All good points…and, like a great Hollywood film, the suspense of what is going to happen is killing me!

What Hwood and Old Media have and what very little of the New Media world has is the business infrastructure necessary to get the content discovered, find the ad network, manage the day to day of a production company, maintain a flow of fresh content, yada yada yada, and survive.

Someone needs to make the phone calls and build the relationships so that the ON Networks, aka aggregators, and the Eisner / Vuguru entities of the world know that the content exists.

Having a sales person with contacts so that phone calls and emails are answered is HUGE. That person costs money and that person wants their money every two weeks. The New Media world tends to have not much money and little cash flow.

This media stuff just will not work on a SCALE large enough to support it as an ongoing entity, in my opinion, without a solid business infrastructure supporting it. The part that will work is a “one and done” style of production, because everybody that enters can get their first piece up and going. We see this mostly as the snack video that sits on YouTube. They then run out of steam and limp back to Mom and Dad’s house to lick their wounds.

I like the Gordian knot solution you wrote of. Really hope something like that emerges. Until that fresh business model is present and mature, the media that survives will look much like current old media does, because at the end of the day we’ve all got bills to pay and mouths to feed. Making snack video for YouTube just won’t cut it. Making Prom Queen apparently isn’t cutting it either. Revenue enough to survive on needs to come from somewhere and right now it is nowhere to be found…..
JB
P.S. There are exceptions and some do make it. JibJab is one example of New Media that seems to have the necessary mix of media content and business infrastructure to make a go of it. I’ll bet SCALE is at the heart of what they do.

I do think you are right that scale is critical and there is a lot to be said for the Hollywood machine and how it works.

But as more consumer attention is splintered, new media must find a way to tap into that trend to make money.

I think WoW is a great example of where it is all going.

And, as a parent of two boys, 2 and 5, I know the trends after spending way too much time on Webkinz!

“The people have spoken, and they want their voice to be heard…”

Exactly!

I look forward to it! And no dumb widgets please!

Content might not want to be free, but consumers want it to be, so Hollywood needs to figure out another game.

I am arguing that studios and labels should be squeezed down!

Our society is willing to pay a little bit at a time for a piece of entertainment. Hwood has made this work. They can live with a customer paying a few dollars, e.g. ticket price, because the Hwood business model is built to scale. A few dollars per customer multiplied by a few tens of millions of customers equals a ton of money. Certainly enough to pay for the production costs and the eight failures that come along with the two successes.

The New model for media, in my opinion, so far lacks this necessity or a worthy replacement for it. New media can be produced at a considerably cheaper rate than Hwood content. Even so, new media still needs to be able to pay itself a living wage or at least pay its production costs. New media is using an advertising model to generate income. This is STILL a SCALE-centric proposition. A few thousand people viewing a bit of snack-video content on the web is not going to pay for that content. It is certainly not going to encourage the creator to keep doing it. New media still needs a few MILLION people to watch the content in order to generate the income from a ppv or ppc income model.

Hwood has mastered a business model that aggregate customers, avoids fragmentation, and makes discovery fairly easy. This model also has immense cash flow and a pretty slick marketing and advertising arm. The New media world has very little of the above business attributes.

New media lives on the internet, which is a VERY BIG place. Web surfers can go anywhere their personal interests want to go. And they do. A few people at a time into a few hundred million niches. Virtually none of those niches can support themselves off of the income from a niche viewer base.

The scant few New media successes, in my opinion, are achieving success because they have found or spent their way to a position in the marketplace that benefits from SCALE.

I think over the next few years we will see a proliferation of content and producers. Following that will come a shake out period where the VAST majority of the producers will drop out as they start to realize they can’t make enough money to survive. I think the “players” that remain will come to look much like Old media does now. Masters at scale. Business-first. Old rules still apply.

Jack Sullivan seems pretty confident in his New Media stance. I wish him the best in his efforts. But I hope he posts again after a few years of trying to make money, beyond the VC injections from his rich Dad. New media is still a tough business with all of the same problems that Old Media had to solve.

The digital entertainment monetization you seek has rested in (user controlled) gaming for sometime both on the creative side and in the emerging advertising side. 9 million people a month in the USA subscribe to WoW.

This is the tip of the new entertainment iceberg. The entertainment generation is being raised on Webkinz and Club Penguin. TV and Movies have competition on a scale unimaginable ten years ago. Take a look at where entertainment time is being spent. The audience has spoken.

The internet is opening up (formerly )closed markets, to more competition and new distribution models.

This will be no different for Hollywood, than it has been for Music, as bandwidth increases.

(Good example is Wall Street–which is embracing digital, faster than most)

Every industry is going through the change, like it ,or not.

The people have spoken, and they want their voice to be heard, their creativity to matter -Not being dictated from someone living in a fantasy world, out of touch with 95% of the free worlds, real world, lifestyle- calling all the shots at what people will read,hear,watch.

People will control more of what they spend their valuable attention on. Get used to it.

The old gatekeepers in industry that are resistant to change, will die off and be replaced with those that “get it”. But that change will com.

Most layers of Hollywood mgmnts teams, should retire gracefully now anyway, in my opinion. The trend of product out of Hollywood has suffered terribly from a stale inertia, and bloated, out of date, cost structures and business processes.

(When is the last time you saw people in Hollywood senior management getting “laid off”? )

Another guess, with the new platforms that are being developed, dont be surprised if the revolution comes from someplace other than California…Its a big country/world out there.

No one geographical area has a lock on content/creativity in this new world. Thinking so implies a disconnect.Especially as distribution costs continue to drop.

My guess is that includes pricey Silicon Valley VC, business models, as well.

But when it comes to figuring out content that will work on the Web that consumers will love and advertisers will pay for, such innovation simply will not come from Silicon Valley.”

Kara,
You seem to forget that the “techies” have children. Give me five months to finish school and appease my father, a couple months more to run my year-old video production company with financing, and then it will be my pleasure to prove you wrong. The children of the dot-com era will solve your problem – promise. We have the ears of our VC fathers, but the minds of the digital generation.

Network content is much messier. Much closer to music than to movies. Especially since Networks do not routinely offer to sell their content in a manner to limit the incentive to violate copyright. By doing so, networks impeach the notion of honor-bound reciprocity – “if you like, you should pay.”

Consumers substitute Cheap for Expensive. Easy for Difficult. Honorable behavior for morally ambiguous. The torrenting or YouTubing of network content is a) cheap, b) easy, and c) morally ambiguous. This combination beats either the networks desired outcome a) unavailable immediately after broadcast, or their generic offering b) expensive, and difficult to watch.

All of this writing ignores the essential fact that intermediaries get too much of the pie. Effective competition will challenge the status-quo. The internet facilitates distribution. Competition wants to be free. Content, not so much.

More free and more money don’t go well together unless the intermediaries such as labels or studios get squeezed down. That seems to be the tone of this article.

I like Kara’s article and will a thought tomorrow.