Stumbling Around in the Dark

Even before the current economic situation, certain media industries were in trouble. In particular, TV and newspapers had both been losing their audience. The current downturn is probably going to accelerate that.

There is the sense that anything that can be reduced to digital bits has changed in some fundamental ways. Here's Virgina Hefernon of the N.Y. Times on how writing for print is not just writing.

Does anyone still believe that the forms of movies, television, magazines and newspapers might exist independently of their rapidly changing modes of distribution? The thought has become unsustainable. Take magazine writing. In school or on the job, magazine writers never learn anything so broad as to “tell great stories” or “make arresting images.” You don’t study the ancient art of storytelling. You learn to produce certain numbers and styles and forms of words and images. You learn to be succinct when a publication loses ad pages. You learn to dilate when an “article” is understood mostly as a delivery vehicle for pictures of a sexy celebrity. The words stack up under certain kinds of headlines that also adhere to strict conventions as to size and tone, and eventually they appear alongside certain kinds of photos and illustrations with certain kinds of captions on pages of certain dimensions that are often shared with advertisements. Just as shooting film for a Hollywood movie is never just filming and acting in a TV ad is never just acting, writing for a magazine is never just writing.

Chris Anderson, author of The Long Tail, is currently writing a book about the free economy. That's where people and companies give things away but still manage to make money by selling something that relates to the give-away. You can find an entire series of articles by Anderson here.

Kevin Kelly has an essay called "Better Than Free." You can read it here or download an updated pdf of it here. His premise is:

When copies are super abundant, they become worthless.
When copies are super abundant, stuff that can’t be copied becomes scarce and valuable.
When copies are free, you need to sell things that can not be copied.
Well, what can’t be copied?

He lists eight "generatives" that can't be copied: immediacy, personalization, interpretation, authenticity, accessibility, embodiment, patronage, and findability. I don't want to explain them all here, but some of them possibly relate to animation on the web.

Immediacy means that if you have a release that's in demand, you can charge people for the right to see it early before releasing the free version at a later time. It might simply come down to putting it on a password protected site and emailing your paying customers the password before releasing it to the world at large at a later date.

Personalization is what JibJab is doing with their E-cards. By allowing users to put their own photos into the JibJab animation, they are offering something that becomes to unique to each buyer.

Embodiment is selling a higher quality copy of what is available for free. It's the equivalent of putting a low rez version of your animation online and then selling higher quality copies. This would also include merchandise that isn't digital, like T-shirts and coffee mugs.

Patronage is asking people to contribute financially to the creation of your work. It's the digital equivalent of a tip jar, and many websites have buttons inviting users to feed the kitty. Advertising would also fit here, whether the advertiser desires the demographic that you attract or they just want their customers to know that they support something the customers value.

Kevin Kelly is also the author of the article "1000 True Fans" about how a creator might be able to survive economically with just 1000 people willing to financially support his or her work. Not everyone buys into this idea. You can read John Scalzi's rebuttal here. Kelly gives the matter further thought here.

Paul Graham has written an essay saying that technology start-ups are getting so inexpensive that they're no longer courting venture capital companies. They can start with overhead so low that they can move into profit quickly and once they're generating profit, there's no need to sell some of their companies to investors. This is in line with Ralph Bakshi talking about animators having an entire studio in a single computer and that it's far easier now to make an inexpensive film than it was. Lower overhead makes it less risky to try out new ideas, such as attempting to figure out how to work in the free economy.

Bob Jaques, an old friend of mine, visited Sheridan College recently and over dinner we were talking about how everyone expects material online to be free. He talked about how he thought animation was going to shorten to 30 seconds in order to work online. He may have a point. As Hefernon points out above, the medium makes a difference and the web seems to favour short material. The problem, which few have solved so far, is monetizing what you put online.

I don't have the answer. If I did, I'd be doing it. But as more people are investigating the idea of giving things away as the basis for their business, I'm watching closely. Other people are reminding everybody that start-up costs are lower than they used to be. Lots of people think that there's something out there and are trying to describe it, but so far nobody has really pinned it down. I expect the current economic situation to make the problems that some media are experiencing worse, but I also think that it's going to give birth to new business models and I hope at least one of them will work for animation.

The Long Tail Revisited

Two years ago, I wrote about Chris Anderson and his book, The Long Tail. A quick summary is that in a brick and mortar world, retailers want their shelves filled with their most popular items in order to maximize profit from the physical limitations of their stores. However, in a digital world, shelf space is essentially infinite and free, so offering maximum choice is a better strategy. An item may only sell once a year, but if you have enough of those items, they can generate enough profit to rival the income you make from more popular items.

There are several well-known online companies that are built on this business model: Amazon, iTunes and Ebay. They each offer a wider selection than physical stores are capable of and have enlarged the market for their products as a result. These companies are often referred to as aggregators, as they pull together lots of products under their virtual roofs.

The long tail has been criticized as a theory. Anita Elberse is a marketing professor who's written something of a rebuttal. There's also a blog called Whiskey's Place that predicts an end to niche markets in the shrinking economy.

While the aggregators have a successful business model, creators who live in the long tail have yet to find one. As a retailer, if you have 100,000 items that each sell one unit a year, you're making money. A creator may only have 1 item, and selling one unit a year isn't going to provide much income. While creators eventually develop a backlist, even somebody prolific is going to be limited to 20 or 30 items.

So is the long tail just a pipe dream as a viable business model for creators? Seth Godin has written an interesting analysis about the nature of the curve, breaking it into three profit centers. His piece is interesting from a big business standpoint. Kevin Kelly looks at Godin's three profit centers and talks about how they relate to creators.

I've been wrestling with this for a while and I think the only advantage to the creator that I can see in the long tail is that aggregators can invent or produce a long tail domain that was not present before. Like Seth's Squidoo does. Before Squidoo or Amazon or Netflix came along there was no market at all for many of the creations they now distribute. The proposition that long tail aggregators can offer to creators is profound, but simple: you have a choice between a itsy bitsy niche audience (with nano profits) or no audience at all. Before the LT was expanded your masterpiece on breeding salt water aquarium fishes from the Red Sea would have no paying fans. Now you have maybe 100.

One hundred readers/watchers/listeners is not economical. There is no business equation that can sustain profits for continual creation from so few buyers. (It can of course support the business of aggregation above the level of creation.) But the long tail niche creation operates perfectly well in the realm of passion, enthusiasm, obsession, curiosity, peerage, love, and the gift economy. In the exchange of psychic energy, encouragement, meaning of life, and reasons to live, the long now is a boon.

That is not true about profits. Economically, the more the long tail expands, the more stuff there is to compete with our limited attention as an audience, the more difficult it is for a creator to sell profitably. Or, the longer the tail, the worse for sales. But if we view the long tail as a market of a different type, as a market of enthusiasm and connection, then as the long tail expands, this increases the chance of two enthusiasts meeting, and so the longer the tail, the better. The first two pockets of the curve are trying to maximize profits; the last pocket of the long tail is trying to maximize passion and connectivity.

There is one further indirect advantage to the long tail. Since your creation now exists in a market (where it would not have existed at all before) it can, if you are lucky, start to migrate uptail. With creativity you may be able to move your creation out of the economic doldrums of the long tail up into section #2, where 1,000 true fans and other mid-level success lies. As I argue in 1,000 True Fans, this is where you want to be as a creator. Seth calls it the pocket of " the profitable, successful niche product" and I agree with him that this pocket #2 rather than pocket #1 is where you want to aim for.

So the long tail is no magic bullet. However, as this comment on Chris Anderson's site shows, opportunities come out of the tail that wouldn't exist without it. The big question for creators is how big an investment to make relative to the expected (or unexpected) return. With animation being so labour intensive, maybe it's the wrong medium for niche markets. I hope somebody proves me wrong on that. The link in the above quote for 1,000 True Fans is very worth reading, and might be the only strategy that's going to prove viable for long tail creators.

1000 True Fans

Kevin Kelly writes an interesting essay on artists developing a core audience as a way to finance their work. The problem for animators is always how long it takes to produce something new. It's far easier to build a fan base if you're releasing material weekly or monthly than if your new film is an annual event.

In any case, I think that this model has potential and there are people who have worked in animation (such as Dean Yeagle or Michel Gagne) who have built up fan bases that enable them to produce personal projects. It would be great to see somebody managing to finance actual films (no matter how short) this way.

(Kelly link via The Comics Reporter.)