[TimJYoung]

Yes, but production <> distribution. It still costs money to produce something of value, whether it's an article in a magazine or an album. The fact that it costs virtually nothing to reproduce an album or distribute it digitally does not negate the investment it took to produce it. And the fact remains that Facebook and Google, among many others, profited handsomely from this confusion.

[abannin]

> Yes, but production <> distribution

Compare with the second paragraph: "The reality is that Facebook is one of the most powerful companies the tech industry — and arguably, the world — has ever seen. True, everything posted on Facebook is put there for free, either by individuals or professional content creators; and true, Facebook isn’t really irreplaceable when it comes to the generation of economic value; and it is also true that there are all kinds of alternatives when it comes to communication. However, to take these truths as evidence that Facebook is fragile requires a view of the world that is increasingly archaic."

FB doesn't pay for the content, which is a major advantage over traditional companies that do both creation and distribution (newspapers) or ones where content is licensed somehow (television, music labels). FB is agnostic to the costs of creating the content, but their networks necessitate producers to user their platform.

[TimJYoung]

Thanks for the replies.

I think that we're going to see how this all shakes out soon enough, and it will probably be one of the business stories of the 21st century.

If the current model is sustainable, then it will continue. I personally think that too much value is being captured on the distribution side, that the content creators are wise to it, and that you're going to see a continual shift in power back to the content creators as they become more and more creative in how they withhold content from free-rider distribution/access platforms that they view as a net negative to their bottom line.

[skewart]

True. I think the author was a bit hasty in how he phrased things here. Given the context of the rest of his writing it's pretty clear that he's talking about the overall supply chain of content as opposed to the demand side.

Basically the insight is that, for a lot of industries, the internet has caused a general shift in the center of power from the supply side to the demand side. Fifty years ago you could maintain a strong and powerful position by controlling the supply chain for media content. Largely this was because supplying media was pretty hard - you had to find and organize the writers/artists, physically manufacture it, and distribute it across a given geographic area. Because it was challenging to supply media, there were relatively few options that consumers had access to, so if you managed to bring something to market it was relatively easy to find people who would be interested in buying it.

The internet turned that dynamic on its head. Now all those challenges with getting media into peoples' hands have evaporated. Of course it's still really hard to produce great content - and individual creators can still do fantastically well - but there is much less money to be made by bringing the content that creators create to the market. Instead, the more powerful position is to control the consumer relationship and let the content creators come to you. In a marketplace where there is a massive supply of different things for consumers to consume it's hard for any one creator/supplier to stand out and get the attention of consumers. So a company that does hold a lot of consumer mind-share and can act as a kind of entry-point to the market for consumers, like Netflix or Facebook, has a ton of leverage over suppliers.

And these companies do add value for consumers. It's overwhelming to have so many different options to chose from. It's nice to have someone help me navigate the choices, or even just present me a steady feed of content I might like.

We're seeing this dynamic not just in markets for media but also in markets for things like furniture and even consumer financial products - Houzz and Credit Karma, respectively, are both trying to be consumer gatekeepers, which will give them tremendous power in their markets.

[confounded]

> It still costs money to produce something of value

It costs rapidly decreasing amounts to produce something of value.

If you want a few stabs from a violin in your song, you rarely need to hire a concert violinist these days, thanks to recordings and software-synthesizers based on infinitely reproducible code and data.

[TimJYoung]

Absolutely, but that doesn't mean that it's still easy to produce the final work. If anyone can do it, then it's obviously not valuable.

Take "Stranger Things" on Netflix, for example. I normally hate sci-fi, but this was one heck of a great season 1 for a series. Did it take a lot less in terms of technical know-how/costs to produce than it would have taken in the 80's ? Sure, no doubt. But, it still is a very unique cultural work that is definitely more valuable than something created by another group of people with access to the exact same technology, but producing something of lesser value. The secret sauce is the people involved and their life experiences, knowledge, and expertise, none of which are "free".

[confounded]

> But, it still is a very unique cultural work that is definitely more valuable than something created by another group of people with access to the exact same technology, but producing something of lesser value

Human cultural value != market-value. This is what I'm getting at.

What was the incremental cost to you to watch each episode?

How much did you pay to watch ET? Buy a Twin Peaks box-set?

> The secret sauce is the people involved and their life experiences, knowledge, and expertise, none of which are "free".

You can find free life-experiences (Medium, Twitter), knowledge and expertise (Github, Wikipedia, Quora) all over the internet.

I'm not saying that people don't need money to exist, or that as we're able to produce more, cultural exhanges are worth subjectively less to other humans (quite the opposite).

I'm saying that the costs of people producing things is decreasing rapidly. What is increasing is the net share of value which is captured by distribution platforms.

It's relevant that you can only watch Stranger Things on Netflix --- you can't 'buy it', you need to pay a rent in perpetuity to watch your favorite shows at your own discretion. This is only possible due to the power which the distribution platform (Netflix) has accumulated.

[TimJYoung]

Good conversation, thank you.

Of course, there is good, free content everywhere, but it is normally in the form of endeavors that don't take a lot of time or are hobbies. As soon as something starts to take more than X amount of hours per week, it has to either start bringing in revenue or it has to stop growing. In other words, there is no limit to the breadth of the content that can be available for free, but there are hard financial limits to the depth of the content that can be available for free.

Re: Netflix: I think Netflix is a good example of a distribution platform that is in a more symbiotic relationship with its content creators. The content creators get the eyeballs for their work and, more importantly, get paid, while Netflix takes their cut. However, this is also changing as Netflix becomes both content creator and distribution platform. As to being able to purchase Netflix content elsewhere, I think it all comes down to the extra revenue vs. possible loss of subscription revenue. For now I think the equation is tilted towards the latter, hence you won't see that content elsewhere. My understanding is that other content creators are getting more than a little nervous about the Netflix-branded content, so they might start playing hardball.