Perhaps It's Not The Entertainment Industry's Business Model That's Outdated

from the just-its-understanding dept

After last week’s post in my ongoing series about the economics of non-scarce goods, where I discussed the ridiculousness (economically speaking) of saying you can’t compete with free, a friend emailed me to make an interesting point. He suggested that despite the common wisdom many of us have suggested, the entertainment industry’s business models aren’t actually obsolete. What is obsolete is what people think the industry’s business model is. And, the worst thing is that the people most guilty of this are the industry execs themselves.

A few weeks back, one of the posts in this series was about recognizing what market you’re really in. I used the example of horse-drawn carriage makers, who mistakenly believed they were in the horse-drawn carriage market, rather than the personal transportation market — leading to troubles once the automobile came around. There’s an important hidden lesson in that. You can actually be succeeding in a market you don’t think you’re in.

When it comes to the entertainment industry, that may be exactly the case. We’ve been arguing that there are plenty of business models that don’t involve actually selling the content, but involve selling other, related products that are made valuable by the content. In fact, that’s what both the music and the movie industry already do. Everyone may think that you’re buying “music” or “movies” but that’s very rarely what you’re actually buying. You’re buying the experience of going to the movies. Or the ability to have the convenience of a DVD. Or the convenience of being able to listen to a song on your iPod. And, in many cases, it’s not just one thing, but a bundle of things: the convenience of being able to hear a song in any CD player, combined with a nice set of liner notes and the opportunity to hear a set of songs the way a band wants you to hear. It can be any number of different “benefits” that people are buying, but it’s not the “movie” or the “music” itself that anyone is buying.

So the problem isn’t that the industry’s basic business model is obsolete — it’s just that everyone thinks they’re actually selling music or movies, and that leads them to do stupid things like put DRM on the music to take away many of those benefits, or making the movie-going experience that much worse by treating everyone like criminals. What they’re doing, and why it’s hurting them, is that they’re actually taking away the features that they used to be selling — and missing out on opportunities to sell other benefits as well. So while we may still point out that the basic business model is obsolete, it may be more accurate to simply say that it’s the understanding of the business model that’s really out of date.

If you’re looking to catch up on the posts in the series, I’ve listed them out below:

Economics Of Abundance Getting Some Well Deserved Attention
The Importance Of Zero In Destroying The Scarcity Myth Of Economics
The Economics Of Abundance Is Not A Moral Issue
A Lack Of Scarcity Has (Almost) Nothing To Do With Piracy
A Lack Of Scarcity Feeds The Long Tail By Increasing The Pie
Why The Lack Of Scarcity In Economics Is Getting More Important Now
History Repeats Itself: How The RIAA Is Like 17th Century French Button-Makers
Infinity Is Your Friend In Economics
Step One To Embracing A Lack Of Scarcity: Recognize What Market You’re Really In
Why I Hope The RIAA Succeeds
Saying You Can’t Compete With Free Is Saying You Can’t Compete Period

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Consumer Innovation

We as the little people have a lot of nerve trying to tell big, important music and movie executives that they are out of date. It’s us. We are so used to consuming entertainment media as if it belonged to us, we reject any new business models which tell us otherwise.

I suppose we’d better innovate the way we expect to use these products so the executives can quit suing us and get back to hosting hot-tub parties.

(Great, now I have to spend the rest of the day pulling my tongue out of my cheek.)

It's an old concept...

… called the ‘entertainment dollar’. A lot of industries have evolved the same concept.

For example, Steve Cahillane, the Chief Marketing Officer of InBev, once described the act of buying an alcoholic beverage as an ‘occasion’. And he wanted to make sure that his beer brands were the choice for ‘occasions’. He used that strategy to build a number of basic beers into ‘branded occasions’, including Stella Artois, Hoegraaden and Leffe, by making them interesting (branded pouring ritual, branded glasses, brand specific color and customer presentation).

I’m quite sure the music industry is very aware that the are competing with other forms of entertainment and distraction, they just won’t say it publicly. Besides, whatever money they are spending on piracy enforcement, lobbying, suing people, etc. is money well spent if it keeps the cash flowing a little longer. The alternative is a long-term change that their boards and shareholders don’t have any appetite for, a common problem in US public companies.



Agree / Disagree

Excellent series of articles.

I tend to agree, but I think for the entertainment industry to genuinely have the model you describe, it has to be coming out in practice. While what you describe is how it should be (and in a meta sense, always will be) it’s not how it is.

The current model exists to create hit singles and straight to platinum artists, (and the infrastructure needed to support world class, money making talent) it doesn’t exist to enhance lives or provide a life experience.

I just started ranting along these lines here.


Bad Title

The content is right on, but that doesn’t change the fact that the entertainment industry has an outdated business model.

Business Model != Market

If my business model in the personal transportation market is to sell horse carriages, I have an outdated business model.

The entertainment industry is in the same market it’s always been in, it’s just that the market has changed.


Many ways to skin a cat

Imaging you are a song writer, singer, producer, engineer of that CD. A lot of bucks go in to making that CD, not to mention the creativity and the artistry. Now the music exec sells your CD using the ‘free’ business model. The CD is packaged with ads, promotions, media technologies, etc and sold as an entertainment experience which happens to have some music. Just like Google sell ads attached to free searches. The exec certainly do get paid. But only for the package because the value of the music is nil. The music production guys get perhaps a 1% ‘overhead’ leftover.

I suspect you won’t want to be in that 1% group. You will instead say that it is NOT the music that’s broken – that music is valued by the public as zero. Rather, it is the entertainment business model as practiced by the business exec that left you dry. So you have three choices:

1) Leave the music creation business altogether and be a burger flipper. It pays minimum wage, which is a lot better than zero.

2) Subscribe to the ‘zero music value’ business model, let the music exec laugh all the way to be bank with his entertainment packages, and you keep your day job as burger flipper. But if this business model is correct, the exec won’t need you anyway.

3) You invent a new business model. In this new model, there is intrinsic value to music and the consumers will agree. Importantly, it will employ distribution technology that correctly assigns value to both music and the technical quality of that music. All technologies that are so defective that they zero out these values will not be used. Sounds impossible? No. Just go to your book store and take a look at what the book publishing and visual arts businesses managed to deliver. They get handsomely paid for the artistry instead of the paper. I don’t remember seeing the buying public complaining too much about the paper being not enough of an ‘experience’ to justify the price. And I haven’t heard any fuss about putting DRM into a pile of book paper or painter’s canvas.

Re: Many ways to skin a cat

But only for the package because the value of the music is nil. The music production guys get perhaps a 1% ‘overhead’ leftover.

I think you’re missing the point here. This is how things are already. What we’re discussing here opens up many MORE opportunities for the actual musicians to get paid, because it focuses on ways to get them paid, rather than just the labels…


nothing new

there is nothing new here, whenever there is new technology, the music and movie industry fight against it. the new technology here is internet distribution, and it’s something many industries have fought against.

but many are learning that you can’t fight it. we do most of our shopping online now. we socialize online. we play games online. and we want our streaming live content from online. we want to get the latest movies and tv shows and music online, when it comes out.

so while they try to infect content with DRM, and offer lesser quality content, the consumer will continue to look elsewhere until the content they want is offered. offer the content the consumer wants, they will pay for it.

i want my content distributed online, without infectious DRM and lowered quality. i don’t want to go to a theatre. i don’t want to have stacks of CD’s. and i don’t want to pay the RIAA when i can directly pay the artists.

those companies that learn to work with and use technology are the one’s who will be making all the money. there are companies that are proving this, and those old companies are fighting against it, but it’s a losing battle. you cannot fight technology and consumer demand forever. you will lose.

Another Model

Before the era of mechanical reproduction of creative works, artists often tried to “own the venue.” Here’s an example. Boxers are not strictly artists, but they are performers. Very well, successful nineteenth century boxers commonly owned their own saloons. One exceptional boxer, John “Gentleman” Jackson, managed to go a step further, and open a fashionable gymnasium over which he presided. Boxing was a bit more upscale then, maybe about like karate now. Wealthy young men would pay to be taught to box. I don’t think that, say, Mike Tyson, could have made a go of running a saloon. Muhammad Ali, on the other hand, probably could have done so.

A musician could open up his own coffeehouse, perform in it, and give away recorded music as advertising. Note that I say a coffeehouse, not a club. A liquor license is probably more trouble than it is worth, in terms of drunks and police problems.

To: T.O. (post 7): The problem with being a burger flipper is that McDonalds owns the grill, and you don’t, and McDonalds appropriates your surplus value. If you can get people into your own place, you can make quite a decent living at burger flipping. That’s where the music comes in.



I run an art house theatre and I love hearing complaints, criticism, suggestions and even the occasional compliment.

The chain theatre I ran, complaints went nowhere, unless it was something I could do. Even then, what I did was “on the sly” because the corporation couldn’t care less and they’d just say “no” because that was the easiest short-term solution. The best thing to get a corporate complaint heard is to find the names of the highest people you can, and complain to them.

I run an independent place now, and it’s great being able to respond to complaints in a timely manner. Plus there’s no MPAA “we hate customers” warning posters around, and I’m not required to check the customers for cameras (a part of my job that somehow I “forgot” about and had my theatres marked down during audits for that).

My wanting to make the theatre a nice place to be wasn’t good in a corporate environment, but it attracted the attention of local theatre owners, so I left.


What Business are we in?


Your comments about the horse-drawn carriage industry not recognizing exactly what business they are in are right on. There’s a blog on Media 3.0 that makes a similar point — about the television industry adapting to advanced media. Shelly Palmer (the blogger at Media 3.0) draws the same “carriage” analogy (but
using the railroad industry versus the airline industry

– Carl

Dean Proctersays:

Entertainment industry dinosaurs dying in the digi

I have a little first hand knowledge of the entertainment companies at the dawn of the digital age. I foresaw the dilemma they would be faced with by the internet and set about to offer a solution in he mid 90’s. It was:
Give the customer what they want.

I offered to enhance every CD (no DVD’s yet then) with full screen video and web links to the record company/band website and make it easy to ‘connect’ the consumer to the artist.

It was the first full screen video on music CD’s playable on 486 PC’s so it was a bit of a novelty at the time and was incentive to put the music CD in your PC, whereby it became even easier to subscribe to the artist, order more product and interact.

The product would consist of digital downloads, custom CD’s and custom mixes of your chosen artists.

I offered the record companies more money than they were making, the artists more money, and the consumer lower prices and more convenience.

The response was interesting. Dreamworks, Geffen, Universal all loved the idea with Paul Kreiger of Universal championing it. Sony tried a couple and decided they could do it themselves (wrongly), BMG wanted me to do it just for them(Germans of course).

I made a lot of money quickly doing interactive CD’s and websites but the companies just didn’t get it.
I had everything covered, – DRM (of a sort – ie if you copied your album and sold it – we would catch you), the artist would get paid for their work – quickly, and the consumer would get what they wanted easily.

In the end the entertainment companies just wouldn’t get on board, and I honestly believe it was because they were ripping off the artists so much that they couldn’t let it go.

At the last boardroom meeting with the entertainment company execs I told them that if they didn’t do it with me it would be ‘done to them’ for free and they’d lose billions. 3 months later there were 300,000 shared tracks on the college networks and the rest is history.

There is no going back, they are in decline. The only chance they had was to make it easier and cheaper for consumers, instead they made it impossible and expensive while the pirates and people just plain sharing made it easy and free and sent them to the wall.

New artists realise the opportunity that the internet provides and they don’t need the entertainment companies to make a good living.

There is room for one big player to win the whole prize but it’s name isn’t SonyBMG, Nokia, Apple or any of the existing players. Just like last time – the new way will leave them far behind – and there is a new way coming – which will make it easier for consumers, to get quality, not proprietary, the consumer won’t be the enemy and the artists will get paid quickly (instantly).

You just can’t beat easier – except sometimes free can for a short while. That business model isn’t open to the dinosaur entertainment companies and neither is the new way coming.
As for the consumer – just give them what they want and make it easy and they’ll happily pay.

Mark my words.

Re: Entertainment industry dinosaurs dying in the digi

Thank you for this “insider” look! As a musician, this issue of course interests me tremendously. I do disagree with the idea that musicians “don’t need the entertainment companies”, primarily because of the vast importance of radio airplay in having a career that extends beyond your local area. But I do love the idea of interactive CDs (maybe in this era, it would be interactive mp3s?)

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Correct me if I am wrong but wasn?t that always the problem? Since copyright law is a mechanism that enables publisher to sell “something” (actually it might be better to say “not-a-thing”) that cannot be sold by giving him exclusive right to sell the package and control its distribution.
It might be better to think about the content (music, movies, ideas, etc.) as a scent. What you sell is the package that contains the smell but not the smell itself. In order to monetize on this you need some form of control; capacity of bottles means that the perfumes will run out while copyrights prevent from copying and distributing the music. Which means that DRM makes perfect sense.
As for the new business model, well there may be no such thing or not the way most of the people would like to see it.

I have been reading about the future of the film industry (and medias in general) for a while now. I have seen a lot of creative ideas (Kickstarter, crowdfunding, Artemis project, CwF+RtB, etc.). I am a filmmaker and I used to earn a decent living selling my films worldwide. In the last few years, the bottom fell out and the prices are dropping so low that making the films become unsustainable. Everybody is scrambling for the exit and looking for a new business model or looking for ways to go back to the status quo. While I agree that it is impossible to stop piracy and pointless to sue for that, heck I agree with most of Tech Dirt assessment about copyright, I however wonder about the viability of a CwF+RtB model and other propositions, like crowd funding (which is a legal grey area and I believe it is only a matter of time before that plug is filled).

So as far as I can tell, the reasoning goes a little like this: spend years building an audience for your film, in order to convince them to finance you and your film, keep them posted on the progress, shoot the film, give it for free along with some reasonably priced schwag they can’t download, and keep promoting the shit out of it until you eventually (or more realistically hopefully) break even then start again…

Fun perhaps, but at this point, it’s not a business it is a hobby! You cannot sustain an industry like this!

If you factor in all the time and effort to make the film, plus all the time you spend “connecting with fans” and providing them with (free) added value, you end up making less than a quarter of a penny an hour for your time! I love my job but I also need to pay my bills!

Under your model, I not only do I need to raise the money to make the film, a difficult proposition even under the “old” model, now I also need to find cash to finance the schwag ( and the warehoouse to store it – you can always go “print on demand” style, but the costs are higher, diminishing your chances of selling it unless you want to make pennies of profit – and let’s face it, only the hard core fans will buy the schwag!) and spend even more time connecting with the audience than ever before, plus add all the support time of maintaining what is now also becoming a retail business!!! I fail to see how it is sustainable for indie filmmakers with limited resources to begin with. It does not appear to make economical sense to me.

Maybe I am not understanding it right but feel free to enlighten me. I’d like to understand what I am missing.


Re: free economy

interesting article. However i couldn’t find two
important market considerations (could be
me that missed it)

1) Capitol flow
2) ROI (Return On Investment)
3) what does your model do when free/infinite vs
limited and necessary? products such as food,
heat, energy, some more food, cars, swimming pools,

If capitol is necessary for the market, then the ROI
needs to be more than competing investment
opportunity ROIs

as an example, if someone can get a better ROI in china,
that’s where their capitol will go. This happened during the
bank bailouts. The US Gov gave the banks money at
low or zero interest and instead of intended action –
(loaning & investing money in the US) the money flew overseas



Create an excellent product first and foremost ..a good piece of work gains interest which builds for the next creative work ..leave the door open ,if others want to use your work let them build on it “creative commons FTW” (remember you were broke once)there are free sources everywhere such as product placement (insert cola can here),free sites like vimeo, youtube (look at me look at me)and many others generate your own ad revenue , build a coalition of others like yourself artists creators (hit the major studios in the eerr mouth) look at the app builders today they make a free version and a paid version with more content .. the hardest part is building the foundation ..


top of the top

I am pro-choice because I believe women?s lives matter. I am pro-choice because I think women themselves are the best people to decide when and if they get pregnant, give birth, and raise children. I am pro-choice because I believe that the right to control yourTop 10 Music Albumsown reproduction is a fundamental right, and is protected both under our Constitution and basic human rights ideals ? and I believe that fundamental right includes the right to prevent pregnancy, the right to get pregnant, the right to carry a pregnancy to term, and the right to terminate a pregnancy


What a wonderful article! It is very inspiring to know there are people out there thinking about the bigger picture and able to divorce themselves from the ridiculous preconceived notions which drive most people’s assessment of the industry. You have definitely earned a regular reader.

We’ve been trying to say things very analogous to this for a while now, but to seemingly no avail. Please, check out our pieces concerning the independent film models if you (or anyone gets a chance) at the subvex website; “The Subvex Resistance: An Independent Distribution Initiative” and “Cult of Personality” – they are, admittedly, much more vitriolic and frantically written than your succinct and well organized article above, but nonetheless I think we’re, for the most part, on the same page.

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Entertainment Tonight

The striking unity of microcosm and macrocosm presents men with a model of their … The truth that they are just business is made into an ideology in order to justify the … It has made the technology of the culture industry no more than the …. Like its counterpart, avant-garde art, the entertainment industry determines its own


It could be argueable, if you take the content industry's behavior out of the equation.

I don’t honestly understand how having the option to watch a movie on a display attached to a disc drive is more convinient than watching a movie on a display thats attatched to anything that can read any compatable storage medium of your choice.

I have for all intensive purposes, a media center on the living room TV that can read anything I want to read. So I can watch the disc on that. I can also watch the disc on any of my computers, but usually theres some software BS on it, so I’d perfer not to plug it in and have to deal with that, but the option is there.

My TV can read my USB stick and most video files I put on it or it pull the file directly off the wired network and easily handle 1080P without any noticable buffer time, my XBOX 360 can read my USB stick or pull the file from the network directly again with almost no buffering time, I can pull the file on my phone from the network, I can watch the movie on my tower with either the USB stick or off the network with a buffering of less than 2 seconds total (even on a 2160P video file), I can watch it on any of the 4 laptops or 3 other computers in the house with either my USB or pull it directly from the network, and if the DRM doesn’t stop me from doing so, I could embed subtitles in any and every language and even put other features and abilities into it just by putting in a little effort and then repackaging the movie into a matroska wrapper on my main tower.

I fail to see how it is “convinient” carrying around a significantly larger and more fragile disc than the pocket sized terabyte hard drive/32gb USB alternatives or pulling the file from the dualband gigabit network on pretty much any device in the house. This fails to address the fact that in most cases the disc also is restricted on how or even if I can skip around to different parts of the movie, is loaded with a bunch of previews for crappy movies before I get to the main feature and in a lot of cases being unable to skip those, there being a pelithra of “extras” that are completely retarded 99% of the time such as commentary from someone that no one cares at all about while it lacks subtitles or other features you actually might want such as commentary from the main actor(s)/director, deleted scenes, trailers and or teasers of the movie itself and/or sequels planned or in production, how the major special effects where done, etc.

I realize that a lot of those things fit into the whole “adding DRM and taking away the features”, and are exactly what you are talking about, but it’s not like this is something that just started happening in the last couple months, just like it wasn’t until after DRM entered the playing feild that adding extra features to almost all sold content became standard practice. As far as the “experience” of going to the movies, I find it’s largely impersonal and largely not very enjoyable. The only redeeming feature is the HUGE screen that I would otherwise not be able to watch the movie on. The clarity is not that much better (1080p on any of 6 different screens, including the 46″ infront of the comfy leather chair, or I could use the 1600P monitor only a couple feet away…), the audio is often times no better (7.1 surround sound matrix at 1,500 watts RMS at home), I have plenty of popcorn, and other snacks, and if I’m out the store is 4 minutes away, and I don’t have to worry about getting a “good” seat.

My problem with the concept that drives this article is that there is a distinctly visible trend of piracy growing as sold content became worse and more restrictive and the piracy excellerated as the content producers kept getting more extortive and more tenatious, even though they did add other features and made digital copies available without having to use something like alcohol soft. Not only this, but they also fail to keep their product readily available, keep taking new measures to restrict people’s access to it (netflix and WB for example), keep making it more difficult for stores and companies to stock it (half of the movies at work that we’re out of have been on order by our DC for weeks if not months), and keep taking it out of circulation sooner (I’m doing price adjustments and complete recalls 4 times more often than before, and they are NOT being sent to the DC, but rather picked up and the requests being generated by the individual studio distribution reps and groups themselves even though our inventory system apparently didn’t get the memo they were pulling the movies).

To be honest, I fail to see any single point where the content industry is anything but 100% guilty of their own decline on every single possible front and angle and how they have done any single thing that actually benefits them other than the short term boost they saw by extorting the consumer more and the false facade they made by including rediculous commentary about nothing important as the “bonus features”.


Re: It could be argueable, if you take the content industry's be

Regarding the "keeping products available"

It blew my mind last year when Hobbs and Shaw was released on Blu-ray and also online for digital purchase or digital rentals, but then six months later or some-such the digital rentals just disappeared. You could still do a full digital purchase, but apparently HBO paid someone enough money that they removed the digital rentals from Amazon, Google, Vudu, and any other digital streaming platform. Crazy.

Zacqary Adam Greensays:

You’re buying the experience of going to the movies. Or the ability to have the convenience of a DVD. Or the convenience of being able to listen to a song on your iPod. And, in many cases, it’s not just one thing, but a bundle of things: the convenience of being able to hear a song in any CD player, combined with a nice set of liner notes and the opportunity to hear a set of songs the way a band wants you to hear.

The problem is, piracy can handily compete with three out of four of these. Convenience of access is a losing battle, because pirates will always be able to make their services more convenient. They don’t even need to be more convenient than the creator’s option, they just have to be as convenient and free. (Also, theoretically you could have a movie theater which torrents everything that they screen and doesn’t share revenue with the creators, but that’s a bit of a stretch.)

So, convenience is a problematic way to look at it. But the experience of going to the movies is where you hit the nail on the head. Maybe not the experience in its current form, which is ? hypothetically ? just another fragile convenience service. A truly resilient model is one which only the original artist can possibly provide, which is an experience.

This is easy for performing artists; they don’t have to change what they’re doing. The challenge is for traditionally absentee entertainers ? filmmakers, authors, visual artists, etc. ? to come up with ways to turn their works into performances, which they and only they can execute.


Playing GOTCHA

GOTCHA is a simple game. Someone flips a coin. Tails, the GOTCHA wins. Heads you flip again. Now you are going to tell me you would never play such an absurd game, but my friends, you play it all the time. You play it with SOPA types who propose things which threaten your rights, and who if they do not win will simply flip again. You play it with pols who chip away at women’s rights, one chisel blow at a time. If the chip doesn’t fall, they flip again. You need to change the game to one where when they lose they lose for real.

For example, how about a new law where publication of any significant portion of a copyright work by the copyright owner, employer, colleagues, or agents, in digital form of any kind, voids the copyright and puts the published work in the public domain.


What they are actually selling...

Perhaps they are in a different market altogether. Everybody talks about how the labels and studios provide functions for marketing, coordinating releases, getting bands in venues and movies in theaters, putting CDs on shelves. Perhaps we have it completely backwards now. Perhaps these organizations actually are promoters. They serve as a kind of broker; the question of whether they are a buyers’ or sellers’ broker is an interesting one, with parallels to the real estate market. Buyers can go to aggregated venues, other middlemen can have distribution deals, it can be a signal of quality to would-be customers; and the labels or studios tend to establish monopoly deals with artists on particular works or sets of works, but that isn’t the way it has to work. The bands could pay for the service in advance, after the fact flat rate, as a cut, or some combination.

Re: What they are actually selling...

They kind of do pay already, in the sense of the label taking a big cut out of their profits. If they pay for the service though, there goes the last pretense of being a “signal of quality to would-be customers”. Personally, as both a creator and a consumer of music, I would like a world where the music on the radio was paid to be there by the bands even less than the crappy system we currently have.


If the work is good...

If you create something excellent, and price it right, people will give you money.

I tried it some years ago with a musical project. And no, I didn’t sell anything but the music. No t-shirt, no concert, no video or special experience. Just the music, delivered digitally (or as vinyl or casette). The project took me a month to complete and it paid off in a year’s income.

It succeeded beyond my expectations, even though the music itself in a somewhat lower bitrate was available for free online.

I believe too much of the fear of “piracy” comes from a entitlement mentality on the part of certain artists. Embrace, rather than reject, the understanding that the world does not owe you a living for your art just because you believe you are awesome. And if you do make something that people like and want to pay you for, stop believing that it’s some sort of annuity that will continue to pay you into your old age. Artists have to work for a living too.



It is very hard for creators to survive in this system. People like writers and artists are often ill-equipped to become “performers” to the point where they can give away their creations and make a living by performing. We need more libraries, where “free” for those who are willing to participate and give their support, making it harder to tear down the libraries.

Todd Shoresays:

Take another step back - miopic

Movie studios and records companies have always made their money off the experience and have treated the content increasingly as having little importance. That is why they are hated by their own customers and the artists who create their content.
That is because they are increasingly not creating art, but instead are creating product. I listen to music for the emotion it invokes, which usually has to pour out of some artist’s soul. Sure, as the maker of my own experience sometimes a riff or backbeat will be in tune with my experience and I will get off on one of their products, but it rarely makes be a repeat customer where I might follow an artist that I find appealing.
The difference is not the point you originally made nor the point of this article. The point is that artistic content is still king and these distributors only produce product. They have steadily been losing sales per capita for the last 35 years. It isn’t new media that is killing them, it is that with the advent of United Artists and now the indies, the art is somewhere else. They are no longer the incubators of art so people buy less of their product.
With sales down they have tried to move their distribution to keep up with the technologies that make it easy for people to experience their product, but they have missed the point that technology in the end will make them superfulous. They will die.



The medium is the message. Each message also incorporates its medium. Songs are 3 minutes long because that’s what fit on a record. (A few disruptive elements, like Stairway to Heaven or American Pie, thoroughly confused the mix). Albums were the length of 1 or 2 vinyl discs. Cartoon were 6 minutes long because that’s sufficient for the beginning of a movie, which was 1.5 to 2.5 hours because that was the best fit for a theatre, while TV episodes fit at one time in the half-hour and hour slots. Even sports was essentially defined by the medium – in the early 1900’s, Baseball -which could be described on radio – was king; when TV came along, football was better action and ideally suited for replays, a capability of the new medium.

When the disruptive tech comes along, the medium can change the massage. Netflix for example started the idea of releasing a whole season of a show at once – you essentially have an 18-hour movie that you start and stop as you feel like. Eventually, the whole concept of perfectly timed episodes in the season will disappear. As theatre revenue becomes less significant, the extended edition will become the norm for movies.

So what is the Hollywood business model?

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