The following guest post was written by Edo Segal (@edosegal).
Media scarcity is dead. In the future my son will have a flash drive that he will pay $29 for that will have the capacity to hold all movies and music ever released by a major label, studio or tv/cable network. It will take 30 seconds to clone the data over the network to a friend who will pay $14.99 for a device with double capacity a year later. How does the media industry survive such a coming disruption?
For many of us that have been in this game for a while, the word “convergence” harbors some shameful vibes. It conjures up many false hopes, dashed dreams and misfires. Nevertheless, I would contend that convergence is upon us and it has arrived from an unexpected delivery man: Steve Jobs. Apple has created a media consumption experience that has reduced friction to such a point that soon the consumer will not know if he is buying music, a movie or a game. The notion of App is changing. The lines between these different forms of media are quickly blurring and soon will be completely artificial. Already these distinctions are merely fossilized conventions that stem from consumers’ discovery habits. As those evolve, like learning that it is easier to go to Amazon and search to find a product than going to aisle 9 at the store. The coming confusion of the consumption experience where a user won’t care or know if what they are buying is a movie, a game or a music track presents vast opportunity.
The prospects for the old media industry appear bleak, as the rest of the media industry follows the music industry into decline. Indeed in my discussions it is apparent that the smart money in Hollywood already sees the writing on the wall. While the trend will take longer, it is clear which direction the wind is blowing. The main lesson to learn is that the market will punish you if you don’t deliver the goods.
But the entertainment industry has a vested interest in the success of this new type of convergence, as within it lies the secret to its continuing prosperity. The only way to block the incredible ease of pirating any content a media company can generate is to couple said experiences with extensions that live in the cloud and enhance that experience for consumers. Not just for some fancy DRM but for real value creation. They must begin to create a product that is not simply a static digital file that can be easily copied and distributed, but rather view media as a dynamic “application” with extensions via the web. This howl is the future evolution of the media industry. It has arrived from a company that is delivering the goods. Apple has made it painless for consumers to spend money and get the media they want where they want it, proving that consumers are happy to pay for media if delivered in ways that make it easy and blissful to consume. For all the criticism Apple draws on the walled garden nature of its business, it has even come around to stripping DRM and allowing users to download mp3 files.
Even today if you look in the iTunes App Store you will see a myriad range of “Apps” that are just evolved ways to package media. While the traditional part of iTunes still mirrors the product taxonomy of a Tower Records, the App Store is creating a folksonomy of media products. It is where new ideas evolve, thrive and go instinctively based on market power. The App Store is where the action is. This is where evolution is unfolding as direct consumer spending spurs media development.
In preparing this post, Erick asked me, “Is Apple a media company?” I thought about that and the answer is really that Apple is what media companies are missing. The missing part of the puzzle is what made media conglomerates such juggernauts in the past. Namely, distribution. The internet is stripping them of their control over the how their products are distributed. Media companies used to be able to create scarcity merely by delaying the distribution of their products across different channels—theaters, pay-per-view, DVD, cable channels, network TV, and so on. The internet disrupts this ability to create media scarcity. It is such a huge disruption, in fact, that it threatens the fundamental profit engine of the media business.
Both during my time interacting with senior management at Time Warner (where I worked at AOL after it acquired the company I founded, Relegence) and with some of my current portfolio companies that are working with the film and music industries, it is clear to me that many of the smart people running these media companies understand which way the wind is blowing. The music industry, as the one that has suffered most of the carnage, is ripest for change. Executives there are receptive to new ideas and move forward quickly, leaving me somewhat optimistic. It is also clear to me that it is hard for the industries which have not endured their level of pain to flee the golden cage of media’s past. But for those firms which rise to the occasion, there will be vast rewards. People’s hunger for good content will not subside. It will continue to grow, but so shall the unbearable ease of pirating it. The premise of extending the media experience to the cloud is a core necessity for the survival and growth of the media industry. It is the only way to for media companies to weather the coming tsunami of increased bandwidth and the ever open web. Hybrid media packaging with both files and an application layer in the cloud is core to a lucrative future.
For a great example of how change is happening see what Britney did today at @BritneySpears. It was, I believe, the first time a major artist premiered a music video on Twitter. This drives people to Amazon or iTunes to buy the track but in the not too distant future it could be the start of much more than that. A complete experience will unfold that will be interactive and convert to new revenue streams. Not just a purchase of a track but of an app that pulls consumers into an experience and further promotes user engagement and virality. Media becomes a platform with a funnel of traffic and conversions to alternative revenue streams. All boosted by the frictionless billing that Apple has created in the App Store. Media executives will have realtime metrics for their success as it maps to revenue and in turn this will accelerate innovation and help redefine media.
If you are a media exec and you look at your product and at the end of the day it’s a digital file that can be copied, then you have a serious problem with your format. Think of your product like a pie chart of the value you are giving the consumer. If 100% of the value is in that file, it is not a sound approach for defending the future of your business. However, if a portion of the experience is derived thorough an integration with a Web component that will yield additional value in functionality or social elements, then it will be more sustainable. There are many such examples emerging in the app store (I am T-Pain, TapTap and many more). Applications that let consumers interact with the media. Create things and share them with their friends. These will not only make the consumer the one who markets your product, but also create an unprecedented level of engagement. That level of engagement will directly map to reduction in piracy as consumers will pay for this experience and wont be able to copy it. Sell access and experiences, not media files.
Guest author Edo Segal (@edosegal) has launched and sold several companies. In 2000 he founded eNow, which he sold to AOL in 2006 (after it was renamed Relegence). Today, he runs his Incubator/Investment vehicle Futurity Ventures, which recently launched a new search engine for wisdom.
I agree with this,
“Applications that let consumers interact with the media. Create things and share them with their friends. These will not only make the consumer the one who markets your product, but also create an unprecedented level of engagement”
and think its the best part of the article.
Tap Tap is a digital file wrapped in DRM. What stops people from cracking the DRM and sharing it over torrents? It’s not a different problem than music, just different DRM. The cloud component is… what? The shared high scores? The ability to download new tracks? That’s the difference.
Just FYI, Tap Tap was the number 1 downloaded app in the Iphone app store in 2008. 4.08 million dowanloads. Undisbuted winner. All legit.
FYI, most apps have been cracked via crackulous and are available via Megaupload-type downloads and via bitorrent.
Music, Movies, Games, everything has been cracked and put on the net, and usually before its official release date. Yet people still keep buying the official legal versions as well.
This has been going on for years and yet media businesses are still doing pretty well regardless. In fact people now are saying that they’re less inclined to pirate media thanks to easy access to what they want.
There will always be people who pirate, and there will always be people who go 100% legit. The key is easy access, and to not screw over your target audience.
I’ll pay a subscription to a streaming service for ease of use. I’ll even sit through a reasonable amount of ads on hulu rather than pirate a show, Just as so long as I can get easy access when I want.
The joke is on any developer thinking he’s going to get distribution on the App Store. He doesn’t. The future cannot be the App Store even if it has been thus far.
If Apple controlled the dissemination of apps for OS X the way they do for the App Store, it would have been a failure too. The problem was that the incumbent was Microsoft Windows and they already had something open.
Developers need the power to distribute their apps by any means – and that doesn’t mean by copying a fucking itunes url.
Ha. Good point. I don’t see how a closed system can be the future when we live in an “open” society.
wow… so many fallacies… no facts… and no logical progression from one assertion to another.
1. Anyone who pays the $99/year gets distribution so long as their app doesn’t violate the terms and conditions. So why do you say he doesn’t?
2. You claim that the future cannot be with the App Store but then admit that it has been “thus far”. Give a reason or get lost.
3. My favorite, ‘If Apple did the same thing with OSX as they did with App Store it would have failed too’ (paraphrased). That is called a slippery slope fallacy. You gave a condition and a radical conclusion with no justification in between.
4. Speaking as a developer, I DON’T need the power to distribute my apps by any means. What I need is the power to MARKET them by any means. And although the App Store doesn’t do good job at helping you market your apps, It doesn’t restrict your ability to market them.
There is a very funny conclusion here as well. Clearly the solution to piracy is to make the content available online only – accessible via net enabled devices – and not downloadable. The cloud is where the future is. But many of the organizations (RIAA, MPAA, etc.) whose businesses will be saved by the cloud are the ones helping the ISP’s push for metered broadband, no net neutrality, etc. in an effort to save their outdated business model. Thereby shooting themselves in the foot yet again!
There is change in the air. Its not business as usual in media companies. They are listening, evolving. I am not suggesting 100% on cloud, rather a hybrid…
Great piece.
The evolution is a bit more evolved than anyone could imagine. Part of the fun of looking to the future is the suprises it brings along the way.
The future you write of is closer than we think
your conclusion is funny. There is no way you avoid piracy.
There is.
Your bottom line is truly where the bottom line is: “Sell access and experiences, not media files.” Great post!
even “access and experiences” will be free in the future. Another revenue model is needed.
Interesting analysis here. This particular angle of “the future of media” is one that I’ve not yet seen discussed anywhere else.
I would argue that there is another angle to this and it is hardware/software exclusivity. It is not just the “content” of the media that matters but how it is “distributed” and on what “medium” it is distributed.
Think Apple+AppStore+iPhone.
Think Amazon+Cloud+Kindle.
Media “control” will still exist as it always has, but that “control” has been taken away from the media producers themselves (thanks to the internet) and has now been seized by the “distributors” and the “medium” makers, i.e. Apple, Amazon, Google, etc.
this sort of infrastructure allows “anybody” to create good content and somehow reap monetary benefits. This will mean the dismantle of big media houses.
Exactly.
Another example is Apple+iTunes+iPod.
Again, the “distribution” is iTunes and the “medium” is the iPod. It gave music artists who produce good content a whole new way to make money and be heard. But it is killing the big media record companies as we all know.
You’ll see this “distribution” + “medium” formula play out again and again with newspapers, movies, television, magazines, etc.
I’m glad this article from Edo Segal has brought this to the surface again.
So the “cloudy” environment model is something like:
Apple
+
AppStore/iTune (distribution platforms)
+
iPhone/iPod (ie, devices)
Great post – thank you!
yes, articles for the Guest authors are the best part in TC. There is a deep analysis as against MG’s making of a story from one liner.
I hate to sound argumentative, but for a prognostication piece, this article is actually a bit short-sighted.
Why? Because it ignores a much bigger picture that encompasses more than just music/movies. It affects all content and distribution. Everyone is fighting the current battle that is the RIAA/MPAA stranglehold. While unfortunately a necessary battle, it (they) will soon die and bring about the next battle; which is what other, similar industries are fighting today. That is, social content/distribution removing traditional barriers to entry.
The reality is that your son will also be producing and distributing his own music, that he’s created himself. And he won’t need the likes of Sony/Viacom/AOL/etc. to do it. Much like bloggers do today, music/movie makers will do tomorrow. Which is to go direct to consumer. Viral will replace hype. Anyone can/will be Britney.
Sure, there are speed bumps between here and there, but it will happen. It’s happening now with journalism and books. It’s slow, like hair-loss, but it’s also about as stoppable. The commoditization of entertainment media has already begun. As you point out, scarcity is itself becoming scarce.
It will happen in the cloud, as you predict, but don’t forget the social and viral aspects of the future!
“The reality is that your son will also be producing and distributing his own music, that he’s created himself.”
Yes, that’s what I see, too. New music types think they will eliminate the major labels and then the artists will reap the rewards. Music 2.0 still expects there will be fans to buy.
But what I see is that the people who now serve as fans want to create themselves. They don’t want to be consumers. They want to be creators. They want to make their own music/movies/art/news.
Already fans are attending concerts not so much to listen but to send pictures and text of themselves to their friends to show they were there.
The wall between artist and fan will blur to such an extent that there won’t be fans to buy content. They may buy tools to help them create the content, but they aren’t all that interested in buying someone else’s final product. It’s not nearly as much fun or fulfilling.
The new “artists” won’t be known for what they create, but how involved they allow other people to be/feel. If you go to their shows, it will because they make you feel like a rock star. No one’s going to be a passive consumer anymore.
Listen to the majority of garage band demo tapes. Or spend a summer reading “slush pile” book submissions.
They are almost all bad. The highlight of your day is finding one that sucks less than the others.
Great article! This kind of articles should feature more on Techcrunch imho. Insightful pieces that provide added value to the day-to-day coverage of Techcrunch by placing these in a larger, trend-based context. While obviously TC’s trademark and right of existence is being able to break such news more than any other techblog, placing it into a larger context by guest authors is a welcome addition to the portfolio.
Great post, fabulous thoughts. two more things are required. Distribution apps need to be platform agnostic and distribution channel agnostic.
but what if i don’t want the media corporations to thrive and media execs to get richer?
what i want to happen in the future is a complete decentralization of media, taken out of the hands of the likes of NewsCorp and Disney and be by the people and for the people. all media will be user generated content and with the internet’s powers of distributions and openess be shares and with the increase of computing power and it’s ubiquity (Moor’s law still relevant and going strong) UGC will be that of superior quality, no need for media corporations the customer is the provider.
Make legit media easily available + cheap and you will have customers. That’s what iTunes is – a door to vast universe of content waiting to be devoured easily in sizable chunks of 99 cents.
For instance, sure you can search torrents for Britney’s latest album – but if you like only a single song from that album is it worth the effort to save 99 cents? Plus the hassle of indexing the music into your library (e.g. copying it, re-tagging, etc).
I think this boils down to a cost vs benefit equation – if the cost of the content is very high, then people will then think it’s worth the effort to pirate than purchase legit.
A problem with cheap content is that it’s harder to make money on each sale. But with internet as a distribution medium you have lower costs, plus the capability to offer more and varied content.
How else is Netflix making money?
Great piece. I think a lot of the commenters are missing the point, partially because you used Apple as an example and that provokes irrational responses from some.
This concept of linking cloud activities to media we own solves the free vs. paid problem. Perhaps I get the song free but pay for access to the ability to add tracks, remix and otherwise customize. I share this with friends who, in turn, purchase more customization. Incremental income that is viral…Apple is cognizant of this as evidenced by their recent acceptance of in-app payments for upgrades or enhanced capabilities.
I think my next company might involved with these ideas.
Things are changing very fast! the app SongVoo was released last week that replaces a persons iPod player and lets them share thier music with their friends on their Facebook feed. The song name links to the iTunes store where friends can listen and buy, and I bet the developer gets a cut of every interaction. The whole structure is changing, and those that fill the cracks quickly are going to be the ones that win.
The future of the media industry is to stop fighting its consumers.
Really, how many people really want all that “value-added” crap bundled in with their digital music or video? Plus pay a bundle more in order to buy it?
I just want my legal .mp3 file at a fair price, where it’s easy to purchase, download, and install on my mp3 player (iphone). I don’t want to go into some store, have to buy a cd with only 2 tracks i want, pay some huge market, then get home and find the cd is DRM’d as well. Or go to a online store and be forced to buy into some bundle of digital crap like photos, liner notes, biographies, etc just to get the one or two mp3’s I wanted.
The media companies are trying to make yet another grab for more profit but mostly likely they’re just be confusing their consumer and adding more friction and hassle to the experience of buying the content consumers want. Push too hard trying to get that higher average sale price and price point and consumers will fight back again.
Fair price, and make it easy to buy.
The Kindle is a good example in one regard, in that it’s easy to buy, the content is delivered immediately, and the prices, for the most part, are fair.
They do, however, need to learn the lessons from the music industry and drop DRM so that one can use the reader of one’s choice.
I’ve always believed that the problem with the App Store has nothing to do with the apps themselves. The future can only be finite when you consider that the platform (the iPhone itself) will eventually have a finite shelf life.
For this reason, unless Apple is the only company producing popular app phones in the future (which is likely but not a given), we can’t quite jump in with both feet.
I will agree with this statement, and have said many times here that the future of these products is packaged media files with web-like functionality. The primary issue is that this requires a new financial plan in terms of content creation and distribution for the companies publishing the content. It could also move further downstream to the artists. I believe that this will be the ultimate result.
iTunes is in my mind a temporary transition point. It is successful, but as we note the increasing number of access points, the nature of these engines will change to an invisible layer. The files themselves can be dumb, ie an MP3, but the binding has to be intelligent. This poses a problem for systems like the LP format. It also has to allow for the access of the content via outside mechanisms. I should be able to download packaged music into my library, or more accurately have a method for finding the files and listening to them.
Personally, I am looking at this problem from the perspective of music and education. Both have similar issues in terms of locating appropriate content and measuring usage, and both share previous high-cost opportunities. How products in these spaces dynamically interact is the question that will allow us to identify a solution.
Currently, Apple won’t even allow for the embedding of media in iPhone applications. iTunes is a strong platform, but that does little for the development of smart media objects. Imagine that I have an iPhone application that can be updated with content which can be used anywhere even without a network, and that the artist can have a direct connection with the user offering new art, photos, media, and tour offers continually over time. That changes the experience of an album from an locked object to a dynamic relationship. It also in my mind requires relationships between applications that offer channels for communication and different capabilities.
“…have said many times here that the future of these products is packaged media files with web-like functionality.”
The problem area is books. Especially fiction. There aren’t extra “media files”, the author doesn’t perform, and almost no one wants a t-shirt.
Quick and easy distribution at a fair price is the only real solution.
Errhgm, what’s the news? Or … wait.
So, I won’t know if what I’m buying is a music track, a video or a game (app) ? This is perfectly nonsense. I can decide if something needs only my ears, or it does need interactivity.
However, content packaging is nothing but new: even at the silent film era, music and film sold each other, even if different forms.
I’ve just seen a video clip from Aerosmith which sold the movie called Armageddon – or was it the other way? we’ll never know.
Have I seen an iPod ad, or a music clip for U2’s Vertigo?
But the same goes for games. I believe a lot of albums were sold because of guitar hero. And remember those ol’ c64 games? Some of them we had on magnetic tapes.. and some of them were the actual music of the films the game represented.
So, nothing new here, I guess, move along.
Every time I read one of these sorts of pieces I am reminded of the overused, yet obviously unknown to the author, truism “the past is prologue.”
At the core, there is nothing you are saying here that wasn’t said about radio, TV or Cable when they were new technologies. What you miss is the obvious lesson that should have been learned from those previous disruptive technologies: That no matter what the distribution method, large media companies will still be needed for their marketing and advertising resources.
This is something we can see right now, without even having to look into the future. The mechanism to distribute your own content easily to the end user has been around for years, be it YouTube, Valve Steam, Xbox Marketplace, Amazon Self Publish, or iTunes. Even before that, there were ample opportunities and possibilities available on the web in the form of various websites. The problem has not been how to get your content to the user for a very long time. The problem is getting the end user to WANT your content, and none of these technologies do anything to address that. Even with your iTunes model, the reality is that the vast majority of content developers don’t make back their development money, without spending more on advertising their content than they did developing it. Sure, Apple makes money no matter what you buy, but for the content developer, iTunes can easily be a monetary sinkhole if you don’t have the resources to advertise your content and get people to notice it is there.
You can have the most clever idea for a show aimed at teen girls the world has ever seen, and without the marketing muscle of Disney behind it, it will still never be as successful as Hanna Montana. People don’t flock to movies like Transformers because they expect it to be that good, or because there are that many fans of an old obscure toy line. They flock to it because of the hundreds of millions of dollars in advertising which convince them they will be missing out on a cultural phenomenon if they don’t go see the movie.
You make the typical technocratic error, which is to assume that everything is decided by the technological ability to do something. There are a lot of factors that go into people’s behavior, and some of those don’t change at all, no matter what technology is behind the distribution mechanism.
I don’t disagree with you, but what exactly is a publisher when all they have left to do is marketing and advertising? Are they still publishers?
The mechanisms are being reduced to nothing, and the companies that used to ship physical products are reduced to locating bands, marketing the bands, and packaging music for different channels. This could be applied across market lines and the same story would hold.
The question seems to be, what are we packaging? Who is selling it? And, how does everybody make money on an increasingly small slice of pie? Advertising is increasingly not about the vast capital previously required, but the social connections to propagate the message.
But that is a trend you could trace all the way back to the dawn of TV and commercial radio. Remember, being able to sell a DVD boxed set of your show is a relatively recent development in the market. For decades TV producers did just fine just airing the show, and then selling syndication rights. They aren’t going to go out of business because there are MORE syndication opportunities in the modern era.
We built a media rich digital experience for Tom Petty’s live anthology
“The only way to block the incredible ease of pirating any content a media company can generate is to couple said experiences with extensions that live in the cloud and enhance that experience for consumers”
Is pretty much what we were thinking when we built this. 48 amazing tracks in flac and mp3 for less than 25 bucks plus access to a site with tons of bonus content. Tom was actually very involved in the creation of this idea:
http://www.tomp...tty.com/youtube
It’s funny that it has taken content creators such as Time Inc. so long to catch on. I worked at Time Inc during the Pathfinder days, and helped launch people.com and ew.com. You can’t imagine how many discussions we had, and I lost, about whether to put the URL on the magazine’s cover. We know how that turned out. But here it is almost 10 years later, and they have just now acknowledged the freight train that hit them. I hope the execs are reading your post, (and they should read Chris Anderson’s book Free as well), because there is a business model for them– now that scarcity won’t work. The idea of creating an experience of engagement with the media to drive revenue rather than the content itself is not new…think Google. The race is and has been on for some time.. the old media is losing badly. If they had taken the risks earlier, they would have been far ahead by now. They had very smart people working there, but their executives were too concerned about driving revenue instead of innovation. Apple is very smart..but they too need to take risks. Android is coming fast and Google and they should be afraid. These days all giants need to look way into the future and see what’s coming or that next train may cause their derailment.
If I ‘really’ had to comment on this article, I would have to write a book. So, here we go…
1. The future of media distribution is not the app store. The future is P2P (probably not via bit torrent) BUT IT WILL BE P2P. If Apple thinks they can continue to force people to acquire their media ‘a certain way’, they are wrong.
2. ‘The cloud’ will be a way for people to backup and interact with either free content, or media that “they own.” People want to own what they pay for, they don’t want huge companies making decisions on how they will use their content, and that is not going to change anytime soon.
3. Big corporations will continue to exist, but they will not be telling us what to do, we’ll be the ones telling them what to do. Companies that connect people together, and allow them to be productive at the same time; will thrive under these circumstances.
Great post – Please, keep ‘em coming!!!
I think apps are good, but does one company have too much control?
You are aaaaaaaaaall wrong. The future is live entertainment. Prerecorded media will be so ubiquitous it becomes boring so that the only thing left that is unique and exciting is live performance. I look forward to the renaissance of live performance; theater, concerts, cabaret, etc. with audiences onsite and online. The record labels will die because live means a more direct interaction between a performer and her audience.
When I’m running, working out, or just working, prerecorded music is just fine, and helps eliminate the boredom.
Or when I get home and want to relax, prerecorded movies and TV shows are just the ticket. Going out is one thing, but that’s the exception and not the rule.
I cannot wait intill apple come out with next. I know they have Itunes and other like I Phone. I know they will do something well in the media industry.
So before iTunes, Wal-Mart would have been a media company?
This is just evolution. First you had Wal-Mart (I’m sure something was before that too) now you have Target. Something is going to come after that. iTunes is the first Gen. Something else will come along. It might come along sooner if the real media companies stop trying to figure out ways to hoard stuff and figure out ways to sell their content. TIVO and Amazon working on making this better.
Maybe I’m just old fashion here, but not every song or movie I watch I’m going to want to play along with the band or reenact scenes from a movie. Yeah that might be fun at parties, but let’s face it all the coolness of the iTunes store I still don’t have lyrics that play along with my music as it’s play that seems pretty basic. When is that coming? Now you are talking about whole infrastructures that media companies can’t even keep up with.
What if the media companies stopped making us jump through hoops and just let people consume the media the way we want however we want.
I can’t help but agree that ’sell access and experience – not media files’ is the way to survive.
But, and I guess this is why I’ve not got a cloud media startup raking in venture capital, I can’t see any really successful examples of this and am hard pressed to think some up.
Some of the youngsters I know are ‘mainstream pirates’ and are of the opinion that ‘if its digital – its free’ . Leaving aside the moral and law issues of this – for them its a fact.
I can see sporting events being ones that will attract pay-per-view but for other media I am far from convinced.
The itunes model and gaming apps are priced low enough in the main that the value for money outstrips the hassle of piracy. And certainly xbox 360’s online live network – which has social friends lists, high score charts, party chat – has enough social binds that the majority won’t pirate for fear of being banned and losing these. Even with itunes quite reasonably priced I still know many that still get all their music ‘free’.
But, sports and social gaming sites aside, can someone please provide examples of others? I agree its the future but have not seen any other steps in this direction as yet.
Great article and some great comments so far.
Agreed that live performance shld be the monetization model. Group consumption of shared media is something that can”t be pirated.
I expect to some third party to attack the “app store” opportunity exclusively. Instead of bundling the app store+hardware+software space as one opportunity, I think the real opportunity in the future lies in someone laying clame to the gateway app store opportunity for other hardware+software+etc players.
Perhaps this ‘cloud’ which you state Media Companies need to set up in which to store all of their entire Media Content – could be the ‘Google Cloud’.
Already Google has in place a successful Book Search, which in time could hold every single Book online and ready to download.
Google News could do the same for Newspapers and Magazines.
The new Google Music Search could eventually do the same with all recorded Music. But add Social elements to the Music Search experience.
Also YouTube could completely change part of their Business Model for the site and ask all of the major Media Companies to download all of their entire Movie, TV and Video libraries.
This official Media Content would at last bring proper and much needed Advertising Revenues for YouTube, whislt still providing current and future User Generated content, but calling it YouTube Social.
But even if this Google Cloud was to come about in partnership with all of the major Media Companies – there will always be current and future Online Media Websites that can deliver all types of Media Content in new and more exciting ways.
Great article. Validates what my company is doing to the tee.
I especially like the idea that added value to media can reduce piracy as it exists today.
RIAA, are you listening?
Edo’s thoughts are dead on…
the more “dimensional” content experience become, the more relevant and be piracy-proof they will be…
Lightning struck with “I am T-Pain” because the functionality /experience of the app aligned perfectly with the (well promoted) creative essence /brand of the artist… (autotune is T Pain’s signature sound…)
the opportunity lies in experiences where the content and the functionality are conceived as one by the artist from the very start…
it will not be about a middle man (read: record label, book publisher) trying to add clever functionality to a work of art once the artists has delivered it…
(though, in certain mainstream cases, the middle man can still provide important promotional support- “I am T-Pain” would have been invisible if JIVE had not made him a huge star to begin with).
All I can say to the author is – exactly. Brilliantly insightful and also similar to where we are heading.
I don’t think for a second that anyone is suggesting Apple become the gatekeeper. But at some point the media companies, as much as the computing hardware and software companies are going to have to look at Apple’s past and apply it to their present.
They changed the music industry with iTunes and the labels and MS have fought them at every stage. And attempting to compete on price on what Apple admits is a break-even business is plain stupid.
The challenge to the labels is to make something better. Seriously make it better. But they don’t gain as much as fast by being better.
And yes, Android, Nokia, Microsoft – they need to take that mantra to heart. Microsoft does some amazing products but they’re losing a marketing war. Similarly Android and Nokia have such fragmentation that they’re in danger of diluting their own messages.
Stay. On. Target.
I think that we need to examine the potential for the media industry, as it is currently constructed, to be bypassed by a new model.
The current model demands exorbitant prices for CDs, songs, etc because of the costs that are built into the industry. A good analogy is the cable industry, which sunk billions of dollars putting cable into the ground all around the country, and is now handcuffed to the business model that will pay that investment off. If the business model shifts too much away from the incumbent model, these companies will have to write-off billions of dollars of investment.
In the same way, the media content creators have HUGE costs that must be included in the price of content, which requires substantial control over the content and its distribution. However, if you could unlock this model and create a P2P model, e.g. where song artists can directly access their fans, then you can remove the costs and the incumbent model will collapse under its own weight.
I’ve heard rumors of these kinds of approaches. For example, why not have artists raise money directly to pay for studio time to record their albums, like raising equity for a company in an IPO? Once the songs are recorded, they belong to the artists and their investors, who will see a return from future record sales (or lose if the band sucks). Make these songs available through the artist’s website, directly through itunes, etc. and they serve mainly as promotion for the band’s real money maker, concerts.
I really like this post, but I think its assumption is that the incumbent model will retain its grip on the industry. We’ve seen time and again that this will probably not be the way things play out. My $.02.
Volumes have been written about the evolution of the biz model of the industry. I think the area that needs more attentions is the basic premise of “what is the product”. i.e. 99.9% of the debate is about the current media products and that is the problem. The products must evolve. There is no choice. It’s not a matter of looking at the current notion of song for .99 cents or move for 11.99 or game for 1.99. The debate and energy needs to shift towards understanding what the media products of the future are. The industry can not afford to grip onto the artificial constructs of the past. Evolve or die… there is no middle ground here. The future of the industry can only be found through innovation. Not technology innovation but creative innovation fueled by technology. Folks need to pull out their crystal balls. At least that’s what i am betting on…
I honestly think you are one hundred percent wrong. Your solution advocates more content to maintain the ‘value’ (read – prices) of media. Whether it resides in the cloud or not is essentially irrelevent.
Consumers do not want extra content. How many times do you watch the ‘extras’ on a DVD – would you be prepared to pay half the cost for a vanilla disk without it? I suspect the majority would.
Consumers have had a taste of ‘free’ and they understandably prefer it. Micropayments (like the 99 cent app) are acceptable, as are subscriptions that allow the ownership of media (not rental). Old media pricing is not.
I cannot see one idea in your essay that differs from soon-to-be-failed saviors of the music business like iTunes LPs. If that industry honestly believes that freebie extra content like artwork and videos are going to halt piracy, they serious misunderstand the requirements of music fans.
The only model that will prevail is the one where the costs fall to a level where consumers simply will not bother to pirate content. This will not happen until the vast, and now unnecessary organisations of the music business and film distribution are dismantled.
One last stumbling point: These industries are now so loathed by consumers for their actions over the last few years, that nothing less than their demise will probably be enough to turn around the habits of pirates. They have to build some mighty bridges if they wish to continue to exist at all.
The music industry ignored the internet, then the internet ate it.
The newspaper industry, taking heed of the music industry’s mistakes, gave their content away before it could be stolen, and then the internet ate it.
I don’t know which lesson Hollywood will learn from the newspaper industry’s mistakes, but I have a pretty good idea what comes next.
A great blog post.
And another thing:
Everyone focuses on the ramifications of the falling costs and barriers to entry of media distribution, but few on those of the same thing happening to its creation.
How long before the technology that is about to bring us “Avatar” is available for $59.00? (Hint: The technology that brought us “Terminator 2” already is: http://bit.ly/2jvrS4.)
Once anyone can capture unlit, uncostumed whole scenes in one take in their living room and then tart it up with sets, outfits and monsters freely available from online libraries (like this one: http://bit.ly/11Paai,) “Lord of the Rings” could be replicated by any hobbyist with free evenings; “24” regularly provided by a group of bloggers.
What, for that matter, will such ubiquity and demystification do to the public’s enthusiasm for such entertainments?
I would not want to be in that industry right now (wait, crap, I am.)
Great post, Edo. The cloud also helps monetize the long tail without significant storage and distribution costs. An unprecedented level of engagement and actual value – that is also the future of effective advertising.
Really… you used Britney Spears hocking her wears over Twitter as your example of how things are changing? I guess you just discovered Twitter three days ago and you’re going through the Twitter is the greatest thing to marketing phase. Maybe I’m just jaded.
BTW: There’s nothing wrong about this article, but I really have heard all of this before… several times… on lot’s of other websites.
Ya, you are jaded
We are just now arriving at real scale on this, It’s only just beginning. Just hang in there!
I’m 25 years old. And I’m making an educated assumption that most readers of this article here are around my age or higher. We are forgetting a very important piece in this puzzle.
We have watched the evolution of the digital age via the web, like a parent watching a child growing up. We are obsessed and interested in it because it’s, in a humbling way, our creation. We strive to find new ways to gain success and conquer the roller coaster ride within the digital age. Yet I believe that the young kids who are being born INTO the digital age, where they have no idea what life was like without it, will get bored. I know, blasphemy it seems, but its a possibility. Does anyone remember the children’s novel “The Giver”?– Doesn’t matter what you have been born into, even if it’s claimed to be the easiest and most convenient lifestyle on the planet, the young will always assume there is something greater out there; something different. It’s the universal Hero’s Journey. It could be fantasy to most, but I think it’s possible that what we consider to be “convenience”, could be considered lame and outdated by the youth of tomorrow. I believe it’s not otherworldly to believe that even the most shiniest of apps may soon become, pardon my french, utterly dull.
Our children: the future’s consumers, could possibly strive for an organic future (not speaking of food), because they won’t care too much about what their lame parents are into. Speaking of myself as well when I say lame.
The future may not be on the internet…
Just my thoughts I had late last night after reading this and watching Roxette videos on youtube
Jessy.