I wrote this piece about digital entertainment and indie creative art or entertainment in 2001. The entertainment/art biz has been parenting like The Great Santini for too long, and too many artists have acted like children when it comes to the money or support side of what we do. I think we’re really entering a new phase where, at least the artists, are learning to understand the business side. It really doesn’t make you less of a creative person. At the heart of any artist, of any human being really, is the desire to communicate. Some of us just want to communicate or share with larger numbers of people. What is called “business” is part of what allows us to do that. If we do it in the same way we make our creative work, and see and allow the others we deal with to be whole people, then it doesn’t have to be a completely inhumane and slimy endeavour. Honest. Remaking the way we do business (i.e. the way we treat each other) is perhaps the thing that our culture needs the most. It requires the most creative minds and hearts we have.

There are two parts to the Digital Entertainment equation. The How and the What. How means the method by which entertainment is created, distributed, shared or played. What refers to the content and form of the Digital Entertainment itself.

Right now, 99% of the collective time and attention of anyone working in the Internet business is directed at the How. Blessed are the Toolmakers, for they have certainly inherited. How is where the big money is. That’s true now and for the foreseeable future. Even those who get into the game for the What generally have their energies re-directed to the How. This is because:

1. it’s not economically viable, and
2. because the How is unavoidably intertwined in the very creation of the What.

The How and the What are bound together like grumpy siblings who have to share a bunk bed. Their relationship, colored by mistrust, love, and bickering affects every realm of the new Digital Entertainment world: investment, creation, business culture, audiences, and the experience of the digital entertainment itself.

“Your turn to take the top bunk.”

“No, you.”

1. Investment

   The people who are leading investment in the New Economy are far more interested in the How than the What. The growth is quicker. How is systems built with an eye toward recurring revenues. Pipes can be used for anything digital, including entertainment. That means an investment can be leveraged across many uses and provide something that (it is presumed) will only become more important over time as it’s used. It also means that the How investment will be valuable without What. It can do well simply connecting people for communication or any other digital activity.

   How includes the access experience, hardware, and connectivity, and services that Digital Entertainment flows through. How is about infrastructure. How is about big multiples. How is an entertainment experience in itself to those who really love technology for its own sake.

   Problem is, that most of the world doesn’t and won’t love it for its own sake. They love it for what it can do. In terms of entertainment, they use it to get them some What. As Hank Barry, Napster’s CEO recently testified to the Senate Judiciary Committee, the people love their music. Ten million Napster fiends can’t be wrong. So the What availability (eg. good music) can really drive the growth of a How business (e.g. Napster).

   How is the locus of growth, dynamism and energy. It is the system that grows with a “network effect.” That’s the name of the business game now. Momentum. But the traditional entertainment business is a hits driven business. Value comes from volume of sales, rather than the pace of growth or expansion. It’s a mature business, and the only place of it to grow really fast, is in the direction of technology: the How.

   Lots and lots of entertainment is developed or acquired so these more traditional What companies can recoup through an Eminem, or Britney Spears or Sixth Sense. The investments in scripts or signed artists can be of a similar size as the initial Sandhill Investments but they make far less money for their investors in the short run. The nature of a How investment is a belief it can bring in recurring revenues or that it develops some kind of other ongoing relationship with its customer base. How investments seem appealing to the What players as well, though they tend to get uncomfortable if they don’t make dollars they can hold in their hands.

   What is a taste business. That freaks any Sandhill guy out of his Dockers. Taste seems dangerously close to feelings. Aesthetics. Very bad predictability. Doesn’t fit into Powerpoint charts easily. How investments are driven by people who are, at brain, technologists and who are all about valuations. Hollywood investments are driven by people who are, at heart, tastemakers and revenue business people.

   Investments in How that are specifically targeted at Digital Entertainment, need to be sure that some good What can get through it. If you’re going to invest in a What maker, then you need to make sure it can reach an Audience. Or you keep betting that a future form of How will really take off (broadband, wireless, Interactive TV) and then you’ll be set.

   The risk of the How business, is that you can own a perfectly good How system that can be rendered irrelevant or circumvented by a newer How system (just as portals were overtaken by desktop applications, then by distributed aggregators and now peer sharing systems). Conversely, good What has amazing staying power. Neither sets of investors, believe they have any good reason to lay many bets on creators of Digital Entertainment. That’s because other new How systems enable the digitizing and distribution of existing What and new independently created What. The world has a lot of What hanging around.

   So given the reality that there is no good short-term investment incentive to create new digital entertainment.

2. Creation: Even Companies need a Day Job

   If you want to make a show that you can distribute through the Internet, then you have to figure out how to make that show. What tools to use. What connectivity is. You can’t just make the show and forget about the tools. You have to deal with an audience at different levels of connectivity on different platforms. Yes, you have to learn your platforms. Your meetings can’t just focus on narrative or characters or gags. You have to be worried about the available helper apps.

   There are no new Digital Entertainment studios (in the traditional sense of the studio) and there will be none. Companies will also have to operate like the independent artist who waits tables and gigs at clubs at night.

   Pixar, Smashing Ideas and Mondomedia all did or do fee for service work until they can cobble enough of their own time together to finish their own creative work or build an audience. (which the digital era does make possible..even easy..given that all of these How players are thrilled to jettison free What through their systems).

   Perhaps it’s for the best. As Virginia Woolf said, “it is doubtful whether poetry can come out of an incubator. Poetry ought to have a mother as well as a father.”

   So, not having the creation of one’s initial digital entertainment pieces “developed” with the financing of another can be a very good thing. The tools and materials one needs are getting cheaper and more powerful (eg. Apple’s iMovie). The acquisition direction gives the work a clearer voice, and greater ownership and control for the artists and less creative risk for What companies since they’ll know what they’re getting when they acquire something or support it through their systems. The creators of digital entertainment that have some momentum (remember, the new How system of value) will get considered for acquisition or support.

   Pixar has begun to make this transition, and is the clear leader at this point in this new era of digital entertainment. Hardware, software and more traditional storytelling and aesthetic concerns combine to make their creative work. In all cases the cash comes from traditional distribution through television or film or packaged goods and merchandise.

3. Business Culture: “It’s Netscape meets Pretty Woman.”

   Some kind of cultural merging between the lands of How and What is critical if the idea of “convergence,” getting entertainment and technology to work together, is ever going to happen properly for people who want to watch and hear it easily. That would mean paying attention to what is easy and pleasing, and communicating your product, service or entertainment for the audience. This is the domain of the What people. Apart from Apple, Silicon Valley has pretty much abdicated the world of marketing, packaging and aesthetics, and feelings: the heart of the entertainment experience. There is nary a decent corned beef sandwich to be found in the lands of technology (Silicon Valley, Austin, Boston). A great loss.

   But the emphasis on partnership in the How world, and the ability to execute whilst planning details are being worked out, these How tenets are critical to the future of Digital Entertainment.

4. Audiences

   How and What mindsets in terms of audience are essentially different.

   How Ventures setting out to make successful software, web sites, web services, hardware or networked systems all think about creating something that will empower or serve as many individuals as possible. The Entertainment Industry, on the other hand, has evolved by creating entertainment and business models focussed on pleasing large masses of people. Those infamous tushes in the seats. Not any more humane a sort of nomenclature than “eyeballs,” the Internet term, but an absolutely different orientation than thinking about user experience. The What business has also developed a healthy “niche market” approach as well, with more targeted marketing and more specific and (sometimes) original storytelling.

   The Digital Entertainment era is about a unique combination of both mindsets. Access and manipulation of the entertainment will affect the experience of it and who gets to experience it. “Viral marketing” (really just a newfangled term for “word of mouth”) considerations are now often built into the design of mini-shows or greeting cards online, in order to encourage one person to pass a piece of digital entertainment on to another. With the explosion of peer-to-peer (or distributed serving–see part 2 of my Copyright infringement piece for more on this) distribution, Counterkulture, a small Canadian start-up, will be using peer to peer to try a kind of superdistribution. Seeding packets of digital entertainment with full tv-style ads in the middle. File swapping and copying are presumed by their business model.

   The Digital Entertainment audience is everyone and individual at the same time. Technologists, who tend to be the captains of How ventures could profit greatly from working hand in hand with What people who understand and value clear communication, emotionality and aesthetics, which make up ease of use.

5. Experience

   This is what audiences are now expected to do with Digital Entertainment. Sure, sometimes it’s just about reading, hearing or seeing bits rather than analog versions of the same stuff. The forms we know and love will endure. But “experience” implies all of those, plus action of some kind. It’s an obvious choice of words for a technologist like Paul Allen to name his gift of music celebration “The Experience Music Project” which definitely has a different ring to it than “The Rock ’n’ Roll Hall of Fame.”

   But the unique aspects of Digital Entertainment are those bound up in the tool, the connectivity, the How. The audience experience is now drifting towards action. The tools aspects and audience control make it a non-linear thing. There is, after all, a huge palette of sounds and images and filmed pieces and clips to work with. Is it any wonder that music has moved to hip-hop, sampling and now turntablism, which more than a pastiche focusses the experience of the What of the deftness of tool usage.

   USA Today recently named the most popular mp3 on the Net an independently mixed song Oops, the Real Slim Shady Did It Again (DJ Gauffie Remix) which combines the current Top Ten hits of Eminem and Britney Spears in a kind of musical Smackdown. Eminem who professes in his song to hate Britney Spears has his same rap sugar coated by the music and beat of the unavoidable Britney Spears tune. Made and sent out with How systems, obtained over the Net through more How systems.

   What is stuck in the top bunk. But as they grow up, How and What will realize that they have become more and more dependent on one another. Even if you don’t get along, at the end of the day, you’re still family.

   This entry was posted on Saturday, July 1st, 2000 at 12:00 am and is filed under business. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.