There Will Be Disintermediation

The first two parts of this series, Disruption and Generation On-Demand, explored my own personal content consumption disruption and traced it through the seismic shift in my reading, listening, and watching habits. My experience seems to align with the generational experience of content at one’s fingertips, on-demand. I called this phenomenon Generation On-Demand because this generation has grown up with and expects that everything and anything (content) be available to them, however, whenever, and wherever they want.

I traced the dramatic decrease in my own immersive reading, music listening, and TV and movie watching in the last few years and cited my ability to work and play whenever and wherever I want as the primary reasons. Accessing any kind of content or service in any spare moment, via Blackberry, laptop, iPhone, Kindle, etc. has enabled me to literally fill every spare moment with endless opportunities to work or play. The result is that my consumption of immersive content – books, movies, music, etc., has universally decreased as access and bandwidth issues hamper most attempts to read/listen/watch anywhere, everywhere, and whenever I want.  It therefore stands to reason that books, music, even movies and TV shows will need to exist in the “cloud” in order to compete for the attention of Generation On-Demand… but therein lies a huge problem.

As I think about books, I realize that while Kindle makes the first serious attempt at “cloud” access of book content, it’s still a very limited set of content and strictly limited to just two devices (Kindle, iPhone).  True ubiquity of access, which is exactly what is needed to attract Generation On-Demand, cannot be limited in scope or by the shackles of physical downloads, onerous DRM, or territorial restrictions. Complete access is the issue, not DRM. Complete access means that a user can buy content and no matter what device, no matter where they are, no matter how they want to access the content (visually, aurally, in Braille, etc.), they can.

The problem with trying to shift an industry like book publishing, which has for hundreds of years relied on business models that are based on physical distribution, is found in the contracts that govern the intellectual property at stake.  These contracts, and the manner in which the rights they represent are sold, are so deeply steeped in the notion of physical rights, physical territories, physical versions, that no coherent “cloud” model seems likely to emerge without huge issues. Take the Google Settlement, for example. The amount of legal fighting over content that has been sitting idle for 10, 25, 50, even 75 years has been overwhelming.  The number of activist parties steeped in backing or undermining the Settlement reads like a laundry list of every conceivable entity that has (or thinks they should have) any stake in the content game. And that is out-of-print and idle content – imagine trying to move forward with expanding the access to in-print and active content.

Just look at the example found in Amazon’s recent snafu regarding TTS (Text-to-Speech) technology. While Amazon clearly could have done a better job of communicating to key publishers its intention to offer TTS on the Kindle, the immediate reaction by the Author’s Guild and the major audio book publishers was swift and visceral – don’t mess with multiple rights on a single device without negotiating in kind. Forget the fact that Amazon owns Audible, (the largest digital audio download service), forget that Don Katz, the founder of Audible thinks about audio as a performance and nobody, after 20 minutes of listening to Hal from 2001: A Space Oddity pronounce Barack Obama as “Brack Alabama,” would ever confuse TTS with a real human audio book performance. Of course the most ironic part of this whole affair is the fact that every ebook can be listened to on a Windows or Apple computer – both of which have TTS pre-installed!

This mess of rights in works was a brilliant way to work with intellectual property when physicality ruled the roost. Unfortunately, as Michael Healy will soon learn when he takes the helm of the Rights Registry, there is a giant rights mess out there. Versions, versions, versions are aplenty – the core copyright owners know little about what they own, and as a result, the registry will be quite busy for years to come trying to settle ownership issues for works going back to 1923.

While Michael’s efforts over time will lead to a cleaner and clearer understanding of who owns what, it won’t fix the inherent problem. The works in question will have competing rights holders for a variety of versions.  Few will have clear electronic rights ownership, and few if none will have a single entity that controls all versions. This is the key to enabling the kind of content access that is needed for Generation On-Demand, and this is what is missing across the board. This problem is beyond enormous – it is basically one that cannot be fixed. There is no short term or mid term gain for any parties involved with IP contracts to fix this problem and you cannot fix something if the parties involved don’t see their goals as being aligned.

The result – we will become irrelevant as an industry (not just publishers, but publishing in every facet) over time and have no place in the content economy.  But lets face it, this doomsday scenario has been sounded for years – who doesn’t think that book publishers will be obsolete in the future?

But what if this particular doomsday scenario had a possible Hollywood ending built in? What if the entire industry could draw upon a galactic change that will be coming… but few realize its coming, one that is documented and legislated, which would force the entire industry to face the reality that There Will Be Disintermediation? And what if this change was so significant that it could possibly even spawn an industry wide reset of the way we do things?

Well, mark your calendars, folks – the disintermediation begins on January 1, 2013.  What happens on January 1, 2013? See for yourself in the US Copyright Act of 1978, section 203.  {…Termination of the grant may be effected at any time during a period of five years beginning at the end of thirty-five years from the date of execution of the grant…}

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4 Replies to “There Will Be Disintermediation”

  1. As someone who teaches the Online Generation, I think it will happen the way it did with music and the way it is now happening with movies and TV shows. People with no ownership stake will put content on line so that others can “share” it. And so the dike will be breached. I agree completely with Evan’s analysis of the Online Generation and his prediction that they will increasingly ignore anything not in the cloud. Anyone who teaches knows it is increasingly difficult to get students to read books. There is a small but significant young audience for books, but a distressingly large portion of the younger generation will not read entire books unless required to do so by professors. When the online generation does research, they do it almost entirely online. Publishers and authors will continue to squabble. Again, I agree with Evan’s analysis; they will never come to general agreement. Meanwhile, the cloud will expand, gobbling up everything that exists in digital form. In music, it appears that artists will continue to make money but most of their revenue will come from live performance, the sale of tee shirts etc. To a considerable degree, the music industry has lost control of its product. “If you can’t beat ’em, join ’em.” The success of Hulu suggests that TV and movies can make money selling ads on their own site, a site that is easy to use, reliable and free of viruses. A huge amount of print (especially periodicals) is already on line; the magazines sell ad space too. This is the single most important problem facing all content providers. The future will belong to those able to adapt to the new environment.

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