When Will Large Media Listen to the Wisdom of the Crowds?

I popped in the Ratatouille DVD the other night to watch with my kids.  As we waited for the movie to begin, I saw a commercial that talks about content stealing. You’ve probably seen it - the one where loud music is playing and they draw the analogy of people stealing stuff from stores as being equivalent to accessing unauthorized digital media.  As I was watching this commercial for the 100^th time, I wondered - at what point will the business models of large media companies catch up to the opportunities for distribution, based on the wisdom of the crowd? 

I whole-heartedly stand behind the protection of the rights for content creators. I believe those who knowingly propagate illegal distribution of this content for their own profit should be punished.  At the same time, large media is focusing on the wrong thing – we are not lacking in technology to make more video content more readily accessible. This technology has existed for many years now.  In reality, large media companies have been reluctant to evolve their business models as rapidly as the technology has evolved to support that content.  The biggest issue for large media companies is that they do not want to cannibalize the existing markets of terrestrial TV, box office movies, and DVDs.  On top of this, these companies saw what happened to the music industry with the Napster epidemic - I’m empathetic to this concern and I get it.

On the other hand if there was ever a time to evolve – that time is NOW.  If we were to take the pulse of the wisdom of the crowd on the topic of easier access to more legal video content with reasonable business models, I am 100% sure that the result would be overwhelmingly positive.  I am not saying that there is an easy way to solve this problem and I understand the complexities behind them. In my years spent working in the digital media space, I learned that it’s best to cannibalize your own market before some else does it for you. In this case, consumers are unknowingly doing that for these large media companies.  In fact, the wisdom of crowd has already had its say, demonstrated by the large number of people accessing unsanctioned content regularly.  People that I know who access content via things like BitTorent do so because it is easy not to save money.

Recently, RedOrbit (http://tinyurl.com/d2wgrg) published an article stating that “executives are now concerned that the recession will cause more users to view stolen shows and movies.”  I find this totally preposterous.  A down economy does not suddenly make everyone a thief.  In fact, it is proven time and time again that in a down economy box office sales go up!  According to Media By Numbers, box office revenue for 2009 is up by 17.5 percent even though ticket prices have increased.  Attendance is up 16 percent, which means box office revenue increases can't be attributed to higher ticket prices. This is the biggest surge in the box office numbers in about two decades.  I am not seeing an increase in arrests because people are sneaking into theaters to avoid the ticket price.

When you calculate this all up, the wisdom of crowds is saying that people are willing to pay for content - they just want it to be easy.  Richard Cotton, general counsel for NBC Universal, told the New York Times, “Young people, in particular, conclude that if it’s so easy, it can’t be wrong.”  I say, wrong, wrong and wrong again.  The truth is that TV seems free because we pay a monthly fee and we just get everything that is there.  With my Comcast service, the content that costs extra is clearly marked and I have to accept it.  Most people cannot draw the difference in their minds between that experience and the Internet.  I pay my monthly internet fee and I get whatever is there and when stuff is not free, it is clearly marked.  Most people are NOT celebrating that they have just stolen free content from someone – they do not even think about it because they have no idea that it is stolen!

I believe that if it is easy, people will do it, which includes both access and business model.  According to Wikipedia, as of January 2009, iTunes has sold 6 billion songs worldwide.  Apple has figured out a model that is easy to access and payment that is easy to accept.  Apple is now moving to a completely DRM free (DRM is the protection technology that prevents open sharing) library by the end of April 2009.  That tells me that Apple is listening to the wisdom of the crowd and adapting.

Now if Steve Jobs can begin to apply that same wisdom to his stake in large media we would be all set.

The Crowd is gathering.........

(Launching coming at the end of April)