Why Marc Andreessen is wrong about "Sillicon Valleywood"

As usual, I’m a few days late to this party. This is because anymore I’m usually a few days late to my feedreader, which is a habit I really need to break.

Marc Andreessen wrote an excellent post the other day about the ongoing writer’s strike, which is occupying the minds of a lot of people connected with Hollywood right now. My good friend Ethan could conceivably lose his job if the strike continues for very much longer. I wish the writers the best of luck; they are being screwed.

But I digress.

Near the end of his post, which summarizes the stupidity of the studios very succinctly, Andreessen outlines his vision of a possible future Hollywood remade in the image of Silicon Valley. He thinks that if the strike goes on long enough to derail next year’s television shows, this is a likely outcome. I’ll call it “Sillicon Valleywood”:

What would a new entertainment media company, producing original content, look like in the age of the Internet?

* Starting from the end of the process: you know distribution is now nearly free. Put it up on the Internet and let people stream or download it.

* Marketing is also free, due to virality. Let people email your content to their friends; let people embed your content in their blogs and on their social networking pages; let your content be searchable via Google; let your content be easily surfaced using social crawlers like Digg. All free.

* Production is very cheap. Handheld high-definition video cameras cost nearly nothing. You can do almost every aspect of production and post-production on any Mac. Hell, you can even score an entire movie for free — there are hundreds of thousands of bands on the Internet who would love to have their music embedded in a new entertainment property as promotion for the bands’ concerts and merchandise.

* The creators of the content are the owners of the company. The writers, actors, directors — they are the owners. They have a direct, equity-based economic stake in the company’s success. They get paid like owners, and they act like owners.

* Financing is straightforward: venture capital, just like a high-tech startup. We live in a world in which financing a high-quality startup is simply not difficult — not for a high-quality technology startup, and increasingly not for a high-quality media startup. Modern financiers love being co-owners of a new company with the talent that will make the company successful — and that’s how it will happen here.

Let me say right off the bat that this is a lot more feasible future for television than for movies. But I think Andreessen has made some assumptions here that won’t hold up:

“Distribution is nearly free” - nope, still not true.

There are services that host streaming online video for free, but many of them have these pesky “I own your content” clauses, and frequently stream your videos at a much lower quality that you’d like. As one of these Vallywood companies, you’d really want to have your own servers (or at least use Amazon’s servers) to stream your own video.

This isn’t as prohibitively expensive as “the old method”---which for movies means selling to movie theaters, printing and shipping film, among other things, or for television means being broadcast on airwaves or cable---but it’s not exactly “nearly free,” either.

“Marketing is also free, due to virality” - wrong again.

Due to the current TV & movies system, distribution itself is really a powerful advertisement. If you go to the theater, you generally have somewhere between 6-14 movies to choose from. If you go to YouTube, you have to sort through a number that is close to infinity. Just creating a video doesn’t cut it online; you need to be noticed.

Yes, there are ways to be notice. Yes, it is a lot cheaper than running TV spots (ironic, yes?) or billboard ads or radio plugs. But it isn’t free. And you still won’t get nearly the same audience that you do through those older methods.

Also, this assumes that the internet is the natural progression and eventually the only distribution channel for television. I don’t think that’s going to happen. There’s a reason people like me are buying big-screen HDTVs (well, I have a projector) - it’s because sitting in front of a computer is a whole different experience that sharing a couch and a TV show with three of your buddies.

Instead of making the computer more like the television (the internet will be dominated by 5-minute clips of shows and viral videos), the TV interface will become more and more like the computer. As people get more advanced set-top boxes and DVRs, the user-interface will become more powerful (and we all hope: easier to use), thus marrying the on-demand style of internet entertainment with the big-screen, common-room convenience of traditional TV.

As long as this distribution channel exists, distribution and marketing will not be free.

Production is very cheap. - True for The Daily Show, not for Heroes

There’s a big passage in Andreessen’s post (I’m paraphrasing here) discussing how horrible life will be if we have to go through 2008 with nothing but reality shows. I wholeheartedly agree.

The problem with ultra-cheap production is that it really doesn’t exist outside of reality TV and, to a certain extent, talk shows. He’s right when he points out that plummeting equipment costs will drive the price tag of show production down, but the overwhelming bulk of the expense is really in people.

It takes a lot of people to make a good TV show, especially ones like Heroes, House, Boston Legal, Battlestar Galactica, The Sopranos, and Lost---all good shows whose type I’d like to see more of.

So what costs have gone down? Well, I’ll italicize the ones that have dropped. There are writers, of course, then there are grips, technicians, makeup artists, cameramen, directors, dps, gaffers, prop managers, location scouts, the cost of shooting in various locations, costumes, props, camera equipment, lighting, gas, actors, and I’m sure a whole bunch that I’ve forgotten.

In other words, your production costs have not gone down significantly.

Despite all of this, Marc could still be right. He’s right to identify distribution as the bottleneck, and if the big production companies can’t get good content because they’ve pissed off all the writers, then it’s possible that smaller, self-owned production companies could get distribution IF, and this is a big if, the cable distribution companies realize that the good content is coming from the little guys, and adapt their service accordingly.

Regarldess of what happens, it will be very interesting to watch, and there will undoubtedly be many, many opportunities for an inventive entrepreneur.