Davos is no conspiracy – it is infotainment

©Ingram Pinn

Greetings from Davos, the annual shindig of world leaders and chief executives in a valley by a Swiss mountain. Or perhaps the site of a global conspiracy of the power elite. Or perhaps the place where a Swiss professor imposes his quaint euro-views on “stakeholder capitalism” on US corporations. Or perhaps one giant cocktail party.

The fact that the World Economic Forum has been going since 1971 and can pull 2,600 professionals away from their desks without knowing precisely why they come is quite an achievement. Any event that can charge SFr22,000 ($23,600) per seat – and up to SFr500,000 for membership – has things to teach rivals.

Quartz, the business news publication, this week unveiled the “confidential” list of Davos attendees, reinforcing the notion that the 0.1 per cent is up to no good. “It allows bankers or people in business to meet and make deals they couldn’t legally do in their offices,” says Richard Saul Wurman, founder of the Ted conferences.

But why travel all the way to Davos to fix prices? Most people here spend their days debating corporate social responsibility and the global economy, and their nights rubbing shoulders with fellow guests over drinks and dinner. The WEF is not a conspiracy; it is infotainment.

Klaus Schwab, its lugubrious founder, presents himself as a high-minded soul whose mission is to foster understanding among politicians and the private sector. In Schwab-speak, this year’s agenda is to “look at the future in a much more positive, constructive and dynamic manner, gaining the resilience [his italics] to adapt to changing contexts”.

Mr Schwab is equally a canny entrepreneur who founded a business that is a model for others, from social networks including Facebook and Twitter to old-media companies that yearn to charge for content. He runs a networked club-like think-tank with high margins and growth that has seen off challenges. Davos possesses, to quote its baffling 2013 theme, “resilient dynamism”.

Given the number of companies that now want to get into the same business, what is his formula?

First, Davos is serious – its participants discuss weighty topics and review the state of the world. They hear from policy makers and economists what is going on, and what they think will happen (rightly or wrongly). “Davos is a factory where the conventional wisdom is manufactured,” says David Rothkopf, the author of Power Inc.

That matters because it is a business-to-business operation – few people here buy their own tickets. The entry fee is paid by organisations that want to be sure it is worthwhile, or at least to justify the expense to anyone who asks. “In my innocence, I didn’t think Davos could keep going because it was so boring, but I didn’t understand it,” says Mr Wurman, who now runs the WWW Conference.

Second, it is live. Media and entertainment companies have come to realise the value of live events, compared with the written word, audio or video. The Rolling Stones, who do not sell half the records they used to, charged fans up to £950 per ticket on their recent tour (and Mick Jagger attended Davos last year).

Meeting experts, seeing their reactions, asking them questions, perhaps even conversing over drinks, is a more engaging experience than reading their words in print or seeing them on television. It is a bespoke event that cannot be duplicated – one that is personal and thus valuable.

It is also full of performances. Alongside the politicians and economists, there are scientists and artists who give insights into their fields – this year they will talk, among other things, on space debris and brain science. Like Ted, it has found that people enjoy a quick dip into another discipline.

Third, it is a club. Entrance is tightly restricted and it plays to people’s vanity to be invited, or even permitted to join. The beauty of members’ clubs such as Soho House is that people pay to be with other people they want to become peers with, or whom they admire. The currency of a club is its members.

In this sense, it is similar to an online social network. Facebook and Twitter are free to use and have massive memberships compared with Davos, but they share with the conference the attractive attribute of not needing to pay for content. Indeed, some companies become sponsors to place people on Davos panels.

Corporate membership, star guests, personal contact, intellectual stimulation and parties make a potent combination. The network effect is hard to break, even with reverses such as the anti-globalisation protests of the 1990s. Once a quorum of the elite signed up, Davos grew until everyone complained it was too big.

What media group, facing the commoditisation of news and the piracy of digital content, would not like to own such a business? Many (including the Financial Times) already run conferences, and others are chasing in the hope of supplementing the meagre revenues from advertising. But Mr Schwab is a tough act to follow.

The high-level conference business is personal. The most successful ones have an impresario-like figure at their heart – first Mr Wurman and now Chris Anderson at Ted, Herb Allen at the Sun Valley media conference, Yossi Vardi at DLD, Mr Schwab at the WEF.

When any set of critics becomes too vocal or too influential, Mr Schwab invites them inside his tent; he denies that the WEF is a conspiracy but plays up its influence on world events; he disdains the Davos fringe of parties and dinners without ever quite running them out of town. If nothing else, it is worth the trip to see how it’s done.

john.gapper@ft.com