A VC« Blogging About Climate Change | Main | VC Cliché of the Week »
Protecting Content
I had an interesting discussion with a friend last night at a beach barbeque. My friend is in the content business. He brought up my post about DRM and iTunes. He said, "you know its not really Apple's fault, it's our fault (content owners) because we are the ones who require Apple to impose those restrictions".
I brought up the "five devices" restriction and said that it wasn't enough in our family. That led to a discussion of what was right and fair. He made the point that content owners are scared of people taking advantage of their content in the digital realm.
I told him that content owners have two choices;
1 - make it simple, easy, and painless to purchase digital content and live with the risk that some people will take advantage of them.
2 - make it hard to purchase and consume digital content and ensure that people will find other ways to get the content (as happened in the music business).
He then said, "what if we destroy the economics of the content business and we won't be able to afford to make high quality programming anymore?"
It's a good question, but I don't think its going to happen. In fact, I think if content owners take the approach of making their content readily available (meaning free or paid but without ridiculous restrictions on fair use), they will see an explosion of consumption that will make their business better than ever.
Comments (13) | Posted July 4, 2006 in Venture Capital and Technology
Comments
Just the other day, I was talking to a friend about the perils of securing content in a seamless digital world. I agree that Apple's restrictions are not very self-serving either because they wind up hurting their business atleast to some extent.
The ideal case would have been content production houses (music as well as movies) creating a referral based marketing movement on the web to help bloggers sell their own content as well as the house's.
In that light, we would have to give credit to the distribution role Apple played in making a 99c store a reality. Without that, we would not be sitting here talking about the 'future of content distribution' !
Posted by: archana | Jul 4, 2006 8:15:28 AM
on a different note, nice picture with the post Fred!
There was a time when I used to read your blog and think Fred Wilson simply does not need to attach his Flikr stream to his posts because he does not need 'woo' his audience with pictures :)
..and now this !
Posted by: archana | Jul 4, 2006 8:17:58 AM
Consumption, and *purchasing* are not the same thing. If someone downloads GB per day via LimeWire, they're consuming the heck out of it. but that's not a good economic model. Consumption without payment is a death spiral.
Posted by: John C. Welch | Jul 4, 2006 3:01:50 PM
Apple has said years ago that they would not remove the DRM from iTMS tracks even if the record companies wanted them to.
FairPlay would seem to exist for the purpose of tying iTMS tracks to the iPod, not "protecting the content".
Posted by: Adam Fields | Jul 4, 2006 3:10:10 PM
A risk, that they will have to take. Sometimes, its much easier for those outside the circle to imagine such decisions, but they (the music industry) have everything to lose, if it goes bad. And it will take them forever to restore.
Posted by: Vijay | Jul 5, 2006 2:39:45 AM
That's something that no one likes to think of: that without DRM, you're asking content creators and providers to blindly trust the entire world to do the right thing in enough numbers to provide them with a living.
This isn't a bet I'd want to make with the food on my table and the roof over my head.
Posted by: John C. Welch | Jul 5, 2006 10:23:07 AM
The alternative to not making that bet, John, is to have zero control over the distribution of your music as people go underground to get it.
Posted by: kareem | Jul 5, 2006 12:11:35 PM
"..and we won't be able to afford to make high quality programming anymore?"
I'd say that's not a 'what if', but an 'is', and we are already seeing it.
Posted by: jackson | Jul 5, 2006 12:13:46 PM
Fred, by sheer coincidence, I just blogged about this topic this week --ending with the same point your friend left with regarding the future price-pressure this puts on content creators.
In our blog I reference a shocking stat from United Press International, regarding the new rumors about Disney and outsourcing to India:
A "70 percent of all media work is digital and much of this can actually be outsourced...Digitizing archives, logging, and metatagging -- by which all footage is digitized and transcribed so that it can be searched by key phrases - are some of the services which the company intends to provide... Performing craft editing, Indian media in the background can reduce time constraints by completing functions such as editing 100 hours of tape down to a more manageable number, leaving broad editorial control to the holder of the tape."
If it's truly 70%, the question I have to ask is this: are the opportunities for those entering media and entertainment field in the U.S. dwindling? Or does the incremental work generated for the industry by new forms of distribution and industry-wide growth in content creation become offset by this trend? I really hope it's the latter.
Posted by: Megan Cunningham | Jul 5, 2006 3:29:11 PM
It's all about the have's and have not's -- there are plenty of people giving away their "content" every day -- this blog (and this comment) are perfect examples. All the "restrictions" in the world will not protect content owners - just like all the locks in the world won't protect your house if someone really wants to get in. I like your first option - make it easy and allow honest people to be honest. Forget about the few and serve the many. I believe there is a quote out there (somehow related to Sam Walton) about "sell to the rich, eat with the poor, sell to the poor and eat with the rich".
BTW - July 11th is the release of the Long Tail book by Chris Anderson -- we live in interesting times.
Cheers!!
Posted by: Arnie McKinnis | Jul 5, 2006 7:03:45 PM
What's going to happen is the death of the blockbuster and the death of the superstar. High quality (from an artistic point of view) will always exists because true artists are driven to create. Rewards come second or not at all (Vincent Van Gogh anyone?)
The digital future promises a successful (though not stellar) future for thousands more artists of every variety than are able to be commercially viable today. The entertainment industry is largely a locked box these days - you can't be a star without a publisher/producer/intermediary. That is starting to change and will continue to change more.
"Disintermediation" is an over-used and over-hyped term in technology and I think at the end of the day the big studios won't be wiped out. Eventually, one or more of them will realise the truth of the two choices you present and go for open easy access. This will open up huge new markets for them and everyone else.
But there will be a lot of pain in the meantime.
Posted by: Mr Angry | Jul 5, 2006 9:57:36 PM
The music industry works on the same principles as the high tech VC industry, and has gone through the same revolution recently. You can set up a new business online in a few weeks and fund it with a credit card, if you have creative talent and good business skills you can reach an audience and be the latest hot thing on TechCrunch in no time.
In the music industry, if you have musical talent and some marketing smarts you can equip a band and record at home using Pro-Tools, and find an audience on MySpace. The major record companies are a mass marketing channel for lowest common denominator big hits. The good stuff is in the long tail, and musicians can get their music out without them.
Go visit Fractal's Myspace page, follow their friend links to Estradasphere, Headshear and Hazerfan, keep going.... There is a whole connected world of amazingly innovative Progressive/Experimental music being created outside the record industry.
Posted by: Adrian Cockcroft | Jul 6, 2006 12:27:53 PM
Software has been digitally delivered (or OEM'd) for years. It is also not DRM'd (for the most part).
Business seems to be doing fine to me. How many unemployed or underpaid programmers do you know?
Posted by: Jeff Schrock | Jul 6, 2006 7:23:20 PM
Main RSS Feed of All Posts
VC and Technology Posts Only
