Prophets are rarely listened to in their own lifetime. But in the case of Chris Anderson, people pay good money to hear him predict the future. On the day he talks to Media Week, he's been conducting a seminar at BAFTA to an audience of media bigwigs who seem like a bunch of enthusiastic fans at a rock concert - which is strange, because much of what he foretells spells their doom.
Anderson is editor-in-chief of Condé Nast's Wired magazine, which launched a UK edition last month, and author of two groundbreaking books. The Long Tail explains how a business such as Amazon can make a fortune selling very niche books, and his forthcoming Free: The Future of a Radical Price explores the growth of free media - mainly online - and explains what this means for society and the industry.
"Plenty of media is going to become irrelevant because we are no longer in an information-scarce world," he says, working through an early proof of his book in a hotel bar near Piccadilly. "Traditional media models were based on a scarcity of information. You want news? You can choose from three newspapers, two television channels and three radio stations, and that's where you're going to get it.
"As a result of this scarcity, media owners were able to attract large audiences and charge a premium on advertising. But now we have information abundance. Media is no less valuable and media owners can still run ads, but it will be very hard for them to maintain the same price in a world where there is an infinite number of places for advertisers to run ads."
The 49-year-old journalist has a degree in physics and wrote for The Economist before joining Wired in 2001. Unsurprisingly, therefore, his predictions are based on internet technology. "In the past decade, we've seen an economy grow up online that is actually based on a different economic model," he says.
"In the offline economy, there are real costs associated with products and they tend to get more expensive over time. But the online economy is actually deflationary. Everything you do online gets cheaper by 50% every year. The model for free is essentially this: in a competitive market, the price falls to marginal cost.
"In any digital marketplace, you will be able to get things for free. Which is not to say that everything will be free, but free is the benchmark price. And this new ‘free' is the basis of a country-sized economy."
Hero brand
In certain respects, much of what Anderson is saying is recognisable to anyone who has worked in the UK media in the past decade. His "hero brand", both in the book and in conversation, is Google. "You use Google every day and I bet it doesn't show up on your credit card," he says.
But the search engine's business model is essentially the same as a free local newspaper, or even ITV. The few subsidise the many and the few are the advertisers. The problem for old-school media, he argues, lies in their cost base.
"Basically, when you use Google on a daily basis, you're costing them a penny or two," he says, leaning forward enthusiastically. "They don't have to charge much for the ads to create a very profitable business. But traditional media has built these human, people-oriented businesses and can't figure out how to make them much cheaper. Google solves that just by taking people out of the loop. It's all about software."
Anderson may be an online guru but his employer is Condé Nast, which still makes most of its money from the old glossy magazine business model. How does he square the two?
"You might imagine I get asked this question quite a lot," he grins. "What it basically boils down to is: is print dead? Of course, as a newspaper moves online, its paper costs fall. But the truth is that its revenues fall to 20% and its costs might only fall to 50%.
"In my day job, what we produce still lives within the scarcity environment. We don't produce information. We produce these Fabergé eggs, these glossy pages with photographs and well-designed 8,000-word articles, which just don't work online. We can still charge premiums because people believe the product adds value.
"But a newspaper is a different question. Does a newspaper work better in print than online? All our jobs are to add value to the internet, because the internet is the air that we breathe and the water we swim in. I fear that some newspapers, such as my home-town paper the San Francisco Chronicle, subtract value from the internet. By the time it shows up, I've read that news already. It's late. I've moved on."
As soon as the idea of a cost-free distribution model became a reality, rival methods were threatened, he says. So Anderson predicts the end of radio stations and even television stations in the long term. "There's still a need for television, it's just that the business model is a problem. What is the idea behind TV advertising? It is to pretty much annoy 90% of people in the hope of reaching 10%.
"Television is interrupt-driven: it is not relevant and it is not targeted. So why have they got away with it for so long?" He answers his own question: "Because video advertising is very effective and at the moment there is no other way to get video advertising out there.
"It's hard for software to discover video's content and match an ad in the same way it can with text. As a result, we have not quite figured out how to do video advertising online. For example, YouTube doesn't make money. But we will. We have been charging more and more for less and less reach in television for decades. The TV business model is like a house of cards and we're just waiting for an alternative to arise."
Intriguingly, he argues, certain parts of the web are able to charge a premium - and their business model is based on enthusiasm. Anderson, who held a research post at Los Alamos National Laboratory before entering journalism, runs his own robotics site through a social networking provider called Ning.
Ad-free site
Anyone can create their own site on Ning for free and the company will then add its own ads and branding. Users can opt to pay for an ad-free site, handing over $40 a month for various features and controlling ad revenue themselves.
"The people who choose to pay are those who are totally committed," says Anderson. "Free maximises Ning's audience. This is how it has got hundreds of thousands of people to set up social networks. It then converts 5% to subscribers and that - combined with its ad revenue - is sufficient to make a profit.
"The lesson of the past decade is that media sites don't do that. Their websites are free, with the notable exceptions of The Wall Street Journal and the FT. Some would like to go back to charging for their websites, but I doubt if they'll be successful."
Then his mobile beeps - it's a text from a cab firm informing him that his taxi's outside. This delights him - back in Berkeley, California, cabs don't offer that service. He worries, as he's taking his leave, that he's sounded too negative: "Listen, few things actually die - name a medium that's died. They just lose share. TV was supposed to kill radio, radio was supposed to kill the concert, the internet was supposed to kill the book.
"Actually, they tend to go from a mass audience to a niche audience." He grins. "You know what? Even vinyl's back. I guess the only real casualty has been the cassette."