State of the (Media) Union

While I have never been one to condone piracy, at the same time, I have held the **AA associations in great contempt in their ridiculous witch hunts and heavy handed lobbying efforts the last few years.

The root problem I have with the whole battle is not that I think media should all be free, but that DRM and campaigns against fair use hurt the honest consumer far more than they provide a defense against the dishonest.

A new report on NPR today talked about the growing piracy of film & video and that it has indeed been coming for a long time. It's something, that just like music piracy, will continue to grow the longer the industry fails to deliver an easy-t0-use, fair-use model of selling content to the consumer.

Additionally, I think the quote from George Lucas on the topic is spot on when he says that if this continues, the industry of Hollywood itself will have to shrink because it no longer makes sense to spend tens, or hundreds of millions of dollars on a product whose scarcity and monetization you cannot guarantee. (In part because there's no longer any scarcity of content - and DRM is the only scheme out there to try and create a false scarcity, and it's not going to work.. nor do I believe it should).

This is going to cause a lot of heartache and extremely painful contractions and re-alignment in our business in the next 10 years. For my part, I'm hedging my bets by extending what I've learned in this business, into other businesses as well.

Amen

You know, out of all the things Mark Cuban has ever said, this is undoubtedly my favorite post to-date.

I understand some people think wearing a suit provides them with a certain level of stature. It gives them confidence. It helps them feel good about themselves. Well let me be the first to tell you that if you feel like you need a suit to gain that confidence, you got problems. The minute you open your mouth, all those people who might think you have a great suit, forget about the suit and have to deal with the person wearing it.

Amen.

The Future of Producing

This great article over at Markewatch talks about the importance of video as the "Future of the Internet," and the author, Bambi Fransisco (is that *really* her real name?) makes a very prescient point I've talked about in the past:

As platforms to view content explode, and content is made available by anyone, the fragmented audience base will continue to force companies to lower their production costs. This, in turn, will compel the typical 1% to 2% of prolific content producers to venture out on their own, fragmenting the creators of content and causing them to speedily produce content that may or may not have been their best.

At the end of the day, Hollywood changes.

I believe that in some ways, we're almost looking *back* at the old studio days with talent, not because it's the way to control distribution, but because there is room for companies out there to foster collaborative and resource-rich exclusive relationships with talent once again.

With the big mean nasty world of having to have insurance, and payroll and all the stuff that comes with any (small) business, many creatives (producers, directors, writers) don't *want* to run their own companies that have to deal with that stuff.

I think that a new model of providing meaningful infrastructure to new creatives would be a very workable option... somewhere between the old style studios and "housekeeping deals" and the "hurry up and grab as much (usually non-exclusive) film school student and user-generated content as you can" approach a lot of media companies seem to be taking these days.

The challenge is to figure out what constitutes "meaningful infrastructure" and how to finance it without going too crazy, but provide an exciting and fertile ground for the next generation of really good entertainers and storytellers.

Innovation & Litigation

There are two parts to this post about a new study that had a great comment about large companies ability to innovate

Another interesting finding in the study is that big companies aren't very good at leveraging their scale to innovate. This is an issue that comes up often when we discuss patents.

People make the claim that small companies can't out-innovate large companies because those large companies have all the money. However, the study suggests that's not true at all. Larger companies can be woefully bureaucratic, slow, inefficient and risk averse. That leaves plenty of opportunity for smaller companies to out innovate the larger ones despite the appearance of a disadvantage in money and scale.

I can unequivocally confirm this.

I can think of two root causes that I see in business operations.

1. Job Protection via non-action (If I don't make a decision, I can't be blamed for it if it doesn't work out well, and therefore won't lose my job).
2. Risk Aversion - For a while, my personal/professional attitude was "what the hell, let's do it" and try some risky projects (hm, maybe this ties into the above too) - the current ligitation stats in this country scare the crap outta me, and should scare everyone.
   

Being risk averse as a larger company, isn't necessarily born out off paranoia, but out of the reality that is the massive number of lawsuits that any large company faces, simply by being an easy target. This statistical excerpt from this journal at Sarbanes-Oxley Compliance Journal put the litigation atmosphere in the US in a very stark light:

U.S. Businesses Face an Average of 305 Lawsuits Worldwide, While Spending 70% of Legal Budgets on Litigation

Billion-dollar+ companies carry biggest litigation burden, fielding 556 cases on average, almost half facing 50 new suits annually.

I have two words for y'all on that topic.

Tort. Reform.

Which still won't make folks worry about losing their jobs any less, I suppose.