I ended Part One with this line – Distribution has been in the hands of the powerful – the gatekeepers of creativity, as it were. They still man the gates, but the walls are no longer standing. Those two sentences of hyperbole would more accurately have ended with – “but the walls are beginning to crumble.”
The bottom line in content production is the bottom line. It costs money to produce programming. And in spite of the democratization of content production tools, at the end of each day producers still need a roof over their heads. So, although I believe that better productions can be created for a lot less money, there still needs to be a way to monetize the production process.
As Gates showed last night in his CES presentation – the delivery of content is driving the Consumer Electronics Industry and content is still king. What are you going to want to watch on your Video iPod, PSP or 80″ HD screen? It won’t be hours of Rocketboom (as wonderful as Ms. Congdon may be).
It will be content that captivates.
For the last half century, most of the moving visual content we’ve consumed has been delivered to us by over-the-air broadcasters and their cable caster cousins. We’ve watched because the content has been of high enough “quality” to draw us in. (I’m not making a value judgement on the amount of garbage we’ve consumed – other than to say that the production values of that garbage have been high enough for us to be engaged by it.)
What began in the fifties as a few networks delivering content has grown into a plethora of content deliverers – all competing for the same ad dollars to produce their content. As I said yesterday, our “contract” with the broadcast content distributors was that we would watch the commercials that paid for the content – and they would provide that content at no charge to us. VCRs and DVRs have helped us more easily break that contract. Yet, we still want to watch the content that advertising has paid for. But advertisers are no longer willing to spend the kind of ad dollars they once did to reach a rapidly diminishing broadcast market – they are no longer willing to pay for our free content. (Read Terry Heaton’s well-reasoned essay The Economy of Unbundled Advertising to get a handle on where ad dollars are going.)
A hit TV show like the Kinnon family favorite, House, costs millions per episode to produce. Without getting into the realities that the show won’t produce a profit for the producers until it enters syndication, the question remains – who is going to pay for it? Will there be a million of us willing to pay two bucks an episode to watch it – downloaded to iTunes? When you consider that the average TV show is just over forty minutes after commercials and credits, you’re paying the same price or more for one TV show on a per minute basis, as you do for a movie rental. (Arguably House is better written than much of the movie dreck we consumed over the Christmas holidays.) And a million two dollar downloads is still not going to pay for House.
So what are we faced with?
I’ll talk about that in Part Three.