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Missing the story on media and technology - August 11, 2008

Two items from the weekend papers had Media Wonk shaking his head over the state of the discussion, at least in mainstream outlets, around the impact of digital technology on the media business--which may be one reason why mainstream outlets--newspapers in particular--are having some a difficult time absorbing that impact. One, which appeared in Sunday's New York Times business section, was a long profile of Time Warner and its new CEO, Jeff Bewkes. The other, which ran in Saturday's Wall Street Journal (I know, who reads the Saturday Journal? Loser bloggers in need of material, that's who.), was an op-ed by Elizabeth Lee Wurtzel (Prozac Nation) headlined, "The Internet is ruining America's Movies and Music." Without putting too fine a point on it, it was one of the dumber things Media Wonk has read on the subject in a long time.

Time Warner: Tim Arango's 2,300 word profile traces Bewkes' efforts to streamline the sprawling conglomerate he took over in January into a pure content company, including spinning off Time Warner Cable and looking to unload all or part of AOL. According to Bewkes and company, the pendulum that had tilted in favor of distribution platforms is now swinging back in favor of content.

''The last number of years, all you have heard about is new and better ways to distribute content,'' [Warner Bros. studio chairman Barry] Meyers said, sitting in his office on Warner's lot in Burbank, California. ''At some point, I think distribution gets commoditized,'' he said, leaving content as the more valuable component.

He pointed at a television screen in his office. ''At the end of it all,'' he said, ''it's just a blank screen.''

In terms of Wall Street's valuation of the company, Bewkes' strategy makes a fair amount of sense. As he laments to Arango, "Dark Knight comes out and it has a calculable earnings lift and the stock doesn't move because the Street factors in something else," like AOL's flagging ad sales. But it's a shame to see a major media company still trapped in the content vs. distribution debate.

On the Web, value is not created primarily by either content or distribution. Users create value out of content through the use of tools that enable them to do something with the content, whether it's to move it, share it, reformat it, store it, discover it, mash it up or embed it. What the media companies most sorely lack is not sufficient content or adequate distribution but a workable mechanism for capturing a fair share of the value users are creating for themselves. Ultimately, media companies need to become not distributors or content owners but enablers.

Wurtzel: Elizabeth Wurtzel's op-ed exhibits the all-too common fallacy of mistaking nostalgia for analysis. Her basic thesis is that we'll miss worshipping rock stars once the Internet is finished destroying the music industry and that nobody goes to the movies anymore. Because of the Internet, or something.

In the era of the online music store -- even if you buy from iTunes rather than stealing from LimeWire, the problem is the same -- no one knows how to listen to a complete album anymore. Everything is slanted toward the hit single. This means that the music industry is oriented toward one-hit wonders rather than consummate musicians, and talent development is just not worth the trouble.
[...]
It's not just the music industry that has fallen apart. Hollywood's motion picture factory is also blundering.

We tend to think of Hollywood the way immigrants envision America -- as a place where the streets are paved in gold. Movie stars might continue to trip the life fantastic, and indeed there are plenty of Bentleys lining the parking lanes of Rodeo Drive. But a November 2007 report, published by the data analysis group Global Media Intelligence, informs us that: "Making movies -- as distinct from owning libraries of fully-amortized films that continue to throw off sizeable profits -- has gone from a modestly profitable activity to one that now generates . . . substantial losses over the initial release of films to all worldwide markets, a period of roughly five years."

It's hard to work up a lot of pity for the overpaid film world. But between Internet piracy, the fact that huge markets like China tend to disobey IP protocols, and a foolhardy tendency of studios to make unwise, profit-sharing deals with bankable talent, movies are not making money the way they used to or the way they should. And now that any old anybody with opposable thumbs can operate a digital camera, international markets have found they favor the locally produced fare over yet another sequel to "Rush Hour." Bombay prefers Bollywood to Hollywood.

Wow. You'd never know from reading Wurtzel that the medium of cinema itself is a technologically dependent phenomenon. It did not, and could not, exist before the invention of chemical film stocks and mechanical film cameras and projectors. Its essential quality--motion--is an illusion created by mechanical technology.

The medium itself and the industry that grew up to support it were expressions of the industrial technology that made it possible. The technology is now changing and so the industry will have to change with it. But to suggest that technology is somehow a new, unwelcome element in cinema is ridiculous. It's a technologically created illusion on a screen.

As for music, it has been an essential part of human culture for as long as we can trace the history of human culture, including American culture. It's the last hundred or so years, since the invention of mechanical reproduction and the industry that grew up around it, that are the anomaly. Newer, digital technology may change the contours of the industry, forcing rock stars to get a day job, but I'm pretty sure music and musicians will continue to be part of human culture.

I don't mind nostalgia. But it shouldn't become a substitute for thinking about important questions.

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