The future of music, film, technology and mass media [Ed]


I was reading an blog entry where William Gibson has posted a copy of his speech to the DGA (Director's Guild of America) about music, film, technology and the possible future of mass media and was pleased, although not surprised, to find it hitting the same notes about the future that I've been commenting on.

Of particular interest is the question of whether the creation of mass-media icons and blockbuster content may just be a twentieth-centry fluke and not the end of a logical progression.

He deftly cites the rise of the Beetles, which was as much of a phenomenon as has ever been seen since the beginning of mass production of records, film and indeed the broadcast industry. However, part of what made the Beetles so great (as a phenomenon, setting aside their musical talent) is that there were so few outlets controlled by so few people, that it was possible to completely swamp international culture with considerably less effort than it takes today.

With the advent of such technologies as cable and direct broadcast satellite TV the general viewing public (and in particular, those folks who create opinion) may well be watching something else when the next potential Beetles make their way on to today's equivalent of the Ed Sullivan show.

Add to that the Internet, and it gets more and more difficult for any phenomenon to be truly a mass phenomenon inside of one country, much less around the world. Many people are presented with so much choice now that they rarely find themselves subjected to the same sets of stimuli as their friends and neighbors.

For me personally, it is a frequent occurrence that I watch fewer than 30 programs from broadcast network television a year, much less keep up with the goings-on of multiple network shows. This provides me with an entertainment (or in my case, closer to infotainment) experience that is more to my liking, however it also sets me apart from some of the cultural phenomena that emerge in modern society (Survivor, American Idol, Ozzy and his family).

But what about the media?

I'm getting to that... One of the trends that I have been discussing with my cohorts has been the idea of disintermediation. Over the years, as technology has evolved, we have gone from trading neighbors for a small number of varied foodstuffs to being able to walk down the street to a grocery store to get foodstuffs from local and regional providers, to being able to walk in to a gourmet grocery store and get food from just about anywhere in the world (much of it fresh-freezed).

The move has always appeared to be in the direction from many smaller, more local organizations to fewer larger, more centralized organizations. Because of economies of scale, the ability to create volume purchasing and production, and also the advent of wide-reaching advertising we have been gradually concentrating our purchasing of goods (and to a much lesser extent, services) to a smaller number of vendors. At the same time, the levels of indirection have moved away as well. In years past, producers made products in regional plants, sent them to regional/local distributors who shipped them to company warehouses which then re-inventoried them and stored them for further shipment to the stores and then to the consumer. As information technology, the ability to predict demand, faster communication, faster transportation, and shorter lead times to production have all become commonplace, the number of intermediate steps has sharply decreased. Many of the distribution middle-men have completely disappeared, in favor of direct relationships with the manufacturers.

This evolution primarily benefitted the manufacturers and the largest retailers. The big retailers could buy products by the truckload (more efficient for distribution than half-truck or single item purchases by smaller stores), and thus didn't need a distributor to provide lot aggregation in order to buy directly from the manufacturer.

Today this is the prevalent model, with the Wal-Marts of the world able to buy direct with huge discounts and the smaller retailers still going through at least one level of distribution because their individual orders are too small.

However, this model itself is starting to break down. I'm not going to predict that it will be gone in the next few minutes or even years, but a few decades from now, we may see an interesting reversal of fortunes between the large chains and the mom-and-pop stores (either the few that survive or others that pop up).

When you look at a store like Wal-Mart, you think of a wide selection and "friendly" service. I don't think of service at all, but that is their advertising campaign, so I stick it in there. I don't think anyone, including the people in their advertising departments believe that you are getting quality service from knowledgeable people. In the end, the name of the game at Wal-Mart is low prices, and thus low overhead.

This formula works for Wal-Mart today because most people know what they want before they buy it and don't value the advice of the sales clerks. Or, if they need advice, they head someplace other than Wal-Mart. As such, the chain (and others like it) are really more of a local distributor than they are a retailer. They take huge shipments of product direct from the manufacturer (or from their distribution warehouses) and deliver it to an intermediate "warehouse" (their stores) where they then clear the payments and present the product to the customers.

From the manufacturer's perspective, Wal-Mart provides them a small level of insulation from the consumer's bad credit and the ability to push product into channel instead of having to take a large risk on overproduction. Or, at least that's what it used to mean. As the Wal-Marts get larger and more powerful, they are requiring just-in-time delivery and right-of-return on products that were unprecedented in years gone by. As such, the manufacturers are taking on more risk (financial, because of the return) and more inventory (either physical or financial) than they would have a few years ago.

As we move forward, a number of manufacturers are realizing that they are taking on the retail risk anyway, but they are getting too few benefits. They are already paying for shelf space in the stores, often times financially holding the inventories that are on those shelves, and seeing fewer and fewer benefits from their distribution/retail partners. Apple Computer has already removed the middle-men from much of its customer base by aggressively courting the customers online and with manufacturer's stores. Gateway has moved from online-only to manufacturer-run stores as well. In both of these cases, the manufacturers felt that they could save money and provide a better experience for the customer (and thus, make them more likely to buy) if they had direct contact with them. Besides, inventory risk and shelf space were already being paid for.

Obviously, perishables are a separate issue, and it will take much longer for there to be changes in this distribution system due to the logistics of spoilage. However, for hard goods, I have little doubt that direct-shipment will continue to increase as a delivery mechanism for goods to the consumer.

But, I want to see a human!

And you shall. I don't think we're going completely online (although I do believe an increasing amount of our purchasing will be done that way, with online drop-shipping shops being the main manifestation of this). However, I do believe that the consumer is going to gravitate toward the kinds of high- service outlets that provide them a real benefit, as opposed to just on-hand inventory. And, there will always be the industries that are regulated for local-only sale. Today, these include alcohol, tobacco, firearms, pornography, and in some states (Washington just passed a law) violent video games.

OK, but what about the media?

With all of that said, let me get around to where I was going with the media. As much as the media doesn't want to admit it, a similar process is heading its way on the disintermediation front, and the dwindling importance of physical delivery (DMCA notwithstanding) is adding to that.

I've already discussed the increase in media outlets that allow me to watch one of hundreds of televisions programs. This allows me to become my own network programmer, to provide myself with whatever entertainment I want (and, with the use of PVR's, when I want).

Then, I discussed the reduction in the essential value of the intermediates between the manufacturer and the consumer. In music, the "manufacturer" today has a special place because they are not the creator. As with books, the "manufacturer" is the publisher. Unfortunately for the music publishers, they have been creating trouble for themselves over the years.

Part of this is a problem with model. Fortunately for the book publishers, there is just something special about a book. Books require scant few resources to use (only light if you want to read in the dark, and it doesn't mind if you get that light from the moon or a torch). Further, a book (usually clocking in at a few hundred pages) often provides hours of reading experience.

Unfortunately for music publishers, this isn't the case. CD's, records, and cassettes are inconvenient. They require the use of amplifiers, headsets, electricity, and some (often bulky) form of playback device. To top it off, the natural length of enjoyment of an individual song is only a few minutes. In comparison to books, music is downright inconvenient. To help with this some, we have created devices like the iPod (and, earlier, recordable cassette tapes and CDs). These help some by minimizing the size and putting a huge amount of programming into our hands at the same time, thus solving the music publishers inconvenience problem. Right?

Well, it certainly solves my inconvenience problem, but it doesn't help the music publishers. The reason is that they have been wanting to sell me 13 tracks (11 of which I don't care ever to hear again) on a flat pre-pressed disk for $13.99. They would prefer that I carry that disk around with me, like I do books. Unfortunately, that's at odds with my convenience which is to carry just the two songs from that CD that I want to hear and to carry them in my pocket with 3000 other songs that I might want to hear. At this point, the music publishers have lost the battle. Scant few will carry a manufactured CD around if it isn't necessary, and it really isn't necessary these days.

But, we provide other benefits

The music publishers plead that they are doing more than just providing the disks with content created by other people, and because of that they should be rewarded handsomely. But, I theorize that they are setting themselves up to go the way that the distributors went in the disintermediation of the retail industry.

In the past (before information technology provided them with minute-by-minute statistics on what was selling and what was not), they were risk takers. They would take a flyer on a few thousand (combined) albums a year and see which ones worked. Since they couldn't tell much ahead of time and didn't have a very good computer model of what would sell, they were more prone to spread their risks out, provide a lot of artists airplay and shelf space, and put the decision to publish artists in the hands of humans.

In the past few years, the industry has reduced the number of new releases (see article from MacWizards Music), presumedly because they think they can better judge the tastes of the public or because they can't recruit the artists. However, I would argue that this is not because of the lack of new music available to them.

Further, it is a widespread belief (although statistics are hard to come by) that the lion's share of advertising by the music publishers are spent on the "sure things", whereas in the past when they couldn't predict things as well, they dedicated more resources to albums on the fringe.

In the end, this makes the music publishers less and less useful to the artists (whose music either isn't published or languishes without advertising because it has been bought and not pushed by the record industry).

Further, as with the Wal-marts, the music industry doesn't actually provide artists protection against the financial problems related to producing a record. Instead, the costs of production, etc. are basically treated as a loan to the musicians while they work with the publisher and if the publisher fails to sell the album, then the musician doesn't get paid. Further, they don't own their original works.

So, it is no wonder that the music industry is looking for every avenue they can to keep the costs of delivery high. If music can be reasonably sold online (per-song or per-album) at a rate that is higher than what the publishers pay the artists now, it is a growing threat to the survival of the music publishers.... disintermediation, removal of the middle-man between the manufacturer (the real one this time, the artist) and the consumer.

Ok, that's fine for music, but what about film

Film is yet again a bit different. Not unlike books, a film is a unit. Not unlike music, it requires more than just a little light to carry it around with you. Thus, it has shades of both mediums.

The interesting issues with film deal with the ease with which new films can be produced by people on a shoestring budget. For the time being (until ubiquitous broadband and even more massive storage or further increased compression), the ability to send major motion pictures around like music is still on the fringe. But, it does scare the industry.

Another thing that scares the industry is the ease by which an individual can create a good-quality film without millions of dollars of studio equipment. As has been seen with "The Blair Witch Project", the advent of inexpensive digital camcorders and cheap non-linear editing software allows people with talent, but little financial backing, to get into the business and have a significant impact on the society and the box office.

The response to this, based on the block-buster mentality of the movie industry, is to make every new picture bigger and bigger, greenlighting fewer releases, but pumping huge amounts of money into them, so as to guarantee that they draw in crowds. And, for the moment we oblige. Partially because that's what we've become accustomed to, partially because there are only a limited number of theaters.

However, if you take the pornography industry as an indicator, there are over 75,000 titles available at DVD Empire's "adult" store, many produced on a shoe-string budget, and much of it on sale cheaply since they sell them primarily online. The lower budgets and availability of self-publishing means that there are more outlets for more people to make more films (and less money for each of them).

This spreading out of interests and money is not in the interests of the mass marketers. Their goal is to release one film and make the entire year's money on it, with no risk that you will go anywhere else. Choice is an option that is not to the benefit of the largest studios. Much as with operating systems, the fewer the producers, the happier the producers are, since they can then reduce the number of products and thereby guarantee what you will buy.

I'm not sure when we'll get there, but the ability to deliver video on the internet will likely mean an explosion in distribution of self-produced film, much as the internet has expanded the number of bands who make their music available online (and the audiences to whom they can sell).

The explosion in self-published films will mean an increase in choice (although not necessarilly the production value) of material available. Much as cable TV programs tend to have smaller audiences and lower production values, we have seen the same for independent online music and will see the same for independent online film.

However, as the number of producers and publishers increase, so do the number of groups creating software that makes higher production values possible at lower prices. Thus, as we have seen cheap digital video recorders and non- linear editing systems, we've also seen a dramatic decrease in the cost of high-end visual effects software (such as Maya from Alias-Wavefront). This trend is good for the software industry, good for the film and music consumer, and good for the artists.

In the end, I predict there will always be a need for certain publishers and middlemen. Their purpose will change and so will their business model. In the end, they will look like the service industry they truly are instead of pretending to be an industry that makes something. They will provide us with advertising to lure us to new properties and they will create sequences of properties to bring our attention to what they want to sell. The latter they will call programming, but it is just marketing and advertising in another form.

This has gone on long enough, so I will leave just a couple of words here regarding the gaming industry, as it is following a similar path of the movie industry (if it is lucky, and the music industry if it is not). The interactive gaming industry has the potential to provide a much longer time of enjoyment (longer even than books), so it doesn't have as much difficulty demanding the premium. However, some of the frills that are required to build a block-buster title these days (hours of video footage, thousands of 3D graphics models, high quality textures) will eventually lose their current status as requirements. I believe that a strong independent industry will grow up for interactive gaming that is less of a movie and more of an interaction. There will always be gaming with a story (perhaps this is where movies will go eventually, melding appropriately with Gibson's vision of the mutable movie), but there will also be room for the next Tetris.