Responses to Blockbuster post

Lots of comments on the stats in yesterday's blockbuster post. Here's some additional data and other responses:

First, the source for most of this data is Box Office Mojo. My spreadsheet of underlying data is here. As always, if you've got a better/different analysis, please post it and I'll link to it.

Second, some of you wanted more detail on the blockbuster share of box office data. Here it is, year by year, with a linear regression to show the trend:

Third, many of you noted that domestic theatrical revenues are now just a minority share of most films' business, which is true. But it's a very good proxy for how those other businesses will do, because how well a film does in theaters heavily influences how well it will do in DVD and abroad. In other words, it's a safe bet that the directional trends of blockbusters as a percentage of the overall business that we're seeing in theaters are showing up in those other markets, too.

Finally, Nat Dykeman queries my assertion that there's more music out there than ever before.

During the same time that labels were crying that people were downloading their cds, and revenue was down 8%, they were quietly cutting the number of cds produced by up to 20%. Personally, I think if you cut your expenses by 20%, and your sales drop 8%, you're doing better than before.

Another example of seeing the world through the lens of the music labels, I'm afraid. MySpace has hundreds of thousands of tracks that were never released by music labels, CD Baby has many thousands of bands who have never been signed, and likewise for the peer-to-peer networks. It's not clear whether Nat is referring to the number of CDs manufactured for each band or the number of bands signed and released. Obviously the former isn't meaningful in this discussion, and I've addressed the latter above.

Just to repeat, most bands aren't signed to major labels. Now that there are ways other than the labels to distribute music, such as those I've mention above, that's no longer a barrier to finding an audience. That's why there's more music than ever out there, even as the music industry--defined narrowly as the labels--shrinks.

Comments

[Nat Dykeman]

I owned an indpendent record company from 93-96, and since then I've run and own an independent record store. I honestly don't believe there are more people making music today. In my county alone, when I grew up there in the last 80's, it seemed like everyone had a band, and everyone had cassette tapes with recordings of their bands. Certainly there are more outlets for the music today. Myspace and mp3s to be heard, and CDBaby and websites to actually sell your product (something seemingly unheard of when I was in high school). But, I wouldn't say that there are more people making music. Just more visibility for something that would venture a guess to say are very similar amount.

All of these things are clearly untrackable, so I was using my number of CDs manufactured as label statistics. Not just major labels, but any indie label, and even some self released albums. Items with bar codes, available at my distributor that I can order at a store. Those numbers of albums released seem to be moving downward at a pretty steady, and high pace.

I realize that these statistics aren't about the long tail, but I think any discussion about how the head is shrinking has to be tempered with the fact that there are less options than before. I believe there was a statistic that if labels had put out the number of albums in...say, 2003 that they had put out in 2002, and they had all been monumental failures, selling maybe...10,000 copies...that the major labels total sales would be up for the year.

Can't wait to read the book!
Thanks

[james haft, director, US Condo Exchange]

Imaging the impact when the Apple Store starts offering full length movies!

[John "Z-Bo" Zabroski]

Hey Chris,

I think you need to more effectively communicate to people how a mature music company does business versus how a local band does business, particularly comparing the past to the present and making recommendations for the future. Your various "Long Tail" posts make twirling around such a comparison simple.

However, I have seen, in space after space, everyone miss out on how to effective communicate these vast differences. When Rupert Murdoch's News Corp. bought out MySpace, it thought it was buying "content" that iTunes and other music services did not possess. Murdoch's company paid over 300 million for a company with the wrong thesis statement for spinning-in MySpace.com into their content aggregation portfolio. MySpace has the potential to be a good source of revenue, but the executives at News Corp. need to sharpen up and realize who they are and act like it.

News Corp. is a mature content aggregation firm. Whether it's long tail or big hits, News Corp. owns the rights to billions of dollars of content. However, that's not what makes News Corp. a power in the creative industries. News Corp.'s revenues blossom from a world-wide sales force and distribution model that venture-capital startups like MySpace.com do not have. Furthermore, News Corp has expertise in world-wide distribution. MySpace.com's entrepreneurs have some expertise in being entrepreneurs. Right now, News Corp. appears to be allowing MySpace.com to dictates News Corp.
s content aggregation model for this particular service. That's poor product line management and a bad way to leverage 50 million users.

Furthermore, MySpace.com continues to add services to increase its userbase, but has yet to really increase its services to increase its revenue! What a bad aggregation model. Yes, more content is available through MySpace, but what have they in particular done to make finding music easier other than trying to network the bands with their fans? The "discovery" of these long tail bands is not easily facilitated by MySpace's current set of tools.

You should not place the blame on others for "seeing the world through the lens of the music labels." The problem has nothing to do with music labels and everything to do with aggregation. Pushing data. Not holding onto data. Yes, content exists, but if the Internet were pushed to it's capacity in terms of bandwidth at any given moement, less than 1/10,000 of that content would be accessed. It's important to observe Amdahl's Constant and it's meaning to VC ventures looking at broadcast communications on the Internet. Why? Because in order for them to productively push packets of data, they need to cut costs, and TCP/IP communications bandwidth, in addition to RTP communications bandwidth is costly.

I respect your love of narrowcasting and your entire blogging venture {{I have posted an absurd amount of times to this blog which doubtlessly shows my affection for this idea}}, but you also could be said to see the world through the use of the narrowcast lens. The next major step here is actually going to be broadcasting for better revenues.

[Jack]

Some one asserted that because the industry cut its production by 20% while its revenue fell 8% that growth was the result.

That individual equated production with expenses. I'm confident (though ignorant) that much of the industry's expenses are realized through efforts not associated with actual production such as marketing and sales.

This would imply that a cut in production would most likely result in a minimal drop in expenses, and that the revenue drop had impact.

[Jon Woolven]

Surely you understate your case when claiming that "how well a film does in theaters heavily influences how well it will do in DVD". I've lost count of the number of times I've wanted to view a movie, but it was considered "minority" (i.e. aimed at people other than teenagers!) and therefore not on show locally. So I see it on DVD instead.

DVD distribution is less bottlenecked than movies in theaters and so taking these sales into account would almost certainly broaden the spread.

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