The World Isn’t Flat
June 4, 2007
by Rob Glaser
Chairman and CEO, RealNetworks Inc.
At D5 last week, we announced our new RealPlayer, which makes it easy for anyone to download video from the Internet and keep it for personal use. Not surprisingly, we’re excited about the product. But what I want to discuss today are the divergent reactions to the product and the ideas behind it–it’s basically a Rorschach ink-blot test for how people feel about Internet media and consumer choice.
People who have seen the new RealPlayer fall into two groups. The first group has two reactions–the first being “Wow, this is cool,” followed quickly by “Of course, this was inevitable.” This group believes that progress is inexorably leading to more consumer choice and empowerment, and that this is a good thing. PVRs are becoming a standard TV-viewing feature, and consumers want the same level of control when they’re using the Web. I think of this as the “Manifest Destiny” group.
Different members of the Manifest Destiny group get excited about different aspects of the new RealPlayer. Idealists get excited either because they love how this technology empowers consumers, or because they have ideas that they want to propagate. The more business-oriented people in this group are excited about wrapping new business models around this expanded consumer choice. And of course techies want to know how it all works.
The second group also has two reactions (if they’re being honest). The first is “Wow, this is cool, but…” followed quickly by “Won’t this destroy” some sacred cow, typically an existing media business model. I call this group the “Flat Earth society” (and not in a Thomas Friedman sense).
This group typically asks a lot of questions about how the new RealPlayer works, seeking to find some fatal flaw. They ask questions about digital-rights management and the legality of downloading videos. We then explain the details, particularly how we respect DRM and how careful we’ve been in creating a product that has numerous substantial noninfringing uses. Indeed, the new RealPlayer is completely legal, just like a PVR, VCR or photocopier. After hearing our explanation, this group tends to sidle away glumly, kind of like Washington Generals fans learning the results of their team’s latest match against the Harlem Globetrotters.
The most surprising thing isn’t that both groups exist–having worked in Internet digital media for a dozen years, I know this dichotomy well. What’s truly shocking is how much the ground has shifted over the past two years.
Two years ago, the world seemed kind of split down the middle, with technologists on one side (Manifest Destiny) and content providers on the other (Flat Earth). But that’s not the case anymore.
To my surprise, of the people we’ve talked to so far, the Manifest Destiny group outnumbers the Flat Earth society by at least five to one. More shocking, even inside large media companies, Manifest Destiny thinking is not only ascendant but, in most cases, it’s carrying the day.
Why the big change? I think it has to do with the fundamental nature of media business models. Media businesses are generally based on accumulating the biggest audience possible, which means going where the audience is. Approaches based on locking down the content out of a fear of piracy are self-defeating. Media isn’t like water or oil, where there is fixed demand. Rather, the more prominent and available media is, the more the media gets consumed.
Successful media companies are generally made up of smart executives who get this. They know that simply trying to stop disruptive consumption patterns hurts much more than it helps. Indeed, the continuing free fall of the music industry, even after the industry’s many legal victories against P2P sites, speaks to the downside of misunderstanding this reality.
That doesn’t mean that DRM is 100% irrelevant, or that content-distribution windowing is going to go away, or that rights holders will no longer get paid for their content. But it does mean that embracing the consumer has got to be job No. 1 for everyone. When a great technology comes along–empowering consumers to download and save video, in this case–the winning approach for everyone is to embrace the technology, and then figure out the business models that work best with the technology.
In other words, the world isn’t flat, and more consumer choice and control really are Manifest Destiny.
Rob Glaser is the founder, chairman and CEO of RealNetworks Inc.
Comments
Of course, this whole universe of multimedia revolves around the Real Player? Not likely. When I save the file to my hard drive, can I save it as anything but Real Media format? How about WMV? ACC? Quicktime? Let’s talk about choice.
The problem with the premise that media companies (successful or not) being made up of smart people is a strange point of view. The RIAA up to this point has proven they are not clued into what we as consumers want. Period.
They maybe be smart in the ways of generally accepted business practices. But there’s a good reason there’s only one Apple. Nobody else gets it, because they are afraid to stray from those generally accepted practices. That’s why Real has never dominated streaming media. Why only iPods have been successful in any way shape or form in the MP3 player market. Why the RIAA is still suing single mothers in rural Oregon. They don’t get it. And that’s why Steve Jobs is credible when he says we’d be better off without DRM, which the RIAA and their ilk think that would be the death of the music industry. They just don’t get it. Because Jobs’s argument creates too much cognitive dissonance in their echo chamber.
Posted by Eric Welch at June 6th, 2007 at 4:43 pmThe real problem is that no one know what the consumer wants…even the consumer. Apple does get it more because they figure out what the need is and they build the box right. There will be a plethora of platforms to watch video until one company emerges with the one that meets the consumer demands. Tell me what the consumer is demanding, then build the platform that does the best job.
Posted by Andy Hunn at June 8th, 2007 at 1:57 pm