Hollywood "Big Content" Under Siege (my comments on Jonathan Handel's AlwaysOn column)
AlwaysOn's Jonathan Handel has published a nice column on what is happening with the content industries, and what the future holds for Hollywood and the 'big content' companies. Here are some of the best snippets and, as usual, some comments (links and images
are mine, too)
First, Jonathan defines the issue: "This battle turns on whether it’s true that “content is king,” as many people believe, or whether content is becoming a mere commoner while the technologies that distribute it become ever more valuable"
I have written about this juicy topic several times, and even made a few videos on it: the question is somewhat academic - I think that in the future, everyone gets to be king at different times. Sometimes it's Context (and filtering) that matters the most, sometimes it's metacontent (i.e. tags, ratings, bookmarks etc), sometimes remixes, sometimes the packaging, sometimes the platform. What's more, content does not need to be King any longer in order to make money - lots of new revenue streams around content (rather than solely off or within content) are in the oven - we just need to tune them up a bit more. And that's the tough part: we will need to let go off the old vine before the new vine has proven trustworthy; this trend is faster than our revenue modeling.
Jonathan writes: "There’s no doubt that traditional content is in trouble. Theatrical box office and admissions ...have generally been flat for a number of years. The DVD business is declining... The network television business is harder than ever, and also in trouble are other traditional content industries, such as those centered on music, newspapers ...books, and magazines. People still consume media the old-fashioned way, but fewer and fewer do so every day, especially younger people" A key phrase: fewer and fewer do so every day. Chew on that. The question is not IF but WHEN this sea change will flood your beach.
This defines it very well: the hunger for content is bigger than ever but the way that the digital natives consume it is totally different. And with a change of 'how' comes the shift of payment; i.e. with time-shifting, place-shifting and device shifting comes a much more troubling control & money shifting. While working on my next book I have looked at this trend in great detail, and it seems that if we compare traditional revenue models (such as 'selling copies') with the emerging new models (such as 'selling access' or advertising-as-we-know-it) we may be looking at a revenue reduction of 5:1, i.e. what made a dollar then makes 20 cents now. The NYT is not going to make as much money with their online ads as they made with their print ads, and they certainly won't sell RSS feeds for $1.50 per day. This is the challenge: new revenue models (as Kevin Kelly calls it, the New Generatives) must be developed than can lead to entirely different sources of remuneration and monetization, many of which we don't even know of, yet, and worse, which will become only apparent after the dismantling of the current revenue model. I sometimes call this the YouTube curse: we know we need it, we know we want it, we know it will work, we know it can make $$ but we (they) don't have the recipe yet!
Jonathan then talks about why traditional content is in trouble: "One [reason] is supply and demand. Demand for entertainment is relatively static, because leisure time is constant, whereas supply (online content) has grown enormously. Some of this is professional content, but even more is user-generated content (UGC). Other factors are the loss of physical form... the low-friction nature of the Internet ...and ad-supported new media business models....Market forces are also key: Computers, Web services, and consumer electronic devices are more valuable when more content is available and, in turn, these products make content more usable by providing new distribution channels. That encourages the growth of UGC and pirated content, reducing the market share of paid professional content, and, not incidentally, increasing the sales of new technological devices and services"
Brilliant explanation, and ending with a fitting if somewhat worrying quote: "As NBC Universal’s Jeff Zucker lamented, the content industries are being forced to “trad[e] today’s analog dollars for digital pennies.”
I had to chuckle while reading the next few sentences: "In contrast to the stagnation and decline of the
Jonathan's final paragraphs conclude: "Whether Hollywood will thrive, rather than just survive, is a harder question... While experiments with new media may yet bring profit to old media companies, the question remains: Will Internet-based distribution (much of it ad- supported) and mobile ever generate as much gross and net revenue as traditional distribution? If so, how much of that revenue will be captured by Hollywood, and how much by the technology companies that own the new distribution platforms? No one knows, but there’s been little good news in these areas for Hollywood. If the studios continue to lose their grip on distribution...they’ll be left with content as their core business. That’s a problem because, fundamentally, the economics of content creation are inferior to those of distribution. The former is an industrial process, painstaking and manual. The latter, in the digital age, is post-industrial and automated. ...Like the British, whose monarchy is now a mere appendage to a parliamentary government, content may find its kingdom ever more circumscribed by technology" Gotta love that one!
Here is my take on this: the telecoms' future plans need to converge or at least intersect with those of the studios so that content and distribution can work hand-in-hand; albeit at the utter mercy of the people formerly known as consumers - since it will be them (us) that will dictate what they like to both the telecoms and the content producers; and they will be talking about it very loudly, on 3 Billion connected and socially-networked devices. I agree with Jonathan that this is the challenge of course: now that CONTROL is on it's way out, and mere copies lose their meaning as chief instruments of money-making, what will take its place, where will that other 80% of the 'disrupted value' come from... and who will get to feast on these new pies?
