Recently occasional guest blogger, bestselling thriller writer Barry Eisler, called me with an idea for a series of articles for this blog. Deeper thinking on something I've been commenting on for a while now. I was thrilled to offer him this platform.
First Madonna and Radiohead; Next, James Patterson by Guest Blogger Barry Eisler
On October 10, Madonna abandoned Warner Bros., her record label for the last quarter century, for a new deal with tour promoter Live Nation. On the same day, Radiohead self-released its new album In Rainbows, available directly through the website www.inrainbows.com for whatever you want to pay for it. The price, as the website says, is "up to you."
I don't think the abandonment of record labels by two of pop's biggest stars is an aberration. And I don't think the implications of this development will be confined to the music biz. Look a little more closely, and you'll see a common element among media companies -- that is, record labels, movie studios, the newspaper business, and book publishers -- and a common dynamic. Here's the way it works:
1. Media companies are built on distribution. Distribution is their most important competitive advantage -- that is, distribution is what most keeps potential new entrants out of the media business.
2. Digital technology is dramatically lowering the costs and logistical burdens of distribution. That is, digital technology is lowering the barriers to entry into the media business, and undermining the foundation media companies are built on.
3. Media companies must find a new competitive advantage to replace distribution. The ones that do will live. The others will die. Either way, players who today play some subsidiary part in the various individual media ecosystems will assume dramatically more powerful roles.
It makes sense that the earliest and most dramatic moves are playing out in the music biz. Of all the media businesses, music is currently the most amenable to digital distribution. An album takes only a few minutes to download. Music in MP3 is easier to store, manipulate, transport, and listen to then music on physical media like CDs. You can also sample a significant percentage of a song by listening to it, and thereby have a high degree of confidence about whether you want the whole song. The only aspect of a traditional album or CD you might miss when you download instead buying the CD is the jacket cover and maybe a booklet of lyrics -- but both of these are as well-suited to downloads as the music itself.
Translation: artists don't need labels for distribution the way they did when music was distributed on albums and CDs. Artists as big as Madonna and Radiohead don't need the labels at all. As superstars pioneer and then prove the viability of distributing without a label, the labels will lose the next level of talent. Self-distribution will become even better known and more successful. More artists will defect as a result. Etc.
I'm not arguing that labels offer no value other than distribution, just that distribution has always been their *key* value, the one thing that only they could offer. They've lost that key value; the challenge now will be to find ways to replace it with something else -- for example, some combination of imprimatur, branding, marketing, and other residual values. But because none of these values offers nearly the barrier to entry that distribution did, other players will move into what today is the labels' exclusive domain. Not all labels will die, but even the survivors will lose clout and profitability.
What about movies? I expect Hollywood is next in line for a shakeup. Today, if you want to release your Major Motion Picture on 1500 screens across the country, you need a studio to ship that many heavy canisters of film to that many locations. As more and more theaters install digital projectors, movies will be distributed to thousands of locations with a single click of a mouse. At that point, you might still need a studio for a variety of things, but distributing film won't be one of them.
The newspaper business -- or, more broadly, mainstream media -- is already reeling from its loss of distribution as a competitive advantage. Not so long ago, if you wanted to regularly offer your opinion on current events to the masses, you had to write an op-ed column for a major daily paper. Now you can just set up a blog. True, the challenge of acquiring readers remains, but distribution itself, on which the papers used to have a lock, is now available to everyone. The rest, again, is marketing and otherwise reaching readers, but as numerous bloggers have demonstrated, reaching consumers is something you can certainly do yourself once you have distribution. And sure, it's hard to develop an income stream as a blogger, but how much revenue do you need, if your cost of distribution is zero?
The last to be affected by the flattening out of distribution will be the book business. Why? Thus far, readers are less inclined to read digital books than listeners are inclined to listen to digital music. The lag, though, is only a question of when, not whether. Digital readers will continue to offer an ever-improving user experience, and more people will adopt them. Sure, probably the majority of readers will never make the move to pure digital, but another emerging technology will flatten out distribution even more. I'm talking about standalone print-on-demand (POD) stations like Jeff Marsh's Espresso Book Machine that can receive a digital download, and then print out and bind a book in a matter of minutes.
Don't think POD stations will ever be able to turn out a book fast enough, and of sufficient physical quality, to entice a consumer? I'll take that bet. Because every technological precedent (laser printers, for one) indicates that speed and quality will only improve. And at the same time, the physical quality of published books -- the bindings, the paper, the covers -- is continually declining as publishers seek ways to increase their profit margins (or narrow their losses). At some point, as POD quality goes up and traditional book quality goes down, the two will meet in the middle. At that point, the playing field will be level, and book distribution will be open to anyone who can afford a POD machine.
What does the advent of POD technology mean for book publishers specifically, and for the book industry generally? The implications are huge, and will be the subject of Part 2 of this piece. See you soon.