It is undeniable that at the present the entertainment and media industries are in a crisis. The business models utilized by the major industry moguls are no longer applicable in this present digital age. The Internet has given the consumer more control of the market than ever was imagined. Person to person file sharing has revolutionized the way we as individuals share information, but it has also thrown an enormous wrench in the economic affairs of the entertainment industries. DVD and CD sales have been steadily declining for years and both the music and film industries are now facing the question of how to update and adapt themselves to create a successful business model to survive in this digital era.
This issue of creating a business model for the digital age is particularly pertinent to me as it directly impacts my future. I am currently an aspiring independent film producer, and I will be entering into this world soon after graduation. It is of paramount importance that I take this issue of digitalization extremely seriously, because it is only becoming increasingly more difficult (economically speaking) to succeed at my craft. Fewer and fewer independent films get off the ground, as Hollywood continues to be affected by piracy and file sharing. I and others like me are the future of the film industry—we happen to also be very well versed in the intricacies of the Internet. We must utilize this awareness to be proactive and make the appropriate adjustments to quell the crisis facing our futures.
In my final paper and presentation I will set out to bring some clarity to this issue facing the film and music industries. In so doing I will examine the future of digital business models in the following three ways: first I will define the potential digital business models that exist; second I will delve into the history of digital business models within the entertainment and media scope by examining both successful and unsuccessful cases; finally I will look to the future of both the film and music industries in an attempt to come up with appropriate business plans for each—in doing so I will examine their current business strategies and how they have been unsuccessful.
Here is my slideshow, please check it out to further understand my view on the future of the entertainment industry’s business models.
There were a couple questions I had about the presentation that I didn’t get the chance to ask in class.
1. You had that chart that showed the drop in DvD sales, but that drop of about 5 billion or so seems to have leveled off since about 2004. Wouldn’t that suggest that file sharing ISN’T hurting sales anymore or that CDs offer users an experience that downloaded files somehow do not?
2. Do you have any examples of a donation model (like the fan fiction “tip jar”) where people can upload their works for free but ask for donations to support their efforts?
3. Do you think statutory licenses have any place here, and if so, who should be involved? Should it be between the State (who then passes it along to copyright holders in general somehow) and ISPs? Studios and individual distribution sites?
1. The drop from 2007-2008 has been 2 billion dollars, so it is pretty significant, and just the beginning. Sorry for the inaccurate graph.
2. I have not really run across many of those sites, most look for donations before making the work, because it is so expensive to make films. I did find a bunch of interesting models tho for film, if you want to check them out, they are in a PDF on this site
http://csb.aftrs.edu.au/index.cfm?objectid=D9B4DB58-145E-3FE8-82AF31AA84C744BD
3. I think statutory licenses do have a place here. I think it would probably be between the studios and distribution sites, but in my plan I want the studios to create their own sites, so I do not know how many independent sites there will be.
yeah there was one other question I wanted to ask. Great presentation by the way. This is interesting stuff and I too am interested in business models (my topic is ASCAPs digital strategy)
You mentioned that with more and more artists/bands leaning toward the Radiohead model, record labels would cease to exist in 10-15 years. I’m not sure how how I feel about this….there are so many recording artists out there — all the Britney Spears types — who really need these labels to make it big. Britney and the like aren’t writing their own work, they really depend on the songs writers and producers to make a hit. So I’m not sure how a Radiohead model would work for all the Britneys out there. This isn’t to say that the label might be restructured into a new type of entity that no longer has that BIG RECORD COMPANY title, but I don’t think that they will be able to dissipate.
Maybe I misunderstood your point…what do you think?
I think I may have rushed this point a bit. I think that the record labels in 10-20 years will significantly be reduced. With the popularity of facebook, myspace music, and all of the other blog driven facets of the Internet, I feel as if artists will successfully be able to reach enough people to get their names out there; look at Girl Talk. Sure, maybe the record labels can withstand all this competition, because they are a huge asset to creating stars, but I do feel strongly that it will be significantly reduced.
Yes, that was an excellent presentation! I didn’t realize films were that expensive to distribute. Is there a time frame in which they are restricted to showing? There’s a dollar theater back home (literally $1, or $.50 on Wednesdays) to see movies on the big screen, but they are movies that have been out of theaters for a couple of months/right before the DVD comes out, so I was wondering if that or re-releasing a film in theaters (like that 2 week Toy Story re-release special) is a potential way of getting more money.
And 3D and IMAX is definitely a good and awesome direction for movies to head to encourage folks to go to the theaters. When I saw Pixar’s Up in 3D, the guy next to me was trying to record it but realized he couldn’t since it was 3D and that doesn’t capture right… hah.
As long as a theater wants to keep the film running it can typically run it, as it purchases a copy of the film print, essentially licensing it, there isnt a time period you can usually show it in, it just becomes less and less profitable as the weeks go by. Typically if a studio wants a theater to keep its film running than it offers the theater a higher percentage of the ticket sales. In the case of your theater I presume that either they are doing it and not telling anyone or they have struck a deal with the studios.
Great presentation!
My question was similar to Danny’s.
Couldn’t one argue the Radiohead/Metallica model worked because they were already well-known bands? They needn’t the help of a record label to get their name out for promotion’s sake, since they already have a loyal (and large) fan following. Would you agree that this model only works for these bands who have already made it big and thus can afford the lack of promotion? It seems for an unsigned artist, promotion is the hardest part of “making it,” and this seems to be something record labels can provide on a grander scale than perhaps the artist alone can.
As I said to Danny I do feel as if social networking and blogs are becoming just as powerful as a record label, but i do agree that marketing is a huge factor. Bands do not necessarily need a record label to hire a publicist tho, which is also an effective means to get your name out there.
My question is also in regards to the Radiohead release model. In addition to the fact that Radiohead is a well-known band that did not need a record label to promote it, do you think that the novelty of the new model when done by Radiohead and Metallica is part of what made it a viable option? While I agree with you that it was a brilliant idea on their part, and is a good possible alternative, do you think that it would remain equally successful if it were to become commonplace? I feel that part of what made the Radiohead release so successful was that everyone appreciated the unique gesture and out of respect and gratitude, people contributed. The release got so much attention and was such a groundbreaking gesture of good faith that people wanted to be a part of it and show their support. But if this sort of pay-what-you-want model became standardized and expected, would people really still be willing to contribute so readily on a regular basis for all the music they acquire, or would the what-you-want just become a lower and lower number?
Well I think that the pay as you want model would definitely yield a wide variety of results, but I think the most important thing is that this is only for the initial release of the CD. After it is released it will be sent into the all you can eat P2P sites, where additional sales will be made.
I had a couple questions about the distribution model, aka streaming high-quality movies that are in theaters to your home.
1. About how much would you charge each customer per movie?
2. What percentage of theatergoers do you think will skip out on the theaters once this service becomes available?
1. I think that the price for streaming high quality movies should be less than the price of a theater ticket so I was thinking around 8.99 something like that. It must be reasonable, and significant enough to make up for the loss in DVD sales.
2. I think that, as long as new movies maximize technology and create an unmatchable theatrical experience, than the drop off should not be overly significant, especially since the online movies would come out a few months after the theatrical. 2-3% maybe?
P.S. Good call on the 3D movies.
http://perezhilton.com/2009-12-02-3d-sequels-are-taking-over
Hey guys thanks so much for the interest in my presentation, I have been really busy writing this paper amongst others. I will get to all of your questions as soon as I have a chance. I don’t mean to take so long, but it’s a hectic time of the semester for me.
Greg
Again with the good calls…
http://perezhilton.com/2009-12-10-twilight-is-going-imax