Big Tech Wants To Rule Entertainment, But Faces Serious Challenges

As in the automobile industry, big tech companies bring considerable knowledge and power to the competition, but face industries where experience with the tangible skills and processes of getting something done and sold may be harder than simply mastering the data. JL


Farhad Manjoo reports in the New York Times:

Technology is not all that matters. The Five achieved dominance in a field that’s won with information, data and precision. But as they move to areas that stretch their skills they won’t be able to take over. The tech giants upended society, but they have difficulty navigating the chaos of the new platforms they have built. They brought Northern California’s tech ideas to Southern California’s entertainment party, and did not understand the value of imagination, talent and subjective inspiration.

The tech giants are too big. Other than Donald J. Trump, that’s the defining story of 2017, the meta-narrative lurking beneath every other headline.

The companies I call the Frightful Five — Amazon, Apple, Facebook, Microsoft and Alphabet, Google’s parent company — have experienced astounding growth over the last few years, making them the world’s five most valuable public companies. Because they own the technology that will dominate much of life for the foreseeable future, they are also gaining vast social and political power over much of the world beyond tech.

Now that world is scrambling to figure out what to do about them. And it is discovering that the changes they are unleashing — in the economy, in civic and political life, in arts and entertainment, and in our tech-addled psyches — are not simple to comprehend, let alone to limit.

I’ve spent the last few years studying the rise of these giants. As tensions over their power reached a high boil this summer — Facebook and Russia, Google and sexism, Amazon and Whole Foods — I began thinking more about the nature and consequence of their power, and talking to everyone I could find about these companies. Among them were people in the tech industry, as well as many in other power centers: Washington, Hollywood, the media, the health care and automotive businesses, and other corners of society that may soon be ensnared by one or more of the Five.

This is the first of several columns in which I’ll take measure of the Five. Here, I assess their efforts to infiltrate entertainment — their plans to push deeper into the business of movies, TV and music, and the fears of cultural domination those moves have provoked.

Why start with the culture industries? The Five elicit worries of total social control. Many people fear the companies will be able to translate their hold on key digital platforms into wholesale ownership of adjacent industries that depend on those platforms, giving them wider economic and social power.

The entertainment industry is a good place to assess those claims because in different ways, the Five have spent years building platforms for the distribution of art, culture and media. Facebook runs the news; Google’s YouTube has videos and music; Microsoft’s Xbox has games; Amazon runs books, movies and TV (and, through its web-hosting service, AWS, hosts much else, including Netflix); and Apple has pretty much of the same, plus all those apps.

Yet in entertainment, we also see the limits of their efforts to push into new territory. Though their technologies have altered nearly everything about how we buy and experience popular culture, the Five themselves have not been the greatest beneficiaries of the changes.

They are pouring money into entertainment, but they have been cornered by nimbler start-ups like Netflix and Spotify. Amazon has struggled to make a hit show, while Apple’s plans for original TV are perpetually around the corner. (It has now struck a deal to revive “Amazing Stories,” the 1980s Steven Spielberg series; there’s no word on when it will air.) All of the Five have labored to create some killer position in the tumultuous new marketplaces their platforms have enabled.

Several times in conversations with people in Hollywood, I heard the tech people referred to as “dumb money” — the sort of outsiders (in the past, they came from oil, then from finance) who parade through town looking to call the shots. One Hollywood executive who has worked often with tech companies told me: “I wouldn’t say we’ve looked at them with fear, no.”

The Five’s struggles in entertainment, if they persist, suggest that they can be as clueless about the changes wrought by technology as the rest of us — that they do not quite understand, and haven’t yet begun to master, how to translate their technological power into wider cultural power.

Not long ago, this story looked a lot more open-and-shut. With the iPod and iTunes, Apple acquired dominance over a music industry that was struggling to respond to the digital age. Amazon eclipsed Barnes & Noble as the biggest boogeyman of the

indie bookstore; for years, it fought bruising battles with the publishing industry over sales contracts that publishers said were too onerous. Through YouTube, Google gained control over not just funny cat videos, but also the modern replacement for radio. (People watch a lot of music videos on YouTube.) And Facebook has become the world’s most popular source of news, a position that has consumed its leaders over much of the last year.

There’s no doubt that technology has upended the economics of modern cultural businesses. In a recent polemic, “Move Fast and Break Things,” Jonathan Taplin, the director emeritus of the Annenberg Innovation Lab at the University of Southern California (and a former rock band manager and movie producer), points out that musicians could once make a decent living off their royalty checks.

Digital technology has now completely undercut that business. YouTube has made every song available online, and even though many artists are paid a cut of the ads placed on YouTube (the company said it paid out $1 billion last year), the money is nothing close to what artists got from selling records.

Mr. Taplin sees what has happened in music as a harbinger for much of the rest of culture. “The rise of the digital giants is directly connected to the fall of the creative industries in our country,” he wrote.

But there is another side to the story. As I’ve argued before, while musicians have had to find new sources of revenue, the rise of online subscriptions and a new consumer willingness to pay have led to an explosion of new cultural voices.

Meanwhile, some earlier doomsaying has not come true: Indie bookstores and print books are making a comeback, while publishers are enjoying record profits. And the tech giants’ eagerness to create entertainment marketplaces has led to a bonanza for some artists. To compete for new members, Apple, Tidal and other streaming services are paying out lavish bonuses; Apple paid Chance the Rapper $500,000 for two weeks of exclusive access to his latest album.

The tech-industry money train is making its biggest hauls in Hollywood. “There are so many new markets for talent and writers to go to, and the creators here love that,” said Marty Kaplan, a professor of entertainment, media and society at the U.S.C. Annenberg School for Communication and Journalism. “Instead of having seven buyers for your idea, there are now more like 20 — and that makes everybody happy.”

This story may sound puzzling. The tech giants are the most sophisticated media companies in the world, so why, after prying open their wallets, have they struggled to capture Hollywood?

It’s because technology is not all that matters. The Five acquired their power by mastering the tech industry. They achieved dominance in a field that’s won with information, data and precision.

But even though they now control valuable platforms, as they move to areas that require them to stretch their skills they are finding that they won’t be able to roll in and take over. Several people in Hollywood told me that many of the Five just didn’t seem to “get” the movie and TV business. They had brought Northern California’s tech ideas to Southern California’s entertainment party, and did not understand the value of imagination, talent and subjective inspiration.

This myopia is part of a pattern that will repeat itself often in this series. You see it in how Facebook got caught off guard by how it was used during the election, or in YouTube’s surprise that some ofits biggest stars were pushing hateful ideas on its platform.

The tech giants have upended much of society, but even they have difficulty understanding and navigating the chaos of the new platforms they have built. It’s not quite clear, yet, that they have the future all wrapped up.