No doubt the entertainment industry has a lot of trepidation about the recently announced Google TV (though it sounds to me like Google is just building Android and Chrome into TV’s and set-top boxes, much in the same way that everybody expects Apple to put iOS into its unannounced iTV… I mean, if you’ve played with the NetFlix or ABC apps on an iPad, it doesn’t sound like there’s anything really new here)… but what really struck me from the LA Times article reprinted in today’s Seattle Times was this particular toss-away:
The prospect of Google getting into television frightens many in Hollywood, who worry that Silicon Valley will upend the entertainment industry just as the Internet ravaged the music and newspaper industries.
Yeah, um, except… what happened to the music industry and what happened to the newspaper industry are two entirely different things.
Music sales, in both units and dollars, rose steadily and healthily for decades before plateauing in the late 1990’s at about $17 billion annually. That’s when digital piracy, particularly the widespread popularity of peer-to-peer file sharing networks, started to take the legs out from under the industry. The dollar value of music sales has pretty much shrunk nearly every year since, to about $10 billion annually today, though thanks in large part to Apple’s iTunes, unit sales in 2009 reached an all time high.
Total paid U.S. newspaper circulation on the other hand had been relatively flat since about 1960, despite huge increases in population, and has been on the decline since the mid-1980’s, well before the market penetration of broadband Internet could have much of an impact on its business. Indeed, if any medium is to blame for stealing away paid subscribers, it is television not the Internet. And while readership has shifted dramatically from print to digital over the past decade, unlike the music industry, it wasn’t digital pirates who put the newspapers’ content free online, but the newspapers themselves.
Furthermore, there’s another huge difference between the music and newspaper industries, and the respective woes they face sustaining themselves in this new medium. While it is true that music industry revenues have continued to slide even as unit sales reach record highs, so too have their unit costs. Thanks to new digital technologies, the cost of recording an album is now a fraction of what it was just 20 years ago, while the cost of distributing a digital track has shrunk to virtually nil. If the old labels can’t figure out a way to exploit these new efficiencies to remain relevant in the new online marketplace, well, that’s their problem, and no real loss to artists who now have multiple means of promoting themselves to new audiences.
But newspapers haven’t benefited nearly as much from new technologies, for while the cost of delivering an online paper is, likewise, virtually nil, they’re still locked into the expensive, capital-intensive medium of print, regardless of how many fewer customers now purchase the print edition. As I’ve previously argued, the whole notion of an “online newspaper” per se is oxymoronic, for the industry’s entire business model is one based on the physical need to print and distribute paper. Absent this medium, much of what a newspaper does as an institution becomes unnecessary, and its legacy print edition becomes a financial drag on the organization as a whole, making it less competitive to newer, totally online competitors.
Indeed, it is reasonable to question whether most dailies can survive the shift from print to digital in much more than name only… which suggests the biggest difference between the music and newspaper industries, at least from the consumer’s perspective. Music labels publish and distribute the collective work of independent artists, whereas newspapers mostly create their own content via staff reporters. Thus if the large music labels were to suddenly collapse and disappear, few consumers would notice, as the new distribution medium is already mature enough to allow independent artists access to the marketplace. But if newspapers were to suddenly disappear there would be an equally sudden collapse in the amount of local journalism being produced… with potentially dire consequences for our democracy.
All the more reason why newspaper executives should not be allowed to absolve themselves of their own mistakes, simply by blaming the bulk of their industry’s woes on external forces.