Will Silicon Valley Own Hollywood?
Posted on June 22, 2007
Filed Under OMG! Old Media is Dying! |
One of the most prominent conflicts within the media world is that of new media versus old media. Technologists argue that technology is making old media less relevant. Many go as far as to claim that old media is dying.
As an individual who is passionate about both technology and media, I enjoy looking at the collision of these worlds and analyzing the claims that are being made. It’s a difficult subject to analyze thoroughly because both industries are quite complex. Additionally, the terms “new media” and “old media” are often not used in a consistent manner and when you consider that many old media businesses, like Viacom, are actually quite involved with what most consider to be new media, you have all the makings of a subject which can be debated ad nauseum without basic assumptions being agreed upon.
In a recent TechCrunch post, that Silicon Valley would take over Hollywood. I find the arguments for this to be less-than-compelling, and believe the simplest way to analyze the situation is to first establish just how technology is impacting the media business. There are two primary changes:
- Technology has made it less costly and complicated to produce media, enabling more people to become content producers. The increasing availability of this technology drives the user-generated content “revolution.”
- Technology is providing new distribution platforms that are more democratic. You no longer need to own a television network, for instance, to have your content distributed to a global audience.
Technologists often jump to the conclusion that these two changes make old media irrelevant. If individuals can produce their own content and distribute it themselves, who needs “professional” content and who needs the media giants that control traditional distribution platforms like television?
Because The Drama 2.0 Show will often examine topics related to technology and media, I’d like to lay out my basic philosophy on this issue. To do this, I think it’s important to address the two areas that technology impacts media: content production and content distribution.
There is no doubt that it has never been easier for individuals to produce media content. Technology provides sophisticated tools, often at little or no cost, which can produce quality content when placed in the right hands. This is certainly a positive thing, but does not mean that “professional” content is a thing of the past. Why? There are a number of reasons:
- Despite the fact that the tools technology provides for content creation are increasingly sophisticated, there is still a noticeable gap between user-generated content and professional content. This gap will not necessarily be eliminated even as the tools become more powerful and less expensive because the tools used to create content are only one part of the equation. Creating content that inspires and entertains requires creativity, training, experience and a team of individuals with specialized skills. A primetime scripted television series on a major network, for instance, most likely has a seven-figure per episode budget. This doesn’t all get spent on equipment - a significant portion pays the people who are required to put together a quality show (the creators, producers, the writers, the casting agent, the actors, the grips, etc.). Without these people, equipment is useless. Comparing a skit that some friends create and post on YouTube to a one-hour primetime television show is like comparing a model rocket to the space shuttle in terms of the complexity and resources which are required to get it off the ground.
- The majority of user-generated content is not appealing to a wide audience. If you give a thousand people a high-end bicycle, it’s unlikely that all but a few (at most) will be capable of riding it at the level of a professional cyclist. Likewise, if you give a thousand people powerful tools to produce content, it’s unlikely that all but a few (at most) will be capable of producing quality entertainment. The amount of “garbage” content that fills services like YouTube is staggering. This reduces the utility and appeal of services which are based upon user contributions (unless of course they are also havens for free copyrighted content, which many of them are). Even though ranking systems on these services provide a filter, traditional media outlets, such as news agencies, also have filters (editors). Even more dedicated user-generated content production projects, like the critically-acclaimed Justin.tv, typically fail to resonate with a mainstream audience. For better or worse, celebrity, sex and materialism sell and the majority of “amateur” producers must compete with “professional” producers who are better equipped to incorporate the tantalizing elements that mainstream viewers love.
- There are a considerable number of highly-talented individuals who are participating in the user-generated content “revolution.” As I have pointed out in numerous comments on TechCrunch, Hollywood is increasingly leveraging services like YouTube as recruiting platforms. While many Web 2.0 idealists might consider individuals who accept a Hollywood offer to be sellouts, the value proposition Hollywood offers is considerable: the ability to earn a real living from your work, the ability to leverage significant resources (financial and human) and the ability to have your content distributed via mainstream platforms, like television, which because of their exclusive nature, are still the most prestigious pedestals on which an individual can have his or her work displayed. While it may be possible one day for a talented vlogger to make a living completely on the Internet, nothing says “I’ve made it” quite like being on television.
User-generated content is here to stay, but professional content isn’t going anywhere. If the average person was to take a daily inventory of his or her content consumption, I think most would find that a significant amount of that content was professionally produced. Additionally, one need only look at the prevalence of copyrighted materials on services like YouTube to recognize the only logical conclusion: if user-generated content is good enough to quench our thirst for entertainment, why are people finding it necessary to upload and consume professional (copyrighted) content to these services in the first place?
The Internet is arguably the most democratic and flexible content distribution platform ever. Because of this, many technologists argue that old distribution platforms are doomed to die along with the “dinosaur” media companies that control them. There are several problems with these arguments:
- The death of distribution platforms has been predicted before. For instance, when the television was introduced to consumers, many predicted the death of radio. In 2007, radio is still here, and although it shares a much smaller place on the stage, its very survival is a testament to the fact that it has some utility and appeal. If history is any indicator, distribution platforms such as television will have to share the stage with newcomers like the Internet. They will not be destroyed, and in fact, the companies that are able to successfully create cross-platform media properties that take advantage of the best characteristics of each of the platforms in a coherent fashion will find themselves the dominant media companies. The future of media is not “new” or “old” - it’s integrated. If this unfolds as I believe it will, the question one must ask is: who is better able to capitalize on the opportunity? The airwaves are limited and acquiring and/or creating a cable network, for instance, is difficult. Therefore, I’d argue that it’s going to be easier for old media companies than it is for new media companies because they already control the distribution platforms which are finite and difficult to access. Viacom, which is quietly building a new media empire of its own, may be one of the best examples of this. It has a significant presence in all distribution channels; even powerful technology companies like Google find themselves relegated to outsider status in many distribution channels outside of the Internet.
- Even though the Internet is the most democratic and flexible distribution platform, other distribution platforms do have appeal to a wide audience because the quality of the experience is often superior. While I enjoy watching funny clips of the Daily Show on ComedyCentral.com, I’m much more likely to view a full-length movie on my plasma HDTV with surround sound. In fact, one might argue that as “on demand” cable services mature, the appeal of services like YouTube will be diminished because any clip from any television show will be available for viewing on your television set at your leisure. Convergence may actually make Internet distribution platforms less relevant.
- Much of the most popular content consumed on the Internet was originally created for distribution via other distribution channels. The Internet serves as a powerful new way to distribute that content, but if the platform the content was originally created for dies, what happens? Broadcast advertising revenues support the creation of much of the content we consume on television. Because that content gets shared on the Internet illegally, the creation of much of the popular copyrighted content on services like YouTube is subsidized by broadcast advertisers. YouTube reportedly generated less than $20 million in revenues in 2006. That revenue would not support the continued production of even a handful of the popular Comedy Central shows that were freely shared on YouTube before Viacom filed its lawsuit against Google. If the innovators of a distribution platform cannot innovate new business models that make the platform profitable for content creators, they obviously risk facing resistance from those content creators. Contrary to what some technologists claim, old media companies have made it very clear that they’re willing to work with Internet distribution platforms so long as they are adequately compensated for the use of their content.
The Internet is a powerful distribution platform and its impact on the media industry has been significant. It will continue to be. But the claims that old media is dying are exaggerated. Like radio, other distribution platforms will be around for a long time sharing the stage with a new character - the Internet. Old media companies are adapting, and at some point technologists will realize that old media has become new media too.
Silicon Valley vs. Hollywood
When Silicon Valley veterans speak of the inevitable takeover of Hollywood by Silicon Valley, they usually fail to distinguish between Hollywood’s two primary businesses: content production and content distribution. For a long time, Hollywood had almost unlimited control over both. It’s reluctantly losing some of its control over distribution. However, the primary driver of the entire media business is content production and it always will be because without content, there is nothing to distribute. This gives Hollywood significant leverage. While Silicon Valley has an increasingly loud voice in the content distribution business, its voice in the content production business is, in my opinion, never likely to be anywhere near as significant (outside of possibly working with Hollywood to produce content that is created specifically for Internet distribution). Content is created to entertain and inform people. The culture that is best capable of creating the content that entertains (Hollywood et. al.) is much different than the culture that is often best capable of finding new ways to distribute it (Silicon Valley et. al.).
So what does this all mean in the grand scheme of things? Hollywood and Silicon Valley are going through a courtship process and will eventually find that even though they don’t always like each other, they’re better off together than without each other. With a little honesty, respect and understanding, it’s a marriage that just might last. And because Hollywood knows how to have a little more fun that Silicon Valley, the wedding is best held at the Casa del Mar and the after party at the Playboy Mansion.
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[…] entire situation highlights the point I made in my post Will Silicon Valley Take Over Hollywood?: distributors of content will always find that they play second fiddle to creators of content […]
[…] and sell ads to advertisers who are currently weary of advertising on user-generated videos. As I have made clear, I believe that most user-generated content is lacking and that quality, professional content is […]
[…] the moment is that they truly believe old media is dying. When Silicon Valley types proclaim that Hollywood will be taken over by Silicon Valley, it’s a reflection of a certain level of arrogance on the part of technology-oriented […]
blogs, podcasts, internet radio, p2p downloading, lack of digital rights all point to one thing: The model is changing for content creation and distribution. Silicon Valley will not take over Hollywood… However, Hollywood’s influence is wanning. Niche content creation will dominate and content distribution will not require securing Hollywood backing.
In fact, I will be so bold to say that the culture of fame that surrounds Hollywood will diminish as the mega movie stars become a thing of the past. Movie stars were products of the narrow content distribution channels. Look at what is happening in the music industry…
[…] So if it isn’t entirely money, what drives the hate kool aid drinkers have for record labels, newspapers and television networks? Why does Michael Arrington relish attacking the record labels and arguing that Silicon Valley is going to take over Hollywood? […]