Media is Ripe for a Convergence of a Different Sort
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Entering New Markets
The other business model--aggressively exploiting the Internet--offers more risks and correspondingly bigger potential rewards. The key is to compete by making use of what is best about networks, not by trying to stifle it.
Anything put online can be instantly copied, so success requires the principle "Enhance old models" to be combined with the principle "Keep them coming back for more." Interviews, discussion groups, and reviews can spice up a site.
Corporate goals could include maximizing ease of access, richness of searches and retrieval, and (through standards like XML) flexibility of display and data manipulation. Layered products would be encouraged, along with plenty of ways to annotate a site, repurpose content, and build communities. And the company would certainly impose no controls that interfered with these facets of online communication--least of all such systems as On Demand Distribution that enforce the use of a single proprietary product.
Recording companies start out here with all the cards: initial access to the material, access to the performers and writers, and access to the media outlets and reviewers who publicize the material. In fact, to have all these advantages and not be able to beat Napster or Morpheus on their own turf is undeserving of pity.
But success in this new media has to be measured along different scales from success in the old media. Perhaps studios will have to stop relying on mega-sales for a few popular artists and learn to promote a variety of acts. The old pay-per-unit model (which was always complicated by such institutions as libraries, video stores, and used book vendors) will probably have to be abandoned; funding through subscriptions might replace it. A big challenge for studios will be abandoning the standard target customer--the middle-class, 12-to-15-year-old male--and serving everyone.
Creating New Media
Ultimately, the Internet has to prove itself--so far as its benefits to culture go--by spawning totally new media instead of just distributing the material created for old media. The new media, probably very fast-changing and interactive, will offer new opportunities for studios to push their content, and will no doubt, offer new ideas for ways to make money. By providing constant change and even allowing users to participate in creative activities, studios can definitively "Keep them coming back for more."
A significant barrier to collaboration is the specter of perpetual copyright, which Congress is creating in a manner reminiscent of the old canard about boiling frogs, by legislating continual term extensions to copyright.
If there's an encouraging message to be taken from the recent Supreme Court decision in the Eldred case--where the Court upheld Congress's right to extend the length of copyright--the message is that Congress has great leeway to reinterpret what copyright means. The Court pointedly refused to endorse Congress's gift to copyright holders--opting merely to "defer" to Congress--and tangentially reaffirmed the doctrine of fair use.
While Congress is probably incapable of removing the copyright walls it has erected, future copyright holders may voluntarily punch holes in them by adopting one of the liberal licenses provided by Creative Commons in order to join the new adventures in media.
A Napster Post Mortem
Finally, let's analyze a great historic failure in media. Whatever happened to the cigar-chomping corporate mogul who would see a young talent and say, "Come with me, kid, I'm gonna make you a success"? Was that just a Hollywood movie stereotype? It certainly isn't happening around Los Angeles these days.
In retrospect, it's obvious that the problem with Napster was not its success--which brought all the negative studio attention--but the fragility of its success. Left to its own devices, Napster would have collapsed along with the rest of the dot-com fly-by-nighters, because it had a rather inscrutable business model and depended for its income on advertising. The few portals left that keep going on the basis of advertising, like Yahoo, offer their users a lot more than a song directory.
What Napster needed was to be taken under the wing of a sympathetic, worldly-wise, older guide, as Thomas Middlehoff of Bertelsmann AG tried to do. (Whether Bertelsmann really had the key to success, and would have followed through after a change of executives, are questions I can't answer.)
But even though Napster probably lacked several key elements necessary for long-term success, it offered several lessons. It showed everyone the dream of a worldwide repository of all the music that anyone would want--a powerful dream that provides a major justification in itself for the existence of the Internet. If we had even one such dreamer somewhere among the managers of major film and music studios, think of what we could accomplish.
Studios now can remove encumbrances by firing the managers that conducted the move to digital media. These managers made a deliberate decision to adopt those media in light of their commercial advantages, but apparently failed to consider the accompanying disadvantages. Such lack of planning deserves no reward from their companies, much less from Congress and the courts.
Studios are also doing well to abandon the tired 1990s strategies of "synergies" and "convergence," which meant merging into ever more unwieldy conglomerates and expecting they could gain market share by brute force--shoving their material down people's throats by advertising it everywhere.
Most of the ideas presented in this paper have been circulating among commentators for some time. New technology always presents a range of possible new practices. Risk-takers will discover the successful ones eventually, given the legal freedom to try.
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