"Big Content" Is Strangling American Innovation
blogs.hbr.org
blogs.hbr.org
The Edison Company used its patent portfolio to keep people away from owning theaters and importing European films.
Paramount, MGM, etc, were considered independents back then and fought back furiously. Then they consolidated vertically to own the theaters as well as the production, which opened the pathways for censorship (the Production Code) - when you only have to influence two or three companies, it's easier to get your way when you threaten a flat-out religious boycott.
NBC killed FM radio in the 30s by way of the FCC: it only came into its own in the late 70s.
NBC killed TV in the 30s by way of the FCC: it only came into its own after the technology had advanced enough that NBC and the other big radio players could continue their vertical monopolies in the new space.
Bell Labs killed a nascent answering machine in the 30's - of course, back then, it was the size of a refrigerator. It used magnetic recording. The next people to use magnetic recording was 3M decades later.
To cover this stuff in depth, read Tim Wu's "The Master Switch."
Bell also had a nasty habit of - when forced to compete by the government - physically sabotaging interconnect points.
It's in the interest of all kinds of managers to drive up favourable results in the short term so that they can achieve their next promotion and/or receive benefits from any stock options they hold (which typically vest on very short-term timescales compared to, say, the length of technological cycles).
Inevitably this leads to those managers seeking local maxima (i.e. sub-optimal tactical revenue generation) rather than more global maxima (i.e. more optimal structural changes to bring about increased revenue generation in the long term) which will take longer to become profitable than the individual is in their post to receive the credit for those decisions.
The problem is apparent in almost all forms of human interaction, to the extent that it is probably deeply-rooted in our fundamental psychology. We all prefer the quick wins to the bigger wins that can be achieved by deferring immediate gratification. (There's a relatively famous study which shows that unattended children will often eat a cookie even when they know they will get two cookies if they leave the cookie alone until the researcher returns in a few minutes.)
So I guess it's important that we realise that this is a deep problem and think about what (if anything) could be done to solve it. I suspect that it's actually near-impossible to change the behaviour of powerful individuals within an organisation in any meaningful way, and that having an external entity usurp the established order is about the best solution that can be achieved. (I assert that this is true on an individual level within organisations and also when considering organisations as a whole.)
It may turn out that this is (in general) a more efficient way to seek global maxima than to wait for a particular entity to alter its behaviour. It would certainly seem that competing entities with different strategies would be so numerous that better strategies are more likely to come from without than within...
Say you you could make infinite cheap copies of a car or a TV, would anyone make a better one?
With the elimination of scarcity what would we do with all our stuff and our free time? Would we sit around and turn into blobs or would we make things better just for the joy of it? Just for the recognition?
Isn't it apparent that IP laws/copyright in the digital age are just a way to impose artificial scarcity where it no longer exists naturally?
There's a flip side: if you could make infinite cheap copies of industrial robots, how many more people would start making cars?
Creative output becomes input for other creative output. Rachmaninoff wrote "Rhapsody on a Theme of Paganini" because nothing prevented him from re-using Paganini's work. Today copyright would prevent that.
IP laws are meant to help incentivize production of new stuff. But they also raise a barrier that keeps people from using old stuff to make new stuff. We have to balance those two things.
John Water's ideal was to flip an idea into a movie in an afternoon. With the prevelance of RED, iPhones, Canon 5Ds, and a few hundred metric tons of mid-2000's mini DV cameras, this has not happened. We're instead moving into a post-commercial era, where we're doing 30 second youtube spots, and watching full-budget long-form.
Infinite manufacturing will result in a neighborhood Shapeways or Kickstarter, not a neighborhood Ford.
I fail to see why that's a bad thing.
Née "Some Assembly Required."
Would you know if it did?
Waters himself wasn't really appreciated for a decade or so. Movies with zero marketing budget don't get recognized immediately.
There are people out there using the technology to make very good films on very low budgets.
The problem isn't getting the films made, and it's not distributing them. It's in connecting the viewers to the films. "Marketing" in the past has been the way that's been done. But we need something else now, a new method of film discovery.
Good stuff is going completely unseen, and that's a real shame.
Overall, for the world, it's much better to be able to use prior knowledge without much or any restrictions, the way humanity has always evolved before patents or copyright even existed.
Imagine someone patenting the wheel. The others would be forced to re-create the wheel in a different way, instead of focusing on using that technology - the wheel in this case - to create something new, like a carriage, or car.
At least one major revenue stream, DVD sales, is collapsing steadily. This leaves box office and derivatives and licensing. Derivatives have never been huge business, or at least not a sturdy enough pillar to bear the weight that DVD sales have borne. And licensing has always been mere icing on the cake, except in the case of titles perfectly suited to it (such as Star Wars).
As the downstream revenue sources dry up, so too will the big production dollars, and so to will the scarcity of access to "Hollywood-quality" creative. At least for most companies.
What's going to happen? One theory is that we're going to see some sort of price discrimination at the box office. Big tentpole movies cost more to make than do lower-budget romantic comedies, for example, and so tickets to Transformers XXIV will cost more than tickets to Generic Sandra Bullock / Jennifer Aniston RomCom. (Arguably this is already starting to happen, if you consider 3D to be a price discrimination mechanism. Whether by intent or by accident, it functions like one).
Another theory is that we're going to see a hollowing out of the middle tier of the film and TV businesses. You'll have giant studios making giant movies, and you'll have tiny indies making tiny movies. But there will be no middle ground, because it will no longer be profitable.
All of this assumes, of course, that production costs hold steady or increase. And so long as there are folks out there willing to pay $20MM for a single actor or $8MM for a director, they will. But the bottom might drop out of that market eventually, too. Or it might stratify dramatically as outlined in the previous paragraph.
You can see this already in the game industry. EA, Activision and Ubisoft have all transitioned to a franchise-only tentpole-or-bust strategy. The independents are struggling to compete with those production values, while two and three-man shops are making respectable livings from sub-$10 downloadable games.
I personally think the middle-ground will bounce back eventually. If only as a place where smaller studios bet their past success on a passion project.
The future is less certain on the TV side of the business. I don't know if TV networks exist 20 years from now, for example. I mean, the companies and the brands will still exist, but they'll probably all function like today's premium cable networks do: monetizing carriers of their content based on userbases. This will be an extremely painful adjustment for the big network congloms.
This is Fox Searchlight, etc.
It asks us to compare what we have with nothing at all. Of course it is easier to think of what we have -- it is right in front of us. But the alternative is not nothing, it is to create something new. And it is not beyond the wit of humans to do exactly that. (And is not one of the quite orthodox appreciations of capitalism that it spurs innovation?)
When a real physical constraint is lifted -- i.e. everyone can now communicate and copy as much info as they want -- the thing to do is spend effort inventing ways to realise this advantage. You do not spend effort inventing ways to stop using it, as the content corps want to -- it is perverse really, is it not? it is a degenerate economy that does that.
That's a little too glib. I think we are better off not looking for more ways to use our ability to kill more people faster. The right response to the atomic bomb wasn't to use it more, but to find ways to avoid using it.
I don't completely disagree with you, so I suppose there must be more nuance to it than either of us are picking up right now.
(A common answer might be: the bad effect is that it harms producers' ability to make money and survive. But this is circular: it only harms them because they are using a system that means they will be harmed.)
(A more sophisticated response would be to give the example of betting tips: there is info that is not really nonrival. But there we are not valuing the info as itself, but as it works as part of a system of rules of a game. That is not really like the info in question.)
It is reasonable to be cautious about practical matters, but these corporate interests have turned it into the grossest FUD. Ignore them and be forward-thinking.
Movie makers get a concrete source of funding, and a defined demographic to design for.
Movie lovers get the movies they love.
Of course, theatres---excepting small private showings--are cut out from this new model. Likely, everyone would turn to streaming movies.
I already purchase HBO---not because I cannot get their content elsewhere but because I want them to make more of it, and I know they take into account the tastes of their paying customers.
It seems to be the with many things these days. Many markets have moved to a more bifurcated structure. You see it in things from airline classes(how many have coach, business, and first), economic classes, video games(as mentioned in other comments here, the list goes on.
Hollywood movies in theaters can sell loads of tickets, and smaller movies can subsist off of rabid fans, but there's not really a mid-line distribution path where I can (a) reach out to a few million people and (b) get them to pay some amount between $5 and $15. Yeah, there's Netflix, but Netflix+DVD sales isn't much money, and Netflix doesn't promote, so it's hard for people to stumble across your movie.
Someone below suggested that video games have the same problem, and I'd argue that's distribution-related as well. On the high end, there are commercials and promotions and E3 demos for games like CoD or WoW, and on the low end, most of the guys making money depend on getting promoted through "featured game of the day" deals or "top rated" sections in their app stores or viral marketing or by just being so cheap it's an impulse buy. There's no real mechanism for a $15-$30 game to receive enough exposure that large groups of people will choose to buy it. Promotions and deals on Steam help with that, but it's not a big channel.
Paying millions for DiCaprio isn't necessarily because of acting talent at this point. It's because of name recognition. If you think that $X in actor salary will get you $5X in box office net, you'll pay it.
From the moviegoer's standpoint, if you have seen movies with DiCaprio that you liked, you'll be more likely to see another movie with DiCaprio. Ergo, the "big name" strategy pays and continues to be used.
--Jack Valenti, president of the MPAA, 1982
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