Disintermediation of the Content Production Value Chain

= an overview of how the internet has disintermediated traditional media production and distribution businesses

• Source: Policy Report: Amateur-to-Amateur: The Rise of a New Creative Culture. by F. Gregory Lastowka and Dan Hunter. Cato Institute, April 2006

CYCLE	BEFORE	AFTER
Creation	"This first stage, in which a creator writes, composes, draws, paints, or otherwise creates fixed expression, is “creation.” Historically, for example, aspiring filmmakers were unable to produce motion pictures without the help of financial backers and technical specialists. [...] The dominant means of organizing all those people is the firm.	Advances in technology, however, are dramatically reducing the costs of formerly expensive creative genres. [...]Individuals now have many of the creation tools that were formerly available only to professionals in the content industries.
Selection	“The next function in the traditional chain of copyright practices is selection. By “selection” we mean the exercise of some discriminatory judgment about which creative works warrant reproduction and distribution. Selection is the process whereby someone decides which works are worthy of the additional investment in conveyance to society.[...]Tens of thousands of “speculative” screenplays are created each year by aspiring writers and mailed to agents, producers [...]Most such scripts go unread, a number are rejected, and a very tiny percentage is actually judged worthy of commercial development.The decision that a script is worth considering for turning into a movie is the epitome of the selection function.[...]Selection is absolutely necessary because investments should not be made in works that will not recoup investments.[...] In high-risk industries like pop music and movies. Those industries are based on a venture capital model of risky production: No one knows what type of content is going to be successful, so many bets are placed on various alternative products [...] one high-performing “hit” will more than cover the costs of a large number of failures.Someone, somewhere, must make decisions about whether a given work is worth exploiting.	Distributed selection is increasingly a more reliable predictor of preferences than are the traditional industry selection agents—commissioning editors, movie executives, and so on. Distributed selection is real-time, individually tailored, and resistant to the personal generalities, inconsistencies, and information deficits that plague traditional industry agents. The average selection agent makes a gut reaction decision about the interest level in a particular market or submarket. The algorithmic distributed selection agent makes individualized predictions based on the end user’s interests.In the music field, for example, AudioScrobbler is a plug-in for various music-playing applications. [...] AudioScrobbler checks your ratings against the playlists of other users and finds those users whose rankings are most similar to yours. It then recommends songs that those users rate highly but are not on your playlist.[...]The technology news and commentary sites of Kuro5hin and Slashdot provide a distributed selection mechanism through their moderation process. Any posting on those sites is rated by multiple users, and an average score is assigned to the posting. Other users can then set their threshold, to see only those postings that are rated above a certain level.[...]Threadless.com adopts this approach in the fashion industry: Contributors submit T-shirt designs to Threadless, and users both vote and comment on the designs. Designs that are rated above a certain level are then made available for purchase by users.[...]It seems inevitable that the function of content selection in the future will be more socially distributed. Central selection agents will lose their relative power in much the same way that the proliferation of cable television channels has led to the decline in prominence of the three major American broadcast networks.
Production	In the production function, someone invests in preparing a work for the market.[...] production invariably entails the re-production of the work.In book and magazine publishing, the text and graphics are typeset and multiple copies are run off from that master version.	The last 20 years have profoundly altered production and reproduction of content. This started with the introduction of consumer reproduction technology: Xerox reprography, audio cassettes, and VCRs. Those technologies were introduced at a time when distributed creation and selection of content were not possible, so we think of them as “reproduction” devices.44 However, more and more, reproduction devices are content production devices.Consumers once needed intermediaries such as the recording industry for the production of music.[...]Today, with the advent of perfect digital copies, the public can take care of the production function on its own.[...]Not only is the computer a production device, but, as noted above, the Internet itself is a technology of production.[...] The genius of cheaper, decentralized production is, not just that people who otherwise would publish can do so more cheaply, but that those who never considered that they could publish are now free to do so.[...] The production function, like the creation and selection functions, has been radically decentralized and amateurized by the technology of distributed networks.
Dissemination	Dissemination has historically entailed the distribution of copies of works to outlets for purchase. Physical distribution beyond one’s immediate sphere invariably requires the coordination of supply chains.	The Internet revolutionized distribution at the same time it revolutionized production.Consumers still have to be made aware of the content and be convinced that they need it. And that is the job of the promotion function.
Promotion	The most important function in the copyright business has always been promotion [...] individual consumers must somehow be made aware of the work’s existence and, more important, be convinced to purchase the work (or access to it).[...]In the past, the processes of selection and promotion were separate, both temporally and strategically. The work of a selection agent was to find the diamonds in the rough, but the promoter was a specialist in selling [...]The importance of the promotion function to copyright industries is hard to overstate, and it is ignored in almost all accounts of copyright. “Brand licensing” is one of the success stories of the entertainment industries of the second half of the 20th century.[...] The promotion function is primarily about finding a mechanism to connect potential consumers with content they are interested in using. Promotion is probably the most important function making the difference between successful and unsuccessful exploitation of copyrighted content.	Increasingly, however, we are seeing the decentralization and consequent amateurization of the promotion function. In fact, the selection and promotion functions are merging.The rating of a particular movie, book, or article by people who are just like you may be a much better mechanism of promotion than any of the mechanisms that centralized actors have had at their disposal. The review function in Amazon.com is one in which individuals are, essentially, promoting content in a decentralized manner.[...]Distributed recommendation systems like Epinions have been built to express opinions on all manner of things, people, and content.
Purchase and Use	Purchase, in the traditional theory of copyright, creates the incentive for creation and also subsidizes the previous five processes. In exchange for cash, a consumer acquires the right to access a work [...]A traditional purchase function is possible, and easy, for decentralized actors. Five years’ experience with online payment demonstrates how simple it is for purchases to be made through the Internet [...]It also must be observed that a direct financial return is not the foremost goal of many players in the content chain.[...] The final function in the content chain is use: the experience or manipulation of the content by the purchaser.	[...] Content is giving way to individual authorship and selection designed to build an artist’s brand and personal reputation or to establish a person’s membership in an online social community. While such reputation enhancement and community recognition will generally lead to financial rewards of some sort, this may not occur through direct purchase.[...]Use is an integral aspect of the life cycle of creative content.If one thinks of use under the traditional copyright model, use is merely passive reception of the content, and nothing has changed.However, if one sees use as adapting, retransmitting, modifying, or otherwise building pon the content, much has changed. In essence, whereas the “use” stage of the creative process in the past was when a creation reached the public, the “use” stage in the amateur-to-amateur model is merely the beginning of the next stage in the creative cycle. The amateur end user may become the amateur recreator or redistributor.”