Monday, July 13, 2015

When disintermediation gets dissed

Today’s post comes courtesy of a student’s proclamation of displeasure in a course I’ve been teaching for the past few months. I’m happy to report that said student became noticeably less dissatisfied as the class progressed, and that we followed up with a series of emails on the topic. It’s no coincidence that the topic on the table was digital disintermediation in the creative industries, the same theme that has concerned this blog for the past 2 1/2 years.

With the student’s permission I’m sharing those emails in today’s post and will follow up in future blog posts with additional thoughts on the topic of the impact of the Internet on the creative industries.

But first, some context.

Last week’s class was our second to final session in the course, one in which we’ve been studying the shifts in media, marketing, and communications as systems move from being dominated by top down, broadcast environments to ones in which that space is shared with individuals who have been able to amass audiences from the ground up, using technologies and platforms such as Twitter, Facebook, YouTube, Instagram, Vine, Soundcloud, blogs, and podcasts to speak directly to consumers/fans/users and construct mini media companies for themselves, out of themselves.

This, in a nutshell, is digital disintermediation; a removal of the middleman – e.g. the publishing house, the record label, the newspaper, the radio station – that once brokered the traffic between creator and audience.


Fairly early into my Powerpoint I could see that Michael Martyn (he says we can call him Mike), one of the older MBAs in the class with over 20 years of experience in the arts, on both the performer and administrative sides, was not happy. I was only a few slides in to a deck of 50 or so slides when an “I’m not buying it” came from the third row of the classroom. The instructor cannot ignore such comments, of course. By this point I had already stated that I was going to address issues such as the ‘myth of digital democracy’ and related concepts that paint overly optimistic pictures of Internet economics, but Mike’s comment sped things up a bit.

His objection was that the middlemen are still very much there, pointing to YouTube a prime example. And while there are certainly forces of reintermediation at work that tug at the DIY-ness of disintermediation, I pointed out that there is a big difference between a platform and a middleman.

A middleman plays the role of gatekeeper, acting as a combination of filter and waystation between the creator and the marketplace. Put plainly, the likes of book publishers, record companies, and broadcasters are all in the business of making decisions that stem this flow of creative outputs, with the belief that their choices are better suited to the desires and tastes of the audience. That would be the opposite game of what universal upload platforms such as YouTube and Souncloud make possible. They do not discriminate. At least not in terms of allowing anyone, anywhere, to make their work accessible to a global audience.

In this environment of platforms and digital media that is networked at the peer-to-peer level, we have the extraordinary ‘trickle up culture’ tales of:
  • Podcaster Marc Maron, who was a veteran comedian on the brink of bankruptcy (financial and emotional) that started podcasting in his garage in 2009 and then hit 1 million downloads per month (January 2011), and then 3 million downloads per month (January 2012), and now gets over 5 million downloads per month and is approaching 200 million cumulative downloads. And yes, President Obama did recently visit his garage and do an episode of the podcast – a request that came not from Maron, but from Obama’s people.
  • Rappers like Tyler the Creator, who started out on Tumblr, tell Larry King “the suits are idiots”, and pride themselves on navigating their own way through the entertainment industry.

  • And there's the less well known, but ridiculously prolific Lil B, who released 676 songs in 26 months – offering them all for free online – and used 125 different MySpace pages early on to reach fans directly. Oh, and he's also given talks at NYU  and MIT.

But back to our class.

Mike was more satisfied with the snapshots of the creative industries I went on to discuss, but we still went on to start up an email correspondence to further hash things out. With his blessing, I’m sharing those emails here, and of course welcome your thoughts, comments, or experiences on the topic, as it is one in which things are constantly evolving.

MM wrote:

Thanks for the follow up. My experience is that people unfamiliar with the sector paint that rosy picture themselves unless it is explicitly laid out for them what the conditions are.

It was a good class. The business issue closest to my heart, and one of the reasons I'm doing my MBA, is that of creating the possibility for sustaining incomes in the cultural sector, and to have this issue be taken seriously by authorizers.

While the DIY ethos is great it is often highly dependent on a level of privilege that makes it exclusive.

I always try to make sure that the reality of the wage situation in the sector be front and centre. I know you know this: I just feel an obligation to the sector to make it central to any discussion because - hey - it's business.

You touched on most of the things that I wanted to say over the course of the class, so I'm sorry if I jumped the gun: I'm very passionate about this issue in particular. For example: one debate that never gets old is how Economic Development Strategies that rely explicitly on VOLUNTEER RUN festivals and events to anchor their tourism plans are supposed to develop a local economy? This is the level of thinking that I'm accustomed to dealing with on these things.

LK wrote:

I'm happy to hear that you agree that overall the information presented was balanced -- neither painting a rosy picture of the industry, nor one of doom & gloom. I will likely teach it again, so the feedback is very valuable.

I hear what you're saying about economic sustainability and, e.g, volunteer labour as an assumed line item in budgets. As I noted last night, one of the realities of industries such as film, radio, TV, music, fashion, etc. is that the market does not balance supply & demand the way it does for, say, plumbers and accountants. For better or worse it seems like there will always be a greater supply of labour than demand in the creative industries.

To this end, you may want to look at the work of Angela McRobbie (you may already have) on the creative industries as economic sector (she was actually one of my profs at grad school). She's based in the UK so her perspective is UK-inflected, and grounded in cultural studies, but there's a lot there that you may find interesting/helpful.

MM wrote:

I have some familiarity with McRobbie, and my own 20 years lived experience working towards economic development of the sector reflects anecdotally much of what she presents. In the late 80s-early 90s the largely not for profit cultural sectors began to move en masse from models of employment to contracts. This developed against the backdrop of a less embattled public sector and more lucrative private sector than we have now: there was a market beyond the worker's immediate network for their work, and not all work came through the network.

This trend towards contracted labour has spread throughout the labour market into public and private spheres. I think McRobbie agrees the cultural sector is the canary in the coalmine for the economy as a whole.

We're not just talking about supply of labour, of course, but the supply of creative capital, which is markedly different. As you indicated, the sheer volume of creative capital flooding the market is pertinent to this discussion.

I make the allusion of what is happening to a democratization of the vanity press of the 19th century: where once only the rich terrible poets had access to the presses now all the terrible poets have access. I will hypothesize that closer examination of the still-emerging long tails of the exposure bell curve will reveal not a sustained, gradual rise but a series of steps and plateaus. Moreover, in the context of the digital distribution space I see an emergence of 'pre-popularity' steps, distinguished by three sequential determining factors:

1) Taste / Access to taste makers
2) Geography
3) Resources of the creator

The only thing that I find more remarkable than the volume of bad poetry on Twitter is the vast, truly supportive, audience for it. While the social network enables exposure it is only an enabler; perhaps that's our McLuhanism here. While I lack enthusiasm for further consolidation of wealth and power among fewer and fewer 'printing houses', I acknowledge we are not even beginning to see how the enabling effects of mass distribution will affect tastes on a global scale.

And now a few concluding thoughts from this blogger....

The reality is that the floodgates are now wide open, with the price of entry reduced to almost nil.

Creation, marketing, distribution, and publishing are all possible at the individual, direct-to-fan level, using tools such as these. 

Click to enlarge

                                  We’re also seeing marketplaces that look like this:

Click to enlarge


And consolidation that looks like the chart below, which on the left shows companies that aggregated YouTube channels for specific markets or demographic segments, and on the right shows the the media, entertainment, telco, and technology companies that have been acquiring them over the past few years.

For example, some companies specialize in aggregating makeup and fashion bloggers, while others specialize in aggregating video game commentators, and others specialize in content that appeals to 18-24 year old males. What the larger companies – in this case firms ranging from AT&T to Disney -- missed from the world of trickle up culture the first time around, they are now vigorously scooping up in the form of acquisitions of the smaller companies that rolled up groups of YouTube channels into a single entity, branded them, and sold targeted ads against the content.

What started out with webcams in garages, backyards, and bathrooms has become a corporate concern in multi-billion dollar companies. Whether or not this is any sort of ‘win’ for individual creators of content that lives and grows online remains to be seen. What is known is that the path from zero to tens and hundreds of millions of views, downloads, and clicks, has never been more rapid, and that in the process new forms of currency have been minted. It’s also worth noting that as this consolidation occurs new barriers are erected between creators and consumers. There are those creators who have either been pursued by or who pursued the aggregator networks. And in a number of cases those networks have in turn been acquired by larger corporate interests. Each one of these steps adds layers (and percentage payments) between the creator and the media platform, and alas we have re-intermediation on our hands.

Thanks for reading and stay tuned for Part 2 of this post and a closer look at Platform Capitalism: Democratic enablers, or monopolists in everyman’s clothing?

Related Reading
Steven Johnson, New York Times, "The Creative Apocalypse That Wasn't":