Citizen Publisher

In March this year Richard Stengel, managing editor of Time magazine, was speaking about the iPad.

For a while many movies were more like filmed plays, until directors really learned to take advantage of the opportunities of the medium. For the iPad “The medium is waiting for its Orson Welles.”

The idea that a new medium needs a new media is not novel. The implication that the new media needs a new genius to define it also follows naturally. However, the implications of new media for the creative industries that are built around them are more difficult to perceive. How are the structures of these industries shaped by disruptive innovations?

Disrupting theater

To see just how disruptive cinema was, consider the plight of acting talent. In the early years of the cinema (1890s–1900s), performers were not even identified in films. In other words, they were not in the “credits” and far from being “billed”. The reason was that stage performers were embarrassed to be in film. Silent film was considered pantomime and since one of actors’ main skills was their voice, they were concerned that appearing in films would ruin their reputations.

Early film was also designed for the working classes, not for intellectuals. With peep shows as the original presentation format, followed by nickelodeons, film was seen as only a step above carnivals and freak shows. Clearly not something that an aspiring actor would want to be associated with.

So here we have a classic disruption: The new medium was of a far lower quality than live theater. Even lower than the Vaudeville and Burlesque shows. It was, as many other disruptions are pronounced, a toy.

However, it had a market–a profitable market. Over time, the product improved and within a few decades completely drained the profits from theater, leaving it to serve only the most demanding customers willing to pay high ticket prices and satisfying only their high brow tastes.

So going from Theater to Cinema involved more than technological or technique innovation. It required business model innovation. Specifically, Cinema technology brought about the “Hollywood” industry, or more specifically, the Star System and the Studio System.

The Star System was a branding technique designed to signal quality to the public. It remains a basic and fundamental innovation: celebrity as product. The Studio System was a production and value chain innovation.

The integrated producer

By the 1930s technological change led to a new value chain: vertical integration, ownership and effective control of distribution and theaters.

During the Golden Age (early 20s to early 60s) eight companies constituted the Hollywood studio system. Of these eight, five were fully integrated conglomerates, combining ownership of a production studio, distribution division, and substantial theater chain, and exclusive contracting with performers and filmmaking personnel.

The studios’ efficient, top-down control over all stages of their product enabled a new and ever-growing level of lavish production and technical sophistication.

Readers may recognize this as the “inter-dependent” business architecture model.

The studio system allowed iteration and innovation and factory-like efficiency in production. This architecture held sway as the technology remained relatively stable and the market for content expanded to cover most of the world’s population.

In the late 60s and 70s, modularity emerged as a more practical alternative and control over production was separated from distribution. (Theater ownership was removed by anti-trust action). The system that emerged gave more power to producers and directors (e.g. Kubrik) and the talent became independent of the studios.

The new Welles

Which brings me back to Orson Welles. Welles’ masterpieces were the product of an industry that allowed innovation to happen. They were the product of an era. An era defined by integrated innovation and inter-dependent value-creating business with common ownership and control.

So when print publishers today think about their future in the era of the iPad, they should consider their value chains and business architectures. Could the new Welles create the new iPad genres to jump off the screen if he worked in a regular publishing firm that outsources practically everything? Or will he emerge from a firm that operates an integrated value chain. A firm like Amazon that owns the device, the publishing system, the retail store and maintains direct relationships with readers?

It’s my opinion that before there is an Orson Welles of iPad there needs to be a Studio System and a Star System for iPad apps. The Star System is nearly there with the current App Store, but it needs discovery and a systematic way of promoting talent. The Studio System has yet to emerge.

This does not bode well for traditional publishing houses aspiring to embrace the iPad. They are not in a position to create these Systems around this new media and hence to nurture the next Orson.

It’s perhaps ironic that Orson Welles’ masterpiece “Citizen Kane” (1941) was the story of a publisher.

  • techMonkeyBoy

    Great read! Thanks for the lite exercise in lateral thinking. As always, a worthwhile destination on the net.

  • Horace. What a great post! Thanks for your analytical and very clever insights. Even though we are miles apart (distance) the disruption you speak of also has huge implications to traditional IT silos or as i prefer to say.. the enterprise will be forced to move from ‘Hi Tech to Hi Touch’ because of a new collaborative meritocracy! Don Tapscotts recent murmuring post puts this into real perspective. Watch:
    Thanks again and keep up the great work!

  • Ted_T

    I'm not sure about the movie analogy, mostly because the facts are different — Charlie Chaplin had already revolutionized cinema more than 20 years before Citizen Kane, and before the heyday of the studio system — indeed Chaplin, along with Mary Pickford, D. W. Griffith and Douglas Fairbanks founded United Artists in 1919.

    It was Chaplin along with his Hollywood contemporaries who transformed cinema into something far greater than theater, in terms of reach, artistic success* and certainly financial gain — Chaplin was a multi-millionaire in 1919 — I seriously doubt any theater actor, director or playwrite had come anywhere close.

    *Note that I'm not claiming that Chaplin bested Shakespeare, but he certainly did his Broadway contemporaries.

    • asymco

      Chaplin was the Welles of the silent era. The point is that the industry reached new levels of innovation only through vertical integration, regardless of the era.

      • Marcos El Malo

        Chaplin was a proto-auteur, but as the studio system was in it's infancy, a vertical structure built up around Chaplin and became UA. (Interestingly, UA was driven to bankruptcy by backing director Michael Cimino's Heaven's Gate (1980).)

        Welles was originally part of the Studio System (although it should be pointed out his background was in theater, radio theater!). The infrastructure of the studios made Citizen Kane possible, but Welles felt constrained by the system nevertheless.

        The decisive disruption with the Studio System started in the 1950s with the "modular" revolution of Auteur Theory and La Nouvelle Vague in Europe. Welles himself left the studios for Europe in late 1947. The 1960s saw the emergence of "The New Hollywood", which was the American iteration of Auteur Theory.

        New technology had a lot to do with auteurs being able to escape the control of the studios and their infrastructure. New cameras, better film stocks, more efficient lighting units, as well as new aesthetics allowed film making to leave the confines of the studio and shoot naturalistically on location.

        However, the biggest disruption to the Studio System came from the new technology of Television.

        Will the next disruption to the phone market come in the form of modular disruption or a paradigm shift, as TV was to cinema?

  • WaltFrench

    Always valuable perspective.

    I wonder, though: was the star system really an innovation of Hollywood? Certainly crowds formed to hear the great Thespians and singers before the movie industry. Maybe these never achieved the level of popular recognition but that may have been a function of class-vs-mass culture, much more than the particular structures of the new mass entertainment.

    There certainly seems to be a shortage of something like the studios and the later broadcast systems, however. How to publish for iPad is just the latest refinement of how the great publishers cope with the intertubes. Wouldn't surprise me if those lowlife aggregators morph into publishing agents as they start earning a reputation for the quality of their material.

  • Interesting post. I noticed many similarities between the events you are describing and the games industry as it is now. I remember actors initially not wanting to be associated with video games, because they were considered toys. Studios also thought that interactive movies would be the way forward, whereas in fact, the video game disrupted the movie industry with it's interactive product instead. James Cameron commented over a year ago on this here

    Skip to the 4:35 point.

    It's seems to me that one reason games are so successful on the iPhone is due to game developers being able to control a larger parts of the value chain. They can market their own material through though web sites and social networks and stand shoulder to shoulder with the giants in the app store without having to fight for shelf space.

    • Marcos El Malo

      Regarding acting talent in games:

      The two things that changed was 1) More big name actors began doing voice work on big budget animated features, and 2) Computer games became a big enough business to be able to offer stars the salaries they required. I don't think Hollywood stars ever looked down on games as toys, it was just a question of the game studios being able to afford them.

  • timnash

    The publishing houses have a back catalog which is currently relatively expensive to reprint and distribute. If they digitize it and sell through Kindle, iBooks etc they can continue to make money for some time and sort out books + media packages which work.

    Record companies have still to realise that their only really valuable asset is their back catalog so accepting disruption is difficult when the people in charge have seen success with another business model.

  • Mark Hernandez

    Perhaps coincidentally, tonight on the TCM network in the U.S. (Turner Classic Movies) is the second episode of a 7-part mini-series (aired every Monday night at 8PM starting November 1st) called "Moguls and Movie Stars," and tonight's second episode is "The Birth of Hollywood."

    And a reminder to everyone, analogies and metaphors do not have to be perfectly accurate and interchangeable in order to be useful in helping us to understand things better.

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