Jun 15, 2007
My friend Noah Brier recently took advantage of something every Jew between 18 & 26 should take advantage of: Birthright Israel. Some of you may know him as an awesome networker (aka Super-connector), others may know him as a great blogger. While away on Birthright Noah invited several people to be guest bloggers, and luckily I was one of them! You can read my contribution here, as well as the variety of comments people left. I've pasted it below in case you really don't want to navigate away from this page; but I suggest reading it on Noah's site, as you can contribute to the conversation that began there.
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A Vision for the Future of Media Distribution
The other day I noticed a sign in Blockbuster's window, announcing an exclusive agreement with The Weinstein Co. I work in the media business and honestly don't know anyone who's compelled to watch a film because The Weinstein Co., or Universal, or any other studio made it. But that's not the main point of this story.
The implications of Blockbuster paying for exclusivity made me think about where the media industry is, and where it “would” go if I were king of the media universe. The first thought was that when Blockbuster gets content creators to sign exclusive agreements, they show a lack of appreciation for who their primary competition is, and worse yet what their customers' expectations are. Customers don't pay Blockbuster for their ability to curate films, they pay HBO for that. Now that Blockbuster is a completely subscription based business, competing on offering may help to fight with Netflix in a winner-takes-all game, but in the big picture, they're only helping their primary competition: free file sharing services on the web.
File sharing services don't care about exclusive agreements, and neither do customers; until it keeps them from accessing media via their chosen distributor. Everything is available on-demand on the web, no matter where you are in the world. So as a customer considering an incomplete offering from both Blockbuster AND Netflix, what would compel me to pay either, or both of them if I can get it all for free, more quickly, online? While I could recommend ways for Blockbuster and Netflix to fix their businesses, they're going to die anyway... so here's what I see coming down the pike once those two (among many others) are out of the way.
I see a future where portals will offer access to every piece of media ever created (and by media I mean everything: from TV shows & films, to video games, music, books, magazines, poems, paintings, etc...). Furthermore, no portal will have exclusive offerings (similar to Internet portals), and there will be minimal barrier to entry (contrasted with the NFL Network's problems). The business model has two fronts, one facing the consumer, and one facing the content creator.
The consumer facing model is based on the fact that every person has “x” number of minutes per day/week/month to spend consuming various forms of media. There is a dollar figure actuaries can determine those minutes are worth both to the portal and to the customer. Quickly a rate plan very similar to tiered cellphone plans will emerge. All the media you can consume in “x” number of minutes per month, for “x” dollars per month.
The content creator facing model will include paying each content creator a fixed amount per unit of time each unique customer spent consuming the media that content creator made available. The kid who took a picture of himself every day for several years & made a film with those pictures deserves the same amount of money per unit of time spent watching his film as did the creators of Spiderman. Why? Because you can't watch both at the same time, and you have a finite amount of time per month to consume anything.
This type of model will take the curating role out of distributors' hands, and leave it in the hands of the artists and their investors. The portals (formerly distributors) will no longer compete on content offering, but on services related to the searching for and interacting with the content. One example is re-inventing the idea of product placement. It won't be about “hoping” your audience noticed everyone in a show only drank Coke. It will be about making a pair of jeans, or a car that's seen on-screen an interactive object that a viewer can click & buy.
Note: I don't assume that the portals will only be accessible on your computer – the computer and the TV will, at this point be minimally different screens to access the same media. But hardware is the final element in this plan: creating tools for consumers to interact with media. Apple is WAY ahead of the curve on this front. With the advent of iTunes, they're not only acting as a portal, but with iPods, and AppleTV they're also offering the hardware and a “whole-product”. Software is relatively easy to develop & roll-out to market, hardware is much more difficult, and anyone who wants into this game had better start partnering with hardware manufacturers, if not buy one or two.
In this altered universe I've imagined, consumers will have ultimate reign, and artists will have way more freedom. The portals will at once offer two-way access from content creators to the smallest niche audiences, and the largest mass-markets. There will no longer be a studio boss, or book publisher who instructs an artist to change their art in order to distribute it. If an artist can afford to make something on their own, they can, and won't need a distributor to reach their desired market. Artists will be free to display their work, and get paid fairly for it. The most successful artists will be picked by mass appeal, rather than by “payola” systems which enable the distribution companies to shove whatever they want down our throats.
Let me know what you guys think!
Stumble
I think the extent to which NetFlix and Blockbuster will "die" is better expressed as the death of physically trafficking in media using physical objects. The chairman of Sun, over ten years ago, raged about the absurdity of taking bits and bytes, burning them to a disc and putting them in the mail or in CompUSA (or Tower Records for that matter).
Netflix is already playing with the idea of letting you watch movies over the Internet instead of them having to send them to you in the mail. So, I think they do have a shot at surviving.
On a long enough timeline, most media will be electronically delivered. Time Warner Cable has this already with 24-hour rentals. For $3, you can watch the movie as much as you want for 24 hours, will full rewind and fast-forward capabilities. If you've never tried it, it's pretty sweet.
A major potential flaw in your argument is the assumption that a consumer would be satisfied with this all-you-can-eat model. "I pay $X/month and then watch anything ever made." This assumes that this service has gotten ahold of the rights to everything ever made. Once there is non-participating content, consumers would get irritated at having to pay fees to all these balkanized services. Know anyone who uses Rhapsody AND iTunes Music Store? (technical issues therein not withstanding)
Why wouldn't a content producer participate? A system where the consumer pays a fixed amount regardless of how much of the movie they watch benefits the majority of movies because most movies suck. It would screw with content creators because they'd have to make the first 10 minutes of their content really catchy, lest they lose their audience and thus money with 80 minutes of movie left to go.
Not to mention if users can upload content into the system, you have the groundwork for massive fraud management problems. How about I obtain a copy of the new Batman movie and then post it. The people that watch my copy will create revenue for me, which Warner Brothers would then have to try and obtain via assorted filing with the service or courts. Look at it this way: right now people are posting movies and TV shows to the internet in large numbers. Imagine if they had a profit motive!
I think you're definitely onto something with the notion of being able to buy products right out of entertainment programming with a click. There's probably good money there.
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