The Sky Is Rising: The Entertainment Industry Is Large & Growing… Not Shrinking
from the let's-dispense-with-the-doom-&-gloom dept
Today, in Cannes, at the Midem conference, I did a presentation that was something of a follow up to the presentation I did here three years ago, about how Trent Reznor’s experiments represented the future of music business models. This time, the presentation coincided with the release of a new research paper that we’ve spent the past few months working on, sponsored by CCIA and Engine Advocacy, in which we did a thorough look at the true state of the entertainment industry. For years, we’ve been hearing doom and gloom reports about how the industry is dying, how customers just want stuff for free, about analog dollars turning into digital dimes… and (all too frequently) about how new laws are needed to save these industries.
Yet, what we find when looking through the research — from a variety of sources to corroborate and back up any research we found — is that the overall entertainment ecosystem is in a real renaissance period. The sky truly is rising, not falling: the industry is growing both in terms of revenue and content. We split the report up into video & film, books, music and video games — and all four segments are showing significant growth (not shrinking) over the last decade. All of them are showing tremendous opportunity. The amount of content that they’re all producing is growing at an astounding rate (which again, is the most important thing). But revenue, too, is growing. Equally important is that rather than consumers just wanting to get stuff for free, they have continually spent a greater portion of their income on entertainment — with the percentage increasing by 15% from 2000 to 2008.
This all points to the fact that what is happening within the industry is not a challenge of a business getting smaller — quite the opposite. It’s about the challenge of an industry getting larger, but doing so in ways that route around the existing structures.
- Entertainment spending as a function of income went up by 15% from 2000 to 2008
- Employment in the entertainment sector grew by 20% — with indie artists seeing 43% growth.
- The overall entertainment industry grew 66% from 1998 to 2010.
- The amount of content being produced in music, movies, books and video games is growing at an incredible pace.
Of course, some of this is a challenge for many existing players, but it should be seen as an opportunity. In fact, we conclude:
- For consumers, today is an age of absolute abundance in entertainment. More content is available in more ways than ever before. If we simply go by the terms of the US Constitution’s clause from which copyright came, it seems clear that the “progress of science and the useful arts” is being promoted — even as copyright is often being ignored or foregone. There is just a tremendous amount of content, a tremendous variety of content, it’s more accessible to more people than ever before.
- For content creators, it is an age of amazing new opportunity. Traditionally, to take part in the entertainment industry, you had no choice but to go through a gatekeeper, which served to keep the vast majority of people who wished to be content creators from ever making any money at all from content creation. Today, that is no longer true. More people are making more money from creating content than ever before — with much of that coming via new tools that have allowed artists to use the internet to create, promote, distribute and monetize their works.
- For the traditional middlemen, the internet represents both a challenge and an opportunity. There is no doubt that the internet has eaten away at some traditional means by which these businesses made money. But, as the data shows, there is more money going into the overall market, more content being created, and many new ways to make money. That shows that there is a business model challenge — and a marketing challenge — but much more opportunity in the long run. The key challenge for business is in figuring out how to capture more of the greater revenue being generated by the wider entertainment industry. Legacy players certainly face a lot more competition (and fewer reasons that artists have to do deals with them) — which can explain some of the public complaints about the “death” of various industries — but overall, it’s clear that by embracing new opportunities, there are plenty of ways to succeed.
We’re hopeful that having this kind of evidence and data will shift the debate from how to stop the sky from falling (when it’s not) to one that looks at how can companies and individuals tackle the key challenge: succeeding in a much more competitive market.