Amazon & YouTube’s Announcements Significantly Change Distribution and Level the Playing Field

Today saw two very important and very similar announcements by two key players in the entertainment industry: YouTube announced the launch of Merch Store, a tool that allows artists sell their merchandise, concert tickets, and more, whilst Amazon declared that it will also start publishing – both digitally and physically – starting with 122 books coming this fall. These two revelations come only six months after Netflix announced its plan to enter the original content business, and less than two weeks after YouTube publicized its original content deal with Tony Hawk and Warner Bros., amongst others.

Interestingly, all of these developments have passed with relatively little buzz surrounding them, despite the fact that the consequences of all the business efforts mentioned above will have serious consequences for the entertainment industry, and for distribution in particular. The Internet has long been hailed as the great equalizer, a democratizing medium that allows anyone to be a producer and a distributor, be it of news, films, books, or music. Until recently, however, such self-distribution remained complicated – producers did not only have to find out how to even put their content on the web, but also to make it visible, draw audiences to their content’s website, and to monetize their own efforts.

As a result, YouTube, Netflix, and Amazon’s recent moves turn into game changers. By offering artists established platforms to distribute their content with an essentially infinite publishing capacity that allows for less rigid selection criteria (if any at all), self-distribution online becomes a truly level playing field for small and big players for the following reasons:

1. Producers no longer need to build complex high-capacity websites to distribute their content, but can use the standardized mechanisms offered by YouTube and Amazon, for example, to distribute through embedding. This can reduce the cost of distribution significantly.

2. In addition, these standard distribution mechanisms usually also included established payment methods, be it PayPal/credit card, user accounts, ad-support, or a combination of all three. This simplifies the monetization of their content for producers, and makes their lives a lot easier.

3. YouTube, Netflix, and Amazon are platforms where the audience already spends a significant part of their day. What’s more, all platforms also collect tremendous amounts of data about their users, including personal interests, demographics, personal income, location, etc. As a result, the platforms do not only offer producers an existing audience, but can help them target niches and probable consumers directly and more efficiently.

4. Global distribution becomes a lot easier as well. Many hurdles in distributing content globally are currently self-inflicted; large entertainment companies don’t want to harm their own subsidiaries or syndication-partners, and as a result often find themselves in legal and political cross-hairs. New content providers and producers, however, do not have (many) such concerns, but mostly try to reach the largest audience possible, regardless of where they are. YouTube in particular has been advocating a borderless-content-policy, and has only restricted access to copyrighted content if forced to do so by the copyright holders. As a result, YouTube is in the ideal position to help interested producers distribute globally.

5. The competition intensifies as well. If everyone can produce and distribute easily, it will continue to be a challenge to stand out from the rest – particularly if global distribution is facilitated as well.

 

From this list, then, it looks like YouTube, Amazon, and Netflix’s moves mostly benefit independent producers and endanger the markets of larger entertainment companies. While this is certainly true in part, entertainment giants will also find certain advantages in YouTube and Amazon’s strives for original content:

1. Large-scale producers can, of course, use YouTube and its colleagues just as well as indie producers to distribute their content. And they will be offered the same advantages concerning niche audiences based on YouTube, Amazon, and Netflix’s data mining. As a result, distribution and advertising become just as cost-effective for mainstream producers as they do for indie producers.

2. It will be easier for mainstream producers to reach audiences where they already ‘live’, i.e. spend a significant portion of their days, when they use platforms like YouTube and Netflix. Rather than having to move viewers to another platform where they will have to create new user profiles, enter their payment information again, and have an additional site to check daily, offering content via YouTube, Amazon, and Netflix (if only through embedding) makes consumers’ lives and the sorting through endless content a lot easier.

3. Large entertainment companies continue to have more money. A LOT more money. So while the online video, music, and reading market may become even more contested, entertainment conglomerates continue to have the large-scale advantage: Expensive and spectacular content that will stand apart from the rest, and maybe even draw audiences to cinemas, game consoles, or special web portals. Thus, in a way, recent developments mean that event and spectacle entertainment can become the market niche for large entertainment producers, and one that is not easy to compete with.

 

Finally, it must be said that by facilitating online distribution for producers, Netflix, Amazon, and YouTube also consolidate their own market positions by putting themselves at the center of entertainment consumption. The only thing that may be needed now is a subscription/payment model for YouTube (which currently is still ad-supported), but looking at YouTube’s previous financial successes, changing payment methods may not be necessary at all.