13 ms·

"Big Content" Is Strangling American Innovation

127 points by cwan 15y ago

solson 15y ago
Questions I have frequently pondered are...If one could as easily replicate and distribute physical products as we can digital products, what would that do to creativity and innovation? Say you you could make infinite cheap copies of a car or a TV, would anyone make a better one? With the elimination of scarcity what would we do with all our stuff and our free time? Would we sit around and turn into blobs or would we make things better just for the joy of it? Just for the recognition? Isn't it apparent that IP laws/copyright in the digital age are just a way to impose artificial scarcity where it no longer exists naturally?
- billybob 15y ago
  "Say you you could make infinite cheap copies of a car or a TV, would anyone make a better one?" There's a flip side: if you could make infinite cheap copies of industrial robots, how many more people would start making cars? Creative output becomes input for other creative output. Rachmaninoff wrote "Rhapsody on a Theme of Paganini" because nothing prevented him from re-using Paganini's work. Today copyright would prevent that. IP laws are meant to help incentivize production of new stuff. But they also raise a barrier that keeps people from using old stuff to make new stuff. We have to balance those two things.
  - sudont 15y ago
    I disagree based on the lack of my generation's (millennial) John Waters. Or Maya Deren. John Water's ideal was to flip an idea into a movie in an afternoon. With the prevelance of RED, iPhones, Canon 5Ds, and a few hundred metric tons of mid-2000's mini DV cameras, this has not happened. We're instead moving into a post-commercial era, where we're doing 30 second youtube spots, and watching full-budget long-form. Infinite manufacturing will result in a neighborhood Shapeways or Kickstarter, not a neighborhood Ford.
    - Vivtek 15y ago
      Infinite manufacturing will result in a neighborhood Shapeways or Kickstarter, not a neighborhood Ford. I fail to see why that's a bad thing.
      - sudont 15y ago
        I didn't say it was bad! It's just more trivial than a car. Née "Some Assembly Required."
        Vivtek 15y ago
        Ah! Point taken. Although I've been giving some thought to local automobile production, actually - Richmond (IN) used to make cars and I think we should again. The only problem is it's damned hard to get one certified nowadays.
      - true_religion 15y ago
        Actually looking at the software market, infinite manufacturing would result in a small few creating a neighborhood Ferrari because it suits their admittedly niche interests.
    - r0s 15y ago
      > this has not happened. Would you know if it did? Waters himself wasn't really appreciated for a decade or so. Movies with zero marketing budget don't get recognized immediately.
      - waterlesscloud 15y ago
        I very strongly believe that it has happened. Actually, I know that it has. There are people out there using the technology to make very good films on very low budgets. The problem isn't getting the films made, and it's not distributing them. It's in connecting the viewers to the films. "Marketing" in the past has been the way that's been done. But we need something else now, a new method of film discovery. Good stuff is going completely unseen, and that's a real shame.
- nextparadigms 15y ago
  What usually happens, is that you take what already exists and build on top of it. Without being able to do that, you'll have to not only recreate that technology from scratch, but you also need to make it different enough so it's not similar to the patented technology. Overall, for the world, it's much better to be able to use prior knowledge without much or any restrictions, the way humanity has always evolved before patents or copyright even existed. Imagine someone patenting the wheel. The others would be forced to re-create the wheel in a different way, instead of focusing on using that technology - the wheel in this case - to create something new, like a carriage, or car.
- jonnathanson 15y ago
  Here's the problem: scarcity exists on the creative side of the entertainment business, but it's scarcity by way of cost-prohibitive access. What's scarce? Access to $20MM-a-movie actors and $8MM-a-movie directors. Access to $200MM productions. Access to creating the "tentpole" movies and shows that result. All of these things require outrageous amounts of capital, and they're all dependent on the ability to monetize the end result by many multiples of production and advertising costs by way of theatrical distribution, DVD sales, licensing and merchandizing, and various other derivatives of the original work. At least one major revenue stream, DVD sales, is collapsing steadily. This leaves box office and derivatives and licensing. Derivatives have never been huge business, or at least not a sturdy enough pillar to bear the weight that DVD sales have borne. And licensing has always been mere icing on the cake, except in the case of titles perfectly suited to it (such as Star Wars). As the downstream revenue sources dry up, so too will the big production dollars, and so to will the scarcity of access to "Hollywood-quality" creative. At least for most companies. What's going to happen? One theory is that we're going to see some sort of price discrimination at the box office. Big tentpole movies cost more to make than do lower-budget romantic comedies, for example, and so tickets to Transformers XXIV will cost more than tickets to Generic Sandra Bullock / Jennifer Aniston RomCom. (Arguably this is already starting to happen, if you consider 3D to be a price discrimination mechanism. Whether by intent or by accident, it functions like one). Another theory is that we're going to see a hollowing out of the middle tier of the film and TV businesses. You'll have giant studios making giant movies, and you'll have tiny indies making tiny movies. But there will be no middle ground, because it will no longer be profitable. All of this assumes, of course, that production costs hold steady or increase. And so long as there are folks out there willing to pay $20MM for a single actor or $8MM for a director, they will. But the bottom might drop out of that market eventually, too. Or it might stratify dramatically as outlined in the previous paragraph.
  - roc 15y ago
    > "Another theory is that we're going to see a hollowing out of the middle tier of the film and TV businesses. You'll have giant studios making giant movies, and you'll have tiny indies making tiny movies. But there will be no middle ground, because it will no longer be profitable." You can see this already in the game industry. EA, Activision and Ubisoft have all transitioned to a franchise-only tentpole-or-bust strategy. The independents are struggling to compete with those production values, while two and three-man shops are making respectable livings from sub-$10 downloadable games. I personally think the middle-ground will bounce back eventually. If only as a place where smaller studios bet their past success on a passion project.
warfangle 15y ago
They always have. The Edison Company used its patent portfolio to keep people away from owning theaters and importing European films. Paramount, MGM, etc, were considered independents back then and fought back furiously. Then they consolidated vertically to own the theaters as well as the production, which opened the pathways for censorship (the Production Code) - when you only have to influence two or three companies, it's easier to get your way when you threaten a flat-out religious boycott. NBC killed FM radio in the 30s by way of the FCC: it only came into its own in the late 70s. NBC killed TV in the 30s by way of the FCC: it only came into its own after the technology had advanced enough that NBC and the other big radio players could continue their vertical monopolies in the new space. Bell Labs killed a nascent answering machine in the 30's - of course, back then, it was the size of a refrigerator. It used magnetic recording. The next people to use magnetic recording was 3M decades later. To cover this stuff in depth, read Tim Wu's "The Master Switch."
- dantheman 15y ago
  IIRC Bell Labs killed their own invention, I think that's fundamentally different than the other cases.
  - iwwr 15y ago
    The FCC delayed cell phone technology by at least 2 decades. AT&T delayed computer networks (pre-internet) by insisting on owning every device that connects to it, so modems had to use slow acoustic couplers.
  - warfangle 15y ago
    True, it didn't fit the rest of the list. They did do a heckuva lot to keep people from competing with them - and to prevent better technologies from coming along (as otherwise mentioned, acoustic couplers. fax machines also fit in there). Bell also had a nasty habit of - when forced to compete by the government - physically sabotaging interconnect points.
    - dantheman 15y ago
haberman 15y ago
"I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone." --Jack Valenti, president of the MPAA, 1982
NHQ 15y ago
Does anybody any HBR know how to write a clear headed statement? You can tell by the little mistakes that the writer is not thinking hard enough, and only writing to flex. Lines like this, for example: "Now, in the past, these efforts might have impacted technology that only involved the consumption of movies and music." Now! In the past! Together at last!
arctangent 15y ago
The "Big Content" problem is a classic example of the short term thinking that is inevitably brought about when human ambition meets current methods of compensation (i.e. pay). It's in the interest of all kinds of managers to drive up favourable results in the short term so that they can achieve their next promotion and/or receive benefits from any stock options they hold (which typically vest on very short-term timescales compared to, say, the length of technological cycles). Inevitably this leads to those managers seeking local maxima (i.e. sub-optimal tactical revenue generation) rather than more global maxima (i.e. more optimal structural changes to bring about increased revenue generation in the long term) which will take longer to become profitable than the individual is in their post to receive the credit for those decisions. The problem is apparent in almost all forms of human interaction, to the extent that it is probably deeply-rooted in our fundamental psychology. We all prefer the quick wins to the bigger wins that can be achieved by deferring immediate gratification. (There's a relatively famous study which shows that unattended children will often eat a cookie even when they know they will get two cookies if they leave the cookie alone until the researcher returns in a few minutes.) So I guess it's important that we realise that this is a deep problem and think about what (if anything) could be done to solve it. I suspect that it's actually near-impossible to change the behaviour of powerful individuals within an organisation in any meaningful way, and that having an external entity usurp the established order is about the best solution that can be achieved. (I assert that this is true on an individual level within organisations and also when considering organisations as a whole.) It may turn out that this is (in general) a more efficient way to seek global maxima than to wait for a particular entity to alter its behaviour. It would certainly seem that competing entities with different strategies would be so numerous that better strategies are more likely to come from without than within...

127 points by cwan 15y ago

Questions I have frequently pondered are...If one could as easily replicate and distribute physical products as we can digital products, what would that do to creativity and innovation? Say you you could make infinite cheap copies of a car or a TV, would anyone make a better one? With the elimination of scarcity what would we do with all our stuff and our free time? Would we sit around and turn into blobs or would we make things better just for the joy of it? Just for the recognition? Isn't it apparent that IP laws/copyright in the digital age are just a way to impose artificial scarcity where it no longer exists naturally?

billybob 15y ago
"Say you you could make infinite cheap copies of a car or a TV, would anyone make a better one?" There's a flip side: if you could make infinite cheap copies of industrial robots, how many more people would start making cars? Creative output becomes input for other creative output. Rachmaninoff wrote "Rhapsody on a Theme of Paganini" because nothing prevented him from re-using Paganini's work. Today copyright would prevent that. IP laws are meant to help incentivize production of new stuff. But they also raise a barrier that keeps people from using old stuff to make new stuff. We have to balance those two things.
- sudont 15y ago
  I disagree based on the lack of my generation's (millennial) John Waters. Or Maya Deren. John Water's ideal was to flip an idea into a movie in an afternoon. With the prevelance of RED, iPhones, Canon 5Ds, and a few hundred metric tons of mid-2000's mini DV cameras, this has not happened. We're instead moving into a post-commercial era, where we're doing 30 second youtube spots, and watching full-budget long-form. Infinite manufacturing will result in a neighborhood Shapeways or Kickstarter, not a neighborhood Ford.
  - Vivtek 15y ago
    Infinite manufacturing will result in a neighborhood Shapeways or Kickstarter, not a neighborhood Ford. I fail to see why that's a bad thing.
    - sudont 15y ago
      I didn't say it was bad! It's just more trivial than a car. Née "Some Assembly Required."
      - Vivtek 15y ago
        Ah! Point taken. Although I've been giving some thought to local automobile production, actually - Richmond (IN) used to make cars and I think we should again. The only problem is it's damned hard to get one certified nowadays.
    - true_religion 15y ago
      Actually looking at the software market, infinite manufacturing would result in a small few creating a neighborhood Ferrari because it suits their admittedly niche interests.
  - r0s 15y ago
    > this has not happened. Would you know if it did? Waters himself wasn't really appreciated for a decade or so. Movies with zero marketing budget don't get recognized immediately.
    - waterlesscloud 15y ago
      I very strongly believe that it has happened. Actually, I know that it has. There are people out there using the technology to make very good films on very low budgets. The problem isn't getting the films made, and it's not distributing them. It's in connecting the viewers to the films. "Marketing" in the past has been the way that's been done. But we need something else now, a new method of film discovery. Good stuff is going completely unseen, and that's a real shame.
nextparadigms 15y ago
What usually happens, is that you take what already exists and build on top of it. Without being able to do that, you'll have to not only recreate that technology from scratch, but you also need to make it different enough so it's not similar to the patented technology. Overall, for the world, it's much better to be able to use prior knowledge without much or any restrictions, the way humanity has always evolved before patents or copyright even existed. Imagine someone patenting the wheel. The others would be forced to re-create the wheel in a different way, instead of focusing on using that technology - the wheel in this case - to create something new, like a carriage, or car.
jonnathanson 15y ago
Here's the problem: scarcity exists on the creative side of the entertainment business, but it's scarcity by way of cost-prohibitive access. What's scarce? Access to $20MM-a-movie actors and $8MM-a-movie directors. Access to $200MM productions. Access to creating the "tentpole" movies and shows that result. All of these things require outrageous amounts of capital, and they're all dependent on the ability to monetize the end result by many multiples of production and advertising costs by way of theatrical distribution, DVD sales, licensing and merchandizing, and various other derivatives of the original work. At least one major revenue stream, DVD sales, is collapsing steadily. This leaves box office and derivatives and licensing. Derivatives have never been huge business, or at least not a sturdy enough pillar to bear the weight that DVD sales have borne. And licensing has always been mere icing on the cake, except in the case of titles perfectly suited to it (such as Star Wars). As the downstream revenue sources dry up, so too will the big production dollars, and so to will the scarcity of access to "Hollywood-quality" creative. At least for most companies. What's going to happen? One theory is that we're going to see some sort of price discrimination at the box office. Big tentpole movies cost more to make than do lower-budget romantic comedies, for example, and so tickets to Transformers XXIV will cost more than tickets to Generic Sandra Bullock / Jennifer Aniston RomCom. (Arguably this is already starting to happen, if you consider 3D to be a price discrimination mechanism. Whether by intent or by accident, it functions like one). Another theory is that we're going to see a hollowing out of the middle tier of the film and TV businesses. You'll have giant studios making giant movies, and you'll have tiny indies making tiny movies. But there will be no middle ground, because it will no longer be profitable. All of this assumes, of course, that production costs hold steady or increase. And so long as there are folks out there willing to pay $20MM for a single actor or $8MM for a director, they will. But the bottom might drop out of that market eventually, too. Or it might stratify dramatically as outlined in the previous paragraph.
- roc 15y ago
  > "Another theory is that we're going to see a hollowing out of the middle tier of the film and TV businesses. You'll have giant studios making giant movies, and you'll have tiny indies making tiny movies. But there will be no middle ground, because it will no longer be profitable." You can see this already in the game industry. EA, Activision and Ubisoft have all transitioned to a franchise-only tentpole-or-bust strategy. The independents are struggling to compete with those production values, while two and three-man shops are making respectable livings from sub-$10 downloadable games. I personally think the middle-ground will bounce back eventually. If only as a place where smaller studios bet their past success on a passion project.

warfangle 15y ago

They always have. The Edison Company used its patent portfolio to keep people away from owning theaters and importing European films. Paramount, MGM, etc, were considered independents back then and fought back furiously. Then they consolidated vertically to own the theaters as well as the production, which opened the pathways for censorship (the Production Code) - when you only have to influence two or three companies, it's easier to get your way when you threaten a flat-out religious boycott. NBC killed FM radio in the 30s by way of the FCC: it only came into its own in the late 70s. NBC killed TV in the 30s by way of the FCC: it only came into its own after the technology had advanced enough that NBC and the other big radio players could continue their vertical monopolies in the new space. Bell Labs killed a nascent answering machine in the 30's - of course, back then, it was the size of a refrigerator. It used magnetic recording. The next people to use magnetic recording was 3M decades later. To cover this stuff in depth, read Tim Wu's "The Master Switch."

dantheman 15y ago
IIRC Bell Labs killed their own invention, I think that's fundamentally different than the other cases.
- iwwr 15y ago
  The FCC delayed cell phone technology by at least 2 decades. AT&T delayed computer networks (pre-internet) by insisting on owning every device that connects to it, so modems had to use slow acoustic couplers.
- warfangle 15y ago
  True, it didn't fit the rest of the list. They did do a heckuva lot to keep people from competing with them - and to prevent better technologies from coming along (as otherwise mentioned, acoustic couplers. fax machines also fit in there). Bell also had a nasty habit of - when forced to compete by the government - physically sabotaging interconnect points.
  - dantheman 15y ago

haberman 15y ago

"I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone." --Jack Valenti, president of the MPAA, 1982

NHQ 15y ago

Does anybody any HBR know how to write a clear headed statement? You can tell by the little mistakes that the writer is not thinking hard enough, and only writing to flex. Lines like this, for example: "Now, in the past, these efforts might have impacted technology that only involved the consumption of movies and music." Now! In the past! Together at last!

arctangent 15y ago

The "Big Content" problem is a classic example of the short term thinking that is inevitably brought about when human ambition meets current methods of compensation (i.e. pay). It's in the interest of all kinds of managers to drive up favourable results in the short term so that they can achieve their next promotion and/or receive benefits from any stock options they hold (which typically vest on very short-term timescales compared to, say, the length of technological cycles). Inevitably this leads to those managers seeking local maxima (i.e. sub-optimal tactical revenue generation) rather than more global maxima (i.e. more optimal structural changes to bring about increased revenue generation in the long term) which will take longer to become profitable than the individual is in their post to receive the credit for those decisions. The problem is apparent in almost all forms of human interaction, to the extent that it is probably deeply-rooted in our fundamental psychology. We all prefer the quick wins to the bigger wins that can be achieved by deferring immediate gratification. (There's a relatively famous study which shows that unattended children will often eat a cookie even when they know they will get two cookies if they leave the cookie alone until the researcher returns in a few minutes.) So I guess it's important that we realise that this is a deep problem and think about what (if anything) could be done to solve it. I suspect that it's actually near-impossible to change the behaviour of powerful individuals within an organisation in any meaningful way, and that having an external entity usurp the established order is about the best solution that can be achieved. (I assert that this is true on an individual level within organisations and also when considering organisations as a whole.) It may turn out that this is (in general) a more efficient way to seek global maxima than to wait for a particular entity to alter its behaviour. It would certainly seem that competing entities with different strategies would be so numerous that better strategies are more likely to come from without than within...