What Crypto Enthusiasts Get Wrong About Entertainment

If you’ve spent any time on the internet this year, chances are you’ve heard about cryptocurrencies, NFTs, the metaverse or web3. Maybe all of the above.

I will spare you another long post explaining what those terms mean, or why they will or won’t change your life. (You can get that from Kevin Roose here.) But after spending a few days at South by Southwest – where crypto enthusiasm was quite strong -- I do want to address a fundamental misconception about how these new ideas will change pop culture.

If you listen to crypto/NFT/web3 enthusiasts, they believe these new technologies will reshape the relationship between artist and fan, eliminating the meddling middleman.

Most artists rely on a third party to fund, market and distribute their work. Musicians take advances from record labels. Filmmakers require financing from movie studios. Screenwriters need someone to buy their script. Social media creators are an exception to this formula. They have largely self-funded their work by posting directly to YouTube and other platforms. But over the past few years, many creators have followed a more traditional path, signing with traditional talent representatives and taking money from third parties. 

Cryptocurrencies, the blockchain and NFTs could all reduce artists’ reliance on these middlemen in slightly different ways. If you are Reese Witherspoon, you could raise money for a new project by selling NFTs to your fans, either offering them ownership of the final product or giving them some other digital good they value. No studio needed. If you are a musician, you no longer need to take an advance, nor do you need a publisher to track all your royalties. Raise money with an NFT, sell the work directly to fans and use the blockchain as your LEDGER to track payments. Gary Vaynerchuk summarized this idea with just a few words: The fan is the new record label.

This is a tantalizing idea. Musicians have always hated record labels, and viewed them as exploitative forces. They sign artists to long-term contracts, offering advances that most people can never repay. Filmmakers and screenwriters haven’t been exploited in quite the same way. But studios  discriminate against women and people of color. They also take forever to close deals, offer copious notes after buying an idea and don’t always market a show when it gets released. Just this week, the creator of “Babysitter’s Club” blasted Netflix for how it handled her show.

My colleague Akayla Gardner wrote a smart piece laying out some of the upside of NFTs specifically:

The revenue [artists are] earning from selling their songs and music as nonfungible tokens, or NFTs, is significantly larger than the pennies they pull in from streaming services such as Spotify. At the same time, they are providing a tangible use case for elements of web3, the preferred nomenclature of venture capitalists who invest in online services built using blockchain technology, where control isn’t concentrated in a single business entity.

And yet, the utopian view of a fully decentralized media ecosystem ignores a simple fact: Most musicians, actors, writers, filmmakers and creative people prefer the support of an institution with expertise. It makes their lives easier.

This is not the first time we’ve heard about some new technology eliminating the record label. Streaming and social media were supposed to do this too. They allowed artists to distribute and market their work on their own, replacing two key label functions. And yet, the number of major artists who’ve gone the independent route is quite small. Even artists who have all the resources in the world – say, Taylor Swift – see value in aligning with a music company.

Good executives — not all executives — know how to help artists. It is their raison d’etre. They find songwriters and producers to help a pop singer. They find features for a rapper. They know how to market a record, and they have relationships with all of the major distributors all over the world. There are some very savvy musicians who are happy to do all the work and keep more of the money. But most musicians don’t want to track down some distributor in India, or clear a sample.

Additional resources, while nice to have for an artist of Swift’s stature, are vital for a new artist. Dua Lipa would not be Dua Lipa were it not for help from her managers, her publisher and her record label. All of those partners took money off of her plate, but they also increased her total earnings.

The resources required to make a movie are even greater. A writer-director can fund a movie and film it without the help of a major studio. Hundreds of people do it every year. But when a studio offers a director help, most of them say yes. Your life is a lot easier when someone else has to worry about finding financing, booking travel, hiring a crew, marketing a release and securing distribution. 

Now I can hear the crypto evangelists. If you can distribute your work directly to your fans, you might not need to rely on the gatekeepers like Apple, Google and Facebook which demand a considerable percentage of your earnings for the privilege of reaching their customer base. You could make even more money. And if new means of distribution emerge, the skills of these legacy companies will matter less.

This is not to say that things will always stay the same. Artists have already gained a lot more control. Record labels and studios have historically sustained their power through ownership. They own large catalogs, which both generate money and allow them to dictate terms to streaming services and retailers. They use that market power to perpetuate their power over the artist. 

But that is changing. A musician no longer needs to perform for a record label executive to get discovered. They can post a song on YouTube or TikTok and become famous in a week. They can get a much better offer from a music company, and might even be able to demand ownership. The artist has the ability to dictate terms in a way they could not 20 years ago.

It is also indisputable that digital currencies and digital goods will play a large role in society. They already do for many people. Just ask any teenage gamer. The next generation of consumer will spend more time in virtual experiences. While it is too soon for me to know precisely how that will impact the relationship between artist and media company, I have to imagine these new technologies will grant even more power to the individual. Artists will be able to raise money selling art directly to their fans, and use NFTs to build their fan club. 

But just because you build something new doesn’t mean you have to tear down something old. Addison Rae used TikTok to get famous. But when she wanted to make a podcast, she signed with an agent. When she wanted to release music, she used a distributor. And when she wanted to act, she made a movie for Netflix. She got famous on her own, but she needed help building a career.

Centralization is also effective for customers. It’s easier to log on to Spotify and find all of the music in the world than having dozens of individual relationships with artists. A centralized service also allows people to discover songs and artists they wouldn’t otherwise know. People already complain about having to use five different video streaming services, or being overwhelmed by the number of newsletters and podcasts. Can you imagine if you had to find everything on your own? – Lucas Shaw

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Disney, Netflix settle some legacy deals

Disney announced a few weeks ago that Marvel TV shows that first debuted on Netflix were coming back to Disney+. A few days after that, the company announced it was moving Ryan Murphy series like “American Crime Story” from Netflix to Hulu.

I’ll admit when I first heard the Murphy news, I assumed this was all part of Disney’s master plan to bring the prolific writer-producer back into the fold. But while Disney will try to bring Murphy back – and Murphy wants a big pay day – this deal had to do with a different Disney corporate strategy: wiping everything it owns off of Netflix and bringing it back to its own streaming services.

For the past several months, Disney’s Kareem Daniel has been negotiating a deal to bring a bunch of Disney titles back to Netflix. This did not come cheap. Disney had to pay millions of dollars to reclaim the rights.

But this will allow Disney to advance some strategic initiatives. It allows Marvel chief Kevin Feige to get his hands on the darker Marvel shows that aired on Netflix and shift them over to Disney+. They just added a TV-MA section to the service, a sign of Disney’s desire to target older viewers. And it ensures that future seasons of FX shows are available for streaming on Hulu whenever Disney wants. (FX blamed the poor viewership for its latest season of “American Crime Story: Impeachment” on the fact that you couldn’t stream it on a major service.)

There was also at least one more component to the Netflix-Disney deal that hasn’t been announced, which is related to Disney reclaiming some rights to movies it had licensed to Netflix. Disney needed to make sure titles currently on Disney+ didn’t disappear and move over to Netflix for a window in the near future. 

Ever since Disney announced plans for its streaming service, its strategy has been to keep all of its projects in-house. It wants to develop, produce and release everything within the Disney system. To that end, Disney+ is in the process of renewing its deal for “Once Upon a Time,” a popular ABC series. It’s a big deal.

The No. 1  movie in India is…

“The Kashmir Files,” a 170-minute film about a student who finds out his parents were killed by Islamist militants in the contested region. The film has been praised by Prime Minister Narendra Modi, and angered many who say it is anti-Muslim. From Reuters

Since opening on Friday the movie has gone from being shown on 400 screens nationwide to 3,000 screens on Tuesday.

It has taken 600 million rupees ($7.86 million) at the box office nationally in five days, according to figures published by trade analyst Taran Adarsh, at a time when many are wary of visiting cinema halls due to the fear of COVID-19.

In comparison, one of the biggest recent Bollywood A-list releases, "Gangubai Kathiawadi", took 570 million rupees in its first five days of sales last month.

Netflix cracks down on password sharing (again)

Netflix will start charging some customers more to share their accounts with people who aren’t in the same household, the company’s latest experiment with curbing password sharing. Netflix has toyed with ways of limiting password sharing in recent years, but has had a hard time figuring out the best method.

It doesn’t want to frustrate its users or cause them to cancel all together. Nor does the company want to crack down on parents who share their accounts with adult kids. It just wants to stop entire college dorms or groups of friends from all using the same account. This problem is particularly bad in Latin America, which is where Netflix is testing this latest effort.

Disney scandal update

Disney employees are staging a series of walkouts to protest their company’s response to Florida’s ‘Don’t Say Gay’ bill. The outrage within the company has not died down, and has CEO Bob Chapek in full damage control mode. The Wall Street Journal summed up the current situation quite well:

Disney’s response to the Florida bill managed to offend both progressives, who wanted the company to do and say more to fight the bill, and conservatives, who wanted Disney to stay out of the debate and now claim it is bowing to liberal agitators within its ranks.

Alex Sherman also wrote a very thorough piece examining the relationship (or lack thereof) between Bob Iger and Bob Chapek. He says it all started with a New York Times article in which Iger said he would help Chapekl through the pandemic, help Chapek didn’t want. The key part:

Since that incident, Iger and Chapek haven’t been able to mend their relationship. … In the months that followed, Chapek began making key decisions about Disney’s future — including a dramatic reorganization of the company and outing actress Scarlett Johansson’s salary following a dispute over her Marvel movie “Black Widow” — without Iger’s input.

Amazon seals the deal

Amazon said it closed its deal to buy MGM for $8.5 billion. Regulators in Europe approved the deal earlier this week, while officials in the U.S. have yet to make a final decision.

Many analysts expected the Federal Trade Commission to challenge the deal since the commission’s chairman, Lina Khan, rose to prominence after writing a paper that portrayed Amazon as an anti-competitive force. The FTC could still sue to block the deal, but the panel is split between two Democrats and two Republicans. The senate has yet to confirm a fifth member.

Amazon’s rationale is pretty simple. The company has been making TV for almost as long as Netflix, and has produced very few global hits. It’s hoping the MGM library and executive team can change that.

This is a good time to listen to my colleague Brad Stone’s new podcast about Amazon. This week’s episode is about… the company’s push into Hollywood

• ESPN poached Fox’s top football broadcasting team for “Monday Night Football.”
• Endeavor chief Ari Emanuel got paid $308 million last year.
• Discovery chief David Zaslav got paid $246 million
• Emanuel fired hundreds of people during the pandemic. Zaslav is about to fire thousands of people.

Weekly Playlist

I thought I was going to talk about how much I am enjoying the new album from Big Thief, an indie rock band I never paid much mind. But then Rosalia released her new album, and I look like a fool trying to dance to it as I walk around Los Angeles.