The 405 is a highway winding in and out across an assortment of communities of what we commonly call Los Angeles. Often because of the intense traffic issuing facing this town, it resembles an eclectic used car lot with its incessant bumper to bumper traffic. It really is an insane way to live. I am almost positive that sitting in this traffic are studio executives who with a lot of time on their hands make a deluge of phone calls as they try to ensure their place in a tumultuous industry and they also most have a lot of time to think.
Given my brief time in the wilds of Hollywood, I am sure the majority of their time is spent attempting to engage in some Machiavellian corporate politics, but they also must think of the state of their business and who it is changing rapidly. Thoughts of Netflix, Hulu, Amazon and course China must float around in their self involved brain pans trying to see path through all the emerging changes in their business. Given that these executives are once in a while human they must be terribly confused by the digital lava they see around them. They must see a business that is loosing its foundation quickly and is being tossed up in the waves of change. A low grade panic must set in as in their minds there is not easy answer when they so crave easy answers. As they sit in traffic feeling the glow of the warm California sun and breathing in a cocktail of carbon monoxide and a buffet of other gases ideas must take shape in their heads that will provide a quick fix, a remedy to both hard work and confusion. They must take control, they must be in control….we need the consumer to love us and only us. We will start to shift the release windows. That idea, mostly born of a mild asphyxiation on the 405 will lead Hollywood to it’s demise and to the deep need to re-invent the movie going experience.
As the asphalt heats up, and the waves of reflective heat rises up, it was in the 90’s this week in LA , this idea bakes into the brain of movie executives. This coupled with a Millennial need to be “special” and a want to avoid hard work they move forward with a plan to remove movie theatres from the motion picture food chain. In their minds theatres are expensive, high maintenance, not much fun…..in short the executives at the studios want a divorce. This is not new, another industry was tanked totally by this thinking. The music industry.
The old music industry is dead, the record store when hordes of fans used to run to each weekend. Putting LP’s in there hands, admiring the cover art and listening to various tracks. It was a place of adventure and of community. A glamorous and fun business that built legends that still endure to this day. A fundamental shift has occurred. For the first time, record sales aren’t enough to make an artist’s career, and they never again will ensure success. Even superstars have it tough. Pitbull while having having 50 million Facebook fans and nearly 170 million YouTube plays has sold less than 10 million albums in his entire career. Rumors , the 39 minute album by Fleetwood Mac, sold 100 million copies. This is the reality of the new music industry, which is built off of digital views, not record sales.
It is the same as the movie business.
1. The Demand
The movie and music industries are just like any other big business: They follow the cash. Over the past two decades, music has suffered through the CD bubble, torrents, Napster, iTunes ,with Apple taking a 30 percent cut of everything that you sell on this platform…. and now, the myriad of streaming services, which reduces sales below the already rock-bottom level.
The music industry has been torn apart by new trends and over the past few years, has succumbed to a state of near free-fall. It’s clutching whatever few straws are left in an attempt to salvage profit from the remains of its broken business models. It is a place that movie executives are placing our business in now.
As movies becomes more and more entrenched in the digital realm, Millennials have emerged as the dominant consumers. More importantly,this group, the Millennials dominate the most promising emerging markets for both music and movies: mobile devices. Millennials use music, media and entertainment apps more than 75 percent more and social sharing apps about 20 percent more frequently than any other age group.
Millennials consume the most music and tell the greatest number of people about it via the smoke signaling that is the internet. The old music industry had a banner metric of artist success: album sales. For years, album sales have been declining and the growth of singles and streaming services have accelerated the trend. As we’ve transitioned into a digital music economy, new measures of success have emerged. A new generation of artists has hit the scene and they thrive on the digital attention rather than units of music they sell. The problem is that the Millennials do not nor feel the need to buy albums.
Concerts do well…..but of course the movie studios forget that essentially movie going is a concert like product.
2. The Supply
All that’s required to make a modern record is a computer and a piece of affordable recording software. One of the most powerful professional DAWs (a digital audio workstation, used to produce music) is Logic Pro from Apple, which costs only $200. Inside the DAW are virtual instruments like pianos, synthesizers and drums, as well as all the necessary tools to edit and produce audio. A young Dutch producer named Martin Garrix reached the top of the charts in more than 10 countries with his smash hit, “Animals,” which he produced and released at 17 years old. Technology is cheap and high-quality learning resources are free. As the result, artists have massively successful records without having set foot in a recording studio (though many will understand the importance of good phono preamps in their home settings). The movie industry is beginning to see this impact as programs like Adobe Premiere become widespread. There is an increasing amount of movies being produced with no real define market for them.
3. Digital Media Discovery Is At An All-time High
Just as technology has enabled easy music production and movie production for young, emerging artists, it has also provided them with a way to reach fans all over the world. There are the classic and often bizarre success stories like Justin Bieber and Lana Del Rey that have risen solely because of Youtube. The secret of Youtube is that it rest on an empire of Millennials who are discovering music and movies online. The problem is that they do not want to pay for it. The music industry middleman has been cut out and a back-and-forth conversation replaced it. Huge stars like Katy Perry ( this still baffles me ) still dominate sales, but Millennials are eroding that model with a new, grassroots discovery model.
4. Millennials Are Beginning to Define Their Own Distribution and Artist Channels
Taylor Swift and Katy Perry have powerful songwriting and production teams. These production teams are one of the main drivers that keep the superstar artists on top. Now, Millennials are breaking down this final barrier, too. Online services are connecting independent musicians so they can form their own dominant songwriting and production teams. This model takes advantage of the fact that there are more independent musicians than ever before who want a piece of the major artist success without the major label strings. With cheap recording technology and an effective way to distribute the music, these independents team up online to rival major labels.
The lessons for the movie business can all be pulled from the music business. It very simple while the executives (still stuck on the 405) have every intent of taking away windowing from the movie business and in the process will disembowel not only the theatres but also the remaining DVD business and the streaming services. If you take away the marquee entry into the market, the movie theatre…the industry will be left without foundation and will sink quickly into the digital mud.
Now theatres must realize that the intent of the studio (which are owned by a vast amount of companies who have deep digital pipe interests) is their ruination. Time to avoid studio product and look for independent producers willing to play ball with them, may I suggest folks like TROMA and the members of the IFTA (Independent Film and Television Alliance).
Remember concerts are community, and those are still doing okay, and that movie going is community….and to the Millennials…community sells.
It is time to build an industry away from the manipulations of the studio system….after all do you really want to trust some folks who spend half of their lives stuck in traffic.
