Interwood (or Hollynet?)

I'm a fountain of weird ideas recently; here are some thoughts on business opportunities around the WGA Strike, or more specifically around the industry changes that have led to the root causes of the strike.

The Industry

We're talking about the whole entertainment industry here: TV stations, book and magazine publishers, and music labels are all in the same basic business.  They're competing for your time, attention, and dollars, with each other and other stuff in your life.

There are a small number of massive conglomerates that control an overwhelming amount of this media, especially in TV and films.  This is a natural consequence of the structure of the industry, which has been dominated more by the cost and complexity (and value) of the distribution networks than production costs.  You can make a TV show, but how do you get it on the air, into syndication, into stores on DVD?  Companies that build up those networks have been bought by one of the big conglomerates, more for the value of the networks than anything else, and those distribution networks made part of the larger one.  Redundant parts are eliminated, efficiencies created, money is made.  This consolidation has been ongoing for decades, and would naturally continue until there are only two or three left.

The Change

So what's different now?  The Internet is.  Their massive competitive advantage disappears as the barriers to entry for all of these forms of entertainment approach zero.

If I want to write, I can just start throwing stuff up on web pages for the whole world to see for free or not very much.  And build up a massive audience (hi mom!).

Musicians can record their compositions or play their instruments and put up mp3s.  They can get some inexpensive video equipment and post their performances to YouTube or similar sites.

Animators can create entertaining shorts and post them, and build up a following.

More importantly, over the past few years people have started actually figuring out how to monetize all of this.  Build up a fan base, host ads, sell merchandise, make a good income.  You may not create a multi-billion dollar Borg-o-tron big company, but people have built very successful businesses and made a good living from things that used to require publishers/syndicates/labels to actually make money with.

The Opportunity

There has been much wringing of hands about the death of the skilled writer/musician/director/actor/animator/illustrator in this new world, and I think the opposite is the real truth.  There will certainly be a lot more crap out there purely due to the lower barrier to entry, but the same thing changes the game for those who have real skill and talent.

One common thread I've seen across many of the posts on writers' blogs about the strike is that the nature of the conglomerates means smothering executive oversight of shows, destroying creativity and generally killing most of the originality and risk.  The Internet is different, the target isn't a massive hit that appeals to everyone and wins its time slot, it is entertainment that appeals strongly to a vertical silo.  You can take risks; you can do things that are very different, because there's a good chance the audience for what you're doing is out there waiting for it, and is profoundly bored of the mostly bland crap out there now.

The Business

The big opportunity I see here on the business side is a matador-like sidestep of the current business models.  Take all the things they're struggling with, the advantage of not having entrenched interests, and make a stake in the ground in the place the industry will have to go eventually, but doesn't want to.

Distribution

First, bypass existing distribution channels completely.  This is the really hard part, but it is much easier than it was a few years ago.  Ad-based web content plus web store merchandising, the item the AMPTP is claiming they want to study the viability of for the next three years?  That's the entire business.

Creation

Work with the people who create the content, not against them.

Give them the stake in the success, sign mutually beneficial union contracts in the spirit of building the enterprise for everyone's benefit.  Create a bigger pie, don't fight so much over the size of the slices.  Work with them to make sure everyone is treated fairly and well.

Give them creative control, don't play it safe.  There's an audience out there for most anything well done; give the people who make the high quality entertainment the opportunity to find their audience.

Accounting

Competing in an industry famous for its unethical account practices, I say don't just be ethical.  Be open, to a ludicrous degree.  Take a cue from the Open Source Software movement, don't just be more open than the big guys, not just more ethical.  Be completely open, be open about absolutely everything, open all the books at all times for anyone who wants to see them.

I would not blame employees of the media companies for distrusting everything they say, especially about money.  The only way to take advantage of that, the only way to really gain the trust of the creative talent and workers who actually make it all happen is to be so open that even they are uncomfortable.  And there's no way the big boys would follow you down that path.

Why The...

The point of all of this is to have the company become The Place that the most creative, most talented, most skilled people in the industry want to work.  The place that new ideas are pitched to first, whose offers are accepted instantly, who has the reputation for the best work and the top people.

The focus of the management is to constantly drive towards that goal, and while naturally there would be lots of oversight to make sure the costs are kept under control (they'd be public knowledge; with everyone being able to look at your books you're certainly motivated to make them not only honest but totally defensible) I think the profitability would come naturally from the incredible creative content that would quickly and reliably be created.

It sounds like it would be an absolute blast, wish I had the money and contacts to make a go of it.  I don't think the startup costs would be too bad, but rule #1: Pay people for their work, don't try to bootstrap it on the cheap.  I don't think you get a reputation for being sensible when you do things on the cheap, I think you get a reputation for being cheap and wanting to get away with things.  If someone does something valuable the only real way to show it is to compensate them for it accordingly.

Comments

[R. Francis Smith]

Can I share this on the next Sturgeon's Law? I'm planning a commentary on the WGA (and a look ahead concerning the DGA and SAG) strike to clarify my position (after some confusion on another podcast, but never mind that), and frankly you just nailed a bunch of it, so why not give you the nod? :)

(Or, heck, if you want to say it yourself, we can make that happen, too...)

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