Archive for December, 2009

In 2009 Jeff Suhy joined Zoic Studios, the visual effects house in Culver City, California. How the former A&R executive found himself working alongside the creators of spaceships for Battlestar Galactica and vicious monsters for Fringe is not only the story of one man’s career, but of the trajectory of the entire entertainment industry over the past three decades.

In the first part of this two part interview, Suhy described the path of his career and how he came to Zoic as Creative Director – Digital Strategy. Here he discusses the current state of the record industry, and what the catastrophic changes there portent for the entertainment industry as a whole.

The entertainment industry is going to be very different in five years, but there will still be an entertainment industry. Do you think you got out of the music industry just in time? It seems like in five years there won’t be anything even remotely resembling a music industry.

I’ve been thinking that for about ten years. Nevertheless, it still seems to exist.  I have a lot of friends who are trying to help shape the future of that business, it’s certainly going to be different – the recording business, we’re talking about, it’s not the CD business anymore. It’s the recording artists, and distributing those artists, and subsidizing tour support to develop an artist. The quote-unquote “record companies” are going to do it, maybe agents.

Digital technology has certainly enabled a lot of bands to record and distribute themselves; some of the barriers to entry are gone, and it makes less of a case for the record business.  They certainly can’t take 85% of the revenue from your sales anymore – but there’s not that much revenue [anyway]. Certainly the forces against them are strong, but there’s always going to be a need for artists to have help shaping and getting their message out there, and there’s gonna be someone to fill [that need].

The record industry can’t take 85% of the revenue from your sales anymore – but there’s not that much revenue anyway…

It won’t look like what it does probably now even, but there will always be a quote-unquote “record business,” just like there will always be a television business and there will always be a film business, even though those things are going to be changing pretty dramatically too.

And radio.

Mmm hm.

Didn’t a lot of what you were talking about with the corporatization of the music business have to do with radio – Clear Channel, Viacom?

Deregulation in the radio business allowed these companies to own tons of radio stations, and start to put on the pressure to homogenize music. If you’re a record company, and you want to get an artist out there, you have to work with Clear Channel if you’re going to have any success. You used to have to work with MTV. If you didn’t get a record on MTV back in the 80s and 90s, it was almost impossible to get a break and become huge. And now that stranglehold is those Clear Channels and those big companies that own the space.

They’re becoming less powerful. That’s the good news, because people are finding music in other ways. They’re finding it through Pandora and referral technologies, iTunes, all these different ways to discover music. It’s fascinating to watch. Luckily I’m not in the middle of it anymore.  I can watch it from the outside, and root for the forces of creativity over the forces of corporatization.

So what’s coming in the next five years as far as digital technologies related to digital marketing and advertising?

I have Netflix on my PS3, and I’m watching Lost right now on my PlayStation 3, streaming in high definition, glitch free. This was the big problem on the Internet all the years I was doing streaming media — there was this buffering, and pixelization, and poor quality. And at the end of the day people were like, “yeah, well, I’m never going to want to watch TV over the Internet, because it’s a crappy little small-screen experience; and I want a big screen, and I want great quality.”

And now, not only is there parity, but there’s instantaneous delivery, as opposed to waiting and buying a DVD, or waiting for your TiVo to record your show. You have the ability now to just get it.

And not only that, but you can interact with it. And that’s the future. Media over IP, on the big screen, and being able to interact with it. It’s pretty simple. It usually is – people always over-complicate things, but that’s the future.

And the mobile device — being able to have the same thing on your mobile device that you have on your big screen, so when you’re traveling you can just reach in and grab whatever show you want to watch on your iPhone or whatever it is that you have. That’s where it’s at.

That model of subscribing to content and not actually taking physical ownership of it is becoming more and more acceptable…

But how are they going to make money?

Good question! Maybe I’m being optimistic, but I feel like there’s a cycle that we’re about to go back through. Back in the early days of television, these shows would have brand integration right in the shows, where you would have the host of the show literally walk off to a set on the side and say, “have you ever thought of using Clorox…”

Like the “Milk of Magnesia Hour,” or “Texaco Star Theater.”

Exactly! You had these brands integrated into television in the early days, before they started creating commercial spots. And that was what paid for television.

These brands and products out there are always going to try to find a way to get exposure to their market. And when people are watching television over IP, if their demographic is all doing that, they have to find a way. Just like they are trying to find a way to get social media to work for them. It’s not an easy equation, but it’s being solved. Little by little things keep happening that get us closer to those advertising dollars and those brand dollars finding their way online. There are companies out there like Generate and other companies, that are working to create branded content that has a high level of quality.

I produced Bud TV for Anheuser-Busch, and that whole project was the first IP TV project where original content, which wasn’t an advertisement, was being developed for a brand. We created a whole bunch of shows. It was a great early experiment. It didn’t go so well, because of the age-verification, and the fact that with an adult beverage you had to be 21 and we had to use your driver’s license to verify you. Everyone was going to YouTube at that point. Traffic on the Internet is like water, it will flow around any kind of obstacle; and we put too big of an obstacle in front of it, so it never really took off. But it was the right idea, and that’s where it’s heading.

Brands are gonna associate themselves directly with TV shows, and production companies and development studios are going to be creating shows and getting ad dollar buy-ins in sponsorship form straight up front.

So that’s for television; and for movies, you’re going to have to pay for them, just like you do now. You just get them over the Internet. Like I’m doing with my Netflix subscription — I can watch shows on my PS3, but I’m paying a monthly subscription. TiVo, you have a subscription; Rhapsody, you have a subscription. That model of subscribing to content and not actually taking physical ownership of it is becoming more and more acceptable, whereas before that was really tough to swallow.

But it seems to me that all the differences between movies and television are based on how those media were originally delivered. Now that those delivery systems won’t exist, won’t the difference between TV and film cease to exist? Won’t you end up with a continuum of some things that are episodic, and some that aren’t, of different lengths?

I think the expectations and templates are breaking down. But people still want to have that Lost kind of episodic reality, or the Sopranos, where you’re following the story of these characters for years. The writers go away for several months and conjure the next season, and they come back with 20 more hours of this idea to share with their audience. That’s one methodology, and however that manifests itself, seven-minute episodes or hour episodes, that will be different content for different types of shows. Some will have multiple storylines happening concurrently, that you will be only able to experience online, where you’re able to click on characters or things within the show and get parallel storylines.

With film, it’s a different type of experience. It’s one complete story, that is digestible within an hour-and-a-half, two hours, and that’s just a different type of experience.

Will you ever go to a theater to see one, in five years, ten years?

I think you will probably with 3D, something like that. There will be different up-sells. Like there’s this new cinema in Pasadena in the newspaper today, which is $29 a ticket. You have this full lounge recliner and a blanket and a pillow, and there’s a little table between you and the person you’re with, and you ring the bell and they bring you martinis. It becomes more of a whole experience, going out. That to me sounds very compelling, and makes me want to go out to a movie. That’s something I want to try.

With Avatar, the 3D showings are sold out, with a higher ticket price that people are willing to pay for a better experience. Otherwise, you can just watch it on your plasma screen when it comes out on TV in a couple of months, pay-for-view, whatever. These release windows are all going to be changing, where you have the theatrical release; the international release; the DVD release; then pay-per-view, then HBO, and then eventually it goes to network. All that’s going to compress and change.

You get 24 hours to watch your show — it’s The Man putting his thumb down on me.

Both the music industry, and the entertainment industry in general, are having tremendous trouble adapting copyright to the new digital age.

With regards to the stakeholders in the traditional media business, people always say to me, why don’t they just do this or do that, set up their own distribution system. The problem is this — there are the publishers; there are the record companies; the artists; the artist management; people who have master licenses, different sorts of rights to the music, publishing rights and what-not; and they all have to agree on a new model. And everybody wants a bigger piece of the future, and to be less [expletive deleted] than they have been in the previous version.

And everyone that has a piece of that pie wants a bigger percentage, because the pie is getting smaller, and because they feel they’re not getting what they’re supposed to get out of the deal. Until they can all agree, that pie gets smaller and smaller and smaller, as everyone clings to the traditional physical product rights realities.

It almost takes, like the Roman Empire, a complete collapse for it to become something different. As long as those systems are in place that define what the record business is, it’s never going to substantively change.

I’ve talked to a lot of different brands who don’t want to even talk to the record companies. They don’t want to have anything to do with it, because it’s this labyrinth of rights and issues, and everybody wants a ton of money for every little thing. Or they want a bigger piece of this, or control over that, and it’s just a mess.

That’s how the entertainment business evolved over time, with these different people having different elements of control; and now they’re all being forced to simultaneously make massive decisions about how this is going to change. No one can agree, and they’re never going to like each other very much because they’ve always been in conflict with each other, competing. The record companies were always the 800-pound gorilla, and now they’re calling for help; and people say “gee, we’ve got the big bully on the block down a little bit,” and nobody really wants to help them.

You’ve got these big live promoters – that’s where the action is now, is on the live scene – they’re the new center of power, these Live Nations, these companies that are signing Madonnas and people like that.  They put them on tour, they make the real money there, and the record becomes a loss leader to generate interest in the live performance. People will spend $45 for a t-shirt for Kings of Leon at their live event, but they won’t spend $5 for the album. They’ll go get it off a file-sharing service for free. But if they have a live disk from the show they were at, they’ll spend $45 for that.

People still want music, they still want content, they still want media. But the systems in place to support the production and distribution of those things are not flexible enough to accommodate what consumers want. Rights restrictions, DRM — people don’t want that. Eventually, that has to go away.

It will only go away when the whole thing blows up.  I want an MP3 of my song in my car, on my iPhone. I want to have it on my computer. I want to listen to it wherever I am and not have to think about compatibility between devices. I want movies in an AVI file, so I can watch them on any device anywhere. I don’t want to have to deal with the rights and crap. Like on DirectTV you get 24 hours to watch your show if you order it On Demand – that’s never going to work. It’s The Man putting his thumb down on me.

Read Part 1.