Not a week goes by where I don't receive a call to discuss the "democratization of content" and what it means for major entertainment companies. People call and tell me that content was king, but now consumers are king and ask me what I think. Before responding whether I agree with this presumption, a follow-up question based on agreeing with the former occurs: Do I think major entertainment companies are doomed because of the Internet? These two questions -- who is king, content or consumers, and are major entertainment companies doomed because of the Internet -- bring to mind the meaning of "democratization of content," which I believe to mean first and foremost the right of the people to determine what they want to consume and second, the right to choose how they consume.
Let's dig into these two questions.
All of us are very excited about Internet-distributed video and the new business and creative opportunities it brings. But is content becoming democratized only now? Content is entertainment, which has been around longer than history has been recorded. But if we look at recorded history as a reference point, all of us know that the success and failure of entertainment has been decided by consumers.
In the western world, democratization of content started when the church and royalty gave up absolute decision-making on what constituted appropriate and quality entertainment. During more recent periods, entertainment has been further democratized by economic factors as we vote with our feet and wallets. During the last 70 years we selected among competing radio shows in the 1940s and 1950s, voted at the retail store when purchasing Parcheesi or Twister in the 1960s, decided whether to tune in to "Charlie's Angels," "The Waltons" or "Seinfeld" from the 1970s through the 1990s, and considered whether to purchase a ticket to Broadway shows such as "Jersey Boys."
The point is that for as long as any of us can remember, content has been democratized as we decide what is good and bad content. This summer, movies will bomb, television pilots will be cancelled, and playhouses will go dark. The entertainment industry is filled with corpses because content is democratized. Cases in point: Millions of us voted "Slum Dog Millionaire" as quality entertainment by reaching into our wallets to shell out the bucks at the box office window. Very few said, "I refuse to watch until it's released for my iCoolDevice." Conversely, do any of you remember Kevin Costner's movie "Waterworld," which cost $180 million to make? Consumers (a couple anyway) showed up at the box office for that flick and voted too. Result? "Waterworld" did as well at the box office as A-Rod does in October. ICoolDevice, free or pay -- no one wanted that one.
The reality is, all content and entertainment -- board games, plays, books, radio, television, movies, and sports -- are democratized, have been for years, have tremendous competition and need to be top quality or consumers won't tune in no matter how we choose to consume. And before the New Englanders counterpoint with "The pre- ‘Big Papi' days of the BoSox wasn't first class entertainment, yet sold out," rest assured I've spent enough time in Fenway to know all 39,928 attendees (and I suspect the players) were inebriated by the fifth inning, so the first-class entertainment didn't have to be on the field.
So what's really the Internet's effect? Formal academics call it Economic Substitution. We simply call it "Choice." Given a finite number of available hours in a day, we have more options to fill our time. The Internet allows us to choose whether we want to shop, do research, sit back and be entertained with video and music, play board games, socialize with friends -- or, with inventions like Kindle, dare I say it, read a book. But the entertainment has to be all-star quality or we'll choose another "sport." In addition to providing Economic Substitution, the Internet decreases friction, enabling easier entry into the entertainment business. Just ask Miles and Greg at EQAL, the creators of "Lonely Girl."
So what's the Internet's effect on major entertainment companies? Economic Substitution = More Competition! Professional content continues to get better as it has for years. If it didn't, we would find substitutes, just as we did for football in Los Angeles.