The Lack Of A 'Golden Ticket' Business Model Doesn't Mean You Give Up And Go Home

from the how-do-these-people-keep-their-jobs? dept

This one is a bit surprising. Following the recent nutty statements from Prince, Kara Swisher has decided to take the contrarian position to explain why Prince might not be so crazy after all. Her reasoning is that she's spent several days down in LA talking to entertainment industry execs (her first mistake), and they seem to agree with Prince that the internet is a darned problem. Of course, to some extent, that's like asking the leading buggy whip makers their feelings on automobiles. Just because they haven't figured out a way to thrive doesn't mean that the automobile revolution is "over."
After spending several days here in Los Angeles this week, talking to execs, talent and others who toil in the entertainment industry--I can't say what I am hearing is that much different in terms of the continuing frustration with the lack of decent business models to replace the ones that have worked for so long and been so lucrative for the entertainment and media industry.
This is how disruptive business models work. The disrupted whine and complain about how the disruptors haven't shown them how to continue making the same monopoly rents they made in the past. But that, of course, ignores the nature of disruption. Disruption doesn't work by having someone come along and show the legacy players how to exactly replicate their old profits. It's the exact opposite of that. Disruption is when others figure out how to break down the barriers to do something more efficiently, and undercut the old business model. But that doesn't mean that there's anything wrong for the underlying benefit that people get.

More entertainment content -- movies, music, books -- are being made today than ever before. Anyone bitching and complaining about how the internet is "destroying" the industry isn't paying attention. What they should be focused on are all of the massive new opportunities created by this sudden glut of content, combined with massively more efficient (and often free) methods for content creation, distribution and promotion.
From music to movies to television, the biggest minds here still sound perplexed as to what will finally be the golden ticket to carry them through to the inevitable next era of digital distribution.
That single sentence basically describes the problem. These guys are sitting back and waiting for someone to hand them a golden ticket that replicates the old ways of doing things. That's not how it works. No one gave the buggy whip makers a golden ticket that let them keep their old lines of business going.

But the lack of a golden ticket most certainly does not mean there are no business models. Those who are embracing new business models are finding plenty of opportunity to do amazingly well (in fact, better than they did before). But, for the most part, it involves hard work and multiple streams of revenue. It's not the old "sit back and let the cash roll in" model that the industry is used to. But, some of us think that's a good thing.
"Why is the consumer always right?" said one exec to me this week in a typical statement. "You can't have a business if there is no business model."
It's a good thing the exec who said that did so anonymously, because otherwise his or her board of directors should be calling for him to be fired. The consumer is always right in a competitive marketplace because if you don't serve them, your competitors will. That there are still entertainment industry execs who don't get this is scary. And, saying there are "no business models" is so wrong that it again seems troubling that this exec still has a job in the industry. We spend a lot of time pointing to all sorts of working business models every day. They may not be the "golden ticket" that this exec wants where he gets to sit back and relax and see the cash flow in, but they can actually bring in a lot more money by leveraging a more efficient system, connecting better with fans, and giving them a real (scarce) reason to buy, rather than trying to bully them into paying through artificial scarcities.

From there, Swisher reverts back to Prince's statements:
If you remove the sillier parts of his quote that preceded it, such a statement is not unreasonable from an artist who wants to be paid for his creative efforts.

Thus, instead of mocking that sentiment, perhaps it is time for tech leaders to figure out a way to keep talent from being dragged into the future without so much kicking and screaming.
The role of the disruptor is not to make life easy for the disrupted. Swisher and these execs seem to be confusing the role of certain folks in the legacy industry with the overall entertainment industry itself. As noted, the entertainment industry is thriving. More movies, music and books are being created. More money is being spent. It's just that it's going to different players. There's no reason to "figure out a way to keep talent from being dragged into the future." The opportunities and wide open path are there. The problem isn't that tech leaders haven't made it easy for them. They have. It's that these guys are so myopically focused on the way they used to make money they don't realize that the new opportunities are already there and have been embraced widely by others.

Filed Under: business models, disruption, entertainment industry, prince

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  1. identicon
    Bob, 7 Jul 2010 @ 1:06pm

    Echo chamber

    Unfortunately the comments section seems to be mostly an "echo chamber." I am against very long term copyright policies, however, copyright, as a method for encouraging content production, is something that has been around a long time. What is so wrong with copyright? I don't mean copyright as currently practiced in America, but copyright in general? Its purpose is rather clearly defined in the US Constitution, and I believe its purpose is worthy. Promotion of content creation is a worthy objective, and if the monopoly on that content can provide it, what is the problem?

    It is difficult to extract the egregious behavior of current copyright holders, from the true benefit of copyright. But copyright is the method currently used to help create and sustain a market. I agree that it is not the only way, but it is a legally sanctioned way.

    Lets think of music artists. If you were one, which method would you rather have to make money. Create music that people like, copyright it, and distribute it for $1 a song. The better your music, the more money you will make (theoretically), which should push people to make better music if they want to make more money. Alternately, you could decide that this was the best music you will ever make, and you will accept however much money comes from selling the music for $1 a song.

    Or would you rather create music that people like, give it away free, and have to hustle selling something else, or giving concerts? I would propose that the first way is easier and the second way is harder. But what if you're agoraphobic? There is no way that you could give concerts. The amount of money that you will make from posters and donations from conscientious listeners will not provide you enough money to live on. You stop making music in order to get some other job. The art world and the culture of the society could lose out because musicians can not support themselves.

    The benefit of copyright is very nicely summed up on the US Constitution. If we wish to support arts and progress, some method to allow people to support themselves by their artistic endeavors is needed. Your argument about disruption and that nobody is entitled to keep their business model, is well taken. Except that in this case, art is not just about business. There are socially important reasons for promoting creation of art. In the society in which you wish to live, having professional art may not be important. However it was seen as important by the "founding fathers" to include it as part of the law of the land.

    How about just one more idea: If there was no copyright, and a musician created an album that was wildly popular. In order to recoup the cost and the personal labor of producing the album, the musician decides to give (and charge for) concerts. However, the musician is not a very good show man. I come along (who is a very talented show man) and I produce a fabulous show using all of the songs from the musician's album. Because I put on a great show, the original musician can no longer gain enough audience for his concerts. Will this musician be likely to try to produce music in the future? I would highly doubt it. But if you say that musicians can no longer expect to produce music once and sell it as many times as it will sell (which means dismantling copyright), you cannot say that the musician can make it up with a different business model. All of the other business models that I have heard here require, or heavily depend upon, copyright. If a musician can have monopoly to hold concerts, why can't they have a monopoly to sell CDs?

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