As I look back at 2005 and think
about the important trends that might provide some
insight into where our industry is headed in 2006 and
beyond, I believe the most significant trend is that
end-user ideas have had more impact on the evolution
of media technology and practice than ever before.
Important new developments that come to mind include:
podcasting, video blogs, RSS feeds, Flickr, YouTube,
BitTorrent, de.licio.us, etc. These have come from
hackers, viewers, listeners, artists, young people at
play, etc. through the sheer enjoyment of trying and
creating new things. We’ve seen the introduction of
numerous new video cameras and digital audio recorders
in 2005, however, what’s more significant is the use
people are putting them to with audio and video
podcasting. The qualitative difference in today’s
media technology landscape is that innovation is
becoming the domain of end-users
and is being guided by human needs, creative
expression, social activities, and intellectual
pursuits; rather than sales goals, quarterly profits,
corporate research agendas, and marketing initiatives.
Walled-gardens give way to
the cornucopia of the commons
Most of the innovation we’re
seeing in our industry is based in and around the
internet and for good reason: there are practically no
barriers to people creating new things and putting
them out there for others to try out and provide
feedback. Most internet standards have been developed
around openness and inter-connectedness, which is the
opposite of the proprietary standards that have
dominated our industry since its inception. While the
radio and broadcast spectrum, cable, satellite, and
theater chains are balkanized and closed to
innovators, the internet is wide open to anyone who
has access to a web browser at home, their public
library, or local café. Furthermore, most of the
software tools people need to create new services are
based on open source and thus free to anyone who wants
to use them.
While electronics manufacturers
and the FCC have been focused on issues of spectrum
allocation and the upgrade from NTSC to HDTV and
“improving” the television experience, young
people are spending less time in front of the tube and
are instead communicating with friends through mobile
phones, instant messaging, and hanging out in online
communities like MySpace.com. In the 1980s MTV was the
place to learn about exciting new music, today MySpace
and legions of podcasters provide exposure to new
musicians who would never get played on radio group
stations. The control of the rudder steering the media
and entertainment industry is slowly shifting from the
boardroom to the wired teenager’s bedroom.
Successful new companies
are talking with their audience rather than at them
The flexibility of digital
technology allows us to invent almost anything we can
imagine and to re-invent the works of others. Because
the rate of migration from engineering laboratory to
the public is rising rapidly, end users become an
early partner in the development process, not only as
consumers, but as re-inventors. An example of this is
Flickr, a wildly popular online photo sharing
community. The developers were originally creating an
online game. Then they noticed that people were using
the photo sharing features more than playing the game.
Rather than follow their original objectives, they
listened to their end users and engaged in a feedback
loop. Developers would put out new features, end-users
would comment on them and suggest others. Recently
YouTube came on the scene offering video sharing and
they have clearly taken many lessons from Flickr. The
business model secret for a successful media
businesses working in this new landscape of digital
bits is counter-intuitive to business people used to
dealing with physical atoms: you have to give
something away in order to get something back from the
community.
Convergence is old news
In the early 1980s the MIT Media
Laboratory convinced early sponsors to hedge their
bets and support the lab’s research program. The lab
predicted that the entertainment, information
technology, and publishing industries were going to
converge as a result of everything moving to digital
bits. Today there is overwhelming evidence that we are
well along the convergence trend. Current research at
the lab indicates acceleration of the convergence
phenomenon. Andy Lippman, Associate Director of the
lab has said, “eventually every company in some way
will become a communications company.”
Radio and television are
undergoing as radical a change as the computer
industry did after the advent of the personal computer
and print media did after the introduction of the web
and the rise of blogging. And the change is happening
at an exponentially faster rate. Consider the speed
with which podcasting went from the realm of geeks in
2003 to making recent headlines in Business Week and
The New York Times
and catching the attention of advertisers and
venture capitalists.
Media and entertainment is becoming
decentralized, embedded in everyday objects,
personally owned, and incrementally changed: a
consumer industry versus a top down infrastructure.
Disruptive innovations are emerging from surprising
places and from new players, consider the challenge
and/or opportunity podcasting presents to the radio
and music industry, and BitTorrent and its ilk
(wide-scale peer media distribution without the need
expensive centralized servers and bandwidth) presents
to broadcasters and the movie industry.
Why spend hundreds of thousands
in ad production and millions in media buys when your
target audience is fast forwarding over commercials
with their TiVo and downloading media through the
internet rather than tuning in the radio or watching
television? You can make more organic, relevant media
right at home or sponsor those who do. I am not
suggesting the end of radio and television
advertising, but current trends indicate changes of
great magnitude creating both threats to those who
resist, and opportunities to those who embrace the
change.
The key factor in these
trends is Reed’s Law and community effects
The philosophical position behind
this article stems from the seminal work of David
Reed, who articulated what is known as Reed’s law.
The law asserts that the community value (cv) of large
networks--particularly social networks--scales
exponentially with the size of the network. The reason
is that the number of possible sub-groups of network
participants is 2n, where n is the number of
participants. This grows more rapidly than the number
of participants in a Metcalfe Network (e.g. the
telephone system and early computer networks, in which
value is a function of the possible connections, or
n2) or a Broadcast Network (e.g. radio and television,
in which value is a linear function of n). This is why
adding an additional 100,000 viewers to a television
audience of 1 million is no big deal, but adding
100,000 network participants to a 1 million
participant social network has a significant effect of
the value of participation in the network.
I use the term community value
because it’s almost impossible to monetize fully the
increase in value at the same rate as the value itself
grows. Value may grow rapidly as the community grows,
but there are limitations to what people are willing
to pay for products and services regardless of their
value. The significance of Reed’s law is eventually
the network effect of potential group membership can
dominate the overall economics of the system. Consider
the rapid adoption rate of podcasting compared to the
adoption rate of faxes or television. Auctions on eBay
and social networking sites like MySpace and LinkedIN
provide examples of sites that demonstrate the value
of group forming. Networking pioneer J.C.R. Licklider
wrote in 1968, “we form communities of common
interest, not common location.” Howard Rheingold’s
book, Smart Mobs, is interesting reading for anyone
who wants to explore these ideas.
The revolution will be
decentralized
Today’s telecommunications
companies follow a hierarchical broadcast
communications model. In contrast to this, the trend
is towards more decentralized applications (e.g.
BitTorrent), lower innovation threshold (Mashups, open
APIs), viral adoption (e.g. podcasting, music
sharing), and acceptable imperfection (e.g. the
perpetual beta of Flickr and many Google and Yahoo!
projects). Just like television did not displace movie
theaters completely, the trend is individual nodes are
playing a more active role in the communication
process as devices (e.g. iPods and smart phones) gain
more processing power and communication infrastructure
evolves to support them within decentralized, self
organizing systems of production and distribution.
The difference between today’s
media technology developments and the introduction of
television is that no one is telling end-users and
hackers what to do. Creativity thrives in an open and
free environment. The entertainment industry continues
to invest in suspect technology like content
protection. The recent news about Sony’s CD content
protection scheme unwittingly becoming a host for
spyware comes to mind. After the whole ordeal they had
to recall it, back to square one. Imagine if that
money had been spent on new product or service
development.
The theory of the long tail
Chris Anderson, editor-in-chief
of Wired, wrote an article titled “The Long Tail”
which appeared in the October 2004 issue of Wired.
Anderson suggests that our culture and economy is
shifting away from a focus on a relatively small
number of mainstream products and large markets
(“hits”) at the head of the demand curve and
toward a huge number of niches in the tail. As the
cost of production and media distribution falls, there
is less need to group products, services, and
consumers into one-size-fits-all packages. The
internet provides us with a distribution
infrastructure without the constraints of physical
retail space and other limitations of distribution.
Narrowly-target media is becoming economically
attractive. Anderson predicts that the demand for
products and services not available in traditional
retail outlets is potentially as big as for those that
are. The potential aggregate size of many small
markets may rival that of the current market. You see
evidence of this with services like the Film Movement
DVD subscription service, niche market DVDs available
through CustomFlix, and independent film distribution
by IndieFlix.
A brave new world
The media and entertainment
industry has not been this exciting since the
introduction of small 16mm cameras and a new culture
gave birth to the cinéma vérité movement. And this
time we’ve got not just a handful of filmmakers and
journalists with new tools in their hands, but
hundreds of thousands, if not millions of young
producers. These are exciting times and the
opportunities are bounded only by our imagination and
desire. I’m optimistic that many key players in our
industry are moving in the right direction rather than
fighting the change. For example, David Kiley of
Business Week wrote about Paramount Studios’ success
with HUSTLE & FLOW,a niche film that was promoted
through weblogs and fan sites. According to Kiley,
thirty five percent of moviegoers surveyed said they
were motivated to see the film through discussions on
line. There are many more examples of this. Have a
happy and prosperous 2006.
David Tamés is Program Director, Digital
Filmmaking at the Center for Digital Imaging Arts at
Boston University and Co-Producer of ArtFilmDesign (http://www.artfilmdesign.com),
a podcast of interviews with creative people. For more
on group forming networks and related writings see
David Reed’s web site (http://www.reed.com/dprframeweb/dprframe.asp)
