Saturday, June 05, 2004

Distribution, Name Brand Content, Cheap Technology Tools

When I left Universal Music in 1999 to go to MP3.com, one of the main things that got me excited about digital music was that digital distribution had an amazing potential to create new markets and access customers who previously couldn't get the product they desired. Of course there are a lot of roadbumps that occurred and continue to occur, but there is an interesting intersection of events that drive how I view media in the future.

Distribution - Throughout recent history there has been amazing growth in the capacity to distribute media content throughout the world. When one considers the growth of radio, followed by television, followed by Cable and satellite TV, followed by the Internet / Digital Cable / Satellite Radio, etc., one sees more and more opportunities for content to reach an audience. There are a lot of interesting implications that result from this that I will touch upon later.

Name Brand Content - I don't know about you, but it seems like there are only 10-15 stations that I regularly tune into periodically. TIVO seems to have made this problem worse. There are a small handful of websites that I visit with frequency, except that RSS readers are making that number grow in an amazing way that I wouldn't have considered a few months ago. For most people, Media content is Friends, ESPN, and Yahoo news. Clearly this content is good, as are the films from the major film studios and the major record labels, etc. etc. The problem with this content is that it is expensive. The businesses that provide these types of media have cost structures that are amazing. The above mentioned increase in distribution means that consumers have increasing methods to substitute consuming/viewing/listening to show/record/game X. If the size of your audiences are shrinking from fragmentation, you either need to find away to reduce your costs to create content, or charge more to the people who distribute the content. It seems to me that the leading point of view today is the later. That is unfortunately because of the third trend:

Cheap Technology Tools - You can produce a record in a much cheaper way than you could 10 years ago. Same goes for movies, books, etc. etc. It seems to me that more and more people are picking up their PC/Mac/DV Cam/Keyboard/ etc. to make a product. Aside from this creative freedom that exists when tools get cheap, business people are also taking advantage of this new paradigm by making feature films with DV Cams such as 28 Days Later. I have a lot more thoughts on these issues, but they lead me to one key conclusion:

Increasing distribution capacity, combined with rising costs of name brand content, when overlaid with the ability to use technology to make inexpensive content, will ultimately lead to a new world where a great opportunity will exist to create new forms of entertainment around a concept many refer to as User Generated Content. That is the subject of my next post.

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