Music, My Stories, Stupidity

Kill The Golden Goose

Back in 2011, there was an article I came across about how the movie studios tried to kill off Netflix.

If you look at the past, you will see the movie studios and record labels attempting to kill off anything that seems to threaten their 90 year old business model.

Any time a new technology or distribution method is successful, the movie studios and labels at first get greedy and either try to demand higher fees or more control of the new technology or the movie studios and labels try to kill the offering because of the monopolistic power they have in the market (plus a lot of politicians as well).

You just need to go back to the recording industry and when the labels negotiated a stake in Spotify. Of course, while the labels took ages to negotiate, YouTube as a by-product became the number one streaming service across the world and they pay even less than Spotify.

But the labels didn’t care about the payment per song, because they made serious coin on the licensing.

For example, if YouTube, Spotify, Apple or any other streaming service want to have music on their site, they need to pay the copyright holders (in this case the labels, because the majority of artists sell their rights to the labels in a crossroads deal with the devil) a large yearly fee for a certain period and then after that period is over, they re-negotiate again for another period.

Anyway, back in 2011, the movie studios had decided that Netflix had become too successful and it was time to put this streaming company back in its proper place as a rental company.

Remember when Netflix started losing popular content. Yep that was the movie studios playing their game by limiting what movies and TV shows they gave to Netflix as part of their licensing agreement.

As we know today, Netflix has countered this by producing more TV shows and movies than their counterparts anyway, in different languages and in any way the director would like it to be. A Netflix movie “Roma” won an Academy Award recently, and the director thanked Netflix for allowing him to make a movie, shot in black and white and spoken in Spanish. But old legacy directors like Spielberg want to ban Netflix from even appearing in Oscar nominations.

The problem that these studios made, and also the record labels, is that they believed the value was in the content. For some users of the service, those 10% of super fans that is the case, however,what does the other 80% care about. They care about the convenience. Netflix put up TV shows that no one had heard of and made that TV show part of the conversation. Spotify has the history (almost) of music at peoples fingertips and artists that no one has heard of are becoming popular.

Netflix is even more powerful than they’ve ever been, and their business model of bundling has changed the game. Disney merged with Fox to offer a streaming service to compete with Netflix. Warner Brothers merged with AT&T to offer a streaming service to compete with Netflix. Meanwhile, Netflix is trying to figure out ways to compete with Fortnite.


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