The Sophistry

I wrote previously asking the simple question: “Who pays?” in response to Marc Andreesen’s post on remaking Hollywood in Silicon Valley’s image.  I spent a few minutes surfing some of the other blogs commenting on Andreesen’s.

Boy, are they all living in some fantasy land or what?

Here’s one example from Fork Bombr:

It seems like the media companies (I’d call them that—seems more accurate than “the TV and movie industry” when really they’re all owned by the same people) just don’t get it. They’ve been handed a golden opportunity to change and create a new business model (in the form of the Internet—iTunes isn’t really that different of a model) and they’re burning it, getting mad at consumers for refusing to play along with their outright, visible avarice.

Artistic expression would be a lot better off if these idiots weren’t controlling what people could see, and when, but if this strike kills The Office, then I’ll never watch anything on TV that isn’t a sporting event, ever again. ever.

Artistic expression would be a lot better if the artists were starving?  Because that’s what they’d be doing without the Hollywood marketing machine to sell their products for them.

Maybe the media companies do get it.  Maybe they were handed not a golden opportunity to “change and create a new business model” but an absolutely crappy opportunity to bankrupt themselves, and decided to pass.

The sort of unthinking tech triumphalism inherent in Fork Bombr’s view — as well as dozens of others who take the same “Yeah, DOWN WITH THE MAN!” view — is problematic not for Hollywood, but for Silicon Valley.  Because it betrays a fundamental lack of understanding of how business actually works: a transfer of assets from one party to another in exchange for a product or a service.  No wonder the Valley is filled with dreamers who think that “Hey, if we build this supercool XYZ, then we will make scads of money through some unspecificed way that we’re going to call ‘change and create a new business model’.”

Even Winds of Change, who is extremely smart, who understands what the business truly is, draws the wrong conclusion:

Of those functions, production and marketing are a bunch of hired guns. It’s distribution that has allowed the studios to dominate the entertainment scene. It started with the movie houses, and then the big 3 networks, but it’s long since ramified into a complex mash of foreign rights, DVDs, tie-ins, logo’ed merchandise, and on down to the plush Disney character toy that turns up a world away.

That kind of distribution has been a huge barrier to entry. It’s a risk mitigation factor that Hollywood can apply to turn the hits into ROI blockbusters, and the mediocre properties into profits after they’ve left the theaters. It’s an asset that the Valley does not command, though we’ve had some relevant experience.

That’s precisely correct — the power of the studios lies in control over distribution.  But they leverage that distribution advantage to extract value from various parties who in turn extract value from consumers and/or advertisers.  Someone always pays.  And that payment fuels the entire engine.

And yet, the conclusion WoC.net reaches requires a leap of fantasy:

In short, anything that can start small, find a place somewhere down the Long Tail curve, and work its way upward, gaining audience and value as it goes. Low-rent and scrappy. The night of the living dead for the Hollywood studio execs.

Huh?  Hollywood doesn’t just have distribution power for the sake of having it.  It uses that power to extract value.  Start small, find a place down on the Long Tail curve (where there is no money), blah blah blah, but expect to starve until you reach a point where you get one of the studios/entertainment companies interested in adopting you into their “old-and-broken” model to extract value from someone.

Take webcomics as an example.  There are some fantastic webcomics out there.  I’m particularly fond of Goblins myself.

I’m willing to bet large sums of money that the creator of Goblins, one Tarol Hunt, isn’t buying his next Ferrari with his earnings from the webcomic.  In fact, if he generates enough cash to pay for his hosting, I’d say he’s a fair success.

It will take the distribution and marketing power to take his mostly-free webcomic and turn it into wads of cash.  By himself, as a “owner-creator”, Tarol is entirely lacking the distribution muscle and know-how, and the marketing prowess, to take his extremely clever little webcomic and make it into the next blockbuster movie.  Even if he buys some inexpensive animation software, he doesn’t have the distribution network to get his work on to WB and the French cable networks and Blockbuster.  For that matter, he can’t hire an advertising team that knows all of the major media buyers.  He simply cannot build the distribution infrastructure that makes money from content.

Instead of this so-called ‘Long Tail’ model being the night of the living dead for studio execs, it will be the biggest boon to ever hit their industry.  Now they can afford to pick the winners and market the hell out of those, without having to spend millions on risky product development.

If this whole future-business-model vision of Andreesen and others come true, here’s a bold prediction.  Who pays?  The artist pays.  The marketeer will still have a rock-solid grip on distribution, which is the key to extracting economic value.  The artist, however, will become one of the huge masses of so-called “owner-creators” who are desperate to get their work noticed by one of the Hollywood bigwigs who can make them a star.

Think about that before you go rah-rah for Hollywood-into-Silicon-Valley.

-TS