For anyone who follows film, television, publishing and newspapers - our culture industry - Robert Levine, the former editor of Billboard and New York Times alum, has written a must-read book.
In “Free Ride,” Levine examines how technology companies and other “digital parasites” are threatening the livelihood of those culture industries, particularly institutions like Warner Bros. and the New York Times, by offering content that they didn’t make.
Far from hating the internet, Levine recognizes the failure of Hollywood studios and publishing houses to adapt to the irreversible rise of the digital world.
However, he believes that the quality of our culture comes at a price, a price that must be supported by charging for that content.
TheWrap spoke with Levine, who lives in Berlin, about why Google may hate him, the future of Ultraviolet and the knuckleheads over at The Guardian.
TheWrap: So why did you choose this as a topic?
Levine: This is going to sound weird. I kept thinking that this is a really important subject so somebody really smart should write about it. A great writer should write about it -- and by great I mean someone with a background in economics or law, someone who has been a staff writer at the New Yorker for 20 years. No one did it, so I said I’ll write it. This is not to say I’m one of those writers, but I tried to be. [The New York Times’] David Carr writes on this subject every week.
What do you mean by that?
If you think about it as a narrative -- and it’s a loose narrative -- it’s this: The media business is a set of businesses, a group of people, a set of assumptions that is part of our culture. How is that being changed by the digital revolution? David is telling that story. He gets that it’s a clash of mentalities as well as a clash of businesses.
And by the two businesses, you mean…
The technology business and media business. I think the media business is always a very…there’s always a bit of unicorn dust in it. If you think about the music business, it is always trying to package an artist as a bit of a myth. Movies have always had pixie dust. Even the magazine business is about buzz. The Internet is just about numbers. Magazine ads are about parties, fashion and fun. Google ads are about metrics -- is this scalable, what stage of funding? Everything is quantitative. The media business is such a qualitative business.
But at same time those businesses have more in common than they’d like to admit. The tech business has a lot in common with entertainment from years ago – brash entrepreneurs who not afraid to break rules with an immigrant despite not being immigrants.
So, about Google: You devote a whole chapter to them in your book, and it’s not the most flattering portrayal. Why focus so much on them and what is so offensive about what they do?
The third chapter is devoted to Google and Lawrence Lessig. One reason is that it’s very hard to tell a story if you’ve got 20 professors and 10 companies so to some extent I tried to narrow it down a bit. But the other answer is that Google just looms so large over the Internet. It’s so omnipresent that people almost don’t realize its there. The extent to which they are everywhere in the debate is sort of spooky.
A couple of people have said, what do I have against them? Maybe that’s my fault as a writer, but I don’t have anything against them. Google is a fantastically successful company that makes some great products. They spend a lot of money to lobby and are extraordinarily effective at doing that. I don’t think that’s evil, I think that’s business. What I did want to say is that Google influences the world in less obvious ways and you should know more about it.
Has Google improved its position on intellectual property this year?
Every few months Google will announce it’s improving its anti-piracy practices. I think it’s improving, but it usually makes these announcements when it’s under pressure. The net result of that is usually good. I don’t want to criticize them for doing something that’s good. On other hand, their reasons for doing it are to avoid further regulation. “Lets volunteer to do this so we wont have to do that.”
And they are certainly incensed about SOPA.
Google really brought out the Astroturf for those bills. They really just whipped people into a frenzy about stuff that’s not in the bill. I don’t think that people who hate bills favor piracy. There are a lot of very smart people who make smart points about why bills are flawed or bad. At the same time, they have a lot of people whipped into frenzy about how this is end of free speech online, and a lot of those people are funded by Google -- and that’s bullshit.
Why does populist sentiment often side with the tech/telecom side rather than the "culture" side?
There is something about Hollywood that conveys offensive excess. You get the sense people in Hollywood are overpaid more than people in the technology business. The amount of money some people in Hollywood make is just absurd and indefensible. On the other hand, a lot of people in Silicon Valley make money that is absurd and indefensible, too. They just don’t spend it in ways as grating on the American public.
The stereotypical guy in Hollywood earnings $15 million a year has a Ferrari and mistresses. In Silicon Valley, he still drives a Prius and wears a denim shirt and chinos so I guess he comes across as more likable and less threatening. But maybe that’s not even true anymore.
Since you brought up Hollywood, let’s transition to the film industry. Can UltraViolet solve a lot of its revenue problems?
I think it’s a really fantastic idea. I don’t know about the execution. Its debut was inauspicious to say the least. People seem to have had a lot of problems with it. That’s a bad sign. On the other hand, plenty of successful products got off to a bad start so well see what happens. What’s interesting about UltraViolet specifically is how can you offer people something more than piracy -- and UltraViolet does that.
UltraViolet offers you more portability than piracy does, but that only works if that’s convenient. It remains to be seen how convenient it is.
That’s a point you make repeatedly in the book – these culture industries need to offer something better than what people can get for free.
Well one part of it is offering something that piracy can’t, but people are more convenience-sensitive and less price-sensitive than anyone thinks. They don’t care as much about price as convenience. They need to make legal commerce as convenient as possible and illegal commerce as inconvenient as possible. The goal should not be to eliminate piracy. That’s not realistic. The goal is how inconvenient can you make it. If you could make it so piracy is only on shady sites out of Russia where you’re risking your credit card, you would dissuade a lot of people.
We need better services. ITunes has aspects, Spotify has aspects, and UltraViolet really epitomizes that. The app ecosystem has a lot of that. I have an iPad and read New York Times every day on the iPad. I would never go back to reading it on the website.
Let me jump in there since in the past week we’ve seen both the Sun-Times and Gannett companies announce new paywalls. The L.A. Times is also planning one. In researching for the book, did you conclude that you have to adopt a paywall or are there other solutions?
There’s no solution that works for everyone. It depends on what you’re trying to do. But if you’re spending a lot of money to generate news, if you have a bunch of international news and are covering the war in Iraq, there’s not enough ad dollars out there at the CPMs you can get online to support that. You need to charge for news.
At the higher end for ambitious papers with a national scope, it behooves you to charge. The leading reason why people don’t pay for news online is that few people are charging for it.
This just makes me think of The Guardian, which I read every day and has tens of millions readers worldwide, and yet its parent company has lost money many years in a row. If they can’t be profitable without charging, then what major newspaper can?
The Guardian probably could charge.
[Guardian editor] Alan Rusbridger has an ideology and is running the paper according to that ideology. I respect that, but that ideology is going to cost a lot of people their jobs.
The other thing that’s weird is that no one really calls him on it. For a guy who is pursuing what has so far been a ruinous business strategy, he enjoys an amazing amount of respect.
I am going to completely change topics here, but I think when you turned in your book Netflix had yet to stumble.
[Laughs] One of things that’s very humbling is how much has changed since I finished the book.
I don’t know how much those Netflix stumbles will mean in the long run. Netflix is one of those things. Everyone will always say they’ll cancel, but does anyone really cancel? If you like Netflix and you want that service, there’s not a ton of competition out there. I think they’ll get over some of this. Their stock went way down because it was overvalued in the first place by most common metrics.
Netflix is one of the biggest in a rapidly growing group of streaming companies. Yet TV would seem to be doing the best of the industries you look at.
It depends on how much cord cutting we see.
What about a la carte cable pricing?
That would help a lot. They are going to resist it, and then they’ll do it and that will really help them because…for a lot of people there is nothing like the value and convenience of cable. They just don’t like to pay for stuff that they don’t watch.
If you do it in the right way, it doesn’t have to have a huge negative impact. A lot of people will realize I do get a lot of value out of the $60 I pay.
Do any of these industries have an obvious, ready-made solution out there?
Some of these industries are almost artificially considered industries. One example – there’s a book of tweets called “Shit My Dad Says.” That’s a book. And my book’s a book. But they don’t really have much in common except they are both printed in paper on hardcover. I’m not ragging on "Shit My Dad Says" says; I think its really funny.
But the idea that those two things should be priced similarly because they are both printed on paper and bound, that’s ridiculous.
One book, sadly not mine, will have more popular appeal so you might want to price it low, for $2, it’s a funny thing to read on the subway and it’ll sell like hot cakes. But a serious non-fiction book might not sell more copies at a much lower price because it can't be consumed on a subway ride. If the demand for serious books is limited by time more then money than cutting prices might not make sense.
How does that apply to the other industries?
I tried to come up with solutions like that for newspapers, but a lot of them aren’t universally applicable. There will be great low-cost video online and some people will make money. But if you want to still have "Mad Men" you will have to charge. You can't support that by advertising alone.
And that's it. At a time when advertising is worth less than ever, it is being counted on to be worth more than ever. There's quite a bit of dissonance. Especially considering that Google and Facebook have so much of the advertising revenue.
There was just a report that said Google has 44 percent of it.
So as things go online, you basically have every other industry that runs on advertising splitting 56 percent of the pie. That’s not going to work. Finding other sources of revenue is much smarter. Charging people radically different prices will be part of the future. Books always had paperback and hardcover. Maybe in the future there will 5 different editions with different rights, timing, extras, who knows.
Those don’t need to be radically different, just different enough that you get people who aren’t price sensitive to spend more money.