Is Hollywood facing a revolution?

Marc Andreessen thinks Hollywood’s business model is about to be shaken up, partly because of the writers’ strike, but mostly because new technology makes things cheaper.

The current business model is that a few large companies, the studios, own the rights to movies and other entertainment products:

  • Historically, marketing and distribution of entertainment properties has been extremely expensive. Running big nationwide ad campaigns and getting distribution into TV networks or movie theater chains is expensive. And production has also been very expensive. Only a small number of very large companies can afford to be in the business.
  • Because of that, those few very large companies — studios — have been bottlenecks. If you are talent — writers, actors, directors — you have to deal with the studios because otherwise you can never bring anything to market.
  • The studios have rationally exploited their bottleneck status to demand ownership of the creative product. Writers, actors, and directors don’t own their output; the studios do.
  • As a consequence, talent gets paid like hired guns, not owners.

But the Internet makes marketing, distribution and production much cheaper:

  • Starting from the end of the process: you know distribution is now nearly free. Put it up on the Internet and let people stream or download it.
  • Marketing is also free, due to virality. Let people email your content to their friends; let people embed your content in their blogs and on their social networking pages; let your content be searchable via Google; let your content be easily surfaced using social crawlers like Digg. All free.
  • Production is very cheap. Handheld high-definition video cameras cost nearly nothing. You can do almost every aspect of production and post-production on any Mac. Hell, you can even score an entire movie for free — there are hundreds of thousands of bands on the Internet who would love to have their music embedded in a new entertainment property as promotion for the bands’ concerts and merchandise.

And so, as a consequence, the new business model will, like Silicon Valley, have the creative talent (writers, actors, producers, etc) owning the product and controlling its distribution. Andreessen imagines the future:

Suppose the writers’ strike continues for months to come — and even beyond that, suppose the actors or the directors also go on strike. In such a scenario, it is hard to see how many companies based on this new model won’t be created extremely quickly — after all, if you really can’t work for the Man, why not start your own company, if you can?

In the event of a long-term strike, out of the ashes of the traditional model would come the birth of certainly dozens, maybe hundreds, and possibly even thousands of new media companies, rising phoenix-like into the global entertainment market, financed by venture capital, creating amazing new properties, employing large numbers of people, and rewarding their creators as owners.

Tim Oren adds that the new Hollywood may take some other ideas from Silicon Valley:

The whole notion of how a title comes into existence and is produced is dramatically at odds with the Valley system. You don’t find Hollywood building ‘the one to throw away’, or beta’ing a lower production value prototype with a friendly audience. This may be the nut of the problem to be faced in applying the Valley model to visual arts: How do you create a continuing asset in which to share ownership, and which can gain equity value over time? The Valley way (even more in an open source, networked age) is to start small, test a lot, iterate, save some features for later, do it again next year. What’s the equivalent in visual arts? I have no crystal ball on this, but I’d speculate that some of the answers are in this list:

  • Bringing back ‘serials’ as a form
  • Long term character development
  • Cross-pollination with manga and anime
  • Direct to DVD projects
  • Faces and characters that emerge in the blogosphere

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.

Andreessen and Oren may well be right here, particularly if Hollywood sticks its head in the sand and alienates its fans/customers in the way the music industry as done so.

This entry was posted in computers, economics, USA and tagged , , . Bookmark the permalink.

One Response to Is Hollywood facing a revolution?

  1. It was our take on the entertainment industry a year and half ago. Join the revolution!

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