Behind The Streams: Sorry Content, Distribution Is King
  • TUESDAY, AUGUST 19, 2014

  • Posted by: David Moffly

Last week music industry pundit Bob Lefsetz posted on the power of distribution; a theory that is completely contrary to the popular aphorism that "Content Is King." The truth is that there is a delicate balance between the two and the balance of power shifts back and forth over time. New distribution technologies and platforms create a real and perceived demand for content making it more valuable for a time. The inevitable maturation of a platform eventually swings the balance of power back to the distributor. Weaker distributors eventually crumble and consolidate in in its' wake.

As technology evolves, it's a cycle that endlessly repeats itself in media. VHS, CD-ROM and DVD's fueled their own mini content booms to fill the new perceived expansion in distribution. It's been said that Bill Gates once spent $30 million on Leonardo Da Vinci's Codex Leicester to take advantage of the immensely bright future of CD-ROM publishing in 1994. Television producers salivated over the opportunities niche channels like The History Channel afforded them. Buckets of money were raised to fill the programming bonanza that was going to be needed to fill all this new airtime and targeted cable channels. Most people missed the point that the networks would largely insist on owning the programming they funded and that what they did commission they would repeat endlessly to fill the hours. Rapid cycles in technology in the media business have given rise to classic media licensing legal language that reads "All media now and invented in the future throughout the Universe" (Pro Tip - never sign this deal).

Today the internet is littered with failed distributors. Who remembers Babelgum, Joost, Veoh and the legion of others? Dailymotion is a ward of the French State and who goes to Metacafe anymore? YouTube could have joined the ranks of the forgotten had it not been quickly snapped up and given the resources and depth of Google. When it opened its doors, YT was an empty shell, allowing people to create and upload content quickly, thereby giving the site inventory. Of course there is Viacom's long running allegation that early staffers copied and uploaded popular shows which, in the early days, quickly became the nascent site's most popular videos.

Today there is plenty of fool's gold flooding the platform in the name of multi-channel network...or, MCNs. Every time I hear of another MCN raising several hundred million dollars I think of the Duke of Westminster (one of the richest men in Europe) in London and his vast hereditary real estate holdings in the fanciest of the city's neighborhoods. You can spend tens of millions of pounds to buy the house but you can never buy the land underneath which needs to periodically be re-leased from the Duke. The House of Westminster has been collecting rents from wealthy folks for more than 300 years by controlling the ground.

YouTube / Google then control the ground and set all the rules. With 100 hours of new video coming into their system every minute, do they really care about Disney / Maker Studios or PewDiePie? I don't think so. In five years we will fondly remember this time and the accountants at Disney will have written their investment in Maker off. The hollow argument of "reaching an audience" and developing YouTube stars into marketable brands outside of the web is destined for the rubbish heap. Name one artist / show who found initial success on YouTube and successfully made a transition outside of the platform. They can't...they appear too small and awkward on TV. Successful programming for YouTube is very specific to the platform and its tools.

Maker Studios recently bought BLIP TV and is making a valiant effort to port its programming outside of YouTube into their owned platform. Rebecca Blacks' cooking series (WTF - This is the "Friday" girl) just doesn't translate outside the YouTube architecture - Her series has language and gestures keyed to the annotations tools and structure of the YouTube player architecture. Her already poor work is made even sillier outside on Maker TV.

The big company analysts putting together these deals must love that they don't have to do the long hard work of building a distribution system with the purchase of a large MCN. YouTube has created the illusion that there is now no barrier to distribution, content uploaded is more or less available worldwide. The barrier is now eyeballs and discovery. YouTube has the eyeballs at a billion plus, which I'm sure they'd be happy to sell you at a premium price.

So - Bob Lefsetz is right, distribution is king and Youtube / Google are the new Dukes of Westminster.

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