Why Content’s Kingdom is Slipping Away

[bicker]

This article relates to something that came up in a recent thread.

TV Week: Why Content’s Kingdom is Slipping Away

The most interesting points I saw:

Demand for entertainment stays relatively constant because demand is largely a function of both cost and consumer’s limited leisure time. In contrast, supply — in the form of both user-generated content (UGC) and pirated content (as well an array of popular video games) — has grown enormously in the last decade.

...

As a result, technological innovation reduces the market share of paid professional content, and increases the market share of UGC and pirated content.

...

Both [professional and UGC] content have value. The problem is that, unfortunately, there does not seem to be room for both unlimited quantities of UGC and a wide selection of paid professional content.

...

The fundamental questions are these: Are we willing to let newspapers disappear, blockbuster movies succumb to piracy and novels be confined to self-publishing? ... UGC is here to stay, and so is piracy. The problems are complex, and the solutions unclear.​

I think this paints a very clear picture of the problems facing media, in general, in our country. I like how Handel drew the parallel between entertainment, and news (the integrity of which he placed even above that of entertainment). This really meshes well with the deterioration and demise of newspapers, and the redesign of broadcast news as either a channel for exclusively either sensationalism or one-sided partisanship.

Handel is generous when he says the solutions are "unclear". He seems very resistant to the idea that there may not be any solution that achieves what the content side of things wants. I think a lot of folks in the industry are not willing to face the fact that the things are never going back to where they used to be. Once the market share for paid professional content is splintered, the challenge is to try to keep what you have left. There isn't much hope of getting people to give up their free or cheap UGC, once it has secured some share of the market, when the alternative is to pay big bucks for professional content. The only hope for any market share recovery comes from fighting the other source of loss of market share: piracy. Yet every attempt to do so is met (at least in the blogs) with rapacious condemnations from pirates and other supporters of the "everything for nothing" philosophy of Entitlement Mentality.

What the article doesn't cover is the impact on the consumer. I doubt many consumers realize how their actions or inactions, with regard to UGC and piracy, end up depriving themselves, down the road, of the higher quality content that they also would like to have. By weakening professional content, we're basically condemning ourselves to a morass of drek.

 

[DisneyWalker44]

Personally, I rejet the guys premise - "There is little doubt that traditional content is in trouble." Look around - still tons of movies. Still tons of TV shows. The record industry still churns out music and artists.

Those people who want things to always be the same are in trouble. Those CFO who want high growth rates every year are in trouble. But the whole concept of professionally produced entertainment is far from doomed.

 

[Carly_Roach]

I'd like to offer another theory to the discussion: personal growth.

It used to be that people entertained themselves. They read books, daydreamed, told each other stories, or spent large amounts of time thinking to themselves in their own minds. Tremendous amounts of outside stimuli were unnecessary due to the endless vastness of one's own imagination.

Then came radio.*

After radio, there came a plethera of "entertainment" venues storming loose from a variety of outlets: TV, VCR and DVD players, etc. It changed our lives, closed our minds, and turned us into a consumeristic society rather than a productive society. Fifty years of constantly being entertained has perhaps led to overload and maybe people are starting to revert back to what's interesting to them again: their own minds and imaginations.

You can't sell to people who've become their own entertainment.

It's an optimistic viewpoint, to be sure, but it's a theory that I ponder from time to time: the mindless masses whose current desire is for reality TV vs. those who've chosen to remember who they are, turn off the outside stimuli that comes from the box and the internet, and develop their own minds once more.








* I'm speaking in terms of in homes and available to the general public in the privacy of their own homes.

 

[bicker]

Fifty years of constantly being entertained has perhaps led to overload and maybe people are starting to revert back to what's interesting to them again: their own minds and imaginations.

As you yourself noted, that's a very optimistic viewpoint. However, I think (and the article highlighted) that there hasn't been any significant contraction in the consumption of entertainment -- rather the "market" is simply being shared by more suppliers. Market fragmentation (which is a very bad thing from a mass-marketer's standpoint -- it is not to be confused by market segmentation, which is a good thing, from a mass-marketer's standpoint).

You can't sell to people who've become their own entertainment.

Well, I think that angle is covered by the fact that you cannot sell to people who react negatively to being sold to.

 

[WebmasterAlex]

I think that the various media mentioned are all different and lumping them together doesn't make much sense, here's my predictions

newspapers- they are in deep trouble. The cost of distribution of a physical paper is becoming unsupportable and the number of people that has to have a physical paper in their hand is diminishing

TV News- I think there will always be a place for the CNN's and Fox news's, the TV news experience is sufficiently different from the online experience

Hollywood- They are going to lose their vertical market and have to focus on content creation, that can't really be duplicated. What that means is Profit and salaries will have to normalize. I'm not sure how much movies will suffer though, do you believe the quality of actors will go down if they only make 500,000 per year instead of Millions? The current crop may quit if they have money in the bank but in the long run the talent will continue

Music- While all of the RIAA lawsuits etc and the debate have focused on theft of existing content I don't believe that is what will ultimately kill the record companies. What I think they are really scared of is a band like CYSHY who sold 300,000 copies of their music with NO record company involved that really scare the industry. While filming a movie is a major undertaking recording an album isn't, what value does the record company add?

 

[bicker]

Personally, I rejet the guys premise - "There is little doubt that traditional content is in trouble." Look around - still tons of movies. Still tons of TV shows. The record industry still churns out music and artists.

Well, I think you're reading more into his statement than what he said. He said that traditional content is in trouble -- not that it is dead. Last year, Skybus, ATA Airlines and Aloha Airlines all ceased operations within a week or two... but all three airlines were operating relatively healthy schedules in the weeks leading up to the their respective shut-downs. The quickest way to condemn your business is to start acting like you're in trouble. The only way to have a hope of surviving is to try to operate, as much as is practicable, as if you've got a long future in front of you. And that's what you see with the production studios producing movies.

Also, if you dig deeper into the film industry, you'll see that they are selling a lot fewer tickets. The only reason why their revenues are still pretty steady is because they're charging more and more each year per ticket. How much longer can they continue to raise the price of admission faster than the rate of inflation before the whole thing collapses? That's really the type of thing that Handel was referring to by saying that traditional content was "in trouble".

Those people who want things to always be the same are in trouble.

That's always the case, with everything, AFAIC.

Those CFO who want high growth rates every year are in trouble.

Well, remember the CFO is just a proxy, for you and me as investors in the company, or for you and me as folks who invest in mutual funds in our 401(k)'s that invest in the company. So, effectively, what you're saying is that we regular Joes, who want to see our retirement nest eggs grow over the years, are in trouble.

Yes, we are.

But the whole concept of professionally produced entertainment is far from doomed.

I think that Handel was actually more optimistic than is warranted, in that regard. While we can probably rest assured that professionally-produced entertainment is going to survive, the question is what the impact of all this will be. If you're saying that there won't be any impact, then I think, with respect, that you're way off-base. UGC and piracy will both have their negative impact on professionally-produced entertainment, reducing the quantity and average quality. One of the most insidious aspects of this is that variety will suffer as well: Entertainment already is becoming more homogeneous, and that will just be exacerbated more by further expansion of UGC and more piracy.

 

[bicker]

I think that the various media mentioned are all different and lumping them together doesn't make much sense

It didn't make much sense to me, when I first read it, but after reading it, thinking about it, and reading some other articles that reinforced the linkage, I'm a believer now. The same mechanics are in play: "The Good Stuff" being undercut by competition from "The Cheap Stuff" and the disreputable stuff.

newspapers- they are in deep trouble. The cost of distribution of a physical paper is becoming unsupportable and the number of people that has to have a physical paper in their hand is diminishing. TV News- I think there will always be a place for the CNN's and Fox news's, the TV news experience is sufficiently different from the online experience

You don't think that the result is a concentration of news from outlets that either exhibit a substantial bias, or that exhibit a focus on sensationalism?

Hollywood- They are going to lose their vertical market and have to focus on content creation, that can't really be duplicated. What that means is Profit and salaries will have to normalize. I'm not sure how much movies will suffer though, do you believe the quality of actors will go down if they only make 500,000 per year instead of Millions?

Besides the impact on variety (which I mentioned above), I think also we're going to see an impact on budgets for the movies that do get made. As you pointed out, perhaps that will not affect the quality of acting (or writing or directing for that matter). As Handel pointed out, these are old-style manual operations that cannot be automated or otherwise obviated. So where will the financial impact be felt? Production values. Reduction in the quality of photography; reduction in the quality of special effects; costuming, perhaps even a reduction in crew that has an effect on make-up, lighting, sound, etc. Any enhancement which represents more cost in production that perceived benefit in sales will be in danger.

Music- ... What I think they are really scared of is a band like CYSHY who sold 300,000 copies of their music with NO record company involved that really scare the industry. While filming a movie is a major undertaking recording an album isn't, what value does the record company add?

I think that will qualify as UGC, eh? I think the good news there is that it really is so cheap to produce high-quality music that that industry might not be as much adversely affected as television and film.

 

[WebmasterAlex]

You don't think that the result is a concentration of news from outlets that either exhibit a substantial bias, or that exhibit a focus on sensationalism?

Of course, but if it takes over much more than it already has there will be a backlash. Besides show me a news outlet even 20 years ago that didn't have a bias.

Besides the impact on variety (which I mentioned above), I think also we're going to see an impact on budgets for the movies that do get made. As you pointed out, perhaps that will not affect the quality of acting (or writing or directing for that matter). As Handel pointed out, these are old-style manual operations that cannot be automated or otherwise obviated. So where will the financial impact be felt? Production values. Reduction in the quality of photography; reduction in the quality of special effects; costuming, perhaps even a reduction in crew that has an effect on make-up, lighting, sound, etc. Any enhancement which represents more cost in production that perceived benefit in sales will be in danger.

I'm not so sure, there will still be competition and plenty of money to be made, just not the profits they are used to, the "industry" is not monolithic they will still be trying to beat the other guy

I think that will qualify as UGC, eh? I think the good news there is that it really is so cheap to produce high-quality music that that industry might not be as much adversely affected as television and film.

Exactly in this case I'm not sure it's a bad thing at all. Music popularity can be determined by the people not by a record company with their own agenda.. can't see why that is a bad thing

 

[bicker]

Of course, but if it takes over much more than it already has there will be a backlash.

Folks keep on talking about television viewers exhibiting a "backlash" against this, that or the other, but for the life of me I cannot remember any such backlashes ever actually happening. Yellow journalism; reality television, ever-increasing time devoted to commercials, decreasing family-friendly programming, etc. I think "backlash", as a television viewer phenomenon, is pretty-much a myth.

I'm not so sure, there will still be competition and plenty of money to be made, just not the profits they are used to, the "industry" is not monolithic they will still be trying to beat the other guy

I think the point, though, is that "beating the other guy" will become a matter of getting more viewers who make purchases based on watching commercials, while spending even less money than their competitors spend to achieve the same success.

 

[DisneyWalker44]

Also, if you dig deeper into the film industry, you'll see that they are selling a lot fewer tickets. The only reason why their revenues are still pretty steady is because they're charging more and more each year per ticket. How much longer can they continue to raise the price of admission faster than the rate of inflation before the whole thing collapses? That's really the type of thing that Handel was referring to by saying that traditional content was "in trouble".

I don't know... been going on for, what, 70 years now? They sold a ton of tickets back in the 30's. But, sure, one of these days it will all fall apart.

The problem is you (and he) are just looking at tickets. What about DVD sales, PPV, direct to video, direct to cable, etc. Venues, formats, delivery methods etc. may all change. Doesn't mean the product itself is doomed.

Hollywood used to produce a ton of comedy, dramas, etc. for radio. Now they don't - they are on TV or DVD. Comedies and dramas were never in trouble, just one narrow delivery mechanism.

So, effectively, what you're saying is that we regular Joes, who want to see our retirement nest eggs grow over the years, are in trouble.

Oh my gosh. I never thought about it that way before. Are things really going to be that bad... does change in the entertainment industry mean we are going to be homeless and begging in our old ages?

Oh, wait, I forgot. Even if company A's profits start to go down when things change, company B can step in and more than make up the difference. The economy wasn't destroyed when, say, the Mutual Broadcast Network went away. Whew.

If you're saying that there won't be any impact, then I think, with respect, that you're way off-base.

No, I'm saying things will change.

Entertainment already is becoming more homogeneous,

Really? Seems to be we've got vastly more entertainment options than our parents had. We've got an overwhelming amount and variety of entertainment to choose from. Lack of choice in entertainment is the least of our worries.

 

[DisneyWalker44]

You don't think that the result is a concentration of news from outlets that either exhibit a substantial bias, or that exhibit a focus on sensationalism?

News has always been about bias and sensationalism. Ever heard of William Randolph Hearst? Besides, we aren't heading toward concentration. In Hearst's day, people had access to 7 newpapers. Now they have access to 7,000.

I think also we're going to see an impact on budgets for the movies that do get made.

Let's see - any possible way to test this theory? Well, we could look over the past 10 years when they trends you worry about have come into being. And we could look at what has happened to movie budgets. Have they been going down? Or have they been skyrocketing?

Perhaps a little less speculation, and a little more real-world observation is called for.

 

[bicker]

The problem is you (and he) are just looking at tickets. What about DVD sales

DVD sales are slipping badly. And for the same reasons.

PPV

I haven't seen significant numbers on that, because I don't think the numbers compare in magnitude to the other numbers.

direct to video

A term which many people who concern themselves about the issue of professionally-produced content equate with crap.

direct to cable

Actually that's covered in the article.

Venues, formats, delivery methods etc. may all change. Doesn't mean the product itself is doomed.

He didn't say it was. He said that there will be damage. "Doomed" is way beyond what anyone has said.

Hollywood used to produce a ton of comedy, dramas, etc. for radio. Now they don't - they are on TV or DVD. Comedies and dramas were never in trouble, just one narrow delivery mechanism.

So what I think you're saying here is that we'll discover a new medium, perhaps holographic entertainment? (It would have to be something like that, a quantum leap, like the difference between radio and television; in other words, involving an additional sense. There are only a few more, btw.... )

Oh my gosh. I never thought about it that way before. Are things really going to be that bad... does change in the entertainment industry mean we are going to be homeless and begging in our old ages?

If you're invested in media companies, probably yes. So what will you do? Move your money to other investments. That rips from media companies the ability to get advantageous loans for operating expenses. They'll die a death due to lack of cash to produce product.

Oh, wait, I forgot. Even if company A's profits start to go down when things change, company B can step in and more than make up the difference.

I think you need to reread the article. The point he made was that all the companies will be assaulted by these new competitors for viewer value perception: UGC and piracy (which generates no money).

So yes, you're correct, "company" B can step in, and we can all be watching YouTube videos. (I'm not sure what kind of "company" would step in to monetize piracy.)

The economy wasn't destroyed when, say, the Mutual Broadcast Network went away. Whew.

Who's talking about the whole economy? Handel is only talking about the entertainment industry. I think you need to reread the article.

Really? Seems to be we've got vastly more entertainment options than our parents had.

Indeed we did have that. And now folks have noted that that trend is over, and we're heading in the other direction. Moreover, there is no reason to believe that undercutting the economic foundation of the industry will have any impact other than further ripping the legs out under innovation and niche programming.

And this will be exacerbated by other factors, such as the push for a la carte pricing in the subscription television industry.

 

[DisneyWalker44]

A term which many people who concern themselves about the issue of professionally-produced content equate with crap.

Which pretty much proves my point that the worried folks are looking into their own imaginations and theoretical arguments, rather than looking at the real world.

If the real work, there is a ton of crap in direct-to-video. But there's also some great stuff. Just like every other medium.

 

[bicker]

I think characterizing people who think that Big Brother and You Tube are crap as people who are too inwardly focused is unfair -- with respect, I don't even thing you really believe that.

I find myself in a strange situation, because I'm pretty happy with many of the new choies, and often find myself at odds with the folks who have more rarified tastes. I think to deny their existence, and the significance of what they're saying, is going to lead to veering away from the the real world you referred to.

Oh: Which direct-to-video Disney films were as good as the best of the theatrical releases?

 

[DisneyWalker44]

I think characterizing people who think that Big Brother and You Tube are crap as people who are too inwardly focused is unfair -- with respect, I don't even thing you really believe that.

Yes, I really believe that folks who categorically call YouTube crap are too inwardly focusing. There's a lot of crap - a *whole* lot of crap. But there's a lot of good too.

Content produced by alternative production methods and distributed by alternate channels isn't necessarily crap. Dr Horrible http://drhorrible.com/mushortio.html is as good as anything going through mainstream channels.

The best stuff still goes through mainstream channels, because that's where the money is. But you don't need mainstream channels to produce quality.

 

[bicker]

I don't think anyone is calling anything "categorically" anything. They're talking about trends and averages, with UGC being more often "crap" than professionally-produced programming. I'm finding it very hard believing that you really disagree with what those folks are actually saying.

 

[DisneyWalker44]

I don't think anyone is calling anything "categorically" anything. They're talking about trends and averages, with UGC being more often "crap" than professionally-produced programming.

There's a world of difference between saying "YouTube is crap" and saying "on average UGC is more often crap than professionally-produced programming." Yes, the "batting average" for YouTube may be low, but there is such a vast amount of content that you still get a lot of good stuff. And will get a lot more as the media matures.

As a side note - you are interchanging YouTube with UGC. They aren't the same. YouTube is a delivery mechanism. UGC is a production method. Much - but not all - of what is being sent over YouTube is UGC.

Put yourself back at the dawn of cable networks. Seriously, open your mind and put yourself back there for a bit. You see the exact trends you are so worried about. Cable shows were produced on the cheap. They siphoned off a significant chunk of the audience from the mainstream networks. Much of the content was utter crap. And even today, on average, what they produce is far below network programming.

But who cares about averages? I can't watch 100 (or 500) channels anyway. All that has to be good is what I want to watch. There is such an explosion of content, that I only need a small % to be good. And that's exactly what cable networks have produced. No, not just good - great. Better entrainment that the networks every produced.

Fractionating the audience hasn't killed television - it's improved it. We've got more great shows now than ever.