The Inevitable

Nothing particularly new, but George Colony of Forrester Research has a nice summary of where we are now in the history of the entertainment industry:

entertainment business models have worked phenomenally in the past 75
years. Edwin Booth, the superstar American stage actor of the mid-19th
century, had fame and a modicum of wealth — but he was compensated,
inflation adjusted, in his lifetime, at less than what Mel Gibson brings in
per movie. John Phillip Sousa was renowned for musical compositions and
performances at the turn of the century, but his career take was less than
what Eminem will make in 2002.

What created this flood of money for artists and the companies who sponsor
them? In a word — technology. Radio, records, film, tape, home audio,
television, VCRs, CDs, and DVDs opened up avenues for syndicating music and
film and drove high compensation up and down the value chain. The
Constitution doesn’t guarantee Harrison Ford $25,000,000 per movie —
technology got him to that number.

Technology can create extraordinary business equations as it did with
entertainment. And technology can rewrite the formula. There are three
inexorable factors that are changing the equation for entertainment.

Those three are the disappearance of a medium: music and movies will be just bit and bites. Consumers want mobility in their entertainment, having it follow them seamlessly from home to car to office. Pricing structure will change.

What does it mean? Rates of compensation will fall – this bothers him not a whit. Liquidity/mobility will explode: “Satellite radio and digital television will prove to be a much bigger problem for the entertainment industry than Napster ever was.” The new moguls will understand the inevitable change and take advantage of it rather fighting it.