Is the Internet Ruining Media? Hardly.


In Saturday’s Wall Street Journal, Elizabeth Wurtzel wrote an opinion piece titled “The Internet Is Ruining America’s Movies and Music.” She talks about how both businesses aren’t like they used to be, because of—you guessed it—the internet.

It’s easy to understand why many people in both the music and movie industries long for the good old days. They used to exist in government-sanctioned oligopolies where consumers had little choice in where their entertainment came from. Whether it was the three network TV stations, limited spectrum for radio, or your local theater being the only option for a movie. Here’s a passage from Wurtzel’s article:

In the era of the online music store — even if you buy from iTunes rather than stealing from LimeWire, the problem is the same — no one knows how to listen to a complete album anymore. Everything is slanted toward the hit single. This means that the music industry is oriented toward one-hit wonders rather than consummate musicians, and talent development is just not worth the trouble.

In reality, the opposite is true. One-hit wonders have always dominated sales in the music industry. This won’t change anytime soon—there will always be the megahits in the “head” of the long-tail. Places like iTunes or Netflix allow the obscure musicians and moviemakers to find some kind of an audience. Also, in the past, if I liked only one song from an artist, I may not purchase their album at all. Now, I can at least get the song I like.

In fact, 47% of our gross domestic product involves intellectual property (IP) transactions, and about 6% of our national worth — $626.6 billion annually — is from our copyright businesses. These are the segments of our economy that are suffering, or stand to do so, as a result of the Internet. The Internet, glorious as it is, should be thought of as the plague of postmodernity.

Because the internet (and computers in general) makes it easier to copy things, people like to blame it for destroying intellectual property rights. Yes, the internet has changed the dynamic for the media companies. But technology radically affecting an industry is nothing new. There are many reasons why the internet has changed media for the better.

Where’s the Scarcity?

Not too long ago, most media products were scarce. If you wanted to see Jaws, there were only two places you could go: the local theater, or on one of the network TV stations. If you wanted the new Rolling Stones album, you had to go buy it at the record store. And there wasn’t any YouTube or video games, so entertainment options were limited.

Computers, the internet, home video, etc. changed that. When a song is uploaded to the internet, it can be downloaded a million times at no cost to the producer. You can watch a movie on your computer, one of hundreds of cable channels, a DVD, or your cell phone. In other words, no more scarcity. But new technology didn’t completely get rid of scarcity. It just changed which components were scarce.

So what is scarce? What can content creators make money off of in the future? Our time is scarce: people won’t waste it on something that isn’t amazing when they have plenty of other things to do. iTunes saves users an enormous amount of time. Live concerts are scarce: fans will pay a premium to see their favorite musicians in concert. Seeing a movie in IMAX is scarce: with current technology, consumers can’t get the same “mega” screen experience anywhere else.

The days when everybody rushed out to Sam Goody to buy the new Beatles album as soon as it came out, the days when lines formed around the block at New York’s Ziegfeld Theater because the latest installment of Star Wars had opened . . . live on only in mild forms.

The recent release of The Dark Knight proves that this statement is incorrect. Since its opening, the movie has grossed over $704 million worldwide. For the first midnight showing, tickets had been sold out weeks in advance. So yes, every once in a while, when a movie has the right combination of quality, mass appeal, and positive word of mouth, it can become a huge success.

You cannot, after all, download a painting or a sculpture. The thingness of the thing itself — all that stuff Heidegger talked about when you read him in college — cannot be translated, even if an exhibit poster will do for poor college students and poverty-stricken bohemians looking for kitchen decorations.

This comes back to the scarcity issue. Original paintings from Picasso are extremely valuable, because they’re scarce. But if the internet allows more people to see (and print out, and hang on their wall) Picasso’s paintings, the more valuable they become to the people who own the originals. In other words, the abundance of one component of the content makes the scarce components more valuable.

The Death of Mediocrity

Peter Chernin, C.O.O. of News Corp., made an interesting comment in a recent interview with Charlie Rose. (Thanks to Nick Nejad for the heads up.)

Peter Chernin: Death in this marketplace is sort of something that feels mediocre. Mediocrity is death. In a world of infinite choice… think about it for yourself: why would you possibly go to something mediocre? You’re either going to go to some big event (Batman right now) because everybody is talking about it, or you’re going to go find that special piece of content. Whether it’s a comedy, whether it’s a drama—but something that really gets you excited personally. I think in all of our content businesses, we need to create product with those things in mind. And what we should avoid is things that feel bland and middle-of-the-road. And you know what—that’s the most exciting thing about the business right now, [because] who wants to be working on things that are bland and middle-of-the-road. The fact that the marketplace rejects them is the best news that every happened to any of us.

Charlie Rose: It seems to me that for an executive like you, it’s the best of times. Because the opportunities, while difficult and challenging, present you with more opportunity for creativity than ever before.

Peter Chernin: Absolutely. It is by far the most exciting time in the business. And you know what—challenge is a good thing in life.

This is the key here. Make something good, make something entertaining, and most people will pay to enjoy it. That could be a small group of devoted fans (the “special piece”), or everyone else in the head of the tail (the “big event”). But with all the different options for entertainment around, nobody will put up with the mediocre. And if the internet caused that, then thank god for the internet.

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