Talent agent Ari Emanuel and Web 2.0 Summit organiser Tim O’Reilly had an entertaining spat this evening over the value of digital content and the battle to stop piracy.It was a classic argument between Northern and Southern California, between the information-wants-to-be-free mindset of Silicon Valley and the content-is-king ethos of Hollywood.
Both had valid points, but Silicon Valley has already won this fight. If the TV and film industries don’t understand this now, they’re going to meet the same fate as recorded music.
In an on-stage conversation with CNBC hostess Julia Boorstin, Emanuel was lamenting the fate of the recording industry, which let Apple corner the digital market with iTunes. Emanuel gave Apple grudging praise, but said that if the record companies knew then what they knew now, they probably wouldn’t have agreed to Apple’s demands for universal $0.99 song prices.
O’Reilly took the mike for the first question, and made the point that the recording industry blew it in the early days by not offering its content in a convenient digital format for a price that consumers were willing to accept. As a consequence, piracy took off, and Apple’s deal was the best bargain that the industry could get. He suggested that the film and TV industries are making the same mistake now by withholding content from new digital platforms like Google TV and Netflix streaming.
Here, Emanuel got hot under the collar and insisted that piracy is wrong and shouldn’t be considered when making business decisions. Instead, he suggested that the government and industry needed to do more work to educate consumers about stealing content and to enforce existing laws.
Emanuel’s right. Content has value. The problem is, once content is digitized, it’s trivially easy to copy it. And every copy protection scheme will eventually be broken. (Cory Doctorow did a great job explaining why this is true way back in 2004–basically, you can’t encrypt content against the people who you’re also supposed to be delivering it to.)
This is isn’t a moral argument. It’s a physical argument. Arguing against the piracy of digital content is like arguing against gravity. Or death.
There are other pressures on the content businesses as well. Infinite channel fragmentation makes it harder to build the aggregate audience needed to pay for expensive productions. As Emanuel pointed out, in 1995 there were four big TV networks. Now there are dozens. Add in the Internet and look forward 10 more years, and you’ve got millions of channels, all tailored to narrow niches.
So what are content creators–and the people who represent them, like Ari Emanuel–supposed to do?
How about focusing on the one type of content that can’t be duplicated? Live events.
Look again at the music business. CD sales are in free fall, and digital isn’t making up the difference. But there are still strong signs of life in the live music business. Yes, there have been some high-profile failures like this year’s Lilith Fair tour, but also some big successes–Coachella drew a record crowd of more than 90,000, the Electric Daisy Festival drew more than 100,000 (and some serious mayhem), and Roger Waters is doing just fine selling very expensive tickets for his tour of The Wall–an album recorded more than years ago. Live music was the only reason music revenue rose in the U.K. last year, according to a recent article in the Financial Times.
How can that lesson be applied to TV and film? Live broadcasts of time-sensitive events are the most obvious tactic, which is why TV sports will continue to thrive and there will always be a niche for news. What else? Keeping movies in theatres for longer? New types of live appearances and performances? Think big: not just scripted performances, but radical participatory events, a sort of endless Burning Man on tour.
I don’t know what the future of entertainment will look like. But as reality trumps recordings, the agents who can find great live performers and hook them up with paying customers will do just fine. Those who pine for the old world, where content was scarce and distribution was tightly controlled, are going to be increasingly marginalized and disappointed.