When I interviewed with Rhapsody two years ago, I was asked to divine the future of entertainment: between content creators and distributors, who would have leverage in the long run? Based on what little I knew about the music industry, I sided with content.
Content is king, I explained with borrowed inspiration from the Bill Gates memo. This was true as far as the music industry was concerned, where three music labels (four back then) control a comfortable majority of music content. By contrast, consumers have dozens of services to consume music.
My interviewer took the opposing view: for every example I brought up, he brought up Amazon or Zappos. We went back and forth debating at length, and both of us dug further into our respective positions. At the end of the interview, I remember waking away with this unsettled feeling like neither of us had gained much from the debate.
I got the job but the question has remained with me like an incomplete thought. In the time since, I’ve had some insight into brokering deals with music labels, designing partnerships with everyone from mobile carriers to hardware manufacturers and modeling new product ideas. Today, I am going to share what I’ve learnt so far about the relationship between content creators and distributors.
But first, I want to re-frame the debate because it doesn’t help to talk about the entertainment industry the same way we talk about manufacturing industries. By talking about content and platforms as if they are separate, we are applying an Industrial-age separation to something which is indistinguishable from the consumer’s perspective. In industries where production and distribution are separable activities and/or undifferentiated, this paradigm may be useful. Entertainment is completely different.
Entertainment is a higher-order human activity. These are the products humans create and consume out of choice. As long as it engages the senses for the sake of engaging them, any product has the potential to entertain. Once you define entertainment this way, it becomes obvious that what people choose to consume is not content, or medium piecemeal but something we can only call an experience. It follows then that we should be deconstructing the product that is the experience and plotting the fates of platforms and content creators by how much they contribute to these experiences.
By framing the debate this way, it becomes easier to understand the rules that shape the fates of “platforms” and “content”:
a) new mediums create opportunities for new experiences
b) any new medium can be replicated in the long run
In the short run, the creator-distributor relationships are pitched as David-Goliath battles. The negotiations between Apple and music labels and Amazon and book publishers offer plenty of fodder for a media seeking that type of controversy. But what good comes to platforms that don’t support their content creators? In the long run, as content creators go so go the content distributors. Particularly in entertainment where the experience is the whole package. And those who get this can build great businesses.
Take video gaming as an example. Once upon a time this was a solitary activity. Yet, I can’t help feeling it always had that potential to grow up. I remember the days when I stared over my friend’s shoulder as he played Prince of Persia and passed level after level. And then when my dad bought us a computer, my brother and I competed to complete the games we bought, an activity that has today become a professional feat called “speedrunning”. It took me an entire weekend to complete Dark Forces II and at the end, I gloated. The internet throws that sport wide open to millions of competitors and spectators. Due to platforms like Twitch, video game play has become a professional, lucrative occupation for those seriously talented at it. Twitch idolizes and places these activities on a pedestal. It has turned the deepest myth about video games – that these are anti-social activities – on its side and laughed all the way to the bank with it.
There is no telling from which garage the next big experience is going to emerge. Take James and his team for example – these guys are the brains behind the DepthKit, a set of tools to create true three-dimensional videos using real-time footage. These are the early days for James who describes his work as an “experiment”, although the work others are doing with the DepthKit can scarcely be called experiments. With each iteration of the DepthKit, things are headed in favor of more immersive, interactive and realistic experiences. There is no better way to describe it than to see it in action.
One can imagine how a future iteration of the DepthKit can enable a more interactive format for TV shows and movies. At that point, consumers are not going to care where the story ends and the medium begins. So to answer that question from two years ago: the future belongs to those who create worthwhile experiences. Whether you want to call them creators or distributors is beside the point. So who has leverage? The customer has leverage. Always.