Speculation on the Rate of Change in Hollywood

From Slate: Hollywood’s New Year – My predictions for 2006

One doesn’t need a crystal ball to see that Hollywood’s future is now inexorably tied to the small screen. Just look at the studios’ own internal revenue numbers. Before the invasion of television, the big screen (aka movie theaters) provided 100 percent of the studios’ revenues. Now it accounts for less than 15 percent. The small screen—which includes computers, portable DVD players, and iPods as well as televisions—provides 85.6 percent. To be sure, much of Hollywood’s celebrity culture, and the entertainment media that feeds off it, remains rooted in nostalgia for the big screen. Meanwhile, the MBAs that run the studios—and their corporate owners—have come to grips with the cruel reality that the movie business is no longer primarily about movies, it’s about creating intellectual properties—the current term of art for a movie, TV series, or game—that can be sold or licensed for personal entertainment in a raft of different forms and markets. According to my crystal ball, the further migration of Hollywood—even with its sticky celebrity culture—into home entertainment will be greatly accelerated in 2006 by the following five events:

“Devolution” of Distribution

Music label forsakes CDs [pdf]

[Ex-Devo frontman Gerald Casale’s] new music is distributed by Cordless Recordings, a new breed of label that has dumped CDs and other traditional formats in favor of offering music only online.

The strategy is meant to cut the cost of catapulting a new artist to fortune and fame by tapping the medium where young fans are finding music.

”When you look at the cost of a major label signing an artist, it costs about a half-million dollars,” said Jac Holzman, who founded Elektra Records in 1950 and now oversees Cordless, a unit of Warner Music Group. He said Cordless does it for ”significantly less,” but wouldn’t be more specific.

Even in today’s iPod-centered music scene, it’s hard to say how far the all-digital strategy might take an artist. There’s no CD box, no liner notes, and very little in the way of traditional promotion.

But one thing’s for sure: Sales of digital music are growing.

Later: The Net Is a Boon for Indie Labels