much more demanding and demand that much more sophistication. And to be fair to Nielsen — and, you know, I have been very public with annoyance with them — they are a pretty good analytics company in many ways.

Peter Chernin Session Photos

But here’s a reason to be bullish (or just less bearish) about Netflix: Amazon’s new tablet is also going to promote Netflix.

The video service is one of four big developers — along with Pandora, Facebook and Twitter — that should have apps ready for the Kindle Fire at launch, Amazon has said over and over again.

Here, in this Bloomberg Businessweek curtain-raiser, for instance. And throughout yesterday’s press event, like during my interview with Kindle content boss Russ Grandinetti.

Why would Amazon welcome Netflix when it’s building a competing video service? That one’s easy: Because even after all the blowback, lots of people like Netflix.

Reed Hastings and company should have 24 million customers at the end of this quarter, and 22 million of them will be streaming video. If you’re trying to sell a new gadget, you want to make sure you can include those folks as potential customers, by making sure they can use the service they like after they give you $200.

There’s also a larger question about how directly the Amazon video service will end up competing with Netflix, anyway. The two services seem similar enough at first glance, but lots of smart folks seem to think Amazon is most interested in using its service as an incentive to sign up for Amazon Prime, its express shipping service.

That is: Amazon wants to use digital video to sell physical goods, while Netflix wants to be in the digital video business, period.

In the video industry, Amazon has a rep for being unwilling to pay top dollar for content. For now, at least, it seems instead satisfied to fill its virtual shelves with not just old stuff, but very old stuff — stuff that’s from shows that don’t appear on TV at all anymore.

Netflix has plenty of that stuff, too, but it has has recently made a point of paying up for much fresher stuff — like episodes of “Mad Men” — and stuff that’s so fresh it hasn’t aired yet, like Kevin Spacey’s “House of Cards.”

To be fair, Amazon’s aims could change. It could happen over time, as it cobbles together enough assets and subscribers to make a real run at Netflix. Or it could be overnight: The company is one of the handful of serious bidders still looking at Hulu, and if it landed that service, things could get very interesting very fast.

But for now, Amazon is going to have enough work convincing people who’ve spent a lot of time and money on Apple’s platform to switch to its own cloud service. No reason to make it harder by pissing off millions of Netflix customers, too.

AOL will fill Bronikowski’s position by promoting two of his deputies: Lisa Namerow will be responsible for most of the AOL Music properties, and Geno Yoham will oversee the company’s surprisingly durable Winamp platform.

At Echo Nest, Bronikowski’s job will be to generate new business for the the four-year-old start-up, which makes most of its money licensing data services to companies like MOG and Clear Channel’s iHeartRadio. One of Echo Nest’s key offerings: Tools that let music services create their own “discovery engines,” a la Pandora’s Music Genome Project.

Last year the company raised a $7 million round led by Matrix Partners.

Prior to AOL, Bronikowski had headed up Yahoo Music and put in time at Vivendi’s Universal Music Group. Earlier this year, AOL Music, which is primarily a free Web radio service, reintroduced a subscription offering.

Over the summer, Spotify finally opened for business in the U.S. and included a free, ad-supported option in its offerings. Now both MOG and Rdio, two other subscription music services, are adding big free components themselves.

Tomorrow MOG is rolling out a Web-based, ad-supported version of the service that gives users an undisclosed amount of free streaming music, which they can keep listening to if they engage with the service in certain ways, like sharing playlists with friends.

And soon Rdio will offering something similar, with two differences: Its free version will be ad-free, and the company won’t prompt users to take certain actions to keep the free going. It will decide, out of the user’s sight, how long to extend the free trial period, with the intent of getting them to upgrade to a $10 monthly subscription.

The timing of the new free services aren’t accidental. They’re both being announced in advance of Facebook’s F8 developer conference next Thursday. That’s when the social network is expected to announce a new music service that will incorporate MOG and Rdio as well as Spotify.

Details about Facebook’s service are still sketchy, but the primary gist is that Facebook won’t be building its own music service. Instead it will work as a hub that allows existing services’ users to share their tunes with their friends.

But it’s very unlikely you’ll be able to listen to a friend’s Spotify song unless you’re a Spotify user yourself. So it’s crucial for the services to make sure that signing up to use them is as easy as possible. And requiring someone to pay to listen to a friend’s song seems like a non-starter.

Hence: Lots of free trials that last for an undefined period.

Rdio CEO Drew Larner won’t comment about Facebook and its upcoming service. But he will talk about the strategy of offering free music, but only for a limited time. “We know free is powerful, it’s a great way to increase your funnel,” he says. “But it’s about not creating a tier for an alternative or replacement for what would be a paying subscriber.”

Ultimately Rdio, MOG and Spotify, along with services like Rhapsody, are all trying to get to the same place. They want customers to pay them a $10 monthly fee for unlimited music that works on both the web and devices like Apple’s iPhone and Google’s Android.

That’s a model the music industry was never happy about until recently, in large part because free ad-supported services like iMeem, MySpace Music, Qtrax, and Spiralfrog sputtered and/or failed completely.

The other option for music fans who don’t want to pay for music but don’t want to break the law is to play with Web radio services like Pandora and Clear Channel’s new iheartradio.

Those services let you listen to unlimited music, for free, but don’t give you on-demand access. Instead, you need to let them program your music for you in some capacity.

Somewhere in between the two sits Turntable.fm, which is also free, but gives users more control of their music — for now, at least, while the company tries to hammer out label deals. The service is also expected to play a role in the F8 announcement next week.

Songza co-founder and CEO Elias Roman said he envisions Songza as a music concierge. So the interface is not oriented toward search (like Spotify) or artist-specific channels (like Pandora) — or a virtual communal listening experience, like fellow social music service Turntable.fm.

Instead, users have access to a selection of the 75,000 streaming playlists people have already created on Songza, like “Up All Night” or “Walking on Sunshine.”

In case the directory isn’t doing it for you, there’s also an activity feed of friends’ listens and a “just for you” section of personalized recommendations. You can’t create new playlists from the mobile apps — that’s a Web-only feature.

Roman said Songza is “working with other social services to keep a listening history,” which would seem to refer to Facebook’s expected upcoming music integrations.

Songza recently raised an undisclosed amount of funding led by Deep Fork Capital.

A good first quarter from Pandora in its debut as a public company: A solid revenue beat, and encouraging noises about mobile advertising. Or at least that’s my take: Investors, meanwhile, have pushed the company up a modest two percent in after-hours trading.

EARLIER:

A quick look at Pandora’s Q2, its first-ever earnings report: Revenue of $67 million and earnings of $0.02 per share, after factoring out certain costs. The Street was expecting revenue of about $60 million, but I’ve seen wildly conflicting reports of “consensus” on earnings per share and EBITDA, so I’ll hold off on those for now.

Analysts are also going to be very interested in other metrics from Pandora, especially its “Total Listening Hours.” That’s the number of hours listeners spent with the service for the quarter, and it’s up to 1.8 billion. That’s a 125 percent year-over-year increase.

Pandora also said mobile advertising revenue accounts for half of its total. That should please skeptics who worried that Pandora’s big growth spurt was coming from mobile use, and that the company wouldn’t be able sell much mobile advertising on iPhones, Android, etc.

Meanwhile, that revenue bump means that Pandora’s content acquisition costs — the money it has to shell out to record labels and publishers — came out to almost exactly 50 percent of revenues. Which sounds like a lot, but is in line with the company’s recent history — and much better than it used to be.

I got a chance to lob a few questions at Pandora CEO Joe Kennedy before his earnings call started. I asked him to provide more metrics about Pandora’s subscriber base, and the breakdown between mobile users and desktop users, and he declined. But he did say that mobile listening now accounts for 70 percent of Pandora’s total listening hours, up from around 60 percent when the company was pitching investors in advance of its IPO.

Kennedy also said he hasn’t seen any effect from Spotify’s well-hyped — and initially successful — entry into the U.S. market this summer. “We’ve not been able to discern any impact from any of the new digital initiatives that have been launched,” he said. “That doesn’t surprise us.”

I’ll be covering the call via a liveblog here shortly.

5:03 pm: Good afternoon! I’ll be liveblogging this call pretty much because I can. To be fair, I’m not really expecting much in the way of fireworks. But since I’m going to listen in anyway, I may as well type up my notes. And then you, dear reader, can read along. Or not.

5:05 pm: CEO Joe Kennedy reading prepared statement. I’ll skip most of this, in part because he’s already previewed some of it, and also because the only interesting part on almost all of these calls is the Q&A.

5:08 pm: Kennedy talking up mobile ads, citing numbers he’s already published, along with industry numbers from IAB, etc.

5:10 pm: And now on to the possibilities of the car market — another key part of the Pandora pitch. (Also a part of most digital music companies’ pitches, it turns out.)

5:13 pm: Now talking up Pandora’s newfound interest in social networks, courtesy of its new app.

5:16 pm: And now Pandora CFO Steve Cakebread. That is a pretty great name. That said, I’m going to direct you here for most of this.

5:17 pm: Of note: 37 million “active users” in July. Up 76 percent year over year.

5:25 pm: Would really, really love it if all public companies emulated Netflix and skipped this entire part of the earnings call. Netflix posts the scripted part on the Web, and goes straight to Q&A. Speaking of which, here we go:

Q: More color on mobile ads, please: Sell-through rates, CPM, ad load? Also, who’s your biggest advertiser? And you say that said advertiser won’t have more than 10 percent of revenue next quarter. Why?

A: Kennedy not willing to offer much color here. Both display and audio growing. As far as big unnamed advertiser — we love ’em. But we think ad base will get bigger and more diverse.

Q: Anyone dropping out because of the economy?

A: Cakebread. Nope. People are trying us out, and then buying more ads.

Q: On content acquisition. That’s a better number than I expected — can you keep that going?

A: Kennedy. “We clearly know how to monetize usage” and we’ll get better at it.

Q: Any effect from Spotify? (Hey! that’s familiar.) And does it make you think you’ll sell more subscriptions yourself?

A: Kennedy. We’re two different businesses. “We haven’t been able to discern any impact,” etc. (See above.) And we’re a different business — they’re on-demand, we’re radio. Radio is 80 percent of audio entertainment, etc.

Q: Even more on mobile monetization, please. (Sort of garbled here.)

A: Kennedy unwilling to talk much about new product launch. But he says both bloggers and advertisers like the new site/app the company put out recently.

Only a “single-digit percent of users” have access to new Pandora.com.

Q: You’ve been talking up local ads. Has the national/local revenue mix changed?

A: Our size and scale as a standalone radio market in individual city/territory is getting significant, and that’s going to be a very big deal for us.

Q: So desktop hours are down/flat? Why is that? Also, how do you allocate dollars that you do from ad packages where mobile/web are bundled?

A: Seasonality. People spend less time on desktop during summer. We think we’ll have “some growth” in Web going forward. But “vast majority” of our business and growth is going to be mobile.

Q: (Couldn’t understand.)

A: Kennedy seems to be answering a question about iTunes and Amazon sales derived from Pandora links.

Question I totally can’t follow about search and social.

Kennedy seems to get it, though. He is talking about Pandora’s discovery algorithm, and balancing that against the wisdom of the crowd. So Pandora can expose you to new music — but not too much new music — it wants to give you stuff you and your pals already like, too.

Q: Can you break down audio ad versus display ad totals? Also, any change about average number of audio ads per hour? And what’s the number of ads per hour for a key demo (ie 18-34) listener?

A: Three audio ads per hour remains our maximum. As far as display versus audio — audio still growing in absolute terms, and percentage of total.

(Missed Q here, apologies.)

Q: Talk more about ad loads — seems like that’s creeping up a bit. Is that correct? Also, ad sales hiring is up, right?

A: Nothing new to say about about audio ads.

OK, signing off. But not before I fess up and acknowledge that this was not my finest liveblog. Will work harder next time.

But compared to some of its peers, Brightcove is almost a throwback: CEO Jeremy Allaire’s company has a clearly defined business, straightforward accounting and a minimum of insider selling in the run-up to its IPO.

A quick glance at the the company’s filing will tell you that:

Brightcove’s business is easy to understand. It generates sales by helping Web publishers put video online. That “software as a service” model has let the company boost sales, along with the Web video boom. In 2006, it posted revenues of $1.4 million. Last year, it pulled in $43.7 million.

The company’s accounting doesn’t require a good imagination. There’s nothing in Brightcove’s S-1 along the lines of Groupon’s now-discarded “ACSOI,” or Demand Media’s novel approach to expensing content costs. And while plenty of established companies use not-strictly-official measures like EBITDA to show off their finances in the best possible light, Brightcove doesn’t bother — there’s not a single reference to “non-GAAP accounting.” Which makes it quite easy to see that the company lost $67.5 million from 2006 through 2010, and another $9.5 million in the first half of this year. It says it doesn’t expect to turn a profit until 2013 at the earliest.

Brightcove’s investors and employees are sticking around. Unlike Groupon, Zynga, and a few other highfliers that haven’t filed yet, including Twitter and Facebook, there’s been very little insider selling. Early investor AOL got rid of all of its shares last November, and last year Allaire sold off 1.3 million shares for a gain of $4.8 million; some other employees sold a few more shares. But Allaire still holds another 2.5 million shares — 4.5 percent of the company’s equity — and as far as I can tell, that’s about it for insider selling.