Outrun Change

We need to learn quickly to keep up with the massive change around us so we don't get run over. We need to outrun change.

Deep background on disruption in music and publishing. Up next? Hollywood.

Does the graph remind you of the newspaper and music industry? Image courtesy of Adobe Stock.

Does the graph remind you of the newspaper and music industry? Image courtesy of Adobe Stock.

Several articles provide an in-depth view of the disruption taking place in several industries due to the IT revolution.

  • Hollywood is ripe for the same creative destruction we’ve seen in music, newspapers, and publishing.
  • New York Times is shrinking their physical space and staff size
  • Prime time TV still having a rough time

The question to ponder in the back of your mind is what are you going to do when this wave of disruption overturns your industry?

January 2017 – Vanity Fair – Why Hollywood As We Know It is Already Over – Looking for a good article on how technology is going to do to Hollywood what IT has already done to music and publishing? If so, this is what you’ve been looking for.

Check out the article to help understand the massive change surrounding us.

Disruption of music industry

First, music and newspapers. The author saw his first indication the music industry would collapse when he started downloading music. Instead of driving to a store somewhere and spending $20 to get one song he wanted, he could spend a buck and get the song immediately.

Author says the music industry has shrunk by half in the last decade. Remember that is after the first round of disruption hit.

Disruption of newspapers

Next were the newspapers. For a long time, the web part of the New York Times was physically separate from the headquarters. “Banished” is the word the author used. At the same time, startups like Instapundit (yeah Professor Reynolds!) and DailyKos were figuring out how to blog. Then WordPress and Tumblr allowed anyone on the planet to start blogging, and doing so for free.

Author says a lot of people didn’t want to wander over to a newsstand and buy a whole newspaper or magazine when instead they could read the single article they wanted, online, for free.

To illustrate the concept, I’ve never bought a copy of Vanity Fair and doubt I ever will. I certainly didn’t drive over to Barnes & Noble to buy the current edition so I could read this article. A blogger I read (see above!) mentioned it and I clicked over.

The end result of the loss in audience?

Newspaper ad revenue declined from $67B to $20B between 2000 and 2014 according to the article.

A mere 70% collapse.

Disruption of publishing

Next up? Book publishing.

Instead of driving to the store only choosing from what is on the shelf at this moment and paying $25, a lot of people preferred a massively larger selection of books which can be downloaded this instant in a far more convenient size (think e-reader) for a mere $9.99.

(Author doesn’t address the in-between step of having several million choices available for a 30% or 50% discount from retail if you can wait ’till the day after tomorrow to start reading. Yeah Amazon!)

Result?

Dropping sales. Author doesn’t provide numbers but says sales of sci fi and fantasy books have helped level off the decline in revenue.

To illustrate this concept, I buy a lot of books every year, I mean a lot.

In the last two years only a few of those were hard copy. Two went to my nephew, several went to another relative who prefers print, and one, count ‘em one, was for me. The only book I’ve bought for myself in several years (perhaps five) the last year was a bible commentary published in the 1940s with a market so amazingly slim that it would not be worth trying to produce an electronic copy. Oh, and the price? Fifty percent higher than the price printed on the dust cover – less than I’d pay for a paperback book in a bookstore. (Update: Just recalled several books I bought a few years ago because they were only available in print.)

Oh yeah, I did just buy two tax books in print copy, but those are for reference and I got them because I really want that author’s work and the books are not available electronically. Also bought a child’s book for my grandson. The cloth hand puppet built into the book would make an electronic version quite unworkable.

Upcoming disruption of Hollywood

Next up? Hollywood movies viewed in a theater.

Lots of people are turning away from the limited choices, having to spending $50 for a date night movie, and having to drive to a theater somewhere to choose from a limited selection at a time someone else set.

To illustrate the concept, my wife and I would like to go out for a movie this weekend, but there are only two shows that have even passing interest to us. Twelve fifty a ticket plus outrageously priced refreshments plus travel time plus watching 10 or 15 minutes of dumb commercials for movies we will never see is not a super great value proposition for a movie that would be merely acceptable.

Result is the number of theater tickets sold is at a 19 year low, according to the article.

The humongously massive bloat of labor costs is ready for disruption (see the article for what ought to be exquisitely painful stories for anyone whose future employment depends on the volume of movie sales).

The massive amount of time needed to edit is another place ready for disruption.

Do you see that oddly large wave off on the horizon?

There are multiple facets of the tsunami heading toward Hollywood.

One intriguing concept is the large tech companies stepping out of their lane into the line of business of other large tech companies. For example, Netflix will spent $6B on original content in 2016. Six billion.

I have read two articles that say Amazon will expand its already existing fleet of airplanes and big rig trucks to take over more of the distribution from UPS and FedEx. Oh, Amazon has its own original content. Article says FaceBook wants to get into content creation. TVLand has three or four of its own shows. They look to be rather raunchy, but they are original programming (even the soft porn packaged as commercials would have been banned as obscene a mere 15 years ago).

Artificial intelligence could analyze hundreds of popular movies and create new screenplays, which the author of the article says in terms of quality would be on par with the average holiday release.

Think forward what could develop from the first few hints of AI and CGI to create popular stars. Not the special effects – the stars. Article provides two examples from Rogue One, both of which are brand new information to me.

First is that one of the leads who appears throughout the movie actually died in 1994. Second is the character Princess Leia making a cameo appearance at the end of the movie. Author’s comment is the actress hasn’t aged a day since 1977. The appearance of both characters were created from whole cloth by AI. One of the voices was real but the other actor has been stone cold dead for 23 years.

Think forward on that concept. Picture this conversation in about five years:  Anyone wanna’ go see the new flick starring Rudolph Valentino and Marilyn Monroe? I hear the on-screen chemistry is wonderful.

Think back to the article – there won’t need to be 200 people on the set to make that movie.

More indications of disruption

Here are a few more indicators of disruption: newpapers and network television continue to collapse.

12/16/16 – Politico – New York Times to vacate ‘at least eight floors’ in Manhattan headquarters – The newspaper will be letting go of 8 or more floors in its signature headquarters. I’m not sure if that is a reflection on how much they have already shrunk their staff or an indication of near-term layoffs or if they are going to reduce the square footage for every employee or a combination of all of the above.

They will rent out the vacated space.

Several smarty-pants on the ‘net have suggested the paper can make more money on rent than from selling papers.

Actually, I’m guessing the rent income will offset some small portion of the collapsing revenue from print papers.

1/17/17 – New York Times – New York Times Study Calls for Rapid Change in Newsroom – Report on a year-long study of how to restructure operations was just released. Staffing will be cut, with the only indication of where is that the number of editors will be reduced.

Think about it.

Cutting editors.

According to the traditional news world, robust editing is the primary competitive advantage they hold. What is the NYT going to cut? Its self-proclaimed competitive advantage.

Visual experts will take the lead on reporting some stories.

One goal is to dramatically increase revenue from digital services. Here is the digital income reported in the article:

  • $400M – 2014 actual
  • $500M – 2016 actual
  • $800M – target

Staffing reductions will be announced by mid-year.

12/29/16 – CNS News – 2016 Was Bad Year for Prime-Time Network TV – The four main networks saw their viewership drop in the double-digit range in the fall compared to prior year. Viewers for the premier week were down 12% from prior year. (I watch so little TV that I didn’t even know the concept of a concentration of season openers was still a thing.)

Article points out the most-watched show in fall 2016 had such a small audience it would have ranked as #79 forty years ago.

To illustrate the problem, neither my wife nor I can name even one new show that hit the air this fall. If the Wall Street Journal decides to run an article on the business angle of breakout hits (assuming any of the new shows have even survived 3 months), I’ll bother myself to learn the names of a few new shows.

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