Something is happening on the road to a Netflix-ed
A brief history
Before broadcast, live performances were an entertainer's bread and butter. Shakespeare's plays were made for performance and published only posthumously. Singers made their living by touring. Print publishing was the earliest form of mass distribution, but authors had few protections for much of print's history. Distribution of film and music changed that and established rule by big companies.
Redlining the RIAA
Then the Internet came along. The music industry found itself on the front lines, with Napster and other file-sharing services allowing kids everywhere to get music for free. Napster got sued and went belly-up. That didn't stop file-sharing from eroding the music industry's revenue. In the decade after Napster's creation, music industry revenues fell precipitously, from $14.6 billion in 1999 to $6.3 billion in 2009. The industry's successful victory was nothing more than swatting a single fly in a hungry swarm.
Of course, Apple
Content on consumer terms
Film and television took longer to show up in pirate enclaves, owing to larger file sizes and transfer speed limits. Revenues haven't plunged, but recent annual growth rates have barely kept up with inflation:
Cable TV Advertising
|2005||$8.8 billion||$21.7 billion||$20.7 billion||$51.2 billion||N/A|
|2006||$9.2 billion||$21.6 billion||$22.7 billion||$53.5 billion||4.5%|
|2007||$9.7 billion||$21.4 billion||$24.2 billion||$55.3 billion||3.4%|
|2008||$9.6 billion||$21.0 billion||$25.6 billion||$56.2 billion||1.6%|
|2009||$10.6 billion||$19.4 billion||$24.6 billion||$54.6 billion||(2.8%)|
|2010||$10.6 billion||$18.8 billion||$27.2 billion||$56.6 billion||3.7%|
|2011||$10.2 billion||$18.0 billion||$31.0 billion*||$59.2 billion||4.6%|
Sources: Boxofficemojo.com, Digital Entertainment Group, and SNL Kagan.
All figures are U.S. totals. Network TV advertising not included.
*Estimated based on SNL Kagan projections from late 2011.
On the other hand, services that offered a convenient way to watch movies, shows, or clips have taken off:
The old model is losing momentum to newer, easier options. Google's
Netflix has been firing plenty of these salvos itself. It has first crack at David Fincher's House of Cards; has already begun rolling out Lilyhammer, its first original series; and will be the exclusive source of new Arrested Development episodes in 2013.
These three programs alone might cost Netflix more than what Google's invested into YouTube's new content push. The right content, however, could simultaneously establish Netflix as quality content provider -- HBO without the cable anchor -- and set a precedent for the rabidly competitive streaming industry, which has a growing list of players that don't differ much fundamentally.
Subscription services have a broader precedent in the form of Sirius XM's
Publishing is so last century
Book publishers, unlike their news brethren, have weathered the digital assault surprisingly well. The industry may be nearing its Napster moment, though. With The Economist projecting sales of 1.1 billion potential reading devices (tablets, smartphones, and e-readers), print's primacy could soon seem a little less assured. But major publishers can still sell into this new environment with ease.
More dangerous is the proliferation of e-book self-publishing options, including Amazon.com's
Tying it together
The old model is being swept away, slowly but surely. Film and television are barely growing, but most of that growth comes from ad spending that inexplicably favors "old media."
The bite-sizing of video entertainment and an inevitable redistribution (if advertisers are sensible) away from print and TV ad spending should give Google more ammo and more leverage. The Stern contract can be held up as proof of success for big-spending subscription services. Both models have merit, and good content in many places means bad news for media conglomerates that often rely on a few monster hits per year.
Computers and the Internet have made it easier than ever to be a star and to promote one's "personal brand." With promotion more personal and access a click away, few aspiring singers, writers, actors, and directors ought to genuinely need old media's help. The few talents reaching the top can go to Amazon, Netflix, Google, Sirius XM, or others for the resources needed for a five-star production. The revolution started slowly, but it's starting to pick up steam. Hopefully it leads to an entertainment renaissance. I don't know how many more Transformers movies I can take.
The mobile boom's been a driving force behind this shift. If you're looking for ways to cash in on the continued growth of mobile, feast your eyes on this free report on three hidden mobile winners. No matter who's creating your content, these companies will make it work faster and more efficiently with each passing year. Don't miss your opportunity to cash in on these mobile success stories. Reserve your free copy of this important report now.
Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter at @TMFBiggles for more news and insights. The Motley Fool owns shares of Apple, Google, and Amazon.com. Motley Fool newsletter services have recommended buying shares of Amazon.com, Netflix, Google, and Appleand creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.