I recently read an interesting article by Ben Elowitz, co-founder and CEO of Wetpaint, a next-generation media platform company, entitled “Content Is No Longer King”. Mr. Elowitz makes a number of good points in the piece. One of his main points is that the Internet has “fundamentally separated content from distribution”. He states, “Until the Internet came along. In every single one of the varied businesses that the Internet has touched – from commerce to media to communications to payments – there has been one common impact: disaggregation.” His point is well taken and as I thought a little more about some of the changes the media industry is going through today, it occurred to me that there was one segment of the media and entertainment industry in which this same sort of disaggregation happened many decades ago. I think we can learn a lot from what that industry went through and use it as a possible indicator of what may lie ahead for the rest of the digital content business. The segment of the media industry I am referring to, is the field of music publishing.
Over a hundred and fifty years ago, the music publishing industry was solely in the business of selling sheet music. Over the years however, new technological innovations helped significantly disrupted this industry. It was not only technology though; much can be attributed to the attitudes towards intellectual property rights that evolved over time, which started out measurably different from what they are today. Particularly in the early days of US copyright law, there was a much greater fear of doling out government-sanctioned monopoly rights to individuals or companies (which is essentially what copyrights are). The laws were carefully crafted in an attempt to balance the right for music composition owners to be compensated for the use of their works while not necessarily giving them total control of those rights in all circumstances. This is why today anyone can play or record a cover song without having to ask anyone’s permission before doing so, yet, there is an obligation to provide compensation in the form of royalties.
Today, the situation that Mr. Elowitz highlights is both similar and different in many ways to what happened to the music publishing business. This time, as before, technological innovation and intellectual property laws play a significant role in driving this transition. Obviously, content digitization and the openness of the Internet’s architecture make it easy for copyrighted content to be converted into information and easily transmitted around the world at the speed of light. Equally though, the law plays a role, with the Digital Millennium Copyright Act (DMCA) providing a safe harbor for search engines and a legal framework which outlines the procedures for the notification and takedown of illegally distributed content. In today’s hyper-connected online world, the general public can play the role of consumer, distributor or even as a contributor to original or derivative works.
Increasingly, the media content owners find themselves in a position where they must search and find those who are using the content they own and take some sort of proactive measures in response. YouTube’s Content Id program is a great example of this. YouTube allows content owners to register their audio and video media with the company and select the option to block, monetize or track viewing metrics of content that has been uploaded by users. Since the media content owners are no longer 100% in control of their content’s distribution, they must take additional steps to reassert their claim to the content and the conditions for its use.
This situation is all too familiar to music publishers. There are over a dozen different industries that rely heavily on the use of music compositions. In most cases, the law has eliminated the need for companies or individuals to notify the music publishers that their works are going to be used. There are many activities within the record industry, radio broadcasting, television broadcasting, movie theaters, concert venues, brick and mortar retailers, bars and restaurants and even telephone systems with on-hold music which rely on the copyrights that music publishers own. Most of the time, permissions are not required upfront. The only requirement is compensation after the use has occurred. As a result, the music publishers have been put in a position where they feel like they must constantly chase down those who are using their works and remind them of their obligation for compensation. As a result, the music publishing industry has lobbied over time to make sure the law covers all of these new uses of their works and they are able to continue to demand fair compensation. In addition, a variety of trade organizations have been formed in an attempt to track and collect from the wide array of business activities that use music in their day-to-day operations.
Compare this with our current digital media landscape and what we have today, I believe is just the tip of the iceberg. Elowitz explains, “Now that distribution of content to audience is no longer linear, distribution decisions are suddenly more complicated.” Mr. Elowitz’s main point is that content companies are far too focused on just managing their content and need to spend more time managing the distribution of the content in order to maximize their audience. He reminds the reader that it is the audience, which is really the main goal. It is a very good point he makes. However, today’s complex digital landscape is still vastly more simplistic than I foresee it will be in the near future. We are approaching an Internet in which distribution channels will no longer define it at all. The future Internet we will experience will be an almost infinitely intricate web of mashups of mashups of mashups. The European Commission is sponsoring a project called SOA4All, which describes itself as “Enabling a web of billions of services”. I think their vision holds a lot of merit. Lately, we hear a lot of talk around “Big Data”, but I think “Big Data” is just the latest challenge we must overcome to get to this “Internet of Services”. Digital media companies, like music publishers, will be put in a very different position than they are today because the data on the Internet will be so vastly more connected and interoperable than ever before. This will make the original distribution channel for a piece of content almost impossible to link back to in an attempt to determine its origin. As a result, the media companies will need to put much greater effort on detecting and tracking who is using their content to enable them to reassert their claim on the content and the conditions for its use. Because of this, their content management systems will be more critical than ever before.
I don’t necessarily disagree with any of the points Ben Elowitz’s makes about audience development and the value that focusing on distribution can bring in the near term. However, there is a suggestion in the piece, which implies that media companies have wasted too much time and effort on the development of their content management systems. I just want to point out where I believe this is all going and suggest that the complexities of content distribution today are going to be pale in comparison to what they will be like in the future. Great content management is what will enable organizations to extract value from the use of their content as they continue to lose control of its distribution. Content owners will need to be absolutely clear about the content they own so they can monitor and track its usage across “a web of a billion services”. If my comparison to the music publishing industry is accurate in any way, it suggests that all digital media companies will possess significantly less control over the distribution of their content and their operations will need to adapt in ways in which today might be viewed as unimaginable. But I am sure the music publishing industry could not have imagined the transformation their industry would go through, starting in 1890s, with the increased popularity of player pianos either.
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