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I teach a course in Georgetown University‘s Communications, Culture and Technology graduate school called “Creative Industries: Reinvention Amidst Disruption.” In the interest of preserving my opening lectures leading into discussion, I will be posting transcripts here. The following is from the first class on August 28, 2014.
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How many of you are familiar with the term disintermediation? Basically, it’s the idea that the former protocols for information dissemination have been upended, or radically reshaped by digital technology. The music business provides a pretty great case study for this phenomenon. The industry experienced a profound disruption in the early 2000s, and the response ranged from reserved to reactionary. So we’ll be taking a closer look at the histories there as we move through the course. It’s not entirely a matter of forensics, because for better or worse, the big entertainment companies are still around, and to a large extent they’ve managed to adapt to the new realities. Ultimately, it is this adaptation that forms the basis of our investigation.
When we talk about disintermediation generally, it’s about the reduction of control that various gatekeepers have over how content or information is accessed or distributed. The reason I find this all so fascinating is that there were a lot of predictions back in the late 1990s and early 2000s about what kind of future the Internet would engender. Many of these predictions came true, but not always in the ways that the earlier visionaries may have envisioned. For example, it is true that the absolute authority of gatekeepers has been reduced. As someone who has been involved in creative pursuits my entire life, I can tell you it’s no small thing to be able to record at home and publish globally with a single click. Back in 2005, even blogging seemed like stealing fire from the gods. We take a lot of this for granted now, which isn’t actually a bad thing. It means that the democratization of information technology is a real phenomenon. But devout belief in the idea of a digital realm without gatekeepers is also folly, as we’ll soon discover.
Access to the marketplace has no doubt been cracked wide open. But distribution of the technology that facilitates this access—whether we’re talking about broadband or smartphones or media-making software—is still very uneven. And that’s why we’ll be looking into the overarching policies that shape digital culture, from telecommunications to copyright to privacy and beyond.
But back to the idea of gatekeepers. They didn’t entirely go away. There’s still Vivendi and Fox, Sony Entertainment and Gannett newspapers. And there are new entities with the ability to act as gatekeepers, even if their virtue is supposedly openness. Some private companies function for all intents and purposes as primary layers of the network—whether its physical infrastructure or mobile spectrum or data or search. But what doesn’t always get examined is how these for-profit corporations are in a position to essentially put a price point on access to culture.
All of these gatekeepers, new and old, are now vying for control of what has become the ultimate platform for distribution. It’s no longer solely about making money from transactions, like in the days of physical retail. In fact, some of the middlemen that in the past provided transaction-based services have really felt the pinch, including record stores and distributors of physical media. Payment processors do great business and banks still exist, obviously. That is, until digital currency takes over.
The point is that many of the companies that once served as necessary nodes in an analog distribution chain are less relevant. Some have modified their business models by exploiting existing intellectual property law to adapt to new market realities. Digital content owners or creators technically don’t need a distributor. But digital distributors can offer leverage and efficiency, especially if we’re talking about large amounts of catalog or representation in negotiations over rates. So there are reasons for the persistence of middlemen. Similarly, it may be helpful to have intermediaries or neutral third parties to collect and distribute royalties to artists. And, although digital technology has theoretically flattened distribution, there is still a market for physical media such as vinyl LPs or Criterion Collection films on Blu-Ray.
Media companies such as record labels, motion picture and television studios, broadcasters and so forth are all middlemen of a kind, in that they are somewhere in between the creator of content and the audience. Some middlemen facilitate transactions or aid in distribution and marketing; some invest directly in the creation of content. What we’re really seeing now is that, while there systems in place distribution and new opportunities for promotion, up-front investment in creativity has become more scarce. At what point does this have an impact on the type of creativity that we get to experience? Culture is certainly affected by market conditions but in many ways exists apart from traditional economics. There has never been an absolute value to creative expression. The challenge of this era is about balancing the promise of ubiquitous access and incredible abundance with the very real needs of those who create culture, the workers and the innovators.
This is a very interesting moment in time. One in which the predictions about level playing fields and direct-to-fan business models have come true, but also a time in which a powerful convergence of really big companies is well underway. The latter dynamic seems to have arisen because of the internet, not in spite of it. It has to do with the way things scale in the online environment, and the business models that support those in a position to take advantage of scale.
In traditional economics, you have something called the “first mover” advantage. Commercial radio had the first-mover advantage in music on AM/FM. NBC, CBS, and ABC had the first mover advantage in TV broadcasts. Those companies are still around, and many of them have consolidated in order to more effectively leverage their original advantage. Then there are newer players—like Amazon or Google or PayPal—that have tapped into something that seems almost like a new Power Law for the digital age. Their reach can sometimes seem unfathomable. Some of these companies want to appear as benevolent actors in the space, providing essential services. And they may very well do that. But they are also businesses with tremendous ability to shape our online—and offline—lives. It’s worth looking into what this means for content producers, and it’s definitely something that our policymakers should be aware of in order to not simply port the flawed structures of the 21st-century communications and content industries onto our developing digital reality.
None of this is settled, which makes it a great time to get our hands dirty. Our inquiry will look at the initial digital disruption and outcomes, the promise of openness and abundance, the copyright laws that restrict or enable growth, innovation and free expression, and the infrastructure that has an incredible amount to do with what is and isn’t accessible, who gets paid and under what conditions. We’re also going to spend some time in the world of the practical. We’ll talk about crowdfunding, new business models, avant-garde distribution approaches and cultural continuity. Who gets to build on what came before? Who gets to chart a new course? What feels “free” may very well come at a cost, and the externalities are both profound and difficult to fully calculate. But we’ll try.