Gates Sees Media Upheaval

SEATTLE Within five years, traditional media options like newspapers, television and directory services will face tremendous upheaval wrought by technology, Microsoft chairman Bill Gates told marketers.

Speaking at the opening of Microsoft’s Strategic Account Summit here for marketers and agencies, Gates said he believes newspapers would be all online in just five years. The only obstacle preventing that now, he said, is the clumsiness of devices to read stories.

“This is a wrenching change for them,” he said, noting that newspapers’ subscription bases are in “inexorable decline” as reading news becomes an online habit.

Gates said offline directories face a similar challenge when competing with the richness of Web search engines for local information. With the addition of voice-based search through mobile devices, which Microsoft gained capabilities in through its $800 million acquisition of TellMe in March, will make paper-based directories mostly obsolete.

“The Yellow Pages usage among people below 50 will drop to near zero within five years,” he said. That would open up a huge market for online local-based advertising for search engines and other online services. The print directory market is worth $26.5 billion, according to the Kelsey Group.

The Microsoft founder even believes TV will finally mesh with the Internet to form a new experience that combines the traditional richness of video with the interactivity of the Web.

As currently set up, broadcast television, which shows the same programming to everybody, will find it hard to compete with Internet Protocol TV that opens up limitless selection, tailored to individual preferences, Gates said. Like newspapers and directories, he sees “dramatic change” for TV in the next five years.