helping to bring baseball and your favorite tv shows to the internet. now he turns his attention to what's in this envelope. and marching to the beat of his own app. with reporters from cnbc, that's this week on "press: here." good morning. i'm scott mcgrew. big companies are bad at innovation, particularly as they bring traditional business to the internet for the first time. though i can think of two exceptions. >> 2-1 pitch. swing and a high drive to right. this baby is way back out of

here. >> those exceptions are major league baseball and my parent company, nbc. baseball brought us mlb.com and the mlb app allowing you incredible access to any game, any time. nbc and its partners created hulu, the popular online television service. perhaps the only time a big media company didn't completely screw up its internet offerings. those two efforts, baseball and hulu, have one thing or one person in common. >> maybe ahead of its time. >> on the team at mlb and the first ceo of hulu. with two major wins behind him, the next effort is manila. an online service helping consumers pay bills, any bill, online instead of through the mail.

george is a recovering attorney who has been working in digital media for years now and joined by us. so why do large organizations get it so wrong on the internet so often? >> well, i don't know why they get it wrong. >> because you got it right. that's why you don't know why they get it wrong. >> i think when you start with great content, i think it should be difficult to get it wrong. >> but they do. >> but they do sometimes. i think if you have great content and you hire the right people and the folks that you hire are really focused on doing what's right for the consumer first and not on saving the existing business models or worrying about the legacy business models, you're off to a great -- >> and we put the consumer first. that's how you sell stuff. >> you know if they show up again. >> the consumers is have the money. they'll give us the money.

putting the consumer first for hollywood recording -- people who jealously guard their contend, baseball, that's much more difficult to convince them. >> but let's think of the context. historically, media companies and sports leagues have not been in the business of selling things directly to consumers when you talk about media. certainly they sell tickets and merchandise to consumers, but their media partners were not selling the as much as directly from the media company. it was all about going through distributors. both at hulu and mlb.com and mlb tv, those were products the first time that we were going directly to consumers with the video contend. >> the other problem i have seen with this is putting the wrong people in charge. getting somebody who's got technology the title somewhere, but doesn't have the relevant skills and then hiring the wrong people after that. how did you avoid that? >> well, we were really diligent about hiring the right people at

hulu. >> how did the organization allow you to do -- keep in mind we are part of the same organization. >> that's a great question. let's take a step back and talk about how large organizations can really innovate and sort the key components you have to have if place to do that. i think it's three things. the first thing you need to have is from the very, very top. you need to have a mandate to do it. the ceo or the baseball commissioner really has to buy in and drive the mandate and has to force the other folks who have a stake in the game to participate. and to support the new venture. so really top level mandate is number one. number two, you have have the ability to create a very creative structure. you have to have the ability to partner with your enemies as nbc and newscorp -- >> you're surprised -- >> absolutely. you have to be able to create that structure and that

structure extends to being able to creating a structure where you can compensate folks and those who are otherwise at a large start-up to come to the digital company. that means creating the equity incentives you don't normally have. it also makes sure that the new company is in a separate physical location. you don't want to co-collocate those folks at 30 rock. that wouldn't work. having a mandate from top and creative structure, you need to have patient capital. if you talk about things that are immediately accretive, these things take investment and take time. when the company was originally set up before i joined it, and at hulu when we were setting it up, we set expectations about the fact that it will take investment. it's a multiyear investment. you have to be ready to lose some money. really tough to do in a public company. easier to do in a private company and in a sports league kind of a structure where the

teams can agree to fund it for a period of time. >> you know, george, one company john and i were talking about is barnes & noble. they have tried hard to translate or really transition to the digital world and for one reason or another hasn't. it's thinking of spinning off the nook business into something separate. what has it done wrong, what does it need to do? >> i don't want to comment on what it's done wrong. >> no, barnes & noble wants you to comment on i. >> it wouldn't be appropriate. but i think the idea of a spinoff is good and bad. when you have a spinoff sometimes you get some benefits from having it completely separate. but you lose some of the synergies which we really relied on at baseball and hulu. we used a lot of the infrastructure that was in place to help launch both of those companies. >> i think what you said, don't put it in the same location, get it out.

>> yes. >> treat it like a start-up. even apple when they created macintosh became the subgroup, a little tiger team and it was physically separate. i think that's a huge part of success. >> i agree. i completely agree. i would never do a start-up within a large organization that was physically located within the large media company. it wouldn't work. >> you have a start-up from a large media company. >> yes. >> manila. any similarities between that and hulu and baseball? >> i think there's lots of similarities. it goes back to the three things that we talked about. manila is a bill management and payment solution where we allow people to aggregate their accounts, see a view of all their money in their accounts, their financial and asset and liability accounts and then pay the bill and be reminded to pay the bill. we started that within hearst and that includes television and newspapers and magazine.

>> give me an example so that the viewer knows, hearst as in -- >> they owns the "san francisco chronicle." dozens of other newspapers around the country. we're the second largest magazine distributor, cosmo and others. we own a portion of a&e, espn. you know, at hearst we started this company and we really wanted it to have sort of the same benefits that hulu had and that baseball had. and we really treat it like a separate company. the employees are not employees of hairss but employees of manila. and we based it in san francisco even though the headquarters for hearst corporation is in new york city because we wanted to attract the best talent we could. we really hired and incented people to help build the company and we gave them a portion of the profits of the company. but we also set the expectation that it will take a couple years to get there. >> why did you start this company within hearst?

if you were to tell me to pick a problem, digital problem that hearst should solve it wouldn't have been -- >> good point. >> especially given the track record. i mean, billing is important. >> it's a huge problem in the united states. there's about $48 billion spent every year sending first-class mail, every single large service provider has on their books this monthly bill to send their customers paper. those customers have really migrated to paying their bills online and to managing their accounts online, but less than 15% have opted for paperless. we thought that was a big opportunity. what hearst gives us is a couple of things. the first is good relationships with cable provides and cell phone providers. >> hearst bills people for things. >> they do, and they have relationship because of the ownership of cable network and others with other service

providers like other cable companies. the second thing is our target demographic is really the chief household officer. the person in the household who's managing the accounts and you asked us about 70 to 75% women and you remember that list of magazines i was going through. good housekeeping, red book, marie claire, cosmo, those are all directed at our target market. we get at-cost opportunity to talk to the customers rather than having to pay market rates and it's a great launching pad. the other thing about that, it's a new revenue stream because we're paid on a monthly base for giving them a marketing platform to talk to the existing customers. >> it's in their best interest to go paperless and they give you a chunk of the savings. >> they pay us a small portion every month, but it creates a new annuity business model which love. the other thing about the service which i think is really unique is that, you know, hearst

is a trusted brand and we're really asking folks to give us their financial institution information so that we can help aggregate their information on the manila dashboard. and, you know, having hearst as a backer knowing we'll be around helps close the business deals. >> time for one more question. >> anoth media technology question. apple and others trying to crack the tv. >> yes. >> will they ever be able to ipodify the tv? there's reasons that the broadcasters doesn't want that to happen. >> well, we own a stake in the cable companies and it would be inappropriate for me to talk about that. >> inappropriate, yes. >> apple always gets the consumer interface and the look and the feel. i think there's room for

improvement in epgs and other things that touch customers. electronic programming guides. and other things that come out of the multisystem aggregators. if apple can do that well they have a real chance. another player to bid on the rights for any of our properties, we are always welcome. >> george, as we head to break, i want to thank you for hulu and mlb.com. >> thanks for having me. up next, 6 million people play an instrument you probably never heard of. stanford music entrepreneur and his akarina coming up.

welcome back to "press: here." i don't play a single instrument. but i can make music. there's a difference.

who says? well, ga won says and he's a music professor. his ideas and inventions allow just about everyone to make music without a traditional instrument. here he is conducting a laptop orchestra. ♪ wong has taken his unusual ideas and turned them into a series of whimsical iphone apps. this is the akarina. musicians blow into the microphone. this is an ipad app called mad pad. making music out of an old honda. and magic piano turning well-known songs into games. ♪ he developed the apps with the company he founded called smeal.

and he's joined by john ford of cnbc. we never had someone run in slow motion on this show. you're the first. >> i'm honored. >> my father-in-law, he's a photographer he would develop his film in the garage in a dark room, once told me that -- you can't be a photographer with a digital camera, because you're not developing your own film and no one who uses a digital camera is a photographer. he was my father-in-law, so i didn't argue with him. are you a musician if you use the iphone to play the flute? >> i think it depends on what you do with what ever you've got to make the music. you can hand someone a violin and they don't do anything with it, then they're not a musician,

it's not an instrument until someone chooses to be express receive with it. >> is that the criteria? can you make music with a honda? >> absolutely. i think being expressive is the criteria. maybe the difference. you can make music with tin cans and some sticks and things you find on the street. you're making music. you can -- you can do that with the violin, the piano or with your mobile phone. >> i mean, you can make music, and what's the most inventive way that someone has created a new musical styling? >> well, we have had people may it with their nose. we have had people kind of have stream of consciousness type of rapping that they do about kind of the night they have had. last night, they auto tune themselves. people made music with their

cars, fridges, cats, roommates. we have seen cats play magic piano on the ipad. >> i have seen that on youtube. >> it is all over the place. we are surprised as anyone to see such a diverse array of ways that people -- people and cats can make music. >> are you at all worried that you're making it easier to make bad music? >> oh, no, there's always the potential to make bad news. >> on any instrument. >> on any instrument. >> but it's harder for people who are bad at music to find instruments. >> did you have a particular one in mind or -- >> cats, for instance. >> we want to enable people. but cats -- i think we should take music and make music pretty much like -- you know as much as we can get it. >> do you get this resistance, have you heard this resistance

before? i think when the electric guitar was first eveinvented it's not guitar. >> people do wonder are digital instruments that we're making from the laptops to mobile phones are they going to for example replace traditional instruments or is -- are they really instruments at all? >> right. >> i think -- you know, i don't think that's a quota in the world for how much music can be made. there isn't a point where we say, hey, we're officially making way too much music, we need to tone it down a bit. there's no quota on what constitutes musical instruments. so i think -- it's an entirely new thing. you can keep adding to the equation of things that we can use to make expressive sound and what is music but perhaps organized and expressive sound. >> it's not sanford, but other schools are trimming budgets and cutting down on musical

education. are you enabling students to -- i don't know, discover music again and bring it back into the classroom? >> hopefully. hopefully. one of the goals we have is to bring the joy of making music to as many people as we possibly can. and that includes musicians, but a also more so people who don't think of themselves as musicians. certainly this goes for students that i think -- and also for the general public. >> how much money are you making? it's got to be pounds and pounds of money. you are wildly successful. >> we're doing all right. >> doing all right? >> we're doing all right. but we could do always do better. i think if you think about how universal music is to people, you know, i never met anyone who said i hate music. there's always some sound or piece of music that engages each one of us. maybe a different thing. but each one of us loves music in our own way.

i think that speaks to this market that, you know, where we can actually build and find and really explore. >> we'll give john the last question one more time. >> you mentioned recorders and that's cheap instruments and that's why we're introduced to them in school. is there a potential to make music more accessible to kids? >> absolutely. >> how will that happen i guess is the question. >> sure. so one of the things that we have, well, you can't really ask someone to be creative on the spot. and say, hey, be creative, one, two, three, go. but with mobile devices that's something that people already have, in their hands, their pockets. this becomes a natural extension of ourselves for better or for worse. and in there seems to lie the potential, you know, i want an instrument, to have one. and certainly the conditions are right with the devices for

someone to realize they have been carrying around a recorder like instrument or a magic piano or whatever in their pockets. they can pull it out and making music shouldn't feel any harder than picking up the phone and calling your best friend. >> we'll leave it there. we appreciate you being with us this morning. we'll be back in a moment.

welcome back to "press: here." tomorrow, yahoos are going to wake up to a new boss that's definitely not the same as the old boss. what do you think of the appointment of scott thompson as ceo? >> history is working against yahoo here because they're three ceos into the turn around and it's hard to find any company except apple who managed three to turn things around. their business is search and display. he doesn't know either by experience. so if he takes yahoo! in the

direction of being more of a tech company again and bringing some more of the retail background into yahoo! it could be interesting. but it will be tough. >> scott thompson has been on this show. i liked him. i thought he was competent. my concern is when a reporter at a press conference or a dial-in press conference asked him what's similar between paypal and yahoo! what are you bringing, and he said well, p paypal has sellers and yahoo! has viewers and i thought that was weak, not a bit there. >> you talked about balancing the needs of the merchants versus customers. seemed like it was tenuous. >> it was a stretch. >> kind of like saying meg whitman has enterprise experience. >> she used enterprise software. >> right. right. it's almost like, well, just say that there really -- it's not

there, but here's a smart person who is coming in to do great things. >> go ahead. >> is it the really the battle? i think the things that people mention time and time again, yahoo! needs to refine its vision and like pulling the weeds. so many things, it has an app, but we have no idea how they're doing if they're doing well at all. >> i think they're sort of enamored with their large numbers, and they have large numbers of viewers, but they don't have a lot of active members of a platform. i worry they confuse the two. they think this is an audience that they can easily monetize. >> but an audience that will move on to other things. yahoo! is my home page at home an i read the news and i like it a great deal. but if something better comes along, i'm gone. there's no sort of allegiance to

those people anymore. >> and yahoo! always quick to point out that it's a very iconic brand. i don't know how -- >> the internet doesn't matter. >> you can say it's an iconic brand. >> i use yahoo! finance a lot. and it used to be that you could do bill pay and things like that with yahoo!. they were early to that. but at this point, there aren't many relevant tools you can use in finance or other areas that are really comparable to other things that are people are doing like manila for instance. maybe they need to do more of that. >> you say more, but the temptation to do less, to go in there and say, listen, we have to figure out what it is we are. and just do that thing. or is more better? >> i think they need to go deeper. when i say more, go deeper in some areas. i agree, they probably can't go deeper in every area because that's really expensive. look at facebook, they're a social network. they do really well at that. on mobile and on desktop.

it took them a long time to do it on ipad. because they didn't want to get too spread out. >> and talent is an issue. let's be frank, when you have your facebooks and the googles of the world, who wants to work at yahoo!? so attracting talent and incentivizing them to stay and innovate. >> i think that's a challenge come monday morning when he gets in front of the people and says, here's why you should stay through one more ceo. >> just the fact that somebody from paypal had the guts to come to yahoo! and do that speaks a lot for the situation. you have to root for somebody who is taking a risk like that. especially in a time like this. >> with 30 seconds left, i can't speak for you, but i like the guy. i wish him the best of luck. it will be quite a challenge. scott thompson, we wish you the absolute best. we'll be back in a minute.

that's our show for this

week. this episode and many others are available free on pressheretv.com. thank you for making us part of your sunday morning.