19/5/2016 REDEF ORIGINAL: Age of Abundance: How the Content Explosion will Invert the Media Industry

AGE OF ABUNDANCE: HOW THE CONTENT

EXPLOSION WILL INVERT THE MEDIA
INDUSTRY
Over the past century, technological advancements have massively
reduced the cost and time needed to create and circulate content.
Though this has liberated artists, consumers are now drowning in a
virtually infinite supply of things to watch, listen to and read. The
answer to a world where attention is the key constraint, not capital or
distribution, isn’t Big Media – it’s the Influencer Curator.
By Tal Shachar with Matthew Ball
Jan 25, 2016 - 11:38 PM

If you read a list of mankind’s most important or influential inventions, there’s not far you
could go without coming across those of Thomas Edison. Oddly, however, it’s unlikely you’d
ever see the device he so-routinely identified as his favorite: the phonograph. While it didn’t
defeat disease, conquer the night skies or take flight, the phonograph was just as
Promethean as vaccines, electricity and the Wright Brothers’ ‘Flyer’. For thousands of years,
media was a privilege of the elite, concentrated in cities and confined to a single moment in
time. With Edison’s phonograph, music had become non-rivalrous, infinitely replicable and
indefinite. Yes, it took decades until the average family could afford a record player or radio,
but the dawn of democratized consumption had arrived.

Unfortunately, however, this same trend led to an ossification in content creation and
distribution. Records, after all, cost money. Production was expensive – as was distribution,
marketing and promotion. So expensive, in fact, that almost every artist lacked the capital
required to actually release their music – a need that paved the way for record labels (or TV
studios, film studios, publishers etc.) that would finance said efforts in exchange for hefty
royalty fees and content rights. These money men though wouldn’t and couldn’t afford to
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invest in every artist with a dream. Given the upfront cost of talent development and
distribution, labels invested in “Arts & Repertoire” men, whose job it was to sift through
countless musicians in order to identify the select few with “commercial viability”. Potential
artists were then further cut down in number when it came time to actually distributing their
content – and then again via marketing/promotional support. Underlying this fact was an
unavoidable truth: content publishers had scale-related disincentives to support more than a
handful of artists. Why record, distribute, market and promote 15 albums if you can achieve
the same unit sales with 10?

Though this system was far from ideal, it was the inevitable outcome of a market in which
talent was abundant, capital limited, distribution bandwidth (e.g. shelf-space, broadcast
spectrum, print layouts) scarce, barriers high, and the cost of failure significant. But as a
result, the content industry slowly shaped itself around a mysterious cabal of financiers and
executive tastemakers that essentially programmed the national media identity. And anyone
who wanted in had to move to New York, LA or Nashville, pay their dues and hope to work
their way up until they could call the shots.

Of course, the music business was far from alone. The more expensive the medium, the more
constrained the supply, the smaller the community and more homogenous the content. Local
disc jockeys, newspapers and TV affiliates did have the opportunity to repackage and
reprogram – to imprint their personality or take, if you will – but this was limited in scope,
drew upon only the content that was already distributed, had to fit within an existing
corporate identity and, again, depended on access to capital or infrastructure.

Over time, however, technology did what it does best: production costs fell, quality went up
and distribution bandwidth increased. Economics, in turn, improved, as did the industry’s
carrying capacity – the number of artists, titles, and pieces of content that could be
supported. The media business was beginning to loosen up.

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But it took until the late 2000s – more than a century after the phonograph – for creation and
distribution to truly democratize. With the Internet, distribution became free and truly non-
rival (if a bit non-excludable), while the proliferation of low-cost media equipment, mobile
devices, and powerful editing software dramatically lowered the costs of production. The rise
of creator-based consumption platforms and crowd-funding platforms, meanwhile, eliminated
many of the remaining barriers hindering independent content creation. This meant that
content could not only be created by those outside the business, but that commercializing
this content became significantly less expensive and risky. This led to a massive increase in
available, indexed and distributed content.

While the media business benefited from many of these changes, the consequences have
been fundamentally destabilizing. The television industry has experienced such a surge in
original content that annual cancellation rates have quintupled over the past 15 years (twice
as many original scripted series were cancelled last year than even aired in 2000). Since
1985, the indie film industry has seen a nearly twentyfold increase in the number of theatrical
releases even though ticket sales have remained flat (in 2014, the Head of SXSW’s film
festival decried that “the impulse to make a film had far outrun the impulse to go out and
watch one”). Plummeting music sales and unprecedented competition have made launching
a new artist so expensive that catalogue sales now make up more than 200% of major label
profits (in 2014, David Goldberg privately encouraged Sony Entertainment CEO Michael
Lynton to essentially halt A&R efforts, as well as investments in actually making new music).
With the democratization of media creation, it’s easier than ever to make content but harder
than ever to make a hit.

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Ironically, the increasing difficulty in creating hits has not bolstered the “hit maker” system but
rather further weakened it instead. In 2013, Macklemore became the first unsigned artist
since 1994 to have a number-one single in the United States – a feat he repeated just three
months later. Mega-star Taylor Swift has been with an independent label since her debut
album and multi-platinum groups such as The Eagles and Radiohead have left the majors to
start their own. The struggles of print publishing are well-known, but the uniqueness of some
of “print’s” recent successes are worth mentioning. The 50 Shades of Grey trilogy, which has
outsold The Harry Potter septet on Amazon in the United Kingdom and made author E.L.
James 2012’s highest-earning author, became a viral hit on FanFiction.net long before it was
picked up in print (and it’s unlikely a publisher would have bought the rights upfront). Andy
Weir’s The Martian is another self-publishing success story.

This metamorphosis is about far more than ever increasing amounts of content and a handful
of stars existing outside the traditional media ecosystem. The entire media business is
inverting. For decades, scarce capital and constrained distribution capacity meant that the
media’s industry bottlenecks sat in the middle of the value chain. Today, however, the
bottleneck has moved to the very end: consumer attention. This shifts the balance of power
from determining what should be made to finding a way to convince people what to watch,
listen to or read in a world of infinitely abundant content.

The preeminence of this challenge has given to the rise of a new type of aggregator-
distributor, including news content sites like Gawker, the Huffington Post and BuzzFeed;

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video and music aggregation services like Netflix, YouTube and Pandora; and even physical
products subscription offerings like Birchbox and Lootcrate. What’s more, it enabled the
major social networks to use their customer data to build massive stickiness, launch their
own publishing platforms and become traffic kingmakers. More broadly, this shift has swung
the balance of power from programmers with the ability to greenlight content to curators with
the ability to get that content heard, seen or read. Of course, the old programming and
financing guard remain important, but with the democratization of production and the
explosion of content creation, the power of 1st party programming is quickly being eclipsed
by the ascendance of 3rd party content curation. The gatekeepers are still manning their
posts, but the city outgrew the walls and the barbarians circumvented the gates entirely.

The Tastemaker Curator

To date, curation has primarily been delivered in three ways. Most common is algorithmic
recommendation powered by behavioral and social graph data – e.g. Facebook’s newsfeed,
Spotify’s Discover Weekly, Netflix’s content feeds. Second is hand-picked selections
delivered by and through the major distribution platforms – e.g. Twitter Moments, Snapchat
stories and Beats Radio 1. Third are one-off recommendations and shares by individual users
– posting a Spotify playlist, reblogging a tumblr post, sharing a link or retweeting a tweet.
Suffice to say, curation today is dominated by well-capitalized technology-media companies
and supported by significant manpower and bandwidth.

However, the next evolution in the media value chain will be the rise of decentralized curation
– with individual tastemakers building up mass followings and driving enormous consumption
by recommending various articles, videos, shows, films, albums, exhibits and so on. While
there’s no way to effectively do this at scale today, the transition is long in development.
Almost everyone today remixes content they’ve created with 3rd party content (just look at
any social feed), reviews and engages in media commentary (ditto) and uses the
recommendations of others to decide what to watch, see, listen to or even believe. Similarly,
every social graph includes a handful of node users whose endorsements proliferate across
the social web. The formalization of this influence will therefore represent both a natural and
value-add extension of existing user behavior.

To this end, multimedia curation is and will continue to be pioneered by today’s web
influencers: YouTube, Instagram and Twitter celebrities such as Connor Franta or Michelle
Phan that have already developed, personal and authentic voices that transcend individual
verticals, genres and brands and influence millions. But it is not and will not be confined to

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these digital influencers alone. “Traditional” celebrities that connect with their audiences on a
deep level – a Howard Stern, Taylor Swift, Glenn Beck or Kardashian – are positioned to and
in some cases already beginning to dive into curation. Mindy Kaling doesn’t have 6M Twitter
followers, two books and her own TV show just because she’s funny, but because her taste,
endorsements and perspective resonates.

The template already exists: Martha Stewart and Oprah both built extensive, multi-category
empires in the pre-digital era largely based on the power of their stamp of approval. With new
distribution technologies, the influencers of today, and maybe Martha herself, will be able to
build even more comprehensive empires than ever before, all built on the power of their taste
and delivered via inexpensive but massively distributed web infrastructure.

This ability for consumers to tap into specific voices will also be critical as more content and
more users come online. Consumer time (or “attention”) doesn’t scale with either the volume
or ready availability of content at their disposal. Discovery functions, too, have a maximum.
The significance of 1,000 likes, 400 ratings or 3.2M plays is very different with 3B Internet
users than it was with 500M. Not only does contextualizing these social cues become
impossible, but the demographics of the reviewers continues to change – first in terms of age
and income, then geography and culture – making it difficult to understand the personal
validity of any crowd based metric. That’s not to say that a product on Amazon with 1,400
reviews and a 3.8 star rating isn’t good – just that the common review mechanisms found
across the web mathematically soften taste out to the average. This works a lot of the time,
but we tend to have very particular tastes in certain categories – and there is a certain
staleness created by narrowing these averages down using look-a-like groups and other
algorithmic techniques. Not to mention the fact, that such an approach often lacks the
element of serendipity and surprise from discovering something you loved but didn’t expect
(especially if you would otherwise have avoided it). As a result, curators both solve a media
painpoint and enrich consumption.

Where Will this Be Built?

The most likely enablers of the age of curation will be today’s social platforms. Though rarely
viewed as such, these companies – Facebook, Twitter, LinkedIn, Pinterest, Instagram – are
already in the business of content creation, remixing and distribution. As such, the expansion
from one-off filters, albums, shares and vlogs to curation would represent an organic
evolution of their existing user toolset. More importantly, however, this change will be critical
if these platforms want to continue to grow user engagement and manage the massive influx
of user created and user-submitted content.

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Many services have invested in centrally-managed human curation feeds in recent months –
such as Snapchat’s Live Stories or Instagram’s event and theme-based “Explore” collections
– but these can only scale so far without the help of the crowd or truly massive content
investments (just ask Encyclopedia Britannica). Twitter, notably, is already planning changes
that will enable brands and everyday users to create their own moments and Instagram has
been promoting curated follower lists from top influencers on the platform for months now.
Others are likely to follow.

To support this, Facebook, Twitter and company will require a broad set of new user tools
and capabilities – such as the ability to bundle multiple types of on-and-off platform content,
create evergreen collections, offer paid subscriptions and connect to physical goods
fulfillment. Buy buttons are just the beginning. As a result, we may even see a new type of
social platform emerge.

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However, curation-centric services won’t just be served by the social giants; there are already
a number of in-market players today. Music start-up Dash Radio, for example, enables
tastemakers to create their own OTT radio stations – free from the need to be “advertiser
friendly”, FCC compliant or audience-maximizing – and has accumulated three million US
monthly users to date. Meanwhile Spot, an app out of Expa, recently launched with the goal
of providing the means for people, experts and influencers to rate and recommend their
favorite restaurants and other locations. In some cases, curators will have their own
dedicated apps – case in point, the massive success of the Kardashian clan’s apps
(particularly Kylie’s), which are in effect vehicles for the families to curate both content and
products including clothing, music and other media.

Influencer Inc.

As these capabilities become more available throughout the social web and individual
curators grow into the power of their voices, many will expand beyond simple curation and
commentary. Brand extensions, licensing partnerships and hired staff will be commonplace –
just look at Bethany Mota’s massive Aeropostale partnership to catch a glimpse. The most
successful curators will even begin commissioning content themselves. In many ways, the
programmer-to-curator shift will appear to come full-circle. But the distinction is critical.

Traditional creatives (though talented) gained cultural influence through their connection to
insiders and access to capital. Today’s curators are influential because they have
relationships with audiences. They’re hired by fans because of their taste, not hired by
executives to satiate the appetites of fans. This, when combined with frictionless commerce
and fan engagement channels, can also make these influencers far more wide-reaching and
multi-vertical than even the Oprahs and Martha Stewarts of the past. As such, their influence
in taste making is an inversion of the classic model, not merely the replacement of old
tastemakers with new.

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For this same reason, many non-media brands will embrace curation in the hopes of
strengthening their own consumer relationships and establishing a distinct voice in the age of
social marketing. The first movers here are likely to be brands that have already achieved
large footprints across multiple social networks, emphasize lifestyle rather than just their
products, and interact with their customers several times a week (if not more than once a
day) – RedBull, GoPro, Starbucks, and Soulcycle are just some of many potential curator-
brands. It’s not hard to imagine any or all of them operating their own Twitter Moments,
Snapchat live stories or newsletter services as part of their apps and loyalty programs, not
merely as marketing efforts but as integral parts of their consumer offerings. This shift is in
already process at Starbucks. Users can now listen to the company’s music playlists right
from their loyalty application and add their favorite tracks to their Spotify account.

Programmers and Programming in a Curation World

As curation’s role in both content discovery and consumption intensifies, content companies
will not only see their programming advantage continue to erode, they’ll also need to change
much of their existing beliefs, norms and business models. For most curators (and
audiences), the distinction between content type (e.g. art, music, film, TV) and class
(“premium”, “low-grade”, “UGC”) is without value. They curate according to their voice and
interests, not library categorizations. This, of course, will prove prohibitive for Big Media. Few
will want to acknowledge the competitiveness of “less valuable” content (this claim has been
at the core of pitches to marketers and ad agencies, after all), let alone subject themselves to
risk of unmanaged content adjacency (“what if the next recommendation doesn’t align with
our brand?!”). As a result, most content creators will initially resist influencer-based
distribution, though its growing importance as a channel will make this retreat only temporary.
If Mindy Kaling “owns” your target audience, you’ve few options other than to distribute
through and with her.

More progressive content owners, however, will create technology and release strategies
specific to influencer-based audience acquisition. Publishers, for example, already enable
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socially referred traffic to slip through paywalls – a model that should be extended to other
media categories such as music, podcast, film and television. In addition, we’re likely to see
subscription add-ons that allow curators to provide their followers with an opportunity to
consume content from directly inside a curated environment. More simply, some content
owners will look beyond distributing advance copies to journalists and include key curator-
influencers. To promote its artificial intelligence original series, for example, AMC should have
sent screeners to the likes of Elon Musk (who boasts 3M Twitter followers and often warns of
the dangers of AI) and Marc Andreessen (who has 450k followers and vehemently rejects AI
alarmism).

Regardless, traditional players will struggle to flex their cost structures, organizational models
and incentives for the curation era. Few curators will see the need to purchase content
licenses or commit to minimum guarantees. As a result, the monetization of curator-
distributed content will tend towards revenue shares and branded content – neither of which
mesh well with Hollywood today. What’s more, Tinseltown is already struggling with
fragmented audience data, complex release windows and unpredictable ARPU.

Open Source Content

Six years ago, Simon Cowell was asked to explain his gift for identifying musical talent. While
his answer seems reductive, its simplicity explains why the shift from programming to
curation is so significant: “I have average tastes. If you looked in my collection of DVDs,
you’d see Jaws and Star Wars. In the book library, you’d see John Grisham and Sidney
Sheldon. And if you look in my fridge, it’s children’s food — chips, milkshakes, yogurt.” For
nearly a hundred years, mass market programming was an essential capability in the media
business. Content creation and distribution were too expensive and failure fraught. But that
doesn’t mean that our cultural tastes were some sort of objective standard alongside
universal truths such as the equality of man or “thou shalt not kill”. They were defined and
constrained by legions of Simon Cowells – white, high income men with common
backgrounds and a shared idea of what was or should be listened to, watched or read.

In the decades since the phonograph was invented, technological changes have enabled our
tastes to expand, our artists to diversify and our content to swell in abundance. While the
notional shift from programming to curation can feel academic, it represents a crucial step in
the democratization of media. Through thousands of individual curators, each of us will be
able to escape the tyranny of averages and the limitations of algorithmic recommendations,
as well as benefit from the ability to become tastemakers ourselves. For once, if we can’t find
something good to watch, read, or listen to, we will have no one to blame but ourselves.

Tal Shachar is a Manager, Business Development at Otter Media. All views are his own and
do not necessarily reflect those of his employer or its holdings. He can be found @tweettal or
[email protected]. 
Matthew Ball is a Director of Strategy & Business Development at Otter Media and leads
Strategy & Originals at REDEF. All views are his own. He can be reached at

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[email protected], followed on REDEF or on Twitter. 

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