I just wrote an article on Nomadz, "Dematerialising Posessions into The Cloud." In it, I wrote about the effect of the weightless economy on goods and services, inspired by the work of Rachel Botsman and her thesis, 'collaborative consumption'.
What I didn't do was discuss at length how this will affect the entertainment industry...
Even if DVD sales disappear, they will be replaced by something else. Thankfully to those of us in the Industry, people still like watching movies, television and other forms of passive entertainment. But it seems increasingly unlikely that people will want to 'own' this content, unless they are a big fan of the content creator (see, "The Sky is Falling - the End of DVD?") In other words, people will want the experience but without the ownership.
Much of this comes down to the devaluation of digital goods. We appreciate going to the cinema, watching content at home - and even sharing content with our friends - but we don't want to pay more for it than we feel we have to. After all, there is so much of it around. There is no scarcity anymore. And in a world without scarcity... in a world characterised by overabundance of supply... We crave the advice of experts and the people we trust. Information and knowledge become more valuable than ownership. Networks become more valuable.
In fact, ownership of physical goods have two components: convenience and fetish. But digital goods have become more convenient (for the most part) and there is less and less fetishism in owning a piece of plastic and some mass-produced artwork (unless, of course, you are a major fan). Exclusivity remains special. But once all my possessions become digital, they have no intrinsic value in being 'mine'. In fact, they become everybody's.
In a world in which everything belongs to everybody, it makes sense that the value is created by curators, trusted advisors and other people who bring together collections, insights, community and such around those things - in other words, ideas; information; knowledge. Isn't this the 'information economy', after all?
We all know what iTunes did to music. It saved it. Despite the bellyaching of the music publishers, Apple saved their livelihoods - even if they were forced to downsize and consolidate. Digital music services have made the system more efficient. There's more product than ever before and more readily available than ever before. Artists still make money from digital music sales but they make even more money doing live performances - connecting directly to their audience and selling one-of-a-kind experiences. And, now, Apple's Ping and other similar services are heralding in a marketplace where consumers eventually become affiliate marketers. In other words, taste-makers promote something they like to followers who then purchase and consume. It seems only pragmatic that some kind of peer-to-peer selling mechanism is brought into this system. In that kind of a world, we all become music distributors - all of us.
iTunes didn't kill the music industry but replaced it with something else and forced some shifts to occur. One of those shifts is that - now that everything is so convenient... that the entire music catalogue of the known world is practically online, indexed and available for purchase - digital goods have become increasingly devalued with pressures to lower the price of albums and tracks. So, when convenience is the norm, the experiential aspects become more valuable. It isn't enough anymore just to make it available. Instead, a premium arises from the social activity surrounding it.
Entertainment is a social activity and a socialising experience. Even if you don't go to a cinema, or watch a something at home with family and/or friends, you still talk about things you've seen that have touched you - even if you watched them by yourself. People you know value your opinion. If they could pay you for your advice, they would (as long as it was good advice in their eyes). These new swap trading and crowd power networks allow this to occur. When we all become distributors, we can earn credits, cash or kudos that is value in our eyes for the advice we give. The obvious extension of this is to remove the friction altogether - stop protecting the content and make it freely exchangeable - so all of us can share it with one another and, somehow, pick up the value somewhere else.
Yes... it's that 'somehow' part that needs expansion. But I don't have the answer, yet. I just know that it will have to happen, because that's where everything is going. Trying to get someone from Generation Y to care about a DVD boxed set is going to be a fool's enterprise.
But I do know that Generation Y wants to share content with like-minded people who follow them on Twitter, Facebook, Ping, YouTube channels and all the other social networks that parlay content. There is kudos in being a trusted source, a tastemaker, someone 'in-the-know' who can make great recommendations and foster serendipity for other people.
Art Greenwald has been very innovative in the way in which he distributes films, especially documentaries. In the past, he has invited fans of previous works to become exhibitors. They can order a DVD of his movie, show it in their community - and charge for admission - then give some of those receipts back to him. It's a bit like what Church groups used to do with religious content. The interesting thing is, of course, that he has co-opted his audience into selling his films. Not that dissimilar from other businesses that utilise their customers' capacity, rather than pay for their own. For example, wholesaler and bulk retailers (e.g. Costco) sell you things in bulk, which you then store at your premises until you use them. This is very different (and less expensive) than retailers that have to break everything down, stock shelves, warehouse unsold items and move things around. Instead, they make savings by forcing you to use your own capacity (customer as warehouse), while passing some of the savings onto you. Greenwald is using his own customers as capacity. They have living rooms, garages... essentially premises for showing films... plus they know how to attract an audience for them. They do all the marketing, ticket sales and exhibition for a fraction of the cost.
All of this means that we need to develop a mechanism for capturing sales between people in peer-to-peer networks. We need business models, we need new copyright legislation... we need a whole bunch of things to make this work. And we'd better act fast, because it's already happened.
Instead of bullying bittorrent sites and potential customers, instead of working out complex encryption schemes... We need to find a way to make the content 'free'. This doesn't mean that we give everything away. It means that we must find the value somewhere else and turn that into cash. But I think that we can get there if we co-opt consumers and customers into becoming distributors.