Schumpeter and the Future of Media

First print, now cable? The road to obsolescence for TV programming.

August 3, 2013
CONTRARY TO POPULAR BE­LIEF, the 20th century did not end at the same time for ev­ery­one.
For those in the music business, it sput­tered to a halt with the close of 1999—the year U.S. recorded-music sales reached their all-time high of $14 billion; by 2012, they had dropped to half that. For news­papers, the end of the century arrived a year later, when U.S. ad rev­enues hit nearly $49 billion; now they’re down to a mere $22 billion. Holly­wood was able to stave off the cen­tury’s demise until 2002, when box-office ad­missions in the United States and Can­ada peaked at 1.6 bil­lion; last year they were down 15 per cent from that (which is not bad, con­sider­ing).
Magazines, for their part, seemed to lead a charmed life—through 2006, any­way, when ad pages topped out at 253,000; since then, they have dropped by more than a third. As for tele­vi­sion, the major broad­cast net­works have been on a slow, inex­orable slide into the fu­ture for decades. In 1980, accord­ing to Niel­sen, well over half the TV sets in America were tuned in to ABC, NBC or CBS during prime time. By 2012, even with the addi­tion of Fox, that number was a little above 20 per cent.
As the industrial age gives way to the digital, we are rapidly moving from a period of mass production, mass consumption, and (at its height in the 1950s) mass conformity to an era of networked pro­duction, unbundled consumption, and personalization of just about everything. Yet in the media industries in particular, this tran­sition is even now the subject of wide­spread confusion and denial. In their determination to stave off the demise of long-profitable 20th-century business models, media companies of every stripe have largely behaved as if they were sheltered from Joseph Schumpeter’s “peren­nial gale of creative destruction.”
The next industry to be ushered head­long into the 21st century will most likely be cable. Com­panies including Com­cast and Time War­ner Cable con­tinue to shrug off the threat of “cord-cutting”—subscribers dumping their ex­pensive pay-TV pack­ages in favor of stream­ing In­ter­net services like Net­flix and Apple TV. True, the numbers don’t look terribly threat­ening at the moment: After years of talk and specu­lation, only 5 per cent of U.S. house­holds have made the move. Just this past spring, Nielsen down-played the phe­nomenon, calling it one of several “interest­ing con­sumer behaviors that we want to keep an eye on.”
No cause for alarm, apparently. But just a few weeks later, Nielsen reported that for the first time ever, cable companies lost more subscribers—80,000 over the 12-month period ending in March—than they gained. “Cord-cutting used to be an urban myth,” cable industry analyst Craig Moffett declared in a research report in August. “It isn’t anymore.”
Schumpeter’s insights were overshadowed in their time (the 1930s and ’40s) by the paramount specters of depression, totalitarianism and war. Today, his analysis of the role played by innovation and entrepreneurship in sweeping away the past seems prescient. Yet as the cord-cutting example suggests, technology itself is only one factor in Schumpeter’s gale. An even more powerful factor is audience behavior, which is influenced but hardly determined by the available technology—and which in turn has a bearing on a welter of other variables, from means of distribution to modes of storytelling.
It’s not enough to keep up with technological change, though that in itself can seem overwhelming. Media companies need to evaluate their business strategies against a complex interplay of tech­nological innovation, audience expectations and behavior, evolving entertainment forms, and long-term cultural trends. The problem is that in the midst of the storm, many of these companies have become too insular to comprehend the forces of destruction they are prey to—much less know how to respond.

 

A Revolution in Expectations

Let’s start with the long-term cul­tural trends, since of all the forces at work, these are the most funda­mental. So­ci­eties tend to resemble the tech­nol­ogies that define them. Indus­tri­al societies typ­ically organize them­selves one way, post-in­dus­trial digital so­cieties quite another. Indus­tri­al pro­duction de­pends on large numbers of peo­ple taking orders from the top as they engage in repeti­tive tasks that yield only a small por­tion of the whole. Nearly every­one is a cog in the ma­chine. Indus­trial-age com­panies—including news­paper pub­lish­ers, movie stu­dios, and tele­vi­sion net­works—tend to operate accord­ingly, on a command-and-control model that relies on hierar­chical think­ing and strict categor­ization. Not for nothing was Holly­wood once dubbed “the dream fac­tory.”
Lines are drawn between au­thor and audi­ence, enter­tain­ment and adver­tising (or “church” and “state,” in the case of jour­nalism), fic­tion and reality. Some­times these distinc­tions are less than sacro­sanct: We’ve had product place­ments in movies and TV shows for decades—but let one be too ob­vi­ous and it will immedi­ately be cas­tigated as “blatant,” even in the ad industry trade press.
Digital societies are more fluid, with networked structures and a sense-and-respond mentality. In terms of organization, effective digital-age companies—Apple, for example—tend to resemble the Internet, decentralized and interconnected, while their less successful brethren, like Microsoft and Sony, remain hierarchical and disjointed. Control still exists, of course, but it’s not exercised through layers of middle management. Individual product lines are not set up as profit centers, an organ­izational gambit that destroys any incentive for internal cooperation. What once were hard classifi­cations tend to blur, to the point that what seems natural, even sacred, to those on one side of the divide can appear all but incomprehensible to the other.
The United States is not at this point a digital society, but it’s fast getting there. Last winter I designed a survey with the ad agency JWT to get at people’s behavior and attitudes regarding the digital realm versus the physical. Unsurprisingly, the divide fell along generational lines: Based on their shopping, reading and listening habits, “Millennials” (people 18-34) were considerably more likely than older groups to be what we called “hard-core digital.” Yet, among those we surveyed, only seven per cent of the Millennials and four per cent of those in Generation X (35-48) fell into this category. Another 45 per cent of both age groups were what we’d call “on their way” to digital. This means that even among Millennials and Gen X, roughly half were merely dabbling with digital or were firmly anchored in the past. Among Boomers (49-67) and Silents (68+), that percentage was far higher.

Once people start to question their $100-plus monthly cable bills and realize that most of it goes for bundles of channels they don’t want, it’s all over.

Just as the future has been arriving unevenly among industries, then, it’s arriving unevenly among populations—even populations in the same age cohort. Nonetheless, people’s be­hav­iors do fall into clear patterns. Even the least digitally inclined now use the Internet to re­search products they’re interested in buying; many of them also use it for playing games and paying bills. Those dabbling with digital do these things and more: They chat and send email; they share photographs; some buy books and music online; some even go there to get the news.
As we move up the digital adoption curve, these behaviors become ubiquitous and new ones come into play: listening to music, shopping for gifts—until finally, we reach the hard-core crowd and find large numbers of people reading e-books and tuning in to streaming music services like Spotify. Yet even among this group, only about two-thirds go online to watch TV shows—which explains why cable providers have been so slow to see cord-cutting as a threat. If past behavior is any guide, however, it could become a threat fairly soon.
With behaviors come expectations. Once people start to question their $100+ monthly cable bills and realize that most of it goes for bundles of channels they don’t want, it’s all over. Eight minutes of advertising out of every 30 on TV? Bring on the DVR. Unable to watch your favorite show anytime you want? Hulu can fix that—maybe. If not Hulu, Netflix. If not Netflix, then definitely The Pirate Bay, the file-sharing service that operates on the far side of the law.
The Schumpeterian gale carries many threats for established media businesses. Among them: constantly evolving technologies, any one of which could prove a dead end; a superabundance of ad inventory, which in turns leads to price collapses; the growing realization by advertisers that they can create their own media and buy less of it from existing publishers. And yet the revolution in ex­pectations may present the greatest danger of all.
As people change their behavior, adopting technologies they like and rejecting others, they develop new habits and wants. But since the transition to digital occurs in fits and starts, and invariably more slowly than its cheerleaders anticipate, media executives long found it easy to lull themselves into a false sense of security. To an industrial-age mindset, online behavior patterns seem all but inexplicable, anyway. Denial seems plausible, even prudent. In fact, it is neither.

 

The Shifting Audience

Over the past few years, as more and more people have become comfortable with smartphones, tablets and services that let you buy or stream stuff online, three key expectations have emerged. Any one of these would be challenging to a 20th-century media company. Taken together, they require a total rethinking of the enterprise.
First, people are coming to expect an infinitude of choice. They want news and entertainment on their own terms. They see no reason they shouldn’t be able to watch movies or TV shows or listen to music whenever they want, wherever they happen to be, on whatever device they have with them—and with a minimum of advertising, thank you.
The first glimmerings of this trend could be detected as far back as the mid-’70s, when Sony, Matsushita and JVC (among others) introduced reasonably priced home videocassette recorders. “Time shift,” as Sony co-founder Akio Morita called it, freed viewers from the tyranny of network programming schedules. Suddenly, people could record their favorite shows and watch them any time. Digital video recorders, introduced by TiVo at the beginning of 1999 and eventually popularized by satellite and cable providers, made this even easier. By that time, however, time-shift was almost the least of it. The Internet was arousing a far more challenging set of expectations.

The media sector as it existed in the 20th century was an aberration — an accident at the intersection of economics and technology. Whether we like it or not, that accident is now being cleared by the inexorable forces of creative destruction and a new one is rising in its place.

With the growth of broadband and the arrival of streaming video services like YouTube, Hulu and Netflix, it’s no longer enough to be able to record a show for future viewing, or try to locate a particular video-on-demand offering in the impossible-to-navigate haystack of cable line-ups. Why should you have to deal with cable at all? And why should you be limited to shows that have recently been aired, or that networks make available through VOD? For that matter, why should you be limited to pro­grams that have been aired in the United States? Why shouldn’t you be able to watch any TV show that’s ever been aired anywhere? And movies—why aren’t they released on the same day the world over? And music albums? We all live on the same planet, and we’re all interconnected, so what exactly is the problem? An intellectual property attorney could lay out in excruciating detail the tangle of rights issues and business interests that constitute the problem—but nobody wants to listen to corporate attorneys. People are here to be entertained.
Meanwhile, a second set of expectations has been developing. Humans have always wanted to somehow inhabit the stories that move them—to be spellbound, entranced, transported to another realm. Immersion is a state of altered consciousness—“not the prim suspension of disbelief,” as James Parker put it in The Atlantic, “but its joyous capsizing.” Historically we’ve managed to plunge in with whatever technology is at hand, from books to film to TV. But digital raises the possibility of im­mers­ing ourselves even further, and in entirely new ways.
Because this kind of thing often serves a marketing function, fueling engagement among committed fans and helping to bring in new ones, it’s turning up increasingly in connection with movies and TV shows. The Walking Dead, currently America’s most popular television series (a first for cable), offers a panoply of opportunities for involvement: Not just the show itself and the comic series it’s based on, plus of course the now-requisite Facebook page, but video games, mobile wireless games, online quizzes, “Webisodes” that extend the main story through online video, novelization, even a weekly talk show about the series.
Other aspects of The Walking Dead saga don’t play out on screens at all. One of the more memorable events at last year’s Comic Con, the annual geekfest in San Diego, was a live “zombie escape”; the AMC network even runs a zombie training course for viewers who want to be extras. Fans of the show can explore all or none of these, as they wish.
So we have audiences expecting an infinite line-up of choices, and expecting to be able to immerse themselves in whatever type of story or entertainment they choose. But there is a third, closely related expectation as well: More and more, audiences expect some kind of active involvement. No longer passive consumers, they now want to be participants—critics, providers, and (through the act of shar­ing on social media) distributors of information.
The age of the couch potato—the ultimate passive media consumer, tagged and identified in a 1987 New York magazine cover story on the social lethargy of middle-aged boomers—is now a memory, and not even that for anyone under 30. Now, with a keystroke, we can send out smartphone photos of a plane crash, an earthquake or a riot; we can share an opinion about the government, the restaurant down the street, or the latest Brad Pitt movie. In the process, many of our most basic assumptions about media have been turned upside-down. In a digital society, the role of the media is not just to speak but to listen; the role of the audience is not just to listen but to speak.

 

The Natural Order of Things?

The problem is that peo­ple naturally tend to assume that what­ever they grew up with is the way things ought to be, and most of the people running media businesses today are prod­ucts of the coach-potato era. But no law of nature states that huge segments of the popu­la­tion shall zone out in front of the TV set for hours on end, or that people shall line up and pay money to sit quiet­ly in a darkened theater with sticky floors and the ersatz-buttery aro­ma of dia­cetyl in the air, or that com­panies shall pay bil­lions of dollars to news­paper pub­lish­ers and television net­works to advertise their wares.
In fact, there is little that’s tradi­tional about “tradi­tional” me­dia. The me­dia sec­tor as it existed in the 20th century was an aberra­tion—an accident at the inter­section of economics and tech­nology. Whether we like it or not, that acci­dent is now being cleared by the in­ex­orable forces of cre­ative de­struc­tion, and a new one is oc­cur­ring in its place.
To see things this way requires taking the long view. Starting in the 1830s, the Industrial Revolution made it feasible for the first time to print reading matter—books, newspapers, magazines—in very large quantities at very low cost and to distribute it quickly to very large numbers of people. A few decades later, inventions by Edison and others—electrical power, the phonograph, the motion-picture camera and projector—made it possible to package music and theater in a similar fashion. All this was enormously efficient in terms of economics, and over time it spurred not only a series of very profitable businesses but a tremendous increase in cultural and political sophistication (the so-called “vast wasteland” of television notwithstanding). Even so, it came at a price.
Two factors in particular were troublesome. First, the advent of mass production made it prohibitively expensive for all but a handful of people to make themselves heard. Between 1835 and 1850, as Harvard Law professor Yochai Benkler pointed out in his book The Wealth of Networks, the capacity of printing presses went from 1,000 sheets per day to 12,000, even as the cost of launching a New York daily shot up from approximately $12,400 in today’s dollars to $2.9 million. Each subsequent advance in technology made the process more expensive, not less—a development that would be celebrated as the barrier to entry that made industrial-scale newspapering viable, and that has now been negated by the Internet.
At the same time, the rise of mass media severed the often-intimate connection that audiences had previously enjoyed with writers, orators and performers. Before, audiences had been a link in the creative process. In theaters, in music halls and even in print, they’d been engaged in a dialogue. Now they were being told to shush. So complete was the disconnect that when Richard Curtis (who went on to make Four Weddings and a Funeral and Love Actually) created the pioneering UK comedy series Blackadder in 1983, he was reduced to peering into basement windows around London to see if anyone was watching his show.
Yet the idea that audiences should find their voices again has not been greeted with huzzahs from the mass-media establishment. Newspaper editors in particular have been aghast at the threat to their long-standing monopoly on information. Not that they put it that way, of course — to them, it’s a question of professionalism. Bloggers, untrained and unedited, just don’t cut it; never mind that some bloggers are, in fact, far more expert in the fields they cover than the average reporter. “If I need my appendix out, I’m not going to go to a citizen surgeon,” Bill Keller, then executive editor of The New York Times, declared in a speech three years ago.
Keller eventually moderated his attacks on “citizen journalism,” admitting that tweets from Tahrir Square, for instance, shed light on what was going on during the demonstrations against Hosni Mubarak. But his mistake all along was to paint the issue as an either/or situation. Readers aren’t journalists—but like audiences of every sort today, they do expect to have a dialogue with the professionals who tell them things. And journalists should recognize that this kind of partnership works to their benefit.
Journalists can’t be everywhere and know everything. They need the help of people on the scene, people with special knowledge. In another context, these people would be called “sources.” It’s just that now, thanks to social media, the number of potential sources is almost infinite.

 

Give People What They Want?

As goes newsgathering, so goes the media industries in general. Audiences are coming to expect involvement, immersion and infinite choice. Some interesting experiments have resulted, especially with regard to immersion. But in too many cases, media companies have been loathe to give their customers what they want—especially when it interferes with their more immediate goal of main­taining long-profitable business models that are becoming increasingly obsolete.
A case in point is Hulu, the Web video site founded in 2007 as a partnership between News Corp. and NBC Universal. The idea was to port TV to the Internet. Tech bloggers all but hooted with derision, and with some justification: Similar efforts by music labels a few years earlier had been almost comically inept, with online stores limited to the output of a single conglomerate and selling music that came so crippled with restrictions, both legal and technological, as to be all but unusable. But this time around, the two media companies made a smart move: They hired an Amazon executive named Jason Kilar as CEO, and they backed him on two important decisions. First, he insisted on including rival networks in the site’s search results on the grounds that to do otherwise would render it as useless as those early one-company music shops. And second, he asked for every show they could possibly license on the grounds that to hold them back would be to invite piracy.
To television executives schooled in the economics of scarcity, Kilar’s moves were heresy. Scarcity has been extremely kind to TV and movie producers over the years, enab­ling them to limit access to their proper­ties by fun­neling them into a series of highly lucra­tive distri­bution windows—theatrical, hotel pay-per-view, DVD, VOD, pay TV, free TV, and so forth. But in an age of endlessly replicable dig­ital content, the old rules no longer applied. En­forced scarcity schemes were becoming particu­larly unten­able, so Kilar aimed to bypass them.
Within months of its launch, Hulu’s breadth of choice, together with its ease of use and clutter-free environ­ment, made it one of the top 10 video sites in the United States. Within a year, it was number two behind YouTube. The bloggers apolo­gized. Hulu was a winner.
Or so it seemed. But things started to go wrong for Hulu when its top in-house proponent, News Corp. COO Peter Chernin, left in 2009. The perception among most television and advertising executives was that, as an unnamed member of the contingent told the trade journal Adweek, “the more Hulu succeeds, the more its partners fail.”

It’s unfortunate but understandable when mass media companies can’t find their way to the future. It is much worse when they are presented with it and reject it out of hand.

It wasn’t only that online advertising was gen­erally selling for a frac­tion of the price of tele­vision—though that in itself seemed reason enough to resist. Hulu was also seen as making an end-run around cable and satellite providers (which were paying hand­somely to carry the channels whose shows were now appearing on­line), as cannibalizing the by-now all-important home video market, and as hurting ratings (and therefore television ad rates) by cutting into broadcast viewing. Never mind that the DVD market was about to collapse anyway, or that, on a cost-per-thousand-viewer basis, Hulu commanded such a premium that it was actually selling its ad inventory at prices comparable to television’s. With Chase Carey, the former CEO of DirecTV, now in charge at News Corp., a different attitude prevailed.
Kilar made his case—or threw down the gauntlet, depending on your point of view—with a lengthy post on Hulu’s blog. “History has shown that incumbents tend to fight trends that challenge established ways,” he wrote, “and, in the process, lose focus on what matters most: customers. . . . Go­ing forward, rapid innovation, low margins, and customer obsession will define the winners in pay TV distribution.”
You could almost hear the shouts of in­credu­lity. Low margins—seriously? And who said any­thing about going forward? Within weeks, Fox moved to limit the availability of its shows on Hulu, denying subsequent reports of an immedi­ate jump in online piracy. Then Hulu’s owners, which by this time included Dis­ney in addition to NBC Universal and News Corp, put it up for sale.
They soon changed their minds and announced they were keeping it after all. At the beginning of this year, after months of speculation, Kilar resigned. Hulu’s owners put it up for sale again, then pulled it off again amid uncon­firmed reports that the bidding had barely topped the $1 billion mark. Mean­while, Net­flix had gained a market cap of nearly $15 billion, not to mention 14 Emmy nomina­­tions.
It’s unfortu­nate but understandable when mass media companies can’t find their way to the future. It is much worse when they are presented with it and reject it out of hand. At this point, only one thing about Hulu is clear: Whoever disrupts television, it won’t be Fox and company.

 

Piracy as an Indicator of Market Failure

Refusal to meet audience expec­ta­tions is one symptom of the enter­tainment indus­try’s dis­con­nect. Another, closely re­lat­ed, is the ongoing ob­ses­sion with piracy. For years, the en­ter­tain­ment in­dus­try has been fo­cused on stamp­ing out illicit file-sharing through legal action—shutting down offend­ing Web sites and ran­domly su­ing people who use them. Un­for­tu­nately, the Whac-A-Mole strat­egy has proven no more ef­fec­tive against piracy than it is against moles. But rather than lead the industry to re-evaluate its efforts, this has mainly acted as a spur to inten­sify them.
The anti-piracy cam­paign reach­ed a high-water mark in the United States at the end of 2011, when Congress seemed po­ised to pass legis­la­tion in­tended to fight off­shore file-shar­ing sites like The Pirate Bay. In fact, the Stop On­line Pi­ra­cy Act and its Senate counter­part went con­sid­erably further. The bills would have left In­ter­net ser­vice pro­viders, search en­gines, host­ing sites like You­Tube, and on­line pay­ment ser­vices like Pay­Pal vul­ner­able to accu­sations of abetting piracy, re­gard­less of whether the allegations were, in fact, true. Abandoning the principle of presumed innocence, the bills would have granted extra-judiciary powers to accusers, enabling them to force Internet companies to cut off services to any Web site charged with copyright violation. Worse, technology experts asserted, technical provisions in the legislation would have compromised the security and even the functioning of the Internet.
Nonetheless, with co-sponsors of every political persuasion, the bill seemed ready to sail through—until a last-minute mobilization by the tech industry and its supporters sent everything off-track. In a flash, or so it seemed, Google, Facebook, Wikipedia and their ilk were able to mobilize supporters online and render the legislation toxic. Deluged with phone calls and faced with a firestorm of protest on the Web, the bill’s backers abandoned it willy-nilly. Hollywood was stunned: That wasn’t how Washington was supposed to work. As a senior official at the MPAA, the movie industry lobbying arm, later admitted, “This was a fight on a platform we’re not at this point comfortable with.”
That much has been apparent from the start. Yet there is increasing evidence that the entertainment industry’s discomfort with the Internet exacts a heavy economic cost, not just in botched anti-piracy drives but in lost revenues. In 2011, a five-year study conducted in six developing nations by the Social Sciences Research Center, a prominent Brooklyn-based think tank, concluded that “enforcement efforts have largely failed, and that the problem of piracy is better addressed as a failure of affordable access to media in legal markets.”
In some of the countries studied (South Africa, Russia, India, Brazil, Bolivia and Mexico), legal alternatives simply did not exist; in others, prices were too high for the locals to afford. One could argue that this doesn’t apply to more developed economies. Later the same year, however, an ad hoc survey in the UK found that, while nearly all of Time Out London’s top 50 British films were available on DVD—an increasingly unpopular medium—only 21 could be legally downloaded online. Ditto for more than 40 percent of the British Academy of Film and Television Arts best-film winners since 1960.
All this suggests that piracy really is a market failure—and illicit downloads a measure of audience dissatisfaction. Although direct causation can be difficult to prove, it is evident that as satisfaction goes up, piracy goes down. This is most obvious in the music industry, which has seen a notable drop in piracy as legal download and streaming services have finally been made available.
The market research firm NPD Group reported in February that only 21 million people worldwide were currently using illegal file-sharing networks, down from 33 million in 2005—in spite of the enormous growth in people with access to the Internet. During 2012, the report continued, some 40 per cent of the people who had been downloading from pirate sites at the start of the year either stopped entirely or did it less often. Of those, nearly half said they changed their behavior because they were able to get music legally through streaming services like Spotify.
The industry’s own figures back this up. IFPI, the international music industry trade group, has reported regular year-over-year increases in digital revenues even as CD sales have collapsed. The digital numbers were minuscule at first, as new revenue streams almost always are. But last year they were enough to enable the world’s music labels to eke out a 0.3 per cent increase in total revenues—their first since 1999.
Yet the appeal of anti-piracy drives to entertainment-industry execs is not hard to understand. As long as the problem is defined as a legal issue, the onus can be placed on consumers. But if there is a market failure—that is, if consumers are turning to piracy because it’s the only way they can get what they want—then the problem is with the companies that supply the market.
To admit that they themselves are at fault would be tantamount to admitting that a media business based on industrial-era economics no longer works. It would mean that media companies would have to stop trying to defend the practices that made them so profitable in the past and start disrupting their own industries—a task for which they have shown very little appetite.
It’s hard to blame them, of course. The problems facing 20th-century media enterprises are daunting indeed. Business practices that have evolved over the past 50 to 100 years are failing to work, and in some cases it’s not clear what would.
For newspapers the situation is particularly dire—consumer advertising melting away, once su­preme­ly profitable classified advertising gone to Craigslist, pay walls a dubious alternative for all but a few. The music business, fattened beyond recognition by the CD bonanza of the ’80s and ’90s, is making the painful adjustment to a new normal. The film business, so addicted to $200-million behemoths that it seems to be turning out more of them than there are summer weekends, is courting death by blockbuster. Broadcast television is a relic, its audience growing older by the day, its future as an ad medium evidently tied to the demand for statins and erectile-dysfunction drugs. The nimbler, more targeted cable channels are currently flourishing, but disruption waits in the wings: Sooner or later they will almost certainly have to function without the economic cushion provided by intermediaries like DirecTV and Comcast. There is no guarantee that any these companies will survive—though some will doubtless live on as subsidiaries of, say, Google or Twitter, just as once-glamorous Paramount found itself a stepchild of the Nixon-era TV syndication outfit Viacom.
This is not to say that the industries themselves are doomed. If enough people want something—recorded music, say, or serial entertainment on the order of Breaking Bad or The Walking Dead—there’s very good reason to believe a market will emerge to support it. It may take a leap to imagine that market, much less create it. But people are taking such leaps already.
In the four years since Kickstarter was founded by a New York-based music journalist and two friends, the online crowdfunding platform has provided financing for some 46,000 projects, including Oscar-nominated shorts, feature films by Brett Easton Ellis and Garden State director Zach Braff, and an Amanda Palmer album that debuted at number 10 on the Billboard charts. “Hell, there are no rules here—we’re trying to accomplish something,” reads the epigraph atop Braff’s Kickstarter page, quoting a remark Edison made to a worker in his lab. By appealing directly to his fans rather than submitting to financiers’ demands that he give up final cut, Braff raised $3.1 million in 30 days.
It’s up to incumbent media companies to prove their relevance in this new world. Meeting audience expectations is not in itself going to solve the economic problems these enterprises face. But if they fail to provide what people want, whatever else they do will hardly matter. In media as in any business, the companies that succeed are those that focus on satisfying the public, not on protecting obsolete business models. This seems to be a hard lesson to learn. But the conclusion is inescapable: Executives who try to hang onto their jobs without pleasing their customers eventually find themselves with neither. ◼︎

More Essays