Last Sunday the New York Times ran an article about GE’s worries over flagship broadcast asset NBC. No surprise, NBC is in trouble. So much trouble that GE is about to dump it. Think about that. GE leaving broadcast television, and NBC on its way to minor league status.
Four years ago Time Warner sold Warner Bros Records and all of its cousins, packaged as the Warner Music Group. It was bought, and subsequently taken public by, Edgar Bronfman, Jr., scion of Montreal’s Seagram’s dynasty. He had already tried, unsuccessfully, to run Universal Pictures and Records after using his Seagram assets to buy controlling interest in Vivendi Universal, but was forced out. Bronfman, as the saying goes, has more dollars than sense.
MGM studios is $23 billion in debt and about to be auctioned off. The lead bidder? Indie movie house Lion’s Gate. MGM- the lion- passing through Lion’s Gate.
What does it tell us, at large, when big corporations leave the entertainment business? You could say, cynically, they are rats jumping from a sinking ship. That would be a truth, but a limited view of the truth. Corporations tend to be profitable when then can regularize production and monopolize, or least funnel access to a desired product through their proprietary channels. Both of those things have fallen apart for corporations in entertainment.
Production. The cost of producing a record or film used to be a barrier to entry. It took cash, and it was the big companies that could supply it. With the cash came strings. Artists of all types: musicians, filmmakers, producers, actors, signed with a corporation for exclusive rights to their work, for (typically) a long time. They got paid (usually), but they did not control their own work, and they did not have the wherewithal to produce and market it on their own.
That has changed. A movie or record or tv show can be produced for a fraction of what it cost ten years ago. Digital technology has reduced cost and increased quality by orders of magnitude. Marketing is still expensive and complex, but distribution is not. The Internet solved that.
Monopoly. Corporations love monopolies. That is the ideal. Seldom is there a pure monopoly, unless you count your local power and light company, but corporations thrive on controlling as much access to a desired thing as they possibly can. Now, in entertainment and many other fields, everyone knows there are multitude options, legal and not, for obtaining anything digital. In other words everything the entertainment industry puts out. Two critical pillars of corporate advantage, limited access to production and monopoly status, are gone. Which is why the corporations are leaving.
Is this a good or bad thing, this leaving? It depends on where you sit, and how old you are. If you are a band like Fleetwood Mac, and you are used to the infrastructure of corporate backing, you are unsettled in the newly atomized world. If you are a young act with a great business team and Internet savvy, you might like it fine. Those that can tap the Internet to build their own base will have an advantage very few of their predecessors ever had– an unmediated relationship with the audience. When Elton had a hit in 1974, he had to sell two million copies to make a million bucks for himself. An artist with ownership of his own product AND ownership of the audience channel, needs to sell only 100,000 units to make a million bucks. I expect that soon we will see some rich musicians and management, doing it on numbers drastically smaller than the Old Days. Where does the corporation fit in?
Good question.
