I cannot recommend more highly Seth Godin’s recent blog post, “The erosion in the paid media pyramid“. If you haven’t read it already, please follow the link, and come back. It’s short, excellent, and we’ll wait for you. The TL;DR is: digital distribution is putting the squeeze on the previously-cash-cow “Mass” media segment, which is largely being replaced by the “Free” segment at the bottom of the pyramid.
He makes many important points I agree with, however I think Seth makes two statements in his article that need to be addressed:
First, he writes:
The marginal cost of one more copy in the digital world is precisely zero.
This is a common misconception. The marginal cost of one more copy in the digital world is very, very, very low – a ridiculously low number, a number so low, that if you weren’t careful, you might just decide to round down to zero. But reading bits off a hard drive and sending them over fiber and copper wires – the process of making a digital copy – as inexpensive as it is, is not actually free.
“So what,” you say. What’s the difference between “free” and “practically free?”
The problem is that the digital world has to scale, and very, very, very small numbers can still become very, very, very large numbers at scale.
I want to encourage everyone to please, stop using this trope. TANSTAAFL still holds true even in the digital world. Saying that digital copies are actually zero-cost leads to terribly erroneous conclusions at the scale of the Internet.
Secondly, he writes:
Media projects of the future will be cheaper to build, faster to market, less staffed with expensive marketers and more focused on creating free media that earns enough attention to pay for itself with limited patronage.
This is true for those mass-media projects that move “down the pyramid.” But what about those mass-media projects that move up instead?
Moving down the pyramid is the easy move: creators keep doing what they’ve always done and get by through “doing more with less” (and also by just “doing less”). Skip the art director, and freelance on DeviantArt. Skip the editor / producer altogether. Skip the marketing, and outsource through a service provider. Etc.
It seems that the real opportunity for media / content creators is not to simply the product, but actually to complicate it. Add enough complexity that it becomes attractively desirable, but hard to produce. An example of this would be the ways that Lucasfilm differentiated the theater experience with 7-channel sound (hard to reproduce at home) or how Broadway differentiates with expensive special effects (hard to pull off in community theater).
Obviously it’s much harder to “move up the pyramid” to a more differentiated product than it is to simply something you’re already doing. But that’s where the profit will be.