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How Media Creation is Overtaking Consumption

For most of media history, we have been creatures of consumption. Large corporations and centralized distribution operations pushed a small amount of expensive, high-quality content at us. Think film studios, record labels, the big book publishers, etc. Because the tools needed to create content were scare, and the financing needed was great, this system perpetuated itself.

As any industry observer now knows, the tools of creation have been democratized, so that increasingly anyone, anywhere can create and distribute high quality film, music, or literature. These new decentralized content creators are bound only by their passion and talent. The degree to which they are empowered to create and distribute content varies by media type, as well as by more mundane variables like internet penetration and income, but the trend is the same across all media. We are now creatures of creation, as well as consumption. Increasingly, we do not consume media without also altering it.

In music, the major labels touch only a few thousand artists, but over 12 million indie acts have uploaded music to MySpace. The market of creators who haven’t yet recorded their art is even larger – in the US alone, over 90 million people play an instrument (Gallup). The same is true in film and video. On the high-end, over 2 million indie filmmakers have uploaded content to the prosumer-targeted service Vimeo, but 1 in 7 U.S. adults has uploaded video to the internet, over 34 million people (Vimeo, Pew).

A few years ago the phrase “user-generated content” was all the rage – my business partner Dan and I were even invited to speak at the “User-Generated Content Expo” in San Jose. Nowadays I hear that phrase less and less. I think perhaps because it is becoming redundant. All content is somehow “user”-generated, or at a minimum, leaves itself open to some form of user modification or interaction. Increasingly the laws of quantum mechanics apply to the media we consume – we cannot observe the content without also altering it. Schrödinger’s cat is simultaneously both dead and alive, until of course we observe it in either state. The same might be said of an unfinished stem package posted online for remixing, or a movie trailer released without music for the masses to score (both real examples from Indaba Music). None of us know what this media will become until we engage with it and observe the outcome.

Nowhere is the power of consumer creation more observable than in the recorded music business. Over the last few years we’ve seen a $13 billion industry cut in half. But at the same time, we’ve seen consumers spend upwards of $7 billion / year on the stuff used to create music – instruments, software, cables, etc. This means that 2011 will likely be the first year in which U.S. consumers spend more money creating music than they do consuming it. This shift obviously has huge implications for media businesses, because an increasing share of consumer income is flowing to content creation rather than consumption. But it also has fascinating implications for culture and society as well.

What does it mean to be a culture of content creators? Ironically it might mean that even as more of us are empowered to be creators – musicians, filmmakers, artists – fewer of us will be empowered to actually make a living creating media. It’s simple arithmetic: When consumers had fewer choices, their media spend flowed to a smaller number of content creators. Each creator received a greater share of every dollar. Now, consumers can quickly and easily consumer media created by innumerable creators, so less money flows to each creator.

I for one think that this irony will be short-lived. More people creating and interacting with more media will mean more opportunities for revenue generation. Content creators just need time to figure out what those revenue streams are. More on this to follow.