Old media meets empowered customers

MUNICH (Fortune) -- Right after the close of the DLD tech/Net/media conference in Munich this week, I was running on a treadmill, looking out at the cathedral and church spires, the only things higher than the hotel's top-floor gym. Europeans respect and preserve the past. What consistently amazes me is how aggressively some in Europe are simultaneously pursuing the future.

Few companies anywhere are smarter about how their business is changing than Hubert Burda Media, the big German magazine publisher that hosts and organizes DLD (which stands for Digital, Life, Design). "DLD has become the best Web conference in Europe, and there's no number two," said venture capitalist Joe Schoendorf of Accel.

Burda hosted the event with graciousness and warmth. (We can only aspire to match such an atmosphere at Fortune's own Brainstorm Tech conference in July.) Reinforcing the civilized mood was the presence in the Munich building where DLD took place of art by some of the world's greatest artists - including Gerhard Richter and Yves Klein.

Burda itself has rapidly moved its magazine writers, including those from its Focus newsmagazine, onto blogs and the Web. It has even taken its dress pattern business - a big legacy operation in Germany - online. The Burda Style site, headquartered in Brooklyn, enables fans to download free clothing patterns and upload modifications and customizations back to the site, which becomes a community for members

That open source, user-generated content approach was implicitly the central topic of the conference, in a way that it wouldn't be at an event hosted by a U.S. media company. In Germany, the distinction between old and new media is essentially considered dead, and the question that remains is how to integrate user-generated "amateur" content with that produced by the mainstream old media.

On a panel I moderated, Burda CEO Hubert Burda said developing software is a critical function for companies like his. Most media companies still think it's all about the content, but taking a software-driven approach makes it easier to find unique and creative ways to develop a synthesis between professional and non-professional content, and to monetize both, usually with advertising.

Blogger and old-media refugee Jeff Jarvis, on a great panel called "Exploding Media," said "Media companies should stop complaining and ask themselves 'What would Google do?'" He said today's mandate is to help people distribute both their own creations and what they receive from professional media in their own way.

As if to illustrate, Google (GOOG, Fortune 500) executive Marissa Mayer showed how Google's Maps and Earth software are both being augmented by contributions from users. For example, ordinary straphangers have built the best map of the Santiago, Chile subway system.

Yahoo (YHOO, Fortune 500) VP Bradley Horowitz put up a slide that said "Anyone with a _____ is a _____" Fill in the blanks: keyboard-author; iPod-deejay; browser-publisher.

But there are tradeoffs, a topic that emerged on another panel I moderated, with Wikipedia founder Jimmy Wales and Jason Calacanis, who has launched a new human-powered search tool, or index, of the Web called Mahalo. Wales is now working on a search product with his for-profit company Wikia. Wales invites users to contribute for free to improve the search. Calacanis, a longtime journalist , thinks that contributors and writers ought to be paid, and says that will insure higher-quality content. Contributors to Mahalo's indexes get paid for their trouble.(Attendee Michael Arrington of TechCrunch put video from that session on his own ground-breaking site.)

Offstage, Calacanis was even more scathing in his criticism of Wales. "He thinks everybody should work for free except him and his backers," Calacanis said.

Calacanis criticizes the vapidity, profanity and offhandedness of much user-contributed content online, including what often passes for feedback to professionally-written blogs and articles. "Now it's the wisdom of crowds versus the expertise of individuals," he says, "and the wisdom of crowds has maxed out."

A panel on social networks, with top representatives from Bebo, Facebook, LinkedIn, Xing and others, was so packed people stood three deep around the periphery.

There was no complacency in evidence at DLD. Here the mood was articulated by Niklas Zennstrom, co- founder of KaZaA, Skype and now video site Joost: "The biggest threat to established companies in rapidly-changing markets is usually themselves, if they are not willing to change."

Here, it seemed, everyone was committed, passionately, to such change. Almost nobody seemed to notice plummeting stock markets. Those in Munich seemed convinced of the transformative potential of Net media to drive value, productivity and economic growth. That, to them, was more important than whatever stocks might be saying in the short term.

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