[Manic Monday] Should Digital Distribution Channels Invest In Producing Content?

[Manic Monday] Should Digital Distribution Channels Invest In Producing Content?

[Manic Monday] Should Digital Distribution Channels Invest In Producing Content?
[Manic Monday] Should Digital Distribution Channels Invest In Producing Content?

These might be interesting times for content creators the world over, as it is increasingly becoming cheaper to produce and distribute content  – music, movies, games, literature – and there are also a multitude of ways to enjoy such creations, where one creation can lead to another (for instance, a book inspires a movie, a movie inspires a game, and so on), not to mention the ways it can all interact and integrate. Yet times are not as rosy for content producers, especially in the ‘traditional’ sense.

Producing content, any content – music, movies, games, literature – used to be a significant financial undertaking. A large amount of hardware, space and expertise were required, and that meant money. Investments, naturally, would only go to the content that would be deemed by a number of people (read: bosses) to be of the highest potential to get return on investment. Judgements like this would depend on a lot of factors, but it all comes down to how big (or deep-pocketed) the potential audience is, and what the sales history is for similar products.

So of course, these content producers, essentially investors of creative work, would want to tightly control distribution and monetization – it’s not right or wrong, it’s simply business. So when even production costs have fallen, hardware costs have not fallen as much, and neither has expertise (such as the good ‘ears’ of a music producer or a sound engineer, a casting director or scriptwriters). Control of monetization, or at least where money can still be made in these increasingly digital times, has shifted from a painstakingly built ecosystem of producers, factories, and distribution channels (like CD stores), to gatekeepers like ISPs and telcos.

Now, ISPs and telcos are companies that put business forward too – so to ensure they keep making money, some have gone as far as investing in their own content, or at least aggregating content directly to the content creators (and not the ‘traditional’ producers). The business logic is sound – if the artist/creator can produce their own content just by funding them, then why go through a content producer? The less parties involved, the less amount money that needs to go around hence larger profits. The artist, funded directly by the new digital gatekeepers, would use that money to fund themselves, get or rent needed hardware and hire expertise to create the content required by the new ‘investors’.

On paper, at least, it seems like a good strategy. Especially the piece of paper stating how much profit is gained. Ultimately, the customer will decide with their wallets. A sound business strategy that may look good in the numbers, may or may not be good for the actual content offered to the public. Is it good? Is it bad? Is it an extension of the telco or ISP’s ego, or is it something that the artist will know their fans will enjoy (and thus eventually pay for)?

It still does not bode well for the content producers either – where at one time, they were the guys who determined if something would hit the market or not (and be successful or not), nowadays content will hit the market regardless, and it is up to these content producers to reinvent themselves as a business offering that would enable a scalable business structure for these artists on a level they could not do themselves (i.e. global distribution, management of multiple business partners, sales and royalty reporting, human resource management, press and PR management). If they can’t reinvent themselves, one by one their artists would release themselves from their contracts, create an independent management company, and cut business deals directly with those who hold the purse strings today.

I’m a big supporter of meeting brands with bands (or other type of content, for that matter) to create a different content offering that may or may not be free for the consumer (usually provided that said consumer buy the brand’s products), but I’m not sure I’m a fan of revenue generators investing in their own content. At the least music labels had music producers, music directors, A&R directors which still chose new artists based on the merit of their talent and music – would the telcos and ISPs be able to do the same? Or would they just concentrate on content that could sell well and sell fast? Would they be interested in building an artist’s career? Would they take the time to meet with the press, do TV talk shows, fan meet & greet sessions to break the artist, to make sure that not only the content sells well today, but the content sells well tomorrow and ten years from now?

Time will tell. Unless you have your own conclusions.

Ario is a co-founder of Ohd.io, an Indonesian music streaming service. He worked in the digital music industry in Indonesia from 2003 to 2010, and recently worked in the movie and TV industry in Vietnam. Keep up with him on Twitter at @barijoe or his blog

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