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The Web: Destroyer or Savior of Culture, Pay and Employment?

Submitted by Charles Hugh-Smith of OfTwoMinds blog, 

The cost of creating and distributing content has fallen to near-zero, and that is not going away.

Last month I explored the contentious question, Is the Web Destroying the Cultural Economy? In my recent video discussion with analyst Gordon T. Long, we expanded this question to pay (earned income) and jobs, i.e. is the Web eroding pay and jobs?

I also discussed these issues with Mike Swanson of Wall Street Window in a podcast Is The Web Destroying the Cultural Economy? An historian by training, Mike is well-placed to put these issues in a larger context.

There are several key dynamics at work. One is the democratization of expression and journalism unleashed by the Web has eroded the industrial meritocracy of gatekeepers and vertically integrated content-media corporations: music labels, publishers, newspapers, etc.

The web has enabled virtually anyone with Internet access to create a nearly-free global distribution network--what I have termed 800 Million Channels of Me (February 21, 2011). This blog is obviously one of those millions of globally distributed channels.

Critics of this democratization feel that this has unleashed an avalanche of mediocrity that is judged on "likes" and pages views--a process in which talent is "lost in a sea of garbage."

The other side of the debate sees the demise of the gatekeepers, who could enforce their own view of what was valuable culturally and economically, as freeing all those who could never get past the gatekeepers. This explosion of creativity and expression is an unalloyed good thing.

It does create a new problem and a new need--some way to curate the flood of new content, as no one digital consumer can possibly listen to, read or watch more than a tiny sliver of the content being produced.

This curation and editorial selection is an intermediary layer between the creator of content and the end user--a layer that replaces the old industrial-meritocracy with a free-floating, self-organizing group of intermediaries who add value by sorting through a larger slice of the web's gargantuan output of content.

But few deny that this flood of free content--music, books, articles, videos, etc.--has drastically reduced the income paid to content creators. Take the porn industry, for example, a once-profitable distribution system for adult content. Now that virtually anyone can bare all and create adult content, the cost of adult content has plummeted to near-zero.

The music industry has certainly exploded in terms of free content, but the income of the entire industry has fallen roughly in half, from $14 billion to $7 billion. The subscription model that is gaining market share--Spotify, Netflix, etc.--offers end users nearly unlimited content for a modest flat monthly fee.

It's difficult for content creators to make much money in this model unless they have millions of end users downloading content.

Some musicians say that Spotify has enabled them to earn a living performing live by introducing their music to a large audience; others are less enthusiastic about the consequences of earning a few dollars from 1 million downloads (for instance, those who don't constantly tour).

Does culture benefit or suffer when the judgment of cultural value is universalized? There is no one answer, as those who see the flood of self-expression as the death of the cultural economy have some solid points: if only a handful of people can make a middle-class living creating content that is widely recognized as being valuable in some fashion, then where does that leave the culture?

Those who see the process of the wheat being sorted from the chaff by the users themselves see new opportunities for creators who were once marginalized to earn a living from a core group of fans and supporters. Musicians with such a core base can earn a living from a much smaller audience than in the old days of mass marketing of a few select bands. Writers like myself can earn more per book sold because we control all the rights and income.

One thing we know for sure: the cost of creating and distributing content has fallen to near-zero, and that is not going away. This impacts more than just content and culture, as Gordon and I discuss in What Do these Trends Suggest? (32:42 video; Macro-Analytics, with Gordon T. Long)