Thinking of this Geffen documentary one can start connecting the dots on why being big in technology is being the new rockstar.
Before, the big names in the media news were people like David Geffen, Michael Eisner, and Tommy Mottolla. Now, it’s people like Mark Zuckerberg, Bill Gates, Steve Ballmer, and Steve Jobs (until he died, but Tim Cook is runner-up).
Before, big media companies controlled distribution of entertainment and information. Now, technology companies do, and in many cases without the consent of copyright holders.
Before, the entertainment industry could make guesstimates on what would hit through A&R, luck and payola. If they could just get you to hear their product enough they know you’d learn to like it. Now, there barely is any A&R and the appeal of the product is based upon how sweet that first taste is without much regard for how long it will last. [As I write this Gangnum Style has just become the most viewed video on Youtube. You think the old guard would ever give Psy a chance? As a counterpoint, you think the new guard would ever give Stevie Wonder and Ray Charles a chance?]
Before, the entertainment business could exploit the talents of others to sell physical media, opening up a healthy model of distribution and retail, lining the pockets of everyone in the chain. A lot of people who weren’t directly involved in the product got rich this way. Now, there is no physical product to sell and tech companies have consolidated distribution and retail to become the single point of contact.
Before, Dr. Dre rapped about poverty and the inner-city. Now, he’s trying to sell you $200 headphones so you can listen to music you downloaded for free.
Before, if you wanted to listen to a track you had to buy a $17 CD because it was the only game in town. Then you could buy that single track for 99¢. Now, you don’t even need to pay. It’s much harder to be a billionaire that way.
Geffen is right to not want to be in the record business these days. His piece of the pie can’t be as big as it used to be.
In both times big media and big tech built their business on the talents of others. But it was mutually beneficial. Listen to what David Crosby says about Geffen. He says something like, “we weren’t looking for somebody who was into the music. We were looking for somebody who could make us money.” I hear people from earlier generations say things like “it was just about the music, maaaaan!” But it wasn’t. Even Woodstock was a sham.
At least Geffen built a track record of making himself and his partners money (well, ask early to mid 1980s Neil Young that question and he might have different answer). But Spotify? How do they make money? By taking investments from Goldman-Sachs and Coke, not through charging for a service they provide. Of course, they’d rather you get a subscription. They are having a rough time making money on their own. What have they earned, other than hype? It’s an experiment and if you’re lucky you can make maybe $13 after 90,000 plays.
Big tech is becoming big media. How did that happen? I think because media companies didn’t hire software developers fast enough. They didn’t cannibalize themselves, they let Shawn Fanning do it. Now the cat is out of the bag.
Today, because of the ease of distribution and the endless amount of choice, it’s way harder to become a billionaire in that business. Geffen can’t be a billionaire in this business anymore. Better to sell a service that can’t be easily duplicated, or a physical product…like over-priced headphones.