CBS and Pepsi have teamed up to roll out the first ever video advertising in a print magazine next month. It will appear in the September 18th edition of Entertainment Weekly.

The mini video screen is packaged into an fixed magazine insert in the middle of the magazine. But only magazine subscribers in New York and Los Angeles will be able to see the video ads in their magazines.

The campaign, which is backed by the Pepsi Max brand, aims to promote CBS’s Monday night comedy lineup and new dramas. The ad uses video-in-print technology developed by Americhip, and features five different clips totaling 40 minutes.

CBS’s Monday night comedy features shows like “How I Met Your Mother”, “Two and a Half Men” and “The Big Bang Theory”.

(Photo: Neil Patrick Harris from How I Met Your Mother/Reuters)

I stumbled across this headline on Wednesday morning:

FT Bosses Launch PR Offensive For Paid-Content Model

I thought: “Launch? Don’t you mean ‘Launched’?” The Financial Times brass has been arguing for months that the only newspapers that will survive the tough times they have been through lately are those that stop giving away the news online, and can do it without sacrificing the advertising money they earn on the Web.

Here’s an excerpt from the blog that produced that headline, courtesy of digitalarmm:

Editor Lionel Barber tells Channel 4 in an interview that there is now “an inexorable momentum behind charging for content” and he urges other national papers only considering introducing paywalls — essentially all of them — to act now (See the video link inside the digtalarmm blog post)

Here’s more:

Meanwhile Barber’s boss, FT CEO John Ridding, was busy telling Guardian.co.uk’s resident press blogger Roy Greenslade that the FT now makes one fifth of its profits from its website, compared to 17 percent in 2007.

None of this is too surprising, but here’s the third prong in the strategy: the equivalent of a house ad supporting the FT’s doctrine on paid content, not published as a real ad, but as the thrust of a commentary in the FT’s Lex column:

The challenge is to restore growth. Those titles most likely to benefit from any eventual rebound will be the top brands or specialist publications that held the line on advertising prices and can credibly charge for content. Weaker publications, having ceded pricing power in their desperation to win business, are unlikely to get it back.

It’s a good thing that the Lex team feels this way because it saves the FT from having to take out ad space in its own paper. That’s synergy!

Veronis Suhler Stevenson is offering a look into its crystal ball.

The private equity firm, a leading one in the media and communications business, came out today with its 2003-2013 forecast, which essentially says the global recession will speed up needed changes in the media world. In other words, things like branded entertainment and mobile advertising are going to get even hotter, even faster.

And things like newspapers, radio, and yellow pages? Well, don’t ask.

Jim Rutherfurd, Executive Vice President and Managing Director at VSS, summed it up like this in a prepared statement: “The prolonged economic downturn has accelerated changes already underway in the communications industry. Notwithstanding significant declines in traditional media, the industry taken as a whole will continue to show relatively solid performance compared to the overall economy.”

Here’s a quick hit of some key takeaways from the VSS study:

• Total communications spending will decline 1 percent in 2009 to $882.6 billion.

• However, total communications spending will grow 3.6 percent per year over the next five years to $1 trillion.

• That will make communications the third fastest growing sector of the U.S. economy.

• Alternative marketing segments will grow at 12.6 percent annually from 2008-2013.

• Here’s what’s looking good over the coming years: Internet media, professional information, business information, education, direct marketing, event marketing, public relations, e-books, word-of-mouth marketing, subscription television, mobile advertising, video games, trade shows, digital out-of-home.
• And not so good: Newspapers, consumer magazines, broadcast television, radio, traditional out-of-home, yellow pages, home video, recorded music, traditional consumer books.

(Photo: Reuters)

Never one to let an opportunity pass to tweak a competitor, Microsoft CEO Steve Ballmer got off a few zingers at long-time rival Apple at the software giant’s analyst meeting on Thursday.

“Share versus Apple, you know, we think we may have ticked up a little tick, but when you get right down to it, it’s a rounding error,” he said. “Apple’s share change, plus or minus from ours, they took a little share a couple quarters, we took share back a couple quarters. But Apple’s share globally cost us nothing. Now, hopefully, we will take share back from Apple, but you know, Apple still only sells about 10 million PCs, so it is a limited opportunity.”

Shipments of Apple’s Mac PCs rose 4 percent in the June quarter, while the global PC market shrank 5 percent, according to Gartner.

Ballmer also touched on the advertising war that has blossomed between Microsoft and Apple, and said the Windows ads have proven to be “quite effective”:

“Starting about two years ago, I started to get the question, what’s up with the Apple ads? It was one of the few places where I had a lot of investors pushing me to spend money as opposed to constrain the spend of money. Well, those folks ultimately won.”

Microsoft, of course, also plans to open its own chain of branded branded stores, some right next door to Apple’s outlets.

Ah, the morning after.

Microsoft and Yahoo have finally come to an understanding, putting to rest what seemed like an endless back-and-forth (As Barry Diller said yesterday,  “We’re not going to have to talk about whether or not it’s going to happen anymore).

In case you were at the beach, on the golf course, riding your bike, or hiding out in a cave yesterday, here are the very basics: It’s a 10-year Web search deal; doesn’t include display; Microsoft will the guarantee revenue per search for the first 18 months; Yahoo expects deal to boost income by $500 million and save about $200 million in capex; Microsoft will pay traffic acquisition at an initial rate of 88 percent; Yahoo will act as the global sales force for both companies’ premium search advertisers; etc. etc.

Just about everyone has weighed in on the deal, and more analysis is certain to come in the days ahead. In the meantime, here’s what we see as a few key questions about the deal.

Will it get regulatory approval? Tough call. It certainly will get a close look, given the high-profile names of the companies involved. And, remember, it leaves really only two major search engines rather than three. On the other hand, is the market really competitive at the moment? And won’t Google just keep extending its lead — and hurting competition — if Yahoo and Microsoft don’t get together? “Without this deal, I think it would be really unlikely that you’d have a market with three robust search providers in 10 years,” said Beau Buffier, an attorney with Shearman & Sterling LLP. (More here from Reuters)

What do advertisers and media buyers think? Most appear, at first blush, to be happy with the deal. Having one dominant search player — Google — makes it tough for the advertising community. So they seem to welcome the idea of some competition. Plus, it simplifies life for media agencies. “”This is extremely encouraging and introduces more balance into the search and display markets,” said Sir Martin Sorrell, chief executive of British advertising group WPP. “It is good for our clients and our agencies and for regulators.” (More here from Reuters)

Can Yahoo and Microsoft put their differences aside? This is always a major hurdle in joint-ventures, partnerships and mergers. It could be especially difficult in this case, given the fiercely competitive nature of both companies. What’s more, in the case nobody is fully in control, unlike a takeover, where, it may be ugly, but one company can impose its will on another. “It ties them together but in a complicated way with no long-term certainty and limited control,” said Ryan Jacob, chief investment officer of Jacob Asset Management, which owns Yahoo shares. (More here from Reuters)

Who came out on top? This will be the big one — at least in dinner party circles.  The early opinion seems to be Mcrosoft (particularly if you want to use stock market performance as a gauge). True, Yahoo is getting a big 88 percent of revenues from sending queries to Microsoft, it will cut spending, and increase operating income. But what about the company itself? Is banking on display advertising really a smart move? Are they locked into a strategic no-man’s land for the next 10 years? As BreakingViews put it, “This turns Yahoo into a company oddly reminiscent of the Internet also-ran AOL.” Reuters columnist Eric Auchard offered a similar comparison, writing “For Yahoo shareholders, it’s value destruction not seen since the misguided merger of America Online and Time Warner at the peak of the dot-com era.” (More here from Reuters)

Keep an eye on:

• Believe it or not, there is other news in the media world. For instance, Cablevision has approved the spinoff of its Madison Squarter Garden unit (Reuters).

• Sony had a tough quarter, reporting a big loss. Again. But the company says better times may be in sight.  (Reuters)

It takes a deft touch to vanish a boatload of cash, but Yahoo seems to have done it.

Disappointed investors voted with their feet initially when the Microsoft-Yahoo deal, announced in the early hours of Wednesday, came with reams of detail on search, revenue-sharing, technology and advertising tie-ups — but no anticipated upfront payment, which some had put at around $1 billion. Yahoo prompty lost about a 10th of its market value.

“This agreement comes with boatloads of value for Yahoo, our users, and the industry, and I believe it establishes the foundation for a new era of Internet innovation and development,” Yahoo Chief Executive Carol Bartz said in a press statement released jointly with Microsoft on Wednesday.

Back in May, Bartz said her company would be open to any deal with “boatloads of money” and the right technology. Microsoft is indeed cash-rich, but the market might be wondering why shareholders won’t immediately see much from its coffers.

Asked what had happened to the boatloads of money on a conference call for investors and media, Bartz appeared to go on the defensive.

“What was really important to Yahoo is that we had a deal that flowed successfully through our P&L. Having a big cash payment upfront doesn’t really help us from an operating standpoint,” Bartz responded, before launching into an explanation of traffic acquisition costs, expense lines and investing in the business.

“So listen, it’s easier to talk about boatloads of cash and value because you guys understand that. But as far as we’re concerned the boatload of cash is us preserving our revenue line.”

Well, that’s one less controversy to worry about. As CrunchGear reports, Microsoft has apparently tweaked the “Laptop Hunter” commercial that ruffled feathers over at Apple. Ah peace, for now.

Here’s the latest version:

Here are some of the day’s stories on the media industry:

Movie studios try to harness “Twitter effect” (Reuters)
“Audiences are voicing snap judgments on movies faster and to more people than ever before on Twitter, and their ability to create a box office hit or a flop is forcing major studios to revamp marketing campaigns. The stakes are especially high this summer season when big budget movies like “Harry Potter and the Half-Blood Prince,” which opened on Wednesday, play to a core audience of young, plugged-in moviegoers,” writes Alex Dobuzinskis.

Sun-Times chief optimistic about sale of company (Chicago Tribune)
But, Michael Oneal writes: “In a court filing last week, creditors in the Sun-Times’ bankruptcy case raised concerns about the sale efforts, noting that the company has “limited time” before it “can no longer sustain the losses being incurred from operations.” They warned that unless a buyer is found soon, “time could run out, or a buyer could be located that would only pay a fire-sale price.”

Goldman makes peace with blogger in trademark case (Reuters)
“The agreement required blogger Michael Morgan to post a disclaimer on his goldmansachs666.com website, saying it has no affiliation with the financial firm. Morgan, a Florida investment adviser, uses his blog — whose name combines Goldman’s name with numbers used to evoke connotations with the devil — to criticize the bank and its large profits,” writes Martha Graybow.

Reuters Opens its Kimono (CJR)
“Wright, Reuters’s global editor of ethics, innovation, and news standards, brandished the thick stack of paper to drive home the point that “we’ve moved beyond the time when people were carrying around books with style guides.” We’re also apparently beyond the time when all journalism organizations charge people for said style books,” writes Craig Silverman

Media companies report their quarterly results during the next few weeks, time that should help us determine the state of advertising. Has it stabilized? Is it growing? Or is spending still trending down?

Google, which kicked off earings yesterday, probably isn’t a great bellwether. After all, it was held up better than almost any other media company during the recession. Still, the largest U.S. Internet search engine hasn’t been completely immune. Revenue was up in the second quarter, but only by 3 percent.

Google executives told analysts and investors on a conference call that they believed their business had begun to stabilize, but were unwilling to predict when a broader economic recovery would prevail.

A number of analysts were unconvinced that Google has overcome the worst of it. (Just look at the stock, which was off 3 percent right after the report).

As Signal Hill analyst Todd Greenwald wrote in a report today: “Management noted that the business “stabilized” in the quarter and that the worst of the crisis was behind them. While we agree that the overall environment did improve, we remain concerned by the dramatic deceleration in Google’s core business, and believe that future quarters may slow down further.”

What is bad for Google is probably terrible for the rest of the media business. Look at NBC Universal, for instance. Parent General Electric reported that the media division’s profit fell by 41 percent.

Where does it go from here? Media executives will likely paint the brightest picture possible in the coming weeks — just as they did last quarter. Then, nearly every one of them said during conference calls that advertising had steadied and spending was set to start picking up. Now, three months later, we’ll be able to judge the accuracy of those statements for ourselves.

Keep an eye on:

• Harry Potter is still huge. The movie brought in $104 million in worldwide during its first day in theaters, setting a new record (Reuters)

• And brace yourself… Kara Swisher reports that “unless there is some major glitch, there might finally be a search and online advertising deal struck between Yahoo and Microsoft.” (All Things Digital)

(Photo: Reuters)

Microsoft Chief Operating Officer Kevin Turner did cartwheels of joy down the corridor — he claims — when Apple’s legal people called him a few weeks ago demanding he stop the “Laptop Hunter” ads, where penny-pinching punters opt for cheaper PC machines over more costly Macs.

“We’re going to keep running them, and running them and running them,” Turner said at a Microsoft conference on Wednesday, relishing a clear blow in the fistfight for customers.

Watch Turner’s spirited performance here — scroll the bar onto 2:57:45 for the Apple segment.

Apple didn’t reply to a request to confirm Turner’s story.

In case you missed the Microsoft ads, or would like to relive Apple’s pain, here’s the first one again: