I recently came across an interesting article entitled My Beef With Big Media by broadcast entrepreneur and maverick rich guy, Ted Turner. In it, Turner argues essentially that the broadcast business has become the domain of less than half a dozen entertainment cartels and is the worse for it. Why? It is because Turner, who founded cable channels TBS, TNT, CNN, and TCM, says he couldn't do that all over again even if he wanted to. There is no room for independents, mavericks, and upstarts in the broadcast business anymore.
During the course of his well thought out diatribe, some thoughts about the music busines that had been rattling around in my brain began to crystalize. This entry is an effort to write them down. I don't know if they will be of use to anyone else, but hey, this is my diary.
The crux of the thought is ultimately that the people currently running the movie, broadcasting, and music industries are measuring success using metrics are completely wrong. Ultimately, they are using management techniques developed for the mass production of material goods during the industrial era and applying them to a medium that is almost completely ill-suited for them. The result is huge profits for a small group of investors and media insiders, but, net loss for everyone else.
There are many benefits to old school industrial consolidation. Administration and mechanisms of production are centralized. Larger, consolidated entrerpises benefit from larger and more diverse markets. Supply can be more carefully regulated. Manufacturing costs can be minimized. In the end, all of this results in more revenue and less overhead. The dead hand of Adam Smith moves the market forward, resulting in higher quality at reduced consumer monetary cost. Everybody wins, right?
The problem with applying these techniques to the media like television, film, and music is that it is easy to lose sight of what these industries are supposed to produce. Like other industrial enterprises, one might think that the raison d'etre of these businesses is to make their owners money. Money is a secondary consideration, however. The real reason that media enterprises exist is because they actually produce culture.
One need only look at the current controversy over file sharing to see that this is so. The music cartels say that file sharers are criminals because they are infringing a right that only the cartels are supposed to have, namely media reproduction. The general public tends to look at the matter differently, however. File sharing is seen by them as a method of cultural exchange, and, culture is the intrinsic property of any member of the society associated with it.
By looking at movies, television, and music as produced culture, it is also easy to see that industrial consolidation is almost precisely the wrong way to manage it. It tends to place production decisions in the hands of fewer and fewer people. It also locates it in fewer and fewer places. It also makes money a more central factor in cultural decisions; the people who run these businesses today tend to have more of a "money" background than a "culture" background because the corporate mission statement is more financial than cultural. Culture thrives on diversity, being available in many different forms in many different places with low cost to access for its consumers. The current trend in media management does none of this.
So what is the solution? I don't really have one, except to say that media is probably one of those businesses that run best for everyone when it is making a profit, but only a small to modest one. The real goal should not be to make one CD sell 10 million copies; it should rather be to make 10 CDs sell one million copies, or better yet, 20 CDs sell half a million copies. Current industry excutives have opted to maximize their profit by reducing the cost required to duplicate a CD, making the 10 million seller the best bet. What they need to be doing is structuring their costs so they can make a modest profit on more of the million sellers, or even better, figure out how they can place the reproduction costs entirely in the hands of the cosumer (through file sharing) and still make a profit.
I keep thinking back on a quote by Jerry Wexler, co-founder of Atlantic Records:
It used to be that when you said to someone in the music industry 'I need a note', they said 'what key?' Now when you say 'I need a note', they say 'at what rate of interest.'
I can't help but think that industrial consolidation, where companies that make consumer appliances, eletronics, and even distilled spirits, has something to do with this.
on 2004-08-02 at 3:27 p.m.
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