Clueless Traditional Media - Andreessen Hits Nail On Head
Over the weekend, I was talking with a friend about the increasing popularity of downloading TV shows and movies. The main point I was making was that the companies that create the great shows seem totally unable to supply their content such that people can watch what they want, when they want. For example, if you live in the UK and are a fan of the show Heroes, then you’ll have to wait until well into 2008 before the BBC will show Season 2. Whereas, in the US, the second season is well underway. Heroes fans all around the world want to watch Season 2 now; and, given that people can stream downloaded content from hard drives on their computers directly to the TVs in their living rooms, there’s no difference in experience watching downloaded content compared to broadcast content. So what are people doing? They’re downloading. This isn’t a niche activity, it’s now completely mainstream.
It’s been a bit of a mystery to me why the TV and movie studios haven’t been moving forward in interesting and effective ways to meet this new demand; just as it was a mystery to me in 1996 that record companies were ignoring the fact that people were starting to download music. This morning, I was reading Marc Andreessen’s blog, and he made a fundamental point that I think explains the reason why.
Lots of people have spoken about media companies being afraid of cannibalising their existing revenues if they adopt new business models. While that fear of reduced profits is undoubtedly real, that can’t be the fundamental reason, because their favoured alternative scenario of “doing nothing” is almost certainly going to be bad for their bottom lines. What’s required is a little business creativity, to go with the artisitic creativity of the writers, directors and actors that they employ. In short, they need to be more entrepreneurial. The opportunity is actually to make more money from their assets, not less. Marc, though, hit the nail on the head. The problem is this: traditional media companies are large, established companies - any entrepreneurs they once had (including, of course, their founders) have long since left the building.
Marc suggests this is a training issue for the media companies. That is, train their employees to be entrepreneurs. I don’t think that’s going to work. Entrepreneurs rarely like working in the environments of large companies. That’s because such organisations tend to be too beaurocratic to “make things happen” easily; and there usually at least a few self-important, low-quality, middle managers around whose interests are badly misaligned with the interests of the company. Perhaps 80% of the time, such middle managers would rather deliberately do the wrong thing, than do the right thing. Entrepreneurs usually like to work in companies where everyone is focussed on the same objective - make the company succeed; and where individuals can, and should, make a difference.
So it looks like traditional media companies are going to have a difficult job figuring out what to do next, as the disruption of their industry happens all around them. I’d been hoping that they’d figure the “right thing” to do next (hint: make TV shows and movies available for people to watch when they want to watch!). Now, though, it seems pretty clear that the odds are stacked against them - their problems are actually built into their “DNA”…
Asam Bashir wrote:
I think the BBC has more internal problems then the rest of the industry put together - it’s lacking the strategic understanding and direction from the very top and something needs to be done pretty soon, the BBC iPlayer fiasco is just the tip of the iceberg. For an organisation which consistently makes the top ten UK iTunes podcasts downloads it should clearly understand that it’s end consumers want this form of delivery and yet, instead of making it’s programmes available for sale in iTunes it wastes money trying to develop it’s own proprioritory format. There are whole series that it could be selling in iTunes not only to UK iTunes customers but worldwide. It thinks it has time but as you say, people don’t want to wait and will download the content instead meaning that those potential sales are lost forever.
In the meantime I’m recording the whole Heroes season 1 in my EyeTV so I can watch it where ever and on whatever device I want - and it’s perfectly legal. NBC and BBC have lost potential sales because Heroes is not available on UK iTunes store.
Go to most Bit Torrent sites and you’ll find a huge amount of BBC content, old and new, obviously there is a global demand but BBC is not going to make any money but one thing is certain, whatever BBC does with iPlayer in the future, we know it’s going to be hideous lamerware that you’re not going to be able to play on the device of your choice….
Posted 06 Nov 2007 at 3:45 pm ¶
simon wrote:
Absolutely. I gave the example of the UK being behind on Heroes. In the US, they’re behind on Dr Who and Torchwood, both BBC Series, so people get those from BitTorrent in the US. And there’s other great content that the BBC produces e.g. mini series like Jekyll, which go down well with American audiences.
As for the BBC player stuff, all I want is to be able to download a standard format video file and then I’ll stream it to my TV. It’s not rocket science; every tiny video podcasting company on the planet can mangage to supply their content like that.
Posted 06 Nov 2007 at 3:56 pm ¶
Mr X wrote:
On the iTunes thing - actually much as respect what apple has done here I think the BBC did the right thing with going their own way - they shouldn’t be at the whim of Apple - on the other hand they have technically messed up with the direction they went. To be fair to the BBC, one the consequences of the Birt years is that they don’t own a lot of the content they broadcast, so they are not free to go DRM free. Also oversees sales help cover the costs of a lot of the more popular series ( how much did it cost to do the last top gear stupid stunt for example? ). They are also not really free to explore other ways of making money - for example download free but embed ads - imagine the fuss ITV would make!
Personally I see the TV license as a price worth paying for a strong, uniquely British cultural world view being available both home and abroad.
So as such I don’t really care if the US don’t pay, I like the fact that they are watching measured Attenborough, rather than ‘When animals Attack’ crap.
So the point is really what should they do doing with the money, and not so much how can they make more.
I loved the Paxman interview clip - great face expressions
http://www.youtube.com/watch?v=XRyW6n5699Q
Or more seriously
http://www.youtube.com/watch?v=kkrIUjp8WmM
Note these clips are posted by the BBC on youtube - a step in the right direction.
Posted 07 Nov 2007 at 10:05 pm ¶
Mr X wrote:
On the main point of big companies and enterpenurial spirit - you can do it - the very best companies do. For example toyota and kaizen - creating a culture of improvement ( however there are signs they are struggling with results of even more growth due to success ).
A really interesting recent book is
‘The science of success’ by Charles Koch - essentially the leader of one of the worlds, if not the worlds largest private companies - he talks about educating his work force on opportunity cost, marginal analysis, that one size doesn’t fit all, ie using your head and focusing on what is important, how they are very careful in spotting the sort of middle manager you are talking about and ejecting them from the organisation, paying people by the value they create etc.
He say’s very sensible things - like it’s brain dead to do a 10% budget cut across the board or have fixed budgets - it’s lazy and counter productive. Or he would go public ‘over my dead body’ because of the damaging short-termism of the markets.
The bottom line is he tries extremely hard to create a thinking, enterprenurial, lets all focus on what’s important company, and, despite the envitable difficulties has succeeded well enough to make his company massively successful.
There is a bit of politics in there ( he is a libertarian ) and some sloppy thinking - he argues free markets are the best way to protect the commons and at the same time rails against the short-termism of the markets - you can’t use complete free markets to protect the earth for the future as it’s in no-ones interest today - free capital does best by maximally exploiting and moving on - if you can spend today on tommorrow with no consequences then it will - you can use market tools to force companies to pay ‘the full price’ but that price actually has to be set by politicians today as it’s artifical: the people of tomorrow don’t exist - so polluting the sea is actually free and if somebody owned it in a free market they might decide the best use of resources is to let you pollute it, make shit loads of money and then move into telecoms…..
Anyway I recommend the book - starts off a bit slow, but some interesting gems.
Posted 07 Nov 2007 at 10:28 pm ¶
simon wrote:
Re: The BBC situation. I agree that the license fee is great value for money, especially compared to my Sky+ subscription. And yes, there are challenges moving to new models. However none of that that alters the reality that viewing audiences want to watch what they want, when they want. And not only is that what they want to do, it’s what they’re doing.
And by the way, the old ways of doing TV advertising are already dead. Whether people are watching TV from a Tive/Sky+ box, or streaming downloaded content - they’re not watching ads. People simply don’t need to sit through ads for irrelevant ads they don’t care about anymore.
The problem for the media companies is that once people have experienced watching whatever TV program or movie they want, whenever they want it, there’s no way they’re going back to the old ways. It becomes their preferred way of consuming TV. This is the way the world is in 2007. Any TV company that doesn’t adapt is ultimately going to die…
Charles Koch’s book sounds interesting, I’ll check it out.
As for large companies being entrepreneurial, I agree there are some large companies with an entrepreneurial spirit, but they’re very much the exceptions to the rule. It’s fundamentally much harder for a larger company to be entrepreneurial than it is for a small company.
Posted 07 Nov 2007 at 11:12 pm ¶
Mr X wrote:
I guess we are in agreement, what I meant with the BBC quote, but which I didn’t make explicit enough in the detailed argument - is that the BBC shouldn’t give a flying fuck about people abroad being able to free-load - ie DRM free.
Obviously at some point they will have to deal with people not having TV’s and the question of enforcement of the ‘license fee’. They could either move to a subscription model ( and hence extend outside the UK’s bounds ) or keep a license fee but have it on broadband - it if you have over X megs then the only reason you need that is your downloading video ( it doesn’t matter whether it’s BBC content or not - just like you still need a TV license even if you just watch ITV ).
The choice between ‘choice’ (subscription) and enforcement ( license ) depends on your attitude to paternalistic elitism - ie is it the BBC’s job not just to give people what they want, but what they should be watching?
That’s the fundamental problem they struggle with that’s stopping them moving forward with various models.
Personally I think they worry too much about too much protection resulting in them becoming irrelevant - they actually have pretty immediate and direct feedback every day with viewers figures - so it’s easy for them to measure the mix between safe programs and taking a risk, between maintaining support for the license and being a force for education and enlightenment.
Posted 08 Nov 2007 at 11:43 am ¶
simon wrote:
Yes. The only thing I would say, though, is that DRM-free != Freeloading. All these companies spend far too much time worrying about what could go wrong; and not nearly enough time thinking how to innovate.
Douglas Adams made an interesting point when he said something like - Anything invented when you’re under thirty seems like a great opportunity to make money; anything invented when your over thirty seems like a threat.
Obviously, that’s a generalisation. But I suspect it may be part of the problem; in addition to the problems with lack of entrepreneurial spirit.
Posted 08 Nov 2007 at 1:22 pm ¶