Wednesday, September 6, 2006

Sam Goldwyn and the future of music on the internet

First published in Marketing magazine in Sept '06, this article looked at how, Canute-like, the record companies were trying to push back the tide.  Four years on, and they've succeeded in persuading the last government to pass the Digital Economy Act; a cretinous piece of legislation that performs the equivalent of insisting that railway lines have a towpath alongside them, and trains are always preceded by a horse because otherwise the canal industry might suffer.  Sam Goldwyn knew what he was talking about...

Sam Goldwyn was a man more known for his (mostly apocryphal) semi-literate aphorisms than for his ability to predict trends, but the essay he wrote sixty years ago in the Hollywood Quarterly was bang on the money.  He looked at the impact of TV on the movies, and much of his thinking can be lifted right from there and applied to today’s battles – both of the movies and of TV - with the internet.

Goldwyn wrote about the importance of the new medium in the very early days, before a million homes in the US had TV, and he had two clear messages.  TV’s rise was inevitable, and fighting it would be futile.

“The future of motion pictures,” he wrote, “conditioned as it will be by the competition of television, is going to have no room for the deadwood of the present or the faded glories of the past.”

TV, he argued, could be the friend of the movies – it would mean that brains, not just money would be required to make pictures.  He looked at new revenue streams it might bring, and at the new visual language that would have to be developed for the small screen.
In other words, he anticipated the success of the medium and worked out how to adapt his business model to it – at the same time working out how to protect his remaining legacy business.

Today’s business world is more sophisticated.  We’ve got Chief Strategy Officers.  MBAs.  Consultants.  So you’d expect far sightedness, analysis and bold strategic leaps wherever you look.

All the more perplexing then when someone from a big company waves a big sign above their head that says “I don’t really understand what’s happening here, so I’m going to try to stop it”.

The recent announcement from Vivendi’s Universal Music Group spotlighted MySpace and YouTube.  Doug Morris, CEO of the world’s largest music company, labelled the sites copyright infringers and said they owed tens of millions of dollars.  It’s now rumoured that the company will file a copyright infringement case against the two websites unless agreement is reached by the end of the month.
Whilst the two sides have been trying to resolve the situation by negotiation, a few things are clear. 

Record companies have never shied from pushing the boundaries of avarice.  The initial success of MTV from running videos everyone had up to that point regarded as publicity material galled the record companies – no matter that they were receiving acres of free advertising, the fact was, someone else was making money.  And that hurt.  The rights were changed, and now everyone pays.

But MySpace and YouTube are different.  Unlike MTV, these sites are made by their users.  Although the framework is provided by the website, the content is posted by ordinary users, and it’s those users Vivendi would end up hurting.

Suing college kids for making mashups is going to make an uphill task for Universal’s PRs.  Lipsynchers in their bedsits, home video fans and Japanese country duos covering Material Girl (checkout Petty Booka) alike will resent their actions, and having Universal’s artists removed from the site will hit a now-crucial grassroots marketing channel.

Much smarter, seemingly, is the Warner Music move to sign a deal with YouTube – also announced recently.  The music giant is working hard to persuade investors that working with YouTube will be good for business – Warner will get a cut of any advertising revenue deriving from showing content that includes its copyright material – either official videos or teenagers playing tennis racquets to the Chilli Peppers.

Warner has seemingly taken Sam Goldwyn’s thinking to heart.  It’s figured out which way the wind’s blowing, and it’s trying to catch the flow.  This might not be the perfect deal – they will undoubtedly learn more as they go along – but it isn’t merely an attempt to push the genie back into the bottle.

To paraphrase Goldwyn’s conclusion: “no one in our industry who has real talent need fear the effects of the internet. I welcome it as opening new vistas for the exercise of creative ability, spurred on by intense competition”.

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