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November 23, 2007

« Immigration and Prosperity [Guest Blogger: Alison Kemper] | Main | Disneyfication of Toronto? »

Marc Andreessen (via Borjas) argues persuasively that the writers' strike will essentially kill Hollywood as we know it. Hollywood he argues is based on an industrial model where big companies have controlled distribution and talent. New technology is fundamentally disrupting that pattern, allowing more efficient and decentralized production and distribution of content. As a result, he contends that a new entertainment business model will emerge - along the lines of Silicon Valley - where talent owns and controls the means of production.

The classic Hollywood economic model is built around the existence of a few very large companies -- studios -- that dominate production, marketing, and distribution. ... As a consequence, talent gets paid like hired guns, not owners. As a consequence of that, talent bands together to form unions. ...

In Silicon Valley, there are many companies, large and small, that create, market, and distribute products -- and more such companies all the time. ... In Silicon Valley, the creators of the product -- the talent -- are owners: owners of their product, and owners of their company. ...  in a world where there can be many companies, the best creative talent will be drawn to the situations in which they will be owners, and will be compensated as owners. Because of that, in technology, creators get paid like owners. 

Entertainment is a huge industry, and it's business model is now shifting to one that is more fully in sync with the creative economy.

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