Recently in Brand in the Digital Age Category
"The user is more important than the advertiser, more important than the developer, more important than anyone else. At the end of the day, it's the user who's going to drive the advertising dollars."
Keep in mind that these videos are not merely informative, but vehicles for building value in the brand of each YouTube personality, especially for a YouTube personality like Renetto. He is marketing himself and his "special" status to the corporate community and to the YouTube audience.
He and others are also acting as a kind a quasi-market test for the corporate entities that they have contact with.
Renetto is a "normal" guy from Ohio, who apparently came on to YouTube as one of the mass, but has built a kind of brand identity as the un-official spokesman for YouTube users - with the accompanied scorn and support of YouTubers.
He obviously leverages this to establish relationships with corporate entities as well as other users. This is for his own advantage, and that has a negative connotation for some on YouTube. So there is an aspect of "credibility”, that is unique and complicated in this format of distribution. YouTubers tend to poo poo polished content, or content that is not "real" as much as they tend to go into a frenzied delight over the controversy. It is a distribution channel with its own content expectation and delivery style tensions. How credible serialized content is depends on a delicate interplay of reality and verisimilitude.
I recommend Frontline's latest four-part piece on the subject, viewable unabridged on line, here.
Forgive me readers, for I have sinned. It's been over a month since my last blog entry. For penance, I promise to watch FoxFaith's new Christian thriller, Thr3e. As Jeff Shannon of the Seattle PI writes, "If 'Thr3e' is any indication of what we can expect from the emerging trend of studio-funded faith-based movies, we may find ourselves wishing "The Passion of the Christ" had been a box-office bomb." Have faith Jeff!
But the real penance would not be complete if I did not take a lesson from Fox's Murdoch on "market retention". What, pray tell, do I mean? As Joanne Ostrow put it, the same cynical Hollywood "where plastic surgery is considered a sacrament" has now found that Christianity sells.
As some of you may know, I split time between Charleston, South Carolina and New York City. Yesterday, I received a direct mail post card from the FoxFaith company itself. Obviously, I wasn't in New York. I raise the point only to re-emphasize (see here and here.) the brilliance of Fox News Corp., who discovered "long tail" marketing years before the term was ever coined by Chris Anderson. Rupert Murdoch, " Me love you long tail."
Where other media firms (Pixar and Disney excluded) have relinquished their brand to stars, Fox has not only retained its brand, it continues to exploit it for it's own gain. You may have a political bone to pick with Fox News, but only because you are aware of their branding. This company understands market retention. This idea is actually quite foreign for many media firms in an age of disposability. Most corporate strategies emphasize market "capture" but not "retention." Fox News Corp. understands both.
powered by performancing firefox
I will not have access to the Internet between November 4th and the 18th, because I will be traveling on a sail boat from Grenada to Antigua. Please excuse the blog interruption.
I leave you for the time being with my undigested thoughts on the broad and relevant topic “the evolving nature and aesthetics of creative content”.
First, it covers the evolving structures of storytelling via new media. Examples of new media structures are foureyedmonsters.com and lonelygirl15.com; and interactive television content that is created on the web to supplement traditional shows. Reality TV is obviously interactive but LOST is the best original dramatic example of this interactivity; and then of course, their is the growth of user generated content from channels like YouTube and CNN): What do these new storytelling structures look like? How are these structures similar and different to their predecessors?
Television, can have a relationship with the internet that film cannot. I imagine that the nature of going to the movies will still demand High Imaging that allows for suspension of disbelief...but there is a degrading of image quality and techniques that lower-end digital technologies have supplanted into the aesthetic psyche of many younger viewers – just look at the ads created and aimed at the under 30 demographic. Old tricks. Why is that? Perhaps because they are expert consumers of electronic stories and know it’s manufactured.... They are deconstructing the image.
Another thought, I think of Mark Chiolis’ (Grass Valley) remark to me in my interview with him:
"Today there are a number of thought provoking questions that are being asked. What happens when there is a true RGB 4k (there isn't one today) sensor that rivals, if not exceeds, that of today's film stock? One of the arguments for film is that people like the "look" which includes the grain and movement through the gate. What happens when the "game-boy" generation takes over? Having grown up with "video" is this the "look" they want to see? Will they have a different set of standards to compare to?"
Film (theatrical features) is (are) different. I think they will demand even more heighten realism and I suspect that Digital 3D will become increasingly popular in that format in the years to come (an outgrowth of the gamers demand for a heightened experience).
What are the fundamental relationships that the younger generation seem to be exploring via this new media content and traditional content? Some may say the subject matter is generally solipsistic, passive - an outgrowth perhaps of the individuals solitary communion with the anonymous web or with media itself...but look at the bleeding edge technology and science of virtual reality. Look at the studies of the psycho-physical effects of these media tools on users in medical and defense research. Passive is not the right word to describe this relationship. Interactive is better. But with what (media) and whom (other players)?
I say one cannot understand this generation unless they have a MySpace page and love it. Why? There is a freedom of movement in the field of archetype and symbol that enables both artist and audience to observe without disclosure, absorb without acquisition, and create without the demand for conclusion. The repetition of archetypical representation uncovers both artist's and audience's collective mythologies, thereby revealing: The anonymous is personal.
Renowned urban planer Richard Florida notes that the fundamental social and economic changes that underpin the Creative Economy, demonstrate that in “virtually every aspect of life, weak ties have replaced the stronger bonds that once gave structure to society. Rather than live in one town for decades, we now move about. Instead of communities defined by close associations and deep commitments to family, friends, and organizations, we seek places where we can make friends and acquaintances easily and live quasi-anonymous lives. The decline in the strength of our ties to people and institutions is a product of the increasing number of ties we have.”
How have television and new media influenced the sensibility and subject matter of creative content. I see the primary relationship that the younger generation is exploring, is with the media itself (I am not talking about the news media, I am talking about media itself). You may critiqued the passivity of video games...but, perhaps that passivity masks an exploration with identity that is not understood by non-participants and therefore disregarded as irrelevant. I say this exploration is powerful and emergent in movies like Adaptation and I Heart Huckabees. This relationship between identity and media is increasingly portrayed as mystical, interactive, and “high touch”. Their is a propensity for role playing, a desire for authenticity coupled with a disdain of truthiness and even traditional ideology. For dramatic content and docu-reality, they create satire and even sarcasm (the mass may also create cynicism, but I would never characterize this generation as cynical. They know the line of complicity runs through each of them).
In some respects, “reality shows” seem like an outgrowth of this propensity for role-playing, a study of the dramas of personality. In deconstructing the “sit com” and “documentary” and even the “commercial brand”, there appears to be an investigation of topics like truth and being.
Regarding lonelygirl15.com. As one writer I spoke with remarked, “Entertainment is always flirting with reality. It seems that things that don't aim to be thought of as real do a much better job. Verisimilitude, it's what it's all about."
Is there a common thread in the subject and structures explored by newer creative content, a post-post modern sensibility? See the NYT’s article, “Brand Underground”:
http://www.nytimes.com/2006/07/30/magazine/30brand.html?ex=1311912000&en=82edb890b1d6c977&ei=5088&partner=rssnyt&emc=rss
There are several larger forces manifesting in the recent development of MTV's Virtual Laguna Beach for example. One of them is the evolution of brand: how the concept has extended itself into the realm of branded communities in the digital age. Gamers (the generation under age 35 and including generations X and Y) have grown up in a world saturated by brand so that the phenomenon is now a vehicle for personal expression and identity beyond the ostensible confines of a corporate mandate (well, except their own). Commentators like Rob Walker (The Brand Underground, NYT) have elucidated the social phenomena well, however, they tend to look at the expression as another failed modernist attempt to beat the system. Hand me the cyanide, the revolution is over and we lost!
Boomers are wired to view creativity as a choice between “selling out” or “sticking it to the man” and the quest for the great society as a dogmatic battle between the mediocrity of relativism and the virtue of absolutes. To use former bohemian terminology, today’s generation does not have that hang up. “They have relatively little generational consciousness,” writes David Brooks, “because this generation is for the most part not fighting to emancipate itself from the past.” The suggestion is provocative considering that while “the baby boom included the largest U.S. birth cohort to date, the game generation will ultimately outdo the baby boom in size, in scope, and presumably in influence,” notes John C. Beck and Mitchell Wade in their study of the game generation’s influence on organizational values in business. “The total size of the game generation is already greater than the baby boom ever was,” and the whole generation of gamers, “including X and Y and letters to be named later-simply approach the world differently than their predecessors.”
I am a broken record, but like dissident antipoliticians from the former Czechoslovakia, who used satire and absurdity to highlight the fact that in a postmodern consumer society the “line of complicity runs through each of us," this new American generation distrusts political grandstanding and even traditional forms of organized politics. Hence, the popularity of so-called no brow satires like South Park, The Colbert Report, and The Daily Show.
The playwright Heiner Mueller once remarked that the potency of theater in his native East Germany was based on the absence of other ways of getting messages across to people. "As a result," Mueller says, "Theater here has taken over the function of other media in the West," before now. While the never ending surface chatter of talking points and double speak on both the left and the right continue to erode the value of words, they also inflate the space between the lines.
None of this mentions how the game generation take globalization for granted and the growing crossover of cultural content from other traditions, “bollywood”, Japanese Anime et cetera.
Advertising Age - MediaWorks - Cingular Invades YouTube With Underground Contest
- In what is perhaps YouTube's biggest sponsorship deal to date, Cingular Wireless has agreed to back a search for the site's most talented unsigned bands. The promotion strikes at the core of rival MySpace, which was founded on the premise of exposing unsigned artists to large audiences online.
There are several larger forces manifesting in the recent development of MTV's Virtual Laguna Beach. One of them is the evolution of brand: how the concept has extended itself into the realm of branded communities in the digital age. Gamers (the generation under age 34 and including generations X and Y) have grown up in a world saturated by brand so that the phenomenon is now a vehicle for personal expression and identity beyond the ostensible confines of corporate mandate. Commentators like Rob Walker (The Brand Underground, NYT) have elucidated the social phenomena well, however, they tend to look at the expression as another failed modernist attempt to beat the system.
I am not suggesting that the gaming generation, of which I am a part, is somehow untethered to history. Instead, I want to emphasize that the boomers polemic between left and right overlooks how truly different this generation is. To paraphrase David Brooks, this generation has simply moved on from the culture war in many respects. Other commentators have illustrated how the game generation has put its resources into transforming corporate America in a similar way its predecessors channeled its own energy into political and social movements. Some, like John C. Beck and Mitchell Wade in Got Game have gone so far as to say that the dot com era was an example of this corporate revolution and symptomatic of the game generation's predilection for role playing, in other words, Sims taken beyond the confines of the console.
The evolution of brand and branded communities is provocative in another respect. Multinational corporations have growing political and commercial leverage that is unfettered from the confines of the nation state. That phenomena presents a challenge to the polis but also changes the way constituents, if only subconsciously, organize themselves. In a commercial world, branded communities, become social organs as much as a commercial one. The notion infuses the gaming generations unique identity and illustrates another way in which they have ostensibly moved on from the polemic that sets art against commerce.
In the new world, media and technology must play to these sensibilities if they intend to reap the rewards of the younger demographic. I would not be surprised in ten years if movie and home theaters became virtual environments equivalent to branded paintball. Gamers demand a heightened sense of reality and want to be engaged with their media in a way far more intense than the boomer's relationship with television. Virtual Laguna Beach is in my mind symptomatic of the beginning of this transformation.
Advertising Age - Digital - How MTV Plans to Let Anyone on 'Laguna Beach'
Excerpts:
"Think of virtual Laguna Beach as a cross between Second Life, the online virtual world community that opened in 2003, and popular computer game The Sims. "
"MTV Networks figures that a single "resident" of its virtual world can translate into $150 of incremental revenue, based on estimates from existing virtual world There.com, whose technology fuels VLB -- or "Virtual Laguna Beach." And that doesn't count revenue from potential advertising. MTV is already in talks with marketers Pepsi, Procter & Gamble, Cingular and Paramount about developing campaigns for the virtual version."
They use the keyboard to walk or run around the island and a toolbar along the bottom of the computer screen offers more functions and can adjust their physical appearances -- from hair color to face shape to complexion. They can go shopping, exchanging MTV dollars for, say, new clothes or a surfboard (they earn MTV dollars by spending time in the world and interacting with brands).
"MTV promises advertising will be much more than billboards on the side of the virtual sidewalk or product placements and said the opportunities for behavioral targeting are "incredible." They also haven't worked out the ad rates -- in part because no one's exactly sure what the ad model will end up looking like."
"'We didn't back into revenue expectations,' said Sean Moran, exec VP-MTV 360 ad sales. 'This is a case of you can't put the cart before the horse.' (For context, however, in the kid- and brand-friendly virtual world Whyville, cost-per-thousand rates range from $6 to $30 and onetime sponsorship setup fees range from $25,000 to $250,000.)"
"Michael Wilson, CEO of Makena Technologies, which created and powers There.com, says the virtual worlds are a breeding ground for focus groups and consumer research."
"'There are a lot of unsafe places online, and we wanted to make this a safe place for our audience and our advertiser partners,' said Jeff Yapp, exec VP-program enterprises at MTV Networks' Music Group."
"MTV developed the project primarily in-house, using about 20 employees over four months. So if it doesn't work, Mr. Toffler said, it's not like the company went out and spent $50 million on an acquisition that bombed. (MTV execs wouldn't outline exactly how much the initiative cost, but earlier this summer Viacom Chief Financial Officer Mike Dolan said broadband channel Overdrive was built with an investment of $5 million over eight months.)"
"VBL is the first step in a series of virtual communities MTV hopes to build around music and lifestyles -- look for a Logo-themed world to launch in 2007, for example."
"Soon VBL will include an e-commerce aspect (the first step will be working with the actual stores in the real Laguna Beach before expanding it out to other national retailers) and launch a second-tier subscription-based service for residents who want the ultimate virtual lifestyle -- who want to live in a waterfront beach house, for example."
Advertising Age - Digital - Warner Bros. Creates Short-Form Digital Ad Content Division
Excerpts:
Aimed at satisfying advertisers' growing thirst for original content and digital platforms, the division, dubbed Studio 2.0, will integrate brands and develop programming specifically for ad sponsorship.
[S]aid Bruce Rosenblum, president of Warner Bros. Television Group. "Since advertisers were intimately involved in the early days of television, it makes sense for them to be involved in this arena, too."
"The goal is to create stand-alone content that speaks to the audience. It's not about creating something that looks like a commercial."
News Corp.'s Fox TV Studios also intends to create original content with marketers in mind, aligning with branding guru Peter Arnell in a nonexclusive pact to create content across platforms.
Ad agencies are increasingly creating their own content for clients, and marketers such as Anheuser-Busch are showing they want to own and even produce their own entertainment content. Commercial production houses are creating more of their own content as well.
Advertising Age - Q&A With the NFL's Lisa Baird: How to Market the Biggest Reality Show
Excerpt:
NEW YORK (AdAge.com) -- Lisa Baird joined the National Football League from IBM Corp. last year at a time of transition: the extension of TV deals with CBS, Fox and DirecTV; a new pact with NBC; and the shifting of Monday Night Football to ESPN -- not to mention a new commissioner who took over on Sept. 1.
Ms. Baird, now senior VP-marketing, took over the top marketing spot after the departure of ex- General Motors Corp. executive Phil Guarascio. As the NFL's big kickoff weekend begins, Ms. Baird took time to talk about matters including the league's future in a digital world.
The NFL is the ultimate reality show: It's unscripted and unpredictable, played out in front of the biggest TV audience each Sunday and Monday night. Mark Burnett couldn't come up with "reality" like the next 21 weeks of our season.
Changing demographics and emerging technologies continue to mystify those companies that are five to 10 years down the road. We're also in a unique brand position with the NFL and the 32 clubs having such massive audiences. We continually need to protect our brand from companies that look to redefine the NFL image to their own advantage.
We've talked a lot about better understanding how our most important constituency -- our fans -- interacts with the NFL, consume media and spend their time and money, particularly given changes in American demographics.
We hold the keys to some of the world's most valuable content -- NFL games. We need to keep finding compelling ways to deliver our content, while protecting our network packages which have been the underpinning of our league and what makes us unique.
MySpace cowboys - September 4, 2006
Excerpts:
With Murdoch's backing, the site has an astonishing number of projects underway: a Google pact to sell text ads on the site; a MySpace Records label; a VoIP feature to let users call one another; international sites in Britain, Australia, France - with nine other countries in Europe and Asia coming soon. DeWolfe counts 20 new products in the development pipeline. "We think we can extend MySpace around the world and it can be a major force globally," says Murdoch, whose Internet ambitions have helped drive News Corp.'s stock up 18% this year.
PC Pro: News: Google wants its MTV
Google and MTV have begun a flirtation by signing a deal to distribute MTV clips through the Google network. The Official Google blog says that clips from MTV and its associated channels such as VH1, Nickelodeon and Comedy Central will start appearing on a site near you that is part of Google's AdSense programme. It is only a toe in the water but may be the prelude to a much bigger alliance.
It is only recently that MTV has woken up to the threat posed by YouTube. It was widely expected that the new 'Flux' web site would be a rival to YouTube. However, at the moment Flux is merely a shop for selling ringtones and pictures. By teaming with Google, MTV may be hoping to use the Internet giant's muscle to challenge YouTube's encroachment into music video.
Business Week writer Catherine Holahan elucidated the pitfalls of brands like Viacom's MTV in a digital age with its lower barriers to market entry. The big question is if and how MTV will maintain its hegemony over the younger demographic, especially with increasing competition from the likes of online content distributors like YouTube and MySpace.
Excerpts and Highlights:
Major Internet players—from search engine Yahoo! (YHOO) to startup video site YouTube—are striking deals to broadcast music videos over broadband. Their hope: The same strategy that won Viacom's (VIA) MTV Networks cult-like control of the 12- to 34-year-old audience two decades ago will prove just as successful today on the Web.
MySpace selects Google search system | Business News | Reuters.com
Excerpt:
News Corp.'s Fox Interactive Media said on Monday that signed a multiyear deal to use Google Inc.'s search and advertising system to direct traffic across its network of Internet sites, including the wildly popular MySpace.com.
One of the main challenges for media firms in the Creative Economy is market retention. "The media content provider resembles a hunter gatherer in that for the creator of the media you start from scratch and need to capture or kill your prey each time, if you wish to prosper," says William Drury, Senior Marketing Consultant formerly with IBM EMEA, "You are only as good as your last effort. Quality, measured as you wish, is primary."
A thousand options fragment the audience for mainstream broadcaster and advertiser alike. What this means for mainstream broadcasters is that marketing television shows that appeal to broad audiences has also becomes more expensive. One of the growing trends in prime time television today is how TV shows with a broad demographic are marketed more like films. "The Premier means everything, says Megan Wolpert, executive VP of Spyglass Television, "just like it does in the film and the music industry. Today, television is starting to put much more stake into the premier of a show. So where it use to be the box office weekend would make or break how many screens you stay in over the next couple weeks in order to see if you can make more money. Today the same phenomenon is happening with television."
What this means for advertisers is that they are paying more to reach those broad audiences, while their effect is less potent. Companies that continue to capitalize on customer relations and experiential marketing are the real winners in this scenario. Market retention is the key to deriving sustainability in the disposable and immediate age of rapid product turnover and new media. Brand awareness or identity alone are no longer enough.
Advertising Age - McKinsey Study Predicts Continuing Decline in TV Selling Power
Excerpt:
"Should everybody shift 30% of their dollars to the web?" asked Amy Guggenheim Shenkan, senior practice knowledge specialist in McKinsey's San Francisco office. "No. There wouldn't be room today if everybody wanted to shift online. Last year [online media] was $12.5 billion, by end of 2007 digital advertising will be $18 to $25 billion. ... So we're seeing a lot of growth, but if you want to match up share of attention and share of dollars it couldn't happen for that reason." The TV ad industry is a $68 billion one.
News Corp. sculpting bold plan for growth
Excerpts:
News Corp. in the past 12 months has been forging media's future by buying and riding the likes of social networking leader MySpace.com and video gamer IGN to meteoric heights while also enjoying record performance levels at its core broadcast and cable television, film and print operations, even as they struggle to reinvent their business models.
USNews.com: Money: MySpace for boomers
Excerpts:Now a new venture, Eons, aims to give baby boomers a place to gather online with other people in the same age group. Jeff Taylor, founder of the popular job website Monster, created this MySpace-like site with features specifically crafted for a 50-plus, Web-savvy user. In fact, you can't even log into the website unless you are over age 50.
The Brand Underground - New York Times
Moving homes today...more soon.
Fox News Corp has a brand. Unlike their competitors, they haven't relinquished it to stars or shows et cetera. They are also the exception because they understand market retention. You may have a political bone to pick with Fox News, but only because you are aware of their brand. MySpace has market retention too, because, well frankly, it's quite addictive. It's the internet version of tobacco.
This idea of market retention is foreign to media firms in an age where most are hyper-focused on "capturing" markets. Media firms spend millions of dollars on marketing only to toss away their branding in a nano-second. All of this is applicable to Fox News Corp. and MySpace. News Corp's acquisition is on the digital ball. Viacom is not far off, but they are trying to build from scratch (with MTV's new social networking site Flux) what Murdoch had but to acquire. While other media firms are looking in their rear view mirror, Murdoch and Myspace are the perfect and timely diagonal expansion. More on that later. In the meantime...
Marketing on MySpace | ForBiddeN fruit | Economist.com
Excerpts:
MTV Think News - Marines Totally Want To Be Your MySpace Friend — And Recruit You
Excerpts:
The courting of the MySpace generation — the site now claims more than 96 million members — is a nod to the importance of tapping the potential of the Internet to reach America's wired youth, according to Major Wes Hayes, Marine Corps Recruiting Command spokesperson.
The site, which features a selection of downloadable Marine wallpaper, also has links to recruiters and, so far, boasts more than 13,000 friends with handles like Promiscuous, Leatherneck and Tha Rock.
"The Marine Corps is always looking for new and innovative ways to make sure our target audience, young men and women ages 18 to 24, are informed about the Marines," said Hayes, adding that the reach into MySpace was not related to the kind of missed recruitment goals some branches of the armed services have experienced in the past few years.
Given the string of highly publicized incidents involving child predators trolling MySpace to meet underage children, the Army pulled its banner ads from the site earlier this year, according to Louise Eaton, media and Web chief for the U.S. Army Accession Command. But the Army kept in touch with MySpace in the interim, and after the site recently issued new security guidelines and assured the Army that MySpace was more secure, the Army is prepping a return of the ads as well as a profile page. "The purpose [of the Army profile page] is to let young people know about the opportunities Army offers," Eaton said.
And why MySpace? "Because young people are there," she said. "We have to go to where young people are." The Air Force advertises on MySpace but doesn't have a profile page, and the Navy has no presence on the site at this point. The Army's profile page is being worked on now by its ad agency, and Eaton said it should be up soon.
"The Internet is a very powerful tool and we see it as a new and innovative way to reach our target audience," Hayes said.
A specter is haunting America - a specter of the
creative economy. Its expressions
are the lifeblood of our nation's economic muscle, and the metamorphoses of our
social and economic organs are symptoms of its manifestation. Yet, we are largely unaware of its
existence, and its ideation remains unarticulated in our public discourse -
obscured as it were by the rapping bare knuckles of narrow-minded extremities
on the left and right hands of our cultural divide. The more opposable of left-handed thumbs
call the phantom menace capitalism
and condemn the corporatization of art and the commodification of culture. On the right, all fingers - except
pinkies - point to the sun setting in the West and call the umbrage Hollywood. For
it is better, that one of your fingers should perish rather than have your
whole hand cast into Gehenna.
I have reduced these analogue dubs into binary code
- comprised of the numeral zero and - for the increasing number of this
magazine's bilingual readers - the numero
uno. I then filtered out
discordant noise using compression algorithms that preserved each sound bite's
ideological fidelity, but I scrambled the signals so that left and right
channels reversed stereophonic polarity.
Presto change-o! At zero
decibels, the human ear perceives near silence - or the sound of both hands
clapping for the "no brow" culture of today's youth.† The canine ear, however,
would still detect the looping chant of hippies asking if that is freedom rock
they hear, and if so, that the volume be turned up.
Friends, country/city men/women! Before you hand cyanide to the old
man behind the curtain - excuse me, 35mm camera - or have postmodern nightmares
of movie executives screaming, “What are our theaters now if not the tombs and
monuments to Film?” Before you condemn the blasphemy of Technicolor's "technology
agnostic" e-cinema rollout; or become a digital Bolshevik, shooting at the
heart and mind of film's aristocracy with your web clips of skateboarding dogs;
before you write that long-procrastinated blog manifesto on the weak social
capital of myspace friendship; or, better yet, one to educate our Prince de’
Medici; keep in mind: This is no joke.
Call it what you will, but the creative economy is here, and our
nation's and your region's wealth depend upon it.
Our means of production is no longer capital,
natural resources, or labor, declares economist Peter Drucker. It's
information.
Yet, one in four IT jobs and ten to twenty percent of financial
services jobs in the United States and Europe will be offshored by 2010. Forrester Research estimates that from
2000 to 2015 some 3.3 million white-collar jobs and $136 billion in wages will
shift from the U.S. to lower-cost countries like India, China, and Russia. Manufacturing bore the brunt of outsourcing
in the past. Today, the service
sector, which employs four-fifths of the labor force, is increasingly affected.[1]
“In the old days," says computer scientist
Vernor Vinge, “anybody with even routine skills could get a job as a
programmer. That isn’t true
anymore. The routine functions are
increasingly being turned over to machines.”[2] Appligenics, for example, a small
British company, has created software that writes software. The application is "up to 500,000
times faster than human programmers and completely error-free," says Jim
Close, the company's business development director: "That means whereas a
human would consider four hundred lines of computer code a good day's work, our
software writes that in under a quarter of a second."[3] Even online à la carte legal services have made inroads into the legal
industry. Analysts say, "As
online resources grow, the demand for traditional services force lawyers to
lower fees."[4]
More provocative than outsourcing, is the magnitude
of convergence between telecommunications, digital technology and
industry. This development has
hastened the transformation of our economy from one based largely on
information and knowledge to one driven principally by creativity. John Howkins categorizes the
creative economy to include fifteen creative sectors - such as research and
development, software, design, and content industries like film, music, and
video games - that produce
intellectual property in the form of patents, copyrights, trademarks and
proprietary designs. The annual
global revenue for Howkin’s fifteen identified sectors was $2.24 trillion in
1999. The U.S. share represents
forty percent of the market with revenue totaling $960 billion. The U.S. share also accounts for more
than forty percent of research and development, forty percent of television and
radio, and thirty percent of film.
Howkins calculates that core copyright industries will be worth $6.1
trillion internationally in fifteen years.
U.S. dominance in these segments - more than productivity improvements
related to new technology and new manufacturing methods - is responsible for
much of the nation’s global economic competitiveness since the
nineteen-eighties.[5]
The creative economy suggests more than
technological progress or the growth of media and entertainment. However, the latter development is
important to emphasize. Most of us
are oblivious to the considerable role that content industries play in job and
wealth creation - not only in terms of regional economic development and
growing high-tech industry, but also in terms of our nation's global economic
competitiveness. In fact, the media,
entertainment, and cultural copyright sectors create new jobs at a rate three
times faster than the remaining economy.
In 2002, these sectors employed 5.48 million workers and accounted for
six percent of U.S. gross domestic product. These sectors also generated $89.26
billion in export revenue - surpassing every other category including
automotive, aviation, agricultural, as well as chemical and allied products.[6] Foreign sales of motion pictures alone
totaled $17 billion in 2002. The
motion picture industry is the only U.S. sector that boasts a surplus balance
of trade with every other country in the world; and the international sale of
filmed entertainment plays a significant role in our nation's overall trade
surplus in services.[7] U.S. sales of entertainment software
also totaled $8.2 billion in 2004, and U.S. game designers exported an
additional $2.1 billion the same year. [8]
Deutsche
Bank forecasts that global revenue for game software will grow at thirteen
percent annually over the next four years, while PricewaterhouseCooper projects
that the U.S. media and entertainment industries will be worth $690 billion by
2009.[9]
U.S. regions are increasingly unable to compete
against places like Bangalore, India or other lower cost localities for the
routine information and knowledge jobs considered to be the holy grail of
economic development. Emphasis is
frequently placed on attracting and growing high-tech to the exclusion of all
else. In reality, the high-tech
sector does not grow in a vacuum.
It certainly will not grow without the creative forms of the content
industries that drive technological advance for fields as diverse as real
estate and medicine, and that also add high-value to technology products and
consumer goods in today's glutted marketplace. “You can’t have high-tech innovation
without art and music," writes urban planner Richard Florida: "All
forms of creativity feed off each other."[10] Ultimately, high-tech requires a
creative social milieu - what Florida has termed "the creative
ethos". This chief ingredient
underpins the entire creative economy and those fertile regions that establish
tangible high-tech hubs.
Even firms cannot compete exclusively with
technology in today's global market.
Technology is cheap and ubiquitous until it acquires the
high-value-added context of creative forms like branding, content, and design. “At Sony, we assume that all the
products of our competitors have basically the same technology, price,
performance, and features," says Norio Ohga, former chairman at Sony.
“Design is the only thing that differentiates one product from another in the
marketplace.”[11] Global competition has pushed quality so
high and prices so low that the pressure to add value is intense. “We can’t compete with the pricing
structure and labor costs of the Far East," remarks Paul Thomson, director
of the Cooper-Hewitt Museum in New York City. “So how can we compete? It has to be with design.”[12]
Stock from companies that place a heavy emphasis on
design outperform their counterparts by a wide margin.[13] For every percentage of sales invested
in product design, a company’s profits increase by an average of three to four
percent.[14] In 2001, Whirlpool introduced its Duet
line of washers and dryers. By
2003, the company had nineteen percent of the front-loading washer market, up
from zero, two years before.
"If you looked four or five years ago, the average life of a
washing machine was something like thirteen years," says CEO, Jeff Fettig:
"We're surveying owners and finding out a lot of people are replacing
their washing machine with the Duet after five, six, or seven years because
they want it, not because their old machine broke or wore out."[15] Coleman Coolers was long considered the
industry standard until competition began to erode the company's market
share. In 1999, Coleman redesigned
its coolers. Two years later, the
company's cooler sales increased by forty percent and Coleman led its product
market for the first time in years.[16]
“Jeff Grady, CEO of Charleston based DLO,” remarks
Director of the Charleston Digital Corridor, Ernest Andrade, “was smart enough
to figure out that you've the iPod, but you don't have the little accessories
to go along with it.” Design also
has the powerful capacity to create new markets - whether for ring tones,
medical devices, or cutensils.
“Abundance, Asia, and Automation turn goods and services into
commodities so quickly,” explains business writer Daniel Pink, “that the only
way to survive is by constantly developing new innovations, inventing new
categories.”[17] “Every product from sneakers to software
is constantly being upgraded," writes Florida, “and everything from mutual
funds to potato chips now comes in an ever-proliferating variety of types -
because the Creative Economy is largely based on selling novelty, variety, and
customization.”[18] "Design has expanded its definition
to include creating, recognizing, and developing opportunities to build business,"
says Tim Brown, president and CEO of IDEO, a design firm based in Palo Alto.[19]
While the creative economy does not represent the
first time application of the high-value-added context of creative forms to
technology products or consumer goods, it does embody the large scale and
pervasive use of this methodology - what Virginia Postrel has termed the
"aesthetic imperative" - and the considerable bearing that this
approach has on the profit margins of every major industry sector. “Manufacturing and technology generate
wealth only when they make matter and information serve human desire,"
writes Postrel: “Desire is the true source of economic value.”[20] When The
New York Times asked GM Vice Chairman, Bob Lutz how his approach differed
from his predecessors, Lutz responded, “I see us being in the art
business. Art, entertainment and
mobile sculpture, which, coincidentally, also happens to provide
transportation.”[21]
Branding, like design, can distinguish a product
from the glut of global competition, but firms today cannot succeed with a
brand strategy based on awareness and identity alone. “Mastery of design,
empathy, play, and other seemingly, 'soft' aptitudes," explains business
writer Daniel Pink, is “the main way for individuals and firms to stand out in
a crowded marketplace.”[22] "It may seem odd to hear a designer
discuss brand positioning," writes John Tanz in Fortune: "Get over it.
No longer the wacky freethinkers whose work may never exist anywhere
beyond their sketchpads and computer screens, designers are developing serious
business chops, becoming better versed in the concerns of the manufacturing,
finance, and marketing departments."[23]
When I asked media-christened branding expert, Rob
Frankel, how companies protect brand in the digital age with its lower barriers
to market entry, he responded: "Most of these guys confuse 'brand' with
identity or product. Identity is one small fraction of brand and products are
merely 'proof' of your brand's promise." Frankel distinguishes himself from
"old school" marketing consultants like Jack Trout and Al Ries
"by redefining brand in a way that impacts the bottom line." "Branding," Frankel continues,
"is not about getting your prospects to choose you over the
competition. It's about getting
your prospects to see you as the only solution to their problem. Everyone makes
a PC, but why do some people insist on a Mac, when it costs more and ostensibly
has less software?"
When you look at the size and scope of the global
advertising industry, you can appreciate how creativity factors into our
economy. Zenith Media estimates
that global expenditure on advertising totaled $403 billion in 2005.[24] According to economists Deidre McClosky
and Arjo Klamer, persuasion, advertising, counseling, and consulting account
for twenty-five percent of U.S. gross domestic product.[25]
Economist Gillian Doyle also notes that when “expenditure on advertising is
calculated as a percentage of GDP, the pattern that emerges indicates that as
the national economy has grown over time in real terms, advertising has not
just grown in parallel, but has grown even faster. So the amount of advertising activity in
an economy is related to the size and growth rates of the economy itself, and
advertising has tended to account for a progressively more significant portion
of GDP as time goes on.”[26]
The convergence of digital technology,
telecommunications, and industry has also eroded product market
boundaries. Sectors that were once
distinct and unrelated now overlap through their shared use of media and
information technology. "What
we do in medicine now relies on digital imaging. It also relies on high-resolution,
high-speed data processing," says Dr. John Raymond, Vice President for
Academic Affairs and Provost at the Medical University of South Carolina. So do digital cinema and entertainment
software. "MUSC was one of the
first institutions in the U.S. to have a sixty-four slice CT scan that gives
amazingly high-resolution pictures of the heart," continues Dr. Raymond,
"Some people believe that this technology may even supplant doing cardiac
catherizations for diagnosing cardiac disease. But trying to enhance the images, learn
how to use computer algorithms to read them correctly, or transfer the data
rich files to a distant site to be read by an expert; those are issues we have
to deal with, that we haven't dealt with adequately."
The CELL based Mercury Computer blade server is a
perfect example of a direct technology transfer from entertainment software to
medicine. Video games rely on
powerful CPUs for the high-speed data processing required to render 3D images
in real time. As gamers demand a
more heightened experience and greater realism, the data rich digital graphics
and audio require more processor speed. Advanced scanning techniques - like the
one described by Dr. Raymond - lead to huge amounts of data. Using a traditional computer processor,
reconstructing an image takes two seconds per slice, or over five minutes for a
full image, but using the CELL processor, a central processing unit developed
and optimized for gaming and broadband by Sony, IBM, and Toshiba, an image is
processed in seconds.
Digital cinema technology has repercussions for any
application where the display and transmission of high-speed high-resolution
data rich images are required: for example, high-resolution satellite imagery
or telemedicine. Consequently, the
National Institute of Standards and Technology developed scientific measures
and test materials to assess image quality and the effects of compression for
the display and transmission of digital content in collaboration with the
Digital Cinema Initiatives LLC - a consortium formed by seven major movie
studios to create a digital equivalent to 35mm film. Before a cinema can screen digital movie
content, the presentation is compressed using high-speed high-resolution
algorithms, encrypted, and transported to theaters via satellite, broadband, or
hard drive. In the end,
"networks don't care what kind of data you are sending over them,"
says Bob Gibbons, Director of Marketing and Communications at Kodak Digital
Cinema.
Military surveillance, targeting, and weapons
testing also use technology that was developed for motion pictures and
entertainment software. The U.S.
government currently employs Panavision's 300x compound zoom lens for military
surveillance. The lens made its
television debut during ESPN's coverage of the Mercedes Championship in Maui
this year. Applying Panavision's
lens technology with a high-speed high-resolution digital camera like the
Panavision HDMAX - that incorporates the QuadHD CMOS sensor - detailed images
of test missiles or objects of interest can be captured for analysis or target
verification. The Mercury
Computer’s CELL based blade server can also handle the requirements of sonar
and radar computation for military or scientific applications, because of its
ability to process real time data streams.
“The Cell BE processor was originally designed for the volume home
entertainment market," says Craig Lund, chief technology officer of
Mercury Computer Systems, "but its architecture of nine heterogeneous
on-chip cores is well-suited to the type of distributed, real-time processing
that will power tomorrow's digital battlefield.”[27]
Hollywood and video games drive the development of
high-speed high-resolution digital image capture, management, transmission, and
display that have implications for fields where these advanced technological
applications would be economically unviable to develop on their own. Digital Light Processing technology
(DLP) from Texas Instruments uses Digital Micromirror Device light modulators
(DMD). DMD technology has made
significant inroads into both the home and theatrical digital projection
display markets, but the technology also has applications ranging from
volumetric display, holographic data storage, lithography, scientific
instrumentation, and medical imaging.
Entertainment software has lead to faster introduction and deployment of
processors, broadband networks, and high definition disks like HD-DVD and
Blu-Ray. The “media richness demanded by gamers and game developers drives
progress in graphics and audio for the entire PC industry,” notes John C. Beck
and Mitchell Wade in their study of the game generation's influence on
organizational values in business.[28] “IBM places value on chips made for
entertainment software that goes beyond revenue and profits," says Dr.
John Kelly, senior vice president and group executive for IBM Technology Group:
"These chips help drive technology in other areas." Online gaming and game downloads are one
of the fastest growing uses for bandwidth connections, and entertainment
software stimulates the demand for third and fourth generation cellular
telephony with broadband speed capability. PricewaterhouseCooper projects that
wireless games in the U.S. will grow from $142 million in 2003 to $2.8 billion
by 2008.[29]
Despite a prima
facie assumption regarding technology's cardinal role and inherent value in
our local and national economies - technology, while an important catalyst, is
not the central driver of long-term economic growth. Although, we are not used to
"thinking of ideas as economic goods," writes economist Paul Romer,
"they are surely the most significant ones that we produce." Unlike
traditional goods such as raw materials or machines that diminish or
deteriorate with repeated use, ideas offer us increasing returns and actually
grow in value the more they are used.[30] The increased competition and shorter
product cycles of the global market, however, have made time a scarce
commodity. As Florida writes,
"Time is literally worth more than it use to be."[31] Therefore, sustained and consistent
creativity is the keys to deriving durable economic growth in today's
economy. The "only way for us
to produce more economic value-and thereby generate economic growth,"
continues Romer, "is to find ever more valuable ways to make use of the
objects available to us.”[32]
The changes in our economic, social, and cultural
organizations that have been developing for decades and define the landscape of
the creative economy are not the result of new forms of technology. Technology, innovation, and creativity
are the products of these broader and deeper shifts; because, it is these
structures, and not technology, that consistently support and elicit the very
conception, production, and transmission of ideas that generate economic
wealth. The “most important ideas
of all are meta-ideas," writes Romer, “ideas about how to support the
production and transmission of other ideas.”[33]
Creativity is expensive and time consuming. The production of commodities in the
creative industries, which include film and television, is said to suffer from
"Baumol's disease": Costs
in these sectors tend to climb faster than the rate of inflation, chiefly
because creativity is dependent on highly specialized human capital and
inherently labor intensive. Labor costs in the creative sectors also tend to
rise more rapidly than others do. [34]
Conventional creative sectors - like high tech and
entertainment - have always fallen under the traditional research and
development model with its characteristic high production and low replication
costs; intrinsic risk; and dependencies on intellectual property and human
capital.[35] Once the first generation of a
pharmaceutical like Lipitor or a movie like Episode
III: Revenge of the Sith is produced in its expensive and lengthy R&D
phase, it costs comparatively little to reproduce and supply it to extra
customers. In the United States,
the period from development, to FDA approval, to market for a new prescription
medicine is ten to fifteen years, and typically costs $802 million.[36] While corresponding data for the time it
takes an average feature to make it to market varies, the industry slang
"development hell" is frequently used to emphasize the notoriously
long periods projects can remain in development before they are finally
scrapped or "green lit." Spiderman, for example, was announced as
a film in 1986 but not released until 2002. In 2005, the cost of an average feature
released by MPAA members was $96.2 million. About thirty-seven percent of, that
was spent on marketing. The norm
for expenditure on an hour-long television episode is $2 million, not counting
development costs.[37] Console game development costs between
$3 million to $10 million per title,[38]
with time from inception to market ranging from one to four years.[39] Meanwhile, costs are projected to rise as
demand for third party intellectual property becomes more desirable to game
companies looking to mitigate escalating risks from fewer profitable
titles. Along with the increase in
licensing fees from proven sports and movie franchises, development costs for
three dimensional graphics, artificial intelligence, and enhanced voice and
sound effects for the next generation game consoles are also projected to rise.
Creativity carries tremendous risk. Only five of every five thousand
medicines tested, according to the Pharmaceutical Research and Manufacturers of
America, make it to clinical trials.
Based on research by the Tufts Center for the Study of Drug Development,
only one of these five is eventually approved for patient use. Of the roughly
forty thousand feature scripts that are written on spec in any given year,
three thousand are optioned and a mere fifty actually made.[40] In 2005, new releases totaled five
hundred and forty-nine. One hundred
and ninety-four or roughly thirty-five percent were released by the majors and
the other three hundred and fifty-five or sixty-five percent by independent
distributors. According to media
analyst Christopher Gasson, only two out of every ten films made by even the most
successful Hollywood studios, make a profit. [41] Most films lose money. "It’s a very frustrating
process," remarks Megan Wolpert, Executive Vice President of Spyglass
Television, "In terms of television very little work is done on spec. Development has a seventy-five percent
failure rate every year and that’s part of the game. You buy eighty projects knowing that
fourteen will be good enough to shoot.
Then of that fourteen, six will be on the air, and the rest just go
away." In 2004, three percent
of PlayStation 2, Xbox, and GameCube titles accounted for 30 percent of the
firms' combined 2004 revenues. The
total market for games included 1,751 separate titles, of which 91.3 percent
sold fewer than 500,000 copies.[42]
Writers like Thomas Friedman and others have
referred to the flattening or horizontal effect of globalization on
business. The trend is
fundamentally a direct result of the emergence of the creative economy. Urban planner Richard Florida notes how
the formal venture capital system, high-tech startup phenomenon, and rise in
research spending have now combined with the creative factory and
subcontract-manufacture systems - translate outsourcing - and a new creative
social milieu to form an “age of pervasive creativity that permeates all
sectors of the economy and society.” [43] Focus on creativity, while
outsourcing or automating production, provides firms with the most efficient
division of labor. According to
Timothy Sturgeon of MIT’s Industrial Performance Center, this model has another
benefit; subcontracted manufacture can also capitalize on risk spreading and
economies of scale. “I think that quality wins in the
long run. Now, quality can also
mean that it is downsized that means that you may be the best but you’re not
the biggest," says Bob Harvey, Vice President of Worldwide Sales at
Panavision: "I believe that Panavision is the best but we are not the
biggest. We manufacture everything
here in this country for the most part.
That isn't fair with digital obviously, but we design everything
here. That is fair with digital.”
Despite our old-fashioned notions about creativity
as something relegated to the fringe, or worse, the elite, creativity is
mainstream. More Americans work in
art, entertainment, and design, than as lawyers, accountants, and auditors.[44] In the United States, professional
artists, writers, and performers have increased three hundred and twenty-five
percent from 525,000 in 1950 to 2.5 million in 1999.[45] Graphic designers outnumber chemical
engineers by four to one, and more Americans are directly employed in film
production than in the steel industry.[46]
Corporate recruiters visit graduate art schools
looking for talent, and design schools emphasize corporate skills along with
draftsmanship. Northwestern's
Master's program in product development at the McCormick School of Engineering
and Applied Science includes courses in basic accounting, marketing, conflict
resolution, statistics, and ethics. Design programs at Stanford and the
Illinois Institute of Technology are also adding business courses to their curriculums.[47] The “MFA is the new MBA,” writes Daniel
Pink, because, in today’s Creative Economy, “the high-concept abilities of an
artist are often more valuable than the easily replicated [left brain] directed
skills of an entry-level business graduate.”[48]
Meanwhile, firms in the gaming industry, the
fastest growing entertainment sector, search for gifted grads with degrees like
Carnegie Mellon’s new Masters of Entertainment Technology or MET. “The larger FX houses are constantly
asking us about our students," says Professor John Kundert-Gibbs, Director
of Clemson’s Digital Production Arts Program - whose alumnae work for the likes
of ILM, Pixar, EA, and Nintendo. As
one game developer put it to columnist Tom Loftus, “Changes in the way games
are built indicate less of a future demand for coders, but more of a demand for
artists, producers, story tellers, and designers.” [49]
Film and video games are to this generation what
journalism was to Bob Woodward’s.
Media and art programs are busting at the seams. Enrollment at the Savannah College of
Art and Design has increased fifty-two percent in the last five years. “When I arrived at USC in 2000,” says
Susan Hogue, Media Arts Instructor at the University of South Carolina and
documentarian, “there might have
been two-hundred and twenty majors in Media Arts, and now it’s over four
hundred.”
In his prescient and aptly titled book, The Rise of the Creative Class, urban
planner Richard Florida identified the emergence of the new economic and social
class of “thirty-eight million Americans roughly thirty percent of the entire
U.S. workforce,” whose creativity is the driving force of our nation’s economic
growth.
[50]
The key
difference between the Creative Class and other classes lie in what they are
primarily paid to do. Those in the
Working and Service Classes are primarily paid to execute according to
plan. The core of the Creative
Class includes people in science and engineering, architecture and design,
education, arts, entertainment, and the media whose economic function is to
create new ideas, new technology, or new creative content and intellectual
property.[51] Around this core, exists a broader group
of creative professionals in business, finance, law, health care and other
related fields, who engage in complex problem solving that involves a lot of
independent judgment and requires high levels of education or human capital.[52] Today in the United States, the
Creative Class is larger than the traditional Working Class. The Service Class, totaling fifty-five
million workers or forty-three percent of the U.S. workforce, is the largest of
all. The growth of the Service
Class, according to Florida, is also largely a response to the demands of the
creative economy. “Members of the
Creative Class, because they are well compensated and work long and
unpredictable hours," writes Florida, “require a growing pool of low-end
service workers to take care of them and do their chores.”[53]
Our collective blackout about the central driver in
our economy flows partly from the intoxicating polemics of the previous
generations’ culture war that eclipse most public discourse about the shifting
boundaries of our social geography and economic life. On the left, critics bemoan the
commodification of art and corporate America’s cooption of the symbols from the
former bohemian and newer alternative counterculture. “Hip is how business understands
itself," writes Tom Frank, suggesting that the emerging culture is just
another aspect of capitalism.[54] On the right, detractors echo related
themes about the devolution of society.
David Brooks describes the members of today’s generation as “The
Organization Kid," part of the “Future Workaholics of America, obsessively
career conscious and deferent to any authority that will get them
ahead." Brooks argues that the
game generation lacks defining concepts of “character and virtue," because
they have "been reared in a country that has lost, in its frenetic seeking
after happiness and success, the language of sin and character-building." "When I asked about moral questions
they often flee such talk and start discussing legislative questions,"
writes Brooks: "These young people are not part of an insurrection against
inherited order. They are not even part of the conservative reaction against
the insurrection. It's not that
they reject one side of that culture war, or embrace the other. They've just
moved on.”
[55]
Yes, they have, and the notion illustrates a
fundamental difference between today’s generation and the boomers. The latter are wired to view creativity
as a choice between “selling out" or “sticking it to the man”, and the
quest for the great society as a battle between the mediocrity of relativism
and the virtue of absolutes. To use
former bohemian terminology, today’s generation do not have those
hang-ups. Perhaps like earlier
dissident antipoliticians from the former communist Czechoslovakia, who used
satire and absurdity to highlight the fact that in a post-modern consumer society
the “line of complicity runs through each of us," this new American
generation distrusts political grandstanding and even traditional forms of
organized politics. “Ideology is a
specious way of relating to the world,” writes Vaclav Havel former antipolitician
later turned President of the democratic Czech Republic - especially when it
fails to find solutions that arise organically outside the limits of its
proverbial box. “All of us,” writes
Virgina Postrel, “must give up the cultural baggage we've inherited from the
romantics, who set art against tech, and feeling against reason; from the
modernists, who treated ornament as crime and commerce as corruption; and from
the efficiency experts, who valued function while disdaining form. We must abandon our prejudices regarding
the sources of economic value. The production of wealth comes not simply from
labor or raw materials or even intellectual brilliance. It comes from new ways
to give people what they want. By matching creativity and desire, the economy
will renew itself.”[56]
The
discussion continues online. For an
in-depth look at this and other related topics, visit
http://www.alexaobrien.com/TheSecondSight.
If you would like to share your thoughts with me, or if you are a
Nigerian official seeking to bequest the estate of a distant O'Brien relation
who died unexpectedly without an heir, my email address is
email@alexaobrien.com.
†
The
term "no brow" is attributed to writer John Seabrook, Nobrow: The Culture of Marketing, the
Marketing of Culture (New York: Alfred Knopf, 2000).
