Wisdom of Marc Andreessen – The Writers Strike
Being an amateur writer I've got a bit of interest in Hollywood these days. So you can imagine my delight when I saw that one of my favorite blogs had a very informative article about it. Mark Andreessen explains the situation and sites his predictions for the potential outcome. Here's the highlights:
Rebuilding Hollywood in Silicon Valley's Image
Last week I posted a rather pointed polemic titled "Suicide by strike" in which I argued that the big entertainment companies were acting suicidally in picking a fight with the writers at precisely the wrong time.
In this post, I more dispassionately outline my theory of why that's the case, and what I think may happen next.
The writers' strike, and the studios' response to the strike, may radically accelerate a structural shift in the media industry — a shift of power from studios and conglomerates towards creators and talent.
First, some context. In Hollywood, the talent — actors, directors, writers — is unionized, and those unions engage in old-fashioned collective bargaining with the studios, also known as "the Man". That collective bargaining establishes the economic framework by which most of the talent gets paid.
Last week, the writers' union — technically unions, but I'll use the singular form for simplicity — went on strike for the first time since 1988 after an acrimonious breakdown in negotiations with the studios over a new deal.
Significantly, the actors' and directors' unions are due to renegotiate their deals with the studios soon as well; some people in Hollywood believe that the studios are being deliberately hostile to the writers in order to send a signal to the actors and directors to not expect much.
The writers are on strike primarily over the terms by which they get paid "residuals", or ongoing payments, for various forms of distribution of television shows and movies. In a simplified nutshell:
- Due to amazing historical circumstances around the birth of the VCR in the early 1980's, television and movie writers are currently paid approximately 4 cents for each DVD sold — bearing in mind that the average sale price for a DVD is over $10, and the cost of manufacturing a DVD is less than 50 cents. The writers want that residual rate doubled to 8 cents per DVD, and the studios are refusing.
- Currently, writers are not paid for Internet downloads via online video stores like iTunes and Amazon Unbox. The studios want to extend the current 4-cent DVD residual formula to Internet downloads; the writers are holding out for more.
- The studios are refusing to pay residuals on Internet streaming of television shows and movies — even when that streaming comes from their very own web sites and contains revenue-bearing commercials. The studios call all such streaming "promotional". The writers are howling with outrage that if the studios themselves are streaming complete TV shows containing commercials, that's clearly not just "promotional". The writers have a good point.
Taken on their own, these issues are most likely negotiable and solvable. However, trust between the two sides seems nearly nonexistent; the writers feel like they have been repeatedly burned by the studios over the last few decades; and the studios may well have a vested interest in beating up the writers in order to motivate the actors and directors to not push too hard in their upcoming negotiations.
And so, the writers are on strike.
What happens if the strike continues for months?
Movie production will apparently be largely unaffected for quite a while; the movie studios have stockpiled scripts and are continuing to shoot new films.
Television, however, is a very different picture.
Scripted television production is already all but shut down. Most late-night talk shows are shut down. Most remarkably, many comedy and drama series are either already shut down or will be within the next several weeks…
What are the probable long-term consequences of an extended strike?
First, ongoing alienation of a new generation of TV viewers.
The music industry's war on digital distribution over the last 10 years, starting with their assault on Napster and continuing to all the present-day RIAA fiascos, has permanently alienated an entire generation of consumers, who are now voting with their wallets and not buying music. They're still going to concerts, buying artist merchandise, buying video games that contain lots of music, even voluntarily paying Radiohead directly for free album downloads — but mainstream recorded music revenue is dropping like an anvil in a Bugs Bunny cartoon, with virtually no hope of recovery.
The TV and movie industry has already been conducting their equivalent war on digital distribution; as a result, most of the new consumers — kids, college students, young professionals — view iTunes and Amazon Unbox downloads as "too little, too late" when it comes to giving them the ability to watch what they want, when they want, on whatever device they want.
I think the TV and movie industry is at a turning point — they could repeat the critical error of the music industry and permanently alienate their customer base; or they could get it together and create viable models for the future that make consumers happy and make money.
Second, driving consumers even faster to the new range of activities they can engage in.
We all know the list: the Internet, social networking, user-generated content, blogging, video games, mobile phones, you name it. All the activities that consumers have discovered and adopted since the last writers' strike in 1988, that they just love, and that have already been siphoning away time, attention, and money from TV and movies even without a strike.
Obviously, the less scripted television and film content that's being produced, the more alienated consumers will shift over to all the new activities — and the less likely they will ever go back.
Third, and most significantly: catalyzing faster development of new business models for entertainment media.
The Internet has already been forcing a rethink of the structure of the media industry, particularly for entertainment. The strike is kicking that rethink into high gear. Here's why:
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. As a consequence of that, talent bands together to form unions — actors', directors', and writers' unions — and engage in adversarial collective bargaining to try to extract a share of the ongoing economics of their output. Hence the residual system that's in dispute today: 4 cents per DVD.
Let's contrast all of that to the Silicon Valley model.
In Silicon Valley, there are many companies, large and small, that create, market, and distribute products — and more such companies all the time. In fact, there is a whole industry — the venture capital industry — devoted to creating as many new such companies as possible, as rapidly as possible.
In Silicon Valley, creation, marketing, and distribution of a compelling new product is not very expensive. And with the Internet, marketing and distribution costs drop nearly to zero. Most successful Internet companies, large and small, use free viral marketing techniques and never run ads. And the whole concept of distribution costs goes away when everything is digital — the next set of bits costs nothing to manufacture.
In Silicon Valley, the creators of the product — the talent — are owners: owners of their product, and owners of their company. In fact, the entities that finance the companies — venture capitalists, private equity funds, the public stock market — want the creators to be owners: in a world where there can be many companies, the best creative talent will be drawn to the situations in which they will be owners, and will be compensated as owners. Because of that, in technology, creators get paid like owners. Therefore, there are no unions. There is no reason for the creators to unionize — they would be negotiating with themselves. The concept of residuals does not exist — they'd be paying themselves. And alignment of interests between creators and financiers is near-perfect. I believe the entertainment industry is in the early stages of being rebuilt in the image of Silicon Valley…
For the Full Article (Which I Highly Reccommend) go to: http://blog.pmarca.com/2007/11/rebuilding-holl.html
Dealing Musical Crack
I'm mildly annoyed because this song is so damn catchy and now I can't stop listening…
So I'm gonna try and pass off my stash to you guys. Hopefully you get addicted too! Mwahahahahahaha!
Like Daughter… like Mother
It's been a while since I've written something personal about what I think. I can make this public because there is a barrier between my online life and my physical life that I could blast holes in with a pile driver and the very next day would be sealed up tighter than a drum. Really it's no matter because if the people I wrote about did know this then at least they'd know how I felt, this is the gospel truth, but it's sensitive to the parties involved so contrary to my usual modus opperandi, I've not spoke up.
If you look way back in my earliest posts there's mention that I don't put a lot of stock in our modern education system. Don't get me wrong, if I had the money I'd go to school for the next 10 years and learn everything I could, but I see post secondary school as more of an expensive luxury rather than a necessity of life. And like all luxuries, to just hand a kid (or anyone) one that hasn't earned it himself is a guaranteed way to have it squandered unappreciated.
I have a very good friend who shares my opinion and amplifies it. She values many important things, work ethic, cleanliness, social skills, freedom of speech, self esteem, and passion for life, but she feels that education is far below all these things. Part of this I'm certain is her own inability to realize that she's smart enough to be educated, or that she just thinks that she's too old to learn more. I don't see this, everything she sets her mind to she becomes excellent at, the woman doesn't know how to fail. But she can and will never get beyond her stigma against conventional learnings.
This prejudice has been transferred to her daughter who's now in high school. This girl is everything her mother is exactly. And suprise suprise she's at the brink of being kicked out of school for negligable attendance and disrespecting her teachers. Her mother is freaking of course, but she created this girl who has exactly the same values and prejudices as herself.
Subconciously this daughter is just looking for approval. She wants to be her mother and work hard and forge a life just like she did, and education is no part of that.
Here's the clincher though, this girl, for reasons I don't pretend to fathom, also looks to me for approval too. She's becoming exactly what I expected her to, but I know she could be so much more, she's a bright, assertive, driven girl who could become so much if she wasn't destined to have a baby at 17. So I can't help but try and challenge her a bit.
Perhaps this society suffers from the fact that we don't tell our kids what they're capable of and make them do it…
Drugs
I was just reading a very interesting article about MDMA (Extacy) getting approved in the US to be used in studies for people suffering from Post Traumatic Stress and severe anxiety disorders… and I couldn't help but think; "Wow, someone thinks a recreational drug might make people happy…"
Wierd huh.
I was reminded of an episode of House where the good doctor perscribes cigarettes for some disorder de-jour in the clinic. I don't recall it being stress related in the show, but weeks later my GF's mother went into the doctor because her anxiety was causing physical backlash and panic attacks and her doctor "recommended" that she "consider" taking up smoking again. (She had quit 8 months prior.) Her husband and daughters have noticed a significant difference, but I shall remain silent. (Cue various mother-in-law jokes.)
All this sort of makes me wonder why the government ties doctor's hands when it comes to doing reserch studies with certain drugs? Most of the drugs they perscribe are potentially addictive with dangerous side-effects anyways, but somehow if they're being used on the street they're automatically bad drugs and have no medicinal purposes whatsoever… or maybe there's some idea circling around in politician's brains that by allowing these drugs to be used medicinally that people will be taking their scrips to some shady character on a street corner.
The part of me that thinks I have an idea of how the world works knows that most of this is to do with the fact that pharmaceutical companies have more to do with this than anything. After all drug companies contribute far more to election campaigns than a bunch of sick people in an activist group. But there's a shift now… the Bush administration has thus-far not been known for it's liberal stance on health-care… so why such a bold move now? I think part of it lies in the popular shift of public opinion… one of the top rated TV shows in the country has a protagonist who is addicted to opiates and is *gasp* … a doctor! Don't let your kids watch that! It'll corrupt them for sure!!!
Maybe it allready has.
W(here) TF is Toe Knee (Part 2)
This is likely to become a series. I disappear from the blogging world for weeks at a time and then post some dashing return in delecate prose as if you were adoring fans that actually gave a shit about what I have to write. Ah illusions what would we do without them…
The main cluprit for my absence is BIO SHOCK, good game. I insisted on finishing it and finally I pulled it off, I agree with Yahtzee on his opinion of the ending, I can think of way cooler endings than the sunshine and roses one I was splashed with… I was actually thinking a little gameplay element like getting a level editor as a way of saying you get to take over Rapture might be a good start.
I've also spent last week in the classroom certifying my advanced first aid. I like the term advanced first aid, it seems to describe how I feel about my training. I'm not a doctor, not a paramedic, but I do have skills, I am trained to react a certain way, and for the first time in all my 8 years of doing medical standby I feel like I deserve to be justified as trained in that way. It's a good feeling.
We have to recertify our first aid every 2 years to keep our tickets. A policy I believe in, this time around a screw up put me in a course that I didn't really expect and I'm glad it happened, our instructor(s) were excellent, both working in the ambulance for years and years, they've seen lots, and it's nice to have that perspective.
Today I'm off to the bank to consolidate 2 loans… one my truck payment and one a "interest free no payment" loan for furniture from the Brick. Never gonna do that shit again… they say no interest but they charge a transaction fee… every month… misleading fuckers.
So hopefully if the loan goes through I'll have a few extra bucks kickin about to buy a shiny new sattelite internet system that will allow me to have unrestriced internet out on my rig for the winter. Which I intend to use to make some money writing, and keep in touch with you guys.
Jeeze, with an absense as long as mine you'd think the glourious return post would be a bit longer…
The Root of All Evil
A long time ago I decided that I didn’t believe in Good and Evil. Sure I believe in kindness, morals, ethics, innocence, pleasure, fun, corruption, deceit, anger, hatred, imbalance and discord. But I don’t necessarily correlate those things with being good and evil.
I asked myself, what is evil? Is it a black sludge that taints our souls? Is it the motive behind our actions? Animals don’t grasp the idea of good and evil, to them there is survival and dominance. And in-fact, the concept of evil as it exists today is a relatively new development of humanity, and in-fact was really truly nurtured by monotheisms. The idea of opposites, of black and white, where there is no grey, only varying degrees of blackness and whitewash, I think is the natural development of the idea that there is only one god.
In fact, why is there only one God? He’s the god of everything right… oh, but he’s not the god of bad stuff. For the bad stuff there’s another guy, but he’s not a god, he’s something else, but we’ll pay more attention to him, because there’s definitely more bad stuff then there is good… right?
The problem I have with Good and Evil is that there is no depth to the perception. What’s detrimental for one could be beneficial to thousands? Is the act evil to that one person? To him it likely appears so. If a general commands a battle that kills thousands, is he evil? If a populace rebels against it’s leaders and starts a revolution that installs a new government are they evil acts? Is the result of those acts tainted by them?
I examined the most heinous act I could think of when I was considering my beliefs, the rape of a child. How could such an act NOT be considered evil in the purest sense of the word? But what is it that makes such a thing so accursed? Why do normal people revile that act so, and still, why do people do it? We humans consider innocence precious, we see the potential of a new person and it makes us feel good inside, and the idea that someone in a fit of selfish lust and desire would take that good feeling of innocence from a precious being and forever taint their lives is very unsettling. Why would someone do that if not completely motivated by evil?
Partially I can understand the motives behind desiring a person who’s not considered “of age” by our society. Youth = Virility, and at one point 14 was considered a fine and appropriate age to be sexually active. It would likely still be appropriate if it weren’t for the consequences of irresponsible sexual activity are quite difficult to handle for a person who’s not yet ascended to a position of independence in our society. But what of those who rape children prepubescent, undeveloped, children? There things are hard to quantify with logic.
Illogical, irrational acts of cruelty and aberrant behavior, are hard to explain, but they obviously exist but certainly not to the degree that certain religious groups would claim.
There is cause and effect to everything, and it is in understanding that cause and effect that we can better understand how to control that cause and effect and eliminate the undesired result.
But control… control of everything, eliminating every act deemed unfavorable… what of that?
Oil Patch Stories Over Lunch
It's a pipe dream of mine to write a dramatic comedy series about the oilfield… so occasionally I remember to take down some of the stories I hear. Here are today's, the names are made up because I've forgot them allready, but these are actual things that occur.
Phil was working for Andy out in a job and mentioned that he'd never taken a crap in the bush. So Andy decided to fix this, and got a bar of laxative. The first day Andy put a cube of laxative in Phil's morning coffee and waited. Phil never hit the bush but he complained of his guts aching by the end of the drive home.
The next day Andy put more this time in Phil's coffee and still Phil didn't go in the bush but by the end of the day phil was in a lot of pain.
The Third day Andy dropped a lot of laxative in Phil's coffee and Phil was doubled over in pain by the end of the day.
The next day Phil was sick and didn't come to work so Andy fired him.
My job foreman told a story of back in the early days when his foreman had him setting down equipment in the bush. He had them take a truck rack into the bush and he was quite picky about it, he had them set it in 3 different spots until he decided on one. The guys moving the thing didn't question they just did their job, eventually they got the truck rack pushed into the snow, then the guy had them arrange some tarps around it. The whole affair took over half an hour. After which he told the laborers. "Now get outta here, I've got to take a shit."
They shrugged and headed off to do other work.
Facebook App Rating Teachers… Genius or Madness?
Well, this is my first attempt at using clipmarks to share some postings… so far I'm not overly impressed. It voxed my post without allowing me to edit any aspect of the post, I might want to label it friends only or something… I think there should be a way to edit in Vox before sending it off to the public… but it's a first try, I'll keep at it.
Anyhow this is an incomplete thought for an article that I'll hopefully publish on coactionize. I've been exploring the idea that social networking allows people to advertise their credentials by letting their clients recommend them across the network. This rating teachers thing might seem juvinile in "rating a professor's hottness" but on second glance it's extremely powerful. What is it worth for a college or university to have the "top rated teachers" by the students on a network that all the students are using??? Great teachers open minds, and students revere them, they'll praise a professor endlessly given the opportunity and with an app like this it will suddenly become obvious who the best teachers are!
Now I'm wondering what other professions this could work with?
|
QotD: Radiohead, In Rainbows
Radiohead release their seventh studio album today and it's only available online and you set your own price. Will you buy the album? Do you buy the idea?
I think I will buy the album… probably drop $10.00 on it and support it as a cause that I believe in. Actually I wrote an article about it last week for a blog that's not quite up and running yet. I figured I might as well post it here. It's for a philosophy-in-business blog called Coaction Theory. I'll likely be writing more about it in the future to share with you.
Radiohead Creates Album sans Record Label – Buy it For… whatever you decide to pay?
Radiohead is creating buzz these days whether you like their music or not. The band has left the labels behind to create their latest album In Rainbows, they’re not selling it through a major record label, there will not be any tracks available on itunes. Instead you can only go here and buy it directly from them, and here’s the catch, you can pay whatever you want for it.
Okay technically you can pay as little as a dollar for the album and there’s a 45 cent processing fee, but that’s the essence of what they’re offering. And honestly it isn’t as bad an idea as it sounds. The audacity of the move creates buzz, and buzz generates traffic. If the album is at all worthy musically that viral traffic will generate into massive sales and they’ll spark a revolution. This is the major record label’s worst nightmare, a band with credibility is proving that it doesn’t need them, and doing it in a very public way. If In Rainbows succeeds then the industry is going to flip on it’s head and where it finally lands remains to be seen.
While I hadn’t expected such an audacious event to spur the revolution against the record label, it was inevitable and frankly I’m surprised it took so long. The record label might shoulder the brunt of the cash required to promote a label and distribute it, but bands don’t get their worth. Some numbers even say that a band will make more money off a reasonably successful album by playing in the park on Saturday nights, selling self-printed tee shirts and CD’s and working a minimum wage job, than it will touring for a year promoting an album. Added on is the real risk that these bands could lose the ownership of their works, and you’ve got a seriously one-sided market in desperate need of shakeup.
The internet is enabling this; the biggest enemy of the majors is not illegal downloading, it’s self-production! Anyone can produce a record, but it takes a label to get it to the masses right?!? Not anymore, youtube has proven that the small creative producer can get a fanbase through a free distribution network, why not the bigger boys? Social networks are allowing nearly free promotion of a product. Those that keep abreast of internet trends know this is called Viral marketing, where the buzz of a product amplifies its self through it’s fans and advocates.
In this case viral marketing along with an efficient, affordable means to transfer their product and communicate with fans is working in Radiohead’s favor. They are using social networks and affordable information transfer to gouge out the biggest profit drain between their work and the purchasing consumer. But really, how much can they be making if they’re only selling their album for as little as a dollar? The answer is about as much as they would by selling it through a label over store counters. The fact is for every dollar you spend on music 7 to 14 cents goes to the artist. The rest goes to the recording label and the distributor. Radiohead is now all three, so if their CD would be $15.00 on the store shelves, and 90% of us greedy consumers only pay the minimum $1.50, well they’ve paid their processing fee and are getting a reasonable approximation of the usual payout. BUT if the band’s fans are like me and decide not to be cheap, they of course will support them with a few more bucks. I mean seriously, who’s going to pull out their credit card for only a dollar?
What makes me smile the most about all this is that it spells the woes of the recording labels more ominously then any other aspect of the internet. While the RIAA sues college students and other fans for file sharing, a band moves in from the unguarded front. Sun Tsu’s art of war says:
Exploit your enemy’s weaknesses
Keep him engaged and expending energy.
Disrupt his communications and alliances.
And that is exactly what is happening.
This development proves Coaction Theory; that with the latency and cost of information getting so low, a creator is able to find success using social networks and developing an alternative advertising and distribution model. They’re using their fans and their blogs as advertisers and self as distributing rather than working on conventional terms. It’s also further proof that as a means of communication the digitization of music will lower its cost to the consumer, as it has with all other means of communication, and bands will be able to gather profits as free agents rather than become the property of large media corporations.
Old Line 