Industries from cable TV / television to movies, books, and music have been seriously disrupted (there’s that term again!) by technological advances. The ways most of these industries operated in the past, primarily music, were very inefficient from a consumer benefit standpoint, but made the overlords (labels, publishers, studios, channels) a lot of money. Now the way we consume culture is rapidly changing. Does the unbundling of these services make consumers better or worse off?
When cultural goods are separated into distinct & exclusive packages, a number of things can happen:
1) Users who really like that thing, such as a TV show, and want access may pay for the service.
2) Users who like that thing and were formerly paying for more (a whole CD vs. single, a package of channels to get access to HBO) will be better off – they get specifically what they want, at a lower price (theoretically).
3) In the long run, this price might not be lower. If you subscribed to Tidal to hear an exclusive track, that means you paid at least $10 for the track, and $120 a year later.
4) Say at the same time, Spotify has exclusive content you also want. You pay for both Spotify and Tidal, because you want it all. But this means you’re paying at least $240 a year in music streaming costs. Americans spend well less than $100 a year on music (excluding concerts) as is. (I've heard a bunch of different figures around $50, but it's unclear what they're specifically referring to.)
It seems highly unlikely the average consumer will be willing to pay for multiple separate services. And yet exclusive content remains one of the only cards streaming services (or digital culture marketplaces) have to play in the fight to differentiate from rivals.
The whole thing which has always allowed the TV content industry [like HBO network or USA or what have you] to survive / thrive is the offsetting of losses by subscriptions being set & big hits generating profits. If the industry ever moved to a model where you paid per show, not even channel, they wouldn’t necessarily be able to sustain production. Also, many shows grow on people after time. Gone is the era of lazily browsing the channels to see what is on. (Although does browsing Netflix equate to this?) Entertainment consumption in the future will be much more channel-driven & purposeful.
Are people better off? They theoretically have more options accessible on-demand in these new services. The way people encounter random content also changes- from channel scrolling to online selection. According to multi-national trade theories product diversity benefits consumers, but I am beginning to disagree. Anyone who has ever searched for something to watch on Netflix can attest to this. Usually, nothing looks that good! Over 10,000 movies and I can’t find something to watch. With the constraint of limited channels on TV, people are happier with lower quality content / what’s presented to them. (Behavioral economics backs this up - more choices benefit people to a point, after which they prove to be increasingly deleterious.)
Those who don’t like to waste time browsing & know what they want to consume will be better off from unbundling. Streaming allows more people to discover a wider variety of music. The cost of discovering new music is virtually zero (I've read that the average Spotify user listens to well over 1,000 tracks a month, although extensive searching hasn't turned up the link to this info.). Even if it did cost something on a specific service, YouTube and Soundcloud allow you to listen to almost any song for free. When acquisition is costless, producers can easily get new customers (fans). But, as the cost of acquisition has declined and cost of entry into the music market has dramatically declined, more artists are entering the music market. The cost of entry decline is due to artists no longer needing to work in a professional studio to start distributing music. Though well-produced (studio) music sounds better, basic recording setups and mixing software start in the hundreds of dollars, an all-time low cost for cultural production. While this is fantastic for encouraging the dreams of amateurs, it also means there is a seemingly endless stream of new music to consume. For all but the most experienced music purveyors, it can be a lot to take in.
Spotify is already addressing the content overflow challenge by creating curated playlists. On the tv/film side, Netflix creates genres and sub-genres, and has a seriously beefy recommendation algorithm, but still misses the mark. And honestly, the recommendations they provide aren’t actually that original.
Spotify’s Discover Weekly Playlist >>>> (infinitely better) Netflix Recommended for You.
I suppose Spotify is lucky in that any given song fairly easy to tag with attributes, whereas films are much harder to categorize because sometimes you really just don’t know what you’re seeing. (Is this true or is this just me not being good at film?)
Are humans’ tastes in culture predictable? Is music really boil-able down to the level of recommendation that a machine can handle? We like to believe machines could never understand the complexity of human emotion, speech, and “intangible” things like culture, but results seem to say otherwise. Google has something called Thought Vectors that express thoughts in a vector form. (which for the non mathematical is like an expression of magnitude that includes a sense of direction / place in space... it's like if you said she's running 8 mph towards the West, but expressed in a single format)
"The technique works by ascribing each word a set of numbers (or vector) that define its position in a theoretical “meaning space” or cloud. A sentence can be looked at as a path between these words, which can in turn be distilled down to its own set of numbers, or thought vector.
Hinton said that the idea that language can be deconstructed with almost mathematical precision is surprising, but true.
“If you take the vector for Paris and subtract the vector for France and add Italy, you get Rome,” he said. “It’s quite remarkable.” "
....If that doesn't blow your mind, I don't know what will. Point being, apparently it's quite plausible to quantify cultural interests, even though the whole thing about art is that often people can't explain why they like it. (Machines can, though!)
Recommendation systems, according to many, represent the future of search & content. How can people discover things they don’t know exist? How can they find out about the unknown unknowns? Eric Schmidt has declared predictive/prescient search to be the next frontier. (Here's a really great article on engineering serendipity that you should read if this interests you in the slightest.)
Perhaps this kind of curated discovery is the backlash, the contraction after the boom of content and culture enabled by the internet. Are people starting to realize that more options may not always improve consumer welfare? In what way do we even define consumer welfare? Consumers aren’t homogenous!
There needs to be established multiple different categories of consumers for the unbundled digital culture marketplace. Perhaps casual versus specific will be good enough, but use-cases for these services need to be defined in order to understand their benefit or lack thereof. I guess the big challenge in assessing value of new digital cultural consumption is that people have vastly different consumption patterns, preferences, and frequently don't even know what they want. The very unhelpful conclusion of this musing, then, is that streaming etc will benefit some and not benefit others.
On a final note, I was talking to a friend (@zck) about this concept of unbundling content, and he had a very prescient view. “re:media—saw an article that the next Apple TV is going to have some sort of universal search over multiple services. Eventually I see [people] subscribing to a few services and then using something on top to automatically organize and track all of them. But [I?] also don’t love having to pay for a bunch of services. Ironically it reminds me of what people have been asking for with cable—channel unbundling /paygo models for channels—but done with a different approach”
So all this disruption of the cultural industry may [read: probably will] eventually be packaged into a really similar model, with different companies & mediums of viewership. The quest to vanquish cable will probably just result in not-cable-except-exactly-like-cable on Apple TV or some other master platform. This aligns very well with the generally cyclical nature of economic products. This (unrelated, kinda) article on ancient financial records affirms the belief that economic packages are cyclical. They had advanced financial instruments 4,000 years ago, and in the 2000s we still haven't figured out how to safeguard against financial instruments of mass destruction. When will we realize history repeats? Maybe never.
There’s really so much more that can be written about the effects of tech/unbundling on cultural consumption and economic outlook for producers, but that’s for another time & place.