The Sky Is Rising: The Entertainment Industry Is Thriving, Almost Entirely Because Of The Internet

from the and-things-keep-getting-better dept

Announcing The Sky Is Rising 2019: a new report offering a detailed look at the entertainment industry.

A funny thing happened on the way to the internet supposedly destroying the entertainment industry. It saved the entertainment industry instead.

A little over seven years ago, we released our first Sky is Rising report for CCIA. At the time, the key point we found in looking at the state of the modern entertainment industry was that the parts that were whining the loudest about how awful the internet was for content were only representing a very small part of the actual content industries. Recorded music may have been struggling as a business, but every other aspect of the music business was thriving. More music was being produced than ever before. More music was being consumed than ever before. More people were spending more money on music than ever before -- just not in the traditional ways. Ditto for video. And books. As we noted back in that original report, if you focused on the supposed true purpose of copyright -- to "promote the progress" of content production -- it was clear that the internet had made that possible a lot more than "copyright" law ever did.

Today, again in partnership with CCIA, we're releasing our brand new Sky is Rising report for 2019, again looking at the state of the global entertainment industry. And, once again, it's thriving. But something big has changed in the past decade or so: even the legacy parts that were struggling when we put together the last report, the parts that were most impacted by the transformative nature of the internet, are now thriving as well. And in basically every case it's because of the internet that the legacy companies have shunned and complained about (not to mention demanded a continuous, never-ending, new set of laws to "tame" the very internet that is saving them).

A few tidbits from the report, though I recommend reading the whole thing. Despite the doom and gloom statements from the industry about how consumers were just "getting stuff for free" and no longer interested in paying for content, the data shows that consumers continue to increase their spending. There was a temporary drop off... but it coincided not with the rise of the internet, but with the 2008 financial crisis:

The recorded music business is often the poster child for an industry "wrecked" by the internet. And you could potentially have made that argument a few years ago if you totally ignored the fact that more people were making and releasing music than ever before. But certainly, "recorded" music revenue had dropped... until, starting around 2014, that turned around. And it's entirely due to streaming music, which last year accounted for nearly half of all recorded music revenue, and continues to grow at an astounding clip. Anyone who says that the internet has destroyed the recorded music business is lying to you:

But, that's not all. As we detail in the report, all other aspects of the music business have continued to thrive -- with much of it being because of the internet. The live music business has continued to grow. Music publishing and performance rights have continued to grow. Music merchandising has become a massive business in its own right. It's literally nearly impossible to find any part of the music business that is struggling these days, despite what some folks in the industry will tell you. Of course, if you're wondering why the RIAA and others changed their talking points from complaining about "piracy" to the made up concept of "the value gap," this is why. They realized that things were going great, and all their talk about piracy killing the industry was increasingly going to ring hollow. So they invented this purely fictional concept of a "value gap" which is basically just whining that other industries are too successful and need to be forced to hand over more money. This too is an old playbook for the RIAA labels, who have spent decades trying to squeeze every penny out of any successful online service, continually insisting that if anyone else makes a dime off of music, it should instead go to the labels.

The video world is another fascinating realm. Netflix and other streaming video providers have helped created the golden age of TV-style programming these days. We detail in the report just how much Netflix, Amazon, and other streaming video services have been spending on content, leading to massive growth in original scripted TV programming. But, it's not just the online streaming services. The number of original scripted TV programs on broadcast, basic cable and premium cable has also risen over the past decade. And this is all happening despite so much competition from other things people can do with their free time:

On the movie side of the coin, box office revenue continues to increase, both in the US and abroad. People are continuing to go to the movies, and more movies than ever before are being created around the globe. There was so much data here, we finally just had to stop adding more to get the report out.

In the past, some people argued that just talking about box office numbers was unfair, because where the internet was really having an impact was in destroying the home video market. There was some amount of irony in that given just how loudly and fiercely the MPAA itself had fought against there ever being a home video market (cue former MPAA boss Jack Valenti's famous Congressional testimony, in which he declared: "I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone."). That wasn't true back then, and it's certainly not true today either. A few years after Valenti said that, the home video market brought in more revenue than the box office -- and that's still true today. The home video market is growing fast -- and it's almost all because of the internet. Note how much of the market is now subscription based, rather than transactional. That's Netflix's innovation, not the movie studios.

And then there's books. Once again, rather than destroying the market, the internet has saved it. More and more books are being published. Interestingly, in the book market, the story was a bit different than elsewhere. While ebooks and audiobooks are now a significant portion of the book market, physical books seem to be making a bit of a comeback -- and a lot of that has to do with the ability to buy them online.

Indeed, what we found in our research is that a tremendous uptick in new books is coming from authors self-publishing (in 2017, over a million self-published books were released for the first time -- a massive increase over the past decade). Believe it or not, most of those self-published books are available as paper books, rather than ebooks, thanks to internet services like Amazon CreateSpace, Lulu and Blurb.

Indeed, as we saw back in the 2012 report, a huge part of the story of today's entertainment industry is how much is now being driven not by the old gatekeepers, but by the fact that anyone can make use of the internet to create: whether it's video, movies, music, books, or video games, lots of people are using the internet to create, to build an audience, to distribute globally... and to make some money. So many of the new "stars" are coming up via the internet, rather than waiting for some legacy gatekeeper to discover them. That hasn't made those gatekeepers obsolete, but it's certainly taken away some of their leverage.

Back in 2011, we noted that so many people kept referring to their being some sort of "war" between Hollywood and Silicon Valley, but it struck us as odd that Silicon Valley kept coming up with the "weapons" that seemed likely to help Hollywood thrive. Eight years later, the evidence is in: the entertainment industry is thriving. The sky is rising. And Hollywood should be thanking the internet, rather than continuing to attack it at every single turn.

Go check out the full Sky Is Rising 2019 Report for a detailed look at the state of the entertainment industry today.

Filed Under: books, hollywood, movies, music, sky is rising, tv, video, video games

Reader Comments

The First Word

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  1. identicon
    Anonymous Coward, 8 Apr 2019 @ 11:11am

    Re: Re: Give and Take

    The average self-publisher makes less than $1,000 a year.

    You got data to support that? Also, remember how averages work, one or two who make only a small amount of money drag the average down. So your data needs to show, specifically, that X number of people make less than $1,000 a year, while Y number of people make more than $1,000 a year. Saying the "average" person is meaningless otherwise.

    The walls that used to keep people from succeeding also kept them from pursuing their delusional dreams in the first place.

    So you're against people pursuing their dreams? Who are you to decide they are delusional? Some people, like Youtubers, had a dream to do Youtube videos. Some didn't even care if they made it big or not, they just wanted to. If they were prevented from pursuing that dream, they never would have been on Youtube or made it big like some of the big names out there today.

    NEW content may not even be driving this revenue.

    Facts, data, and statistics please.

    The internet did not magically make any crimes go away

    No one said they did.

    enabled many more

    I'm sorry, are you seriously making the argument that just because some new thing was given to people and that some people used it to commit "new types" of crimes (because of the new thing) that we should never give people new things? I laugh in your general direction.

    This completely ignores the massive benefits the internet has brought with it that, quite literally, far outweigh any new crimes or downsides. That's not to say we should do nothing to prevent those crimes, but saying the internet is garbage solely because some people figured out how to do some bad things with it is preposterous.

    There is absolutely no justification for piracy,

    Well, actually, there is. Do you recall tape/CD copying/ripping in the 80s and 90s? It allowed people to share new music to friends/family who got introduced to music they liked and subsequently went and bought new albums and concert tickets. Free advertising. Now not all piracy can be justified, but when Ed Sheeran and other artists are encouraging fans to copy and freely share their work, I'd say there is at least some justification for it.

    There is absolutely no justification.....for allowing the internet to exist in a way that makes copyright unenforceable.

    Human existence makes copyright unenforceable. Are you suggesting the human race should not be allowed to exist because they infringe copyright? That's cute. Just because there are challenges, doesn't make it bad.

    What you will get is a world ruled by people like PewDiePie, who don't suffer piracy, and a world without useful books that often take years to compile and reveal valuable formerly-secret information that just remains secret now.

    Have you heard of Wikileaks? I hear they "reveal valuable formerly-secret information" that is now public knowledge.

    And it's hard to suffer piracy when you give your work away for free, essentially. It costs me nothing to go watch one of his videos and I can even download it for free and share it if I want. Perhaps he found a business model that works better and is more resilient to piracy. Perhaps that's a good thing, not a bad thing.

    Any good books on tax evasion on the internet?

    Actually, there are.

    Why not?

    Because you don't know how to use a search engine?

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