Matt Boggs really likes this insightful essay by Clay Shirky, and I concur:
“Clay Shirky’s “The Collapse of Complex Business Models,” is a thoughtful and provocative piece on the way that “high quality” products (which are also complex and expensive) reach diminishing returns, where they are being made ever-more complex without any rise in value, because the institutions that made them don’t know how to be less complex. It’s a great commentary on walled gardens, paywalls, and the reflexive entertainment industry sneer that YouTube is made out of nothing but priceless pirated media and worthless videos of cats. Before I read the essay, my overall feeling was that Diller was stating not a fact, but a half-truth: yes, content must be paid for, but it is far from fact that the end users must pay for it. End users don’t pay for newspapers; advertisers do. End users don’t pay for most TV; advertisers do. End users don’t pay for most content in general; advertisers do. This model doesn’t work for all content, obviously, but the bottom line is that someone must always pay for content–but that someone will vary.
The end user wants lots of content available for as little money as possible, paid as simply as possible.
The content distributor wants to make as wide a profit margin off the content it distributes, which involves paying as little as possible to distribute it (including to those who actually make the content), and charging as much as possible for it.
The content creator wants to make as much money as possible from its creations, while still making (as a general rule) as much good content as possible, and paying as little as necessary to get it distributed to the widest range of users (the better to sell more content later for more money).
Something has to give, but it’s not going to be the end user: the end user WANTS as much content as possible, but a) there’s a whole lot of content out there; and b) there’s a whole lot of legally free content out there. Technically, there’s also a c) (some people will choose to illegally obtain content for any number of reasons), and it’s a big c), but a) and b) are more than enough to require distributors like Mr. Diller to change his tune or find a new line of work.
After having read the essay, I feel that Shirky generally seems to express a similar view, citing Mr. Diller’s IAC and Rupert Murdoch’s News Corp. as examples of complex, inflexible bureaucracies. However, I disagree with the idea that content creation as a whole is a complex society (it’s just a chunk of it) that is doomed to utter failure. More persistent storage media, combined with lower production costs for content will make labor the only serious expense for content creation. This may destroy large corporations, but ultimately, it just means that if society itself fails, archeologists’ chief challenge with deciphering our civilization will be sifting through all the ridiculously easy-to-find relics–except for any that are still under copyright at that late date. However, our content-generation media, despite their protestations to the contrary, only document our civilization. They aren’t the civilization itself.”