I discovered Gotye‘s “Somebody That I Used To Know” about five months ago when Rosi Golan recommended it. I had it on repeat for days, eagerly anticipating the release of the album*. Everything was working as described in my post “The Importance Of Free Music (Or Give ‘Em A Taste First)”. The single was a great first taste, and I craved more. I was excited to wait for the album, anticipation was enhancing my experience, and I was telling my friends about how great the single was. So far, so good. That’s when it went wrong.
Gotye is based in Australia and when the album came out, it was exclusively released there. When I checked for it on US-only streaming service Rdio, I found nothing. But I knew it was out there. I checked on my European Spotify account and my iTunes US, and again found nothing. But I knew it was out there. There was no clarity on a US release date and the whole situation was driving me crazy. You can probably guess how I ended up satisfying my craving for the full album, and how my evangelizing failed to have the positive effect on my friends that were interested but not quite as motivated as myself to jump through some hoops and dig up the album. Lets call this experience a set of “lost transactions”.
There is a world of lost transactions out there. In part, due to artificial market separation and distribution delays based on geography, and in part because of release inefficiencies per distribution channel. The latter is most glaring in the world of movies, which often still operates with different release dates per market. I stumbled upon “I Love You Phillip Morris” on iTunes UK in early 2010 while traveling, but wasn’t allowed to buy it on my iTunes US account until early 2011. That seems silly. The movie industry also distinguishes between distribution channels and offers extended periods of exclusivity to those channels perceived to lead to greater value (mostly movie theaters). Fred Wilson wrote about a frustrating experience in his aptly title post “Scarcity Is A Shitty Business Model“. A choice quote:
“Film executives [...] insist that they need their windows. They argue they need to manage access to their films to extract every last dollar from the market. That just doesn’t make sense to me. If they went direct to their customers, offered their films at a reasonable price (say $5/view net to them), and if they made their films available day one everywhere in the world, I can’t see how they wouldn’t make more money.”
I subscribe to this point of view, both for movies and other forms of digital entertainment including music. Beyond the fact that many execs are rusted into place and unwilling to change, the challenge here lies in the fact that part of the food chain will strongly opposed this idea as they stand to lose a lot of money. This lobby is so strong that they have come very close to pushing a bill through congress that would potentially break the internet and limit freedom of speech. You better believe if they go that far to “fight piracy”, they will protect their windows of exclusivity with just as much vigor.
If you take away the window of exclusivity, movie theaters will be exposed for what they have become: a mostly mediocre entertainment experience. The window of exclusivity = the emperor’s clothes. Without it theaters would have a much harder time pulling the crowds necessary to maintain their levels of income. Most mainstream theaters no longer provide a superior experience to watching a movie in your home on a big flat screen. Aside from semi-relevant technology** like 3D, the only thing that really keeps them in business is exclusivity. Sure, people also go to a theater to be part of a group experience, and because some movies look much better on a really big screen, but in the big picture*** it’s mostly because of an antiquated set of rules and not because theaters provide an undeniably awesome service we cannot wait to consume.^ That’s when you know you’re in trouble.
As a business and technology geek I experience lost transactions, even when they save me money, as ugly and inelegant happenstances caused by the failure to provide a quality experience around content that I am eager to pay for. When we fail as companies to provide these quality experiences we turn fans into reluctant pirates, and we lose their support. I hope that the ever-louder voice of the consumer can push us along to accept that we now live in a single market world when it comes to digital entertainment. It’s pretty great actually, and we should take advantage of it rather than fight it.
* (I actually reached out to his management to see about a US release on Family Records, but they had it locked in already.)
^ Let me emphasize I am talking about most mainstream theaters, and that there are also some great independents out there that provide a much better experience like the Alamo Draft House chain in Austin (TX) and Nitehawk in Brooklyn (NY).
** Semi-relevant because it only really makes sense for a certain type of movie.
*** Get it? 
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