They Don’t Get It?

Caroline McCarthy at The Social, a CNet blog, writes about a Michael Eisner interview with Neil Cuvuto, Fox Business News, about the Writers Guild strike: Eisner’s advice to striking writers: Blame Steve Jobs, not the studios

He said it would take about three years for Web video and other forms of digital distribution to gain enough of a foothold to be profitable–and that’s when the Writer’s Guild would have a case to make. “What I’m saying is for a current writer, for six thousand people to give up today’s money for a nonexistent piece today is stupid,” Eisner asserted. “They can do it in three years. They shouldn’t be doing it now.” Right now, the profit from digital content is “a piece of a nonexistent flow, which won’t be nonexistent, but it will be nonexistent for the next three years.”

Well, Mr. Eisner certainly know a good deal more about not making money than the Internet, as his current venture, Vuguru, is essentially designed to be a cable channel on the ‘Net that is supposed to be funded by advertising, like most cable channels. This model has never worked for the ‘Net, and there is little likelihood it will work for Mr. Eisner, the man who thought that Fahrenheit 911 would be a big loser for Disney and ended up losing the profits from the distribution and well as the Miramax subsidiary in the end.

It is pointed out that Steve Jobs is on the Disney board that dumped Mr. Eisner, which might color Mr. Eisner’s opinion of him. What isn’t pointed out is that Apple under Steve Jobs has been making money from digital distribution over the Internet almost from the first day iTunes opened shop, and has a rather good record in other areas. A major portion of Mr. Jobs success is that he concentrates on things he thinks are desirable from the stand point of his customers, rather than the stock market, and picks pricing points to maximize profits.

As a coder and small business person I look at ‘Net distribution as a marvelous thing for a content producer: essentially low fixed cost of production and automatic accounting. A unit is sold and you immediately know what you made. There is no need to have warehouses, worry about transportation and regional distribution of the product. Nothing goes out of print or out of stock. There are no returns or shoplifting losses.

So, what’s the problem?

I’ve watched and read too much about the media conglomerates ripping off the creative people not to suspect that they are very unhappy with the transparency of the system. You can’t hide profits or lie about sales. The numbers are hard; they can’t be fudged.

Mr. Eisner apparently doesn’t believe in planning for the future. If there are no profits, the writers get nothing, but there will be a program in place to compensate the creative people if profits should “magically” appear, and no years of going without when the media companies decide that they have a ‘Net distribution channel in place and it does seem to make money. You may not remember how the writers got screwed on the video tape/DVD market, but they do.