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Thu Jan 19, 2012, 08:21 PM

Why protecting the buggy whip industry (again) isn't going to work.

An open letter to Time-Warner, Walt Disney, General Electric, Newscorp, Viacom, et. al., (not to mention HarperCollins, Hearst, and dozens more...)

Dear Content Packagers, Content Distributors, and Content-Provider Exploiters:

The end of the world already happened. You missed it. Or, to put it another way: The entire herd is miles down the road, kicking its heels up. Nailing the barn door shut is, to put it gently, not a terribly productive use of your time.

Let me help you re-think.

Because I know who'll get tossed out of the sleigh first: The schlubs and schlemiels working at the bookstore, doing layouts in a cubicle, packing up film cans for delivery, and generally doing actual work for peanuts in pay while you wring your hands and keen over the diminishing worth of your million-dollar stock options. And while I quite frankly think it would be good for y'all to feel a little of the economic uncertainty and the pain that the rest of us struggle with daily, I'd prefer to limit the damage you'll do in the process to tens of thousands of others.

So let's look at the paleo business model first:
Writers, performers, artists, etc., produced creative output that people wanted-- if they knew about it. But getting that creative output to people who would remunerate the artists, writers, etc., was costly, time consuming, and difficult. And, frankly, not usually a congenial enterprise to people who preferred actually producing the content. It could be done on a very small-scale, retail, one-to-one or one-to-few basis, but that wasn't often enough to keep the musician, painter, poet, etc., in beer and skittles for long.

And thus was born an industry dedicated to packaging and distributing the work of the artists, writers, etc. Entrepreneurs built theaters, bought printing presses, found ways to package and reproduce this creative output in larger quantities to meet larger demands. Other entrepreneurs opened retail shops, set up newsstands, invested in broadcasting equipment, and found ways to take the packaged creative output and put it before larger and larger audiences.

In this paleo business model, the actual producers of the creative output had much to complain about: They had little or no control over the packaging and distribution of their work, unless they happened to be one of the lucky ones who hit it big and could hire their own lawyers and (eventually) agents to keep them from getting too baldly exploited. It wasn't an ideal model. But it kept lots and lots of people employed, and it brought creative output to ever-widening audiences in an ever-expanding array of forms. There were hundreds of publishers, record companies, impresarios, film studios, radio stations, bookstores, etc., all competing both to find the most attractive creative output, and to put it before the largest and most lucrative audiences.

The paleo business model became a victim of emerging mass technologies, the evolving science of artificial demand creation, and the enablement of pro-oligarchic capitalist structures. The modern business model replaced it:

Consolidation and vertical integration produced your huge machines. You now spend vast amounts of money creating a demand for the output of writers, performers, artists, etc.--but only the ones who are willing to be exploited by you or who have some kind of unpredictable, freak success outside your control. Whereupon you bring them into control as soon as possible, on the most favorable terms (for you) that you can manage. You package their work with minimal input from them for minimal cost, and you distribute it through the outlets you own at maximum profit to yourselves.

As you became more and more profitable, you consolidated further, vertically integrated further, and wrote the "suggestions" for intellectual property legislation that would continue to maximize your profit and control of others' creative output. And you solemnly assured the producers of that output that it was their rights you were protecting, because should unauthorized methods of packaging or distribution ever result in putting creative output before audiences that you weren't making vast profits from, the producers of that output would see even the pittance that represented their "ownership" of copyrights and revenues therefrom go poof! and vanish.

There are only a few of you, but you had immense control and immense profit from that control.

But it's a post-modern world now.

The resources required to package and distribute creative output, content for short, no longer require large capital outlays, huge workforces, and highly specialized skills. Anyone with an internet connection can distribute content. And anyone who's willing to learn various software skills (many quite simple) and/or spend modest amounts on widely-available equipment can package that content in high-quality, easily usable forms.

Content producers can (and do) interact directly with consumers. Oh, you can still create demand, with a big enough investment-- but if you can't control the packaging and distribution of the content, why make that investment? One silly home-made video of a kitten can out-"sell" a carefully-crafted corporate-produced meme in a day.

Your control is gone, your vertical integration is meaningless. Your vast profits are AT AN END.

You need a new business model.

There's good news and bad news.

The good news first: There are enormous possibilities in the post-modern world. Unexplored market niches, new wrinkles in packaging and distribution to be discovered, and vast cost savings to be gained by reducing the quantities of static packaging produced (usually expensive!) and moving to inexpensive digital production.

The bad news: It's going to be a long, long, long time before you can re-invent a way to control the system to funnel vast profit margins into the pockets of a few oligarchs. There's still profits to be made-- in improving the quality and accessibility of packaging, in aggregating content for consumers, in segmenting distribution and marketing to niches, in evolving new ways to package and synergize content. But it won't involve control, monopoly, or oligarchy again for a long, long time. Maybe never.

Who's going to make money in the post-modern world?

Content producers, to some extent. Those who produce stellar content will do well, as they have always done. They will find ways to work with packagers and aggregators and marketers and to benefit from broad demand and broad accessibility to their content. The sloggers-- the hard workers in the middle who produce good content and are willing (or driven) to do so in sufficient amounts-- will do alright as well, if they are willing to be a little pro-active in packaging and distributing their own work, and finding new ways to connect with their consumers. The vending machines-- competent producers who will work on demand for others-- will actually do a little better in a demand-rich environment.

Individuals and groups of individuals who find new, creative, accessible, attractive ways to package and distribute digital content, and who are willing to work collegially with content creators, and be alert and responsive to consumers. These will do very well indeed-- but they will require too much agility and internal control to be able to function in an older corporate model. You won't be able to co-opt them.

And a whole new group: Content aggregator/marketers. I don't know the word for them yet, I'm not sure it has been invented. But in a world so dense with digital content in so many forms and varieties, those who find a way to connect consumers easily with the particular types of content they are seeking will do very well indeed. But it's not a market that can be cornered. New sites will constantly be springing up, new people will be innovating ways to present content, locate content, prioritize content, connect people with content.

So it's time to stop chasing down the scattered, frolicking beasties who have already forgotten ever being in your barn, time to stop thinking of new and stouter ways to nail shut the doors to the already-empty building.

The ones who survive will be the ones who adapt to the new reality, not the ones who spend the most money and effort trying to shove the calendar back to 1989.

Just a friendly heads-up.


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Reply Why protecting the buggy whip industry (again) isn't going to work. (Original post)
TygrBright Jan 2012 OP
SharonAnn Jan 2012 #1
TygrBright Jan 2012 #2

Response to TygrBright (Original post)

Thu Jan 19, 2012, 08:25 PM

1. Thank you! Dis-intermediation rules!

Digitization means that many of the "middle-man" processes are no longer needed. And the business models that relied on them are no longer appropriate.

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Response to SharonAnn (Reply #1)

Thu Jan 19, 2012, 10:04 PM

2. Exactly. My next book will go right from InDesign to epub. n/t

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