Symphony of (Creative) Destruction
A short look at the dynamism of media industries across nations.
Hi guys. It’s been a while :)
This piece is long, so I’m going to cut to the chase. The playlist for this is very unstructured, but it’s music from artists and scenes that I’ve mentioned here. It’s also mostly propaganda for drum-n-bass and The Weeknd. Sorry but I really like indulgent.
I’m really happy with how this piece has turned out. I’m not an expert on economics, but I like to think I understand media business. Being exposed to so much great art around the world just naturally caused me to ask how it’s generated, and what we (as India) can learn from those ecosystems. Turns out, there’s a lot we can learn, not just from their efforts and mistakes, but from our own. I hope you enjoy reading this, I certainly enjoyed writing this, despite it being my least structured piece in a while.
The cover image is from Bristol’s drum-and-bass bike event. Yep, that is a perfectly normal event for their people. And yep, that’s how much we’re lagging behind them.
I often wonder about Parasite being the success it became.
Parasite is that rare combination of being not just critically acclaimed, but also effectively blockbuster-material in terms of how much money it made. The 22nd highest-grossing film in its home country, the first film in 15 years to have crossed 1M moviegoers in Japan, Oscars for Best Picture and Best Director. And the success of Parasite spawned a regeneration of interest in Bong Joon-Ho’s body of work as a whole.
Parasite is, however, globally one of the most popular of a slew of excellent movies that one country has been producing for a couple of decades. South Korea and provocative film-making are now synonymous with each other. The country has been experiencing an enviable prolonged renaissance in that space.
But more notable is the story that kickstarted this period. There was a time when South Korean film exports were overshadowed by its Hollywood imports, and an authoritarian state (as East Asian economic successes have been characterized) held a huge hand over media censorship. And then the switch flipped. The country constantly innovates in new ways of making crazy film and even television, which has become huge in its own right. K-Pop brought about its own revolution in music. This also coincides with the period when South Korea was experiencing high levels of economic growth. Their media industry is now on automatic mode.
I could very well juxtapose this to other countries and their successful exports. Why have Sweden and Netherlands in particular given us so many legendary EDM artists — Avicii, Swedish House Mafia, Martin Garrix, Afrojack? Why is Hong Kong cinema such a thing? Isn’t it crazy that Wizkid, Rema and Burna Boy, who are now globally renowned, all hail from Nigeria? Could you ever imagine Australia being a country that gave us Tame Impala and a whole wave of psychedelic rock artists?
And I also intend to apply the converse forms of the above questions to outline what you’re about to read: why has India not broken out of the overwhelming statism of Bollywood? Why are American blockbuster studios like Warner Bros declining in relevance (and valuation)?
National media exports are often perceived (and designed) as showcases of soft power. However, many of these instances have truly outgrown that need, and are products of ecosystems / foundations that evolve and find new ways to make good art. They innovate constantly, and foster the birth of new, groundbreaking artists. Largely successful economies have found bottom-up approaches to creating cooler, more innovative art, as opposed to top-down.
This piece attempts to answer some of those questions I've posited. I’m not sure if they will be entirely satisfactory, but I think they’re important to start conversations about how we could foster better arts and better entertainment.
Bottoms Up
I’ve always wanted to visit Toronto. Not because my favorite basketball player made one of the greatest clutch shots in the sport for that city, and certainly not because of its large NRI population.
But it spawned a very specific sub-genre of music that people today call the “Toronto sound”, or “dark R&B”. Why did such a specific sub-genre come out of this city, that’s not particularly known as a capital for the foremost human sins that are so characteristic of the genre: lust and addiction (and sometimes greed)? More importantly, why did this particular subgenre spawn two of the world’s most successful artists of all time?
Like any other city, Toronto is known for a few things. It’s one of the world’s most ethnically diverse metropolises — nearly half the population is composed of immigrants. Mexicans, Hungarians, South Asians, East Asians and Africans. It’s known for its chilly, pitch-black winters. It has a globally famous film festival. It lives and breathes sports. And most importantly, it’s got The Weeknd.
Abel Tesfaye is the son of Makkonen and Samra Tesfaye. His father was a well-educated Ethiopian immigrant who left his wife and children early on in Abel’s childhood. He was raised by a single mother who worked to make his ends meet, and he left home on a weekend when he was 17. We all know this story. We know that he crashed with friends while homeless, uploaded a lot of music on YouTube, shoplifted, did a ton of drugs, all the glitz that informed his music. This is his first-ever gig in the historic (and now sadly shut) Mod Club. Ever hear that kind of crowd for a rookie?
The origin of the city’s hiphop soundscape came from pioneers like Kardinal Offishall, who actually started using dancehall influences in hiphop way before Drake. But the sound took on a new form after The Weeknd. It’s slow, has a hard low end / bassline (bordering on distortionary), like other hip-hop parallels takes inspiration from the numerous ethnicities that reside in the city (and American R&B), and is cool but intensely emotional[0]. The Weeknd explicitly cites Ethiopian love ballads as an influence on his music.
He released his first mixtape, House of Balloons, in 2011, and it was a sleeper internet hit. Nobody knew who he was, and he wasn’t signed to a label per se either. That was followed by Thursday and Echoes of Silence. It caught everybody’s attention, especially Drake. But this is less interesting than the base that set him up for global appeal. To raise funds to repackage his first three mixtapes into one Trilogy[1], he applied for one of Canada’s foremost media grants, FACTOR.
FACTOR is a public-private partnership that provides a no-strings attached amount of money. For both Trilogy and his debut album Kiss Land, The Weeknd secured a total of $200K in multiple payments. Later, he secured some more through Canada’s other foremost media grant system, Radio Starmaker. Both grants, essentially government projects, were done not just for “the arts”. The underlying principle was that these grants could be economic multipliers if used well, bringing in money for Canada through a variety of ways in the future.
This has largely been a successful idea for Canada. The list of artists that owe their careers to one of these grants includes: Arcade Fire, Carly Rae Jepsen, Grimes, US Girls, and further back, Alanis Morrissette and Nickelback. Canada has its own music fund that collects 1.5% off the top of all radio station revenue. FACTOR is a branch of the same. However, this funding doesn’t just exist for artists, but also entrepreneurs and indie labels looking to provide innovative solutions in the industry.
FACTOR is not perfect. It wants to see some traction for an artist before it can decide whether they’re worth it. If there is no traction, then a jury gets to decide whether their music is worth giving them a grant. The Weeknd wasn’t decided by the latter, but if he were — do you think “got the walls kicking like it’s 6 months pregnant” would fly with judges? They’re not great at scouting, it’s not what they have the ability or capacity to do.
But FACTOR and Radio Starmaker have been fundamental in shaping a market out of music as if it were another consumer industry being kickstarted by subsidies. They’re trying to foster the creation of various actors such as scouts, marketers, videographers, live venues. Music professional (and later CEO of Abel’s own XO Records) Amir Esmailian (who is Iranian) helped procure funding for him under the XO head. Before that, he and Wassim Slaiby (Lebanese) — the founder of Capital Prophet Records — scouted rapper Belly (Palestinian) and turned him into gold in the music charts.
What these government grants try to achieve is rooted in some important assumptions about the music industry:
Musicians are entrepreneurs. This implies that their sources of money are, unlike a salary (and like profits), unpredictable. They will fluctuate, and after a while it becomes much harder for a musician to scale / reinvest in themselves because big things like renting studios and doing live shows take time and money. Their best bet then becomes to resort to a job.
This also means that music can easily become a winner-takes-all market. Without some sort of cushion, it will be really hard for someone to eke a decent living out of making music. You’re either a superstar or you’re not. That being said, you need various kinds of musicians for such a market to evolve sustainably.
Music doesn’t just need musicians; it needs operators who understand the commerce of art. The industry needs people who get distribution, sources of monetization, and scaling like it were another company. You don’t make a song without someone who can market it well.
Here’s Australian sensation Courtney Barnett in her own words talking about what it means to get a risk-free grant:
“Government grants gave me creative independence when I was starting out, because it meant I was worrying less about impressing for label and publishing advances, and I was less reliant on taking some big-company sponsorship to fund a tour.”
Courtney Barnett worked as a pizza delivery driver while she tried to make it big in music. Her first EP was released under her own entity, Milk Records, which she had started by borrowing money just to produce the EP. It’s hard enough for someone starting out in music to build a network of relationships with labels and publishers. It’s harder still to do it while not being inclined towards the business side of things as much — a problem one may sympathize with.
Barnett is, then, clearly a success story in the Australian music fund understanding those 3 concepts behind being a musician. A government grant eases the need to be purely entrepreneurial, and lets you focus on just the production side of things. Since such a grant subsidizes the immediate need for a strong network to succeed, you may thrive on your own right. Plus, you can get a grant not just for being a musician, but also someone who aids the process of music production, distribution, or monetization.
The governments of Australia, Canada and Sweden are all examples of what I’d like to call bottom-up innovation. They allow anybody in their country to try and make it big, upset the established order. The Weeknd is a textbook example of completely changing the so-called “game” — which in this case is Canadian (and eventually global) pop and R&B. You could test your talent on the open market by merely being good at one instrument and some vocal prowess. A grant may not take care of everything, but it opens a lot of doors.
But state policy is never assurance of consistent bottom-up innovation. In fact, one country that has become a 21st-century powerhouse in global pop music has, for the most part, a very explicit top-down approach to creating hits that started all the way from how its government shaped the music market.
Fuel To Fire
The Hallyu wave was a response to a devastating financial crisis that saw foreign direct investment retract heavily from the South Korean economy. It spurred the country into forming complete self-reliance in terms of value generation through K-Pop. Countries like ours[2] desperately want Korean popstars to headline music festivals here.
Funding is only a part of the story that unlocked South Korean music exports. In the 1990s and early 2000s, piracy laws were extremely loose in the country. There was immense pressure from Western nations on South Korea to tighten copyright law. By the 2010s, the situation was completely the opposite, with South Korea enacting some tough patents on music.
While it’s unclear if the timing of enacting these laws was deliberate, a paper by Stockholm School of Economics alum Johan Williams[3] Jolin argues that such ‘looseness’ around copyright law was a big factor in improving the competitiveness of the South Korean music industry. The lax attitude in the 90s allowed natives to access music for next to nothing, often to the detriment[4] of the country’s own musicians. But a unique model of copyright that was enacted later led to the rise of some of the country’s biggest stars of all time.
And South Koreans love the internet — the country ranks very highly in indexes that capture internet access. Of course, it’s the medium that enabled piracy for them on such a large scale. South Korean music agencies used this to their benefit by conducting their business not with consumers, but with other businesses like retailers, labels, and most importantly, social media platforms. This allowed South Korea’s internet-savvy audience to consume all this music virtually for free, only in lieu of taking in ads as well.
South Korean pop music is highly institution-driven, and homegrown music labels like HYBE, YG, JYP and SM Entertainment — the Big 4 — are huge firms that drive how the industry works. While not a product of government picking winners (as they existed before favorable economic policy), these labels were certainly the biggest beneficiaries of state policy. They own the entire supply chain of music production in their local context, including scouting, developing, and investing in talent. They end up taking the risks of production, acting effectively like venture capital firms. In fact, SM Entertainment has its own venture capital firm.
The problem? It’s an oligopoly. The Big 4 labels operate in very similar procedures. They decide what runs and what doesn’t. Much of that is based on their manipulation of Korean cultural values. Labels run cram schools in the name of scouting talent. When they sign somebody, they exert overwhelming levels of control on their careers as their contracts stipulate restrictions on sex, affairs, and alcohol. These future stars are subject to exhausting routines of vocalization and dance, and most infamously, makeup. South Koreans have a disgustingly brutal beauty standard, and the labels play no part in alleviating that problem with how much they demand their popstars look conventionally attractive. It’s almost exactly as if the music industry operated like a factory.
This is an example of top-down innovation, and it’s the most culturally dominant form of music production in the country. It follows a set process that, in the short term, seems very hard to deviate from, and leaves little room for future attempts at an incumbent upsetting the entire industry.
There’s also evidence why this form of innovation, while less risky than the type followed in Canada (because the outcomes are fairly in control), is not good business in the longer run. There is significant industry chatter[5] that the market has become highly saturated, and the growth of the industry was very dependent on groups like BTS. The factory model of production that K-Pop follows is turning out to be as much their undoing as their supposed initial cause of success. The stock prices of the Big 4 labels in South Korea have been showing a declining trend[6] fairly consistently this year, even as they’re still able to enjoy success abroad, or what is left of it.
Moreover, many of K-Pop’s biggest names are now opening their own labels[7] to gain artistic freedom from the Big 4. Artist-led labels are futuristic and do much better work than traditional music labels — be it a Drake opening OVO Sound (I’ve struck-through a chord here, and it’s major), or a Weeknd opening XO Records. However, this end could not have had more different means when you compare either country.
That being said, non-label affiliated Korean entertainment venture capital does exist, and they fund risky startups trying to crack media technology as well as production. This was ALSO part of a state policy push[8], where the plan was to use VC money to back new music and new films. Smaller film producers loved this idea because it was difficult to get a loan for a movie that lacked the backing of major distribution. And the risk in these investments is shared between private venture funds and the state media fund called Motae. The excerpt below from a paper explaining this public-private synthesis, reclaiming some big director names, explains the beautiful outcomes that this model can produce[9]:
Without supporting small film production and new directors, a fund manager points out, “the country would lose the next Bong Joon Ho (the director of Parasite) or Park Chan Wook (the director of Old Boy)” whose names guarantee a box-office hit. It is interesting to find that Bong’s previous film projects The Host (2006), Mother (2009) and Snowpiercer (2013) received investments from Motae-backed VC funds.
If you were wondering how significant the impact of this model is, this statistic might help: in 2017, one-third of all venture capital went into South Korea’s entertainment industry.
State policy can also end up being extremely stifling, creating weird, perverse incentives for people to invest in media. It so happens that one doesn’t have to look too further away from home to see that. Bollywood has been historically financed under immense constraints, not least because it really only gained the status of an “industry” in 2000. Film studios and producers were largely at the behest of moneylenders who would quote exorbitant interest rates. Transparency in film financing was a huge issue until the Ministry of Finance lay guidelines at the turn of this century regarding the same. Only after 2000 were producers able to secure loans from commercial banks, and eventually equity interest from private companies. For a long time, there was no organized market for financing Bollywood effectively.
In fact, the first ever film that was insured[10] in India was Subhash Ghai’s 1998 flick, “Taal”. And when its underwriter, United India Insurance wanted to re-insure it with a foreign firm, they flatout refused, citing the complete lack of accountability[11] in Indian film production. It’s also not far-fetched to say that it is this lack of state recognition and care that may have forced the hand of producers to resort to dugouts that Hades might enjoy. The underworld connection with Bollywood was partly an outcome of producers wanting cheaper capital, creating a trail of black money and unaccounted receipts that no cast or crew member would have wanted to make public. Because of this, Ram Gopal Varma was quoted to have said:
“Bollywood at the moment is not ready for institutional finance.”
However, I would be quite amiss if I did not talk about the Indian government’s attempts to rectify the problems themselves. After all, the government didn’t completely hate film, they just had their own idea of it — which was to be educational and social (or propaganda, if you wish), not masaledaar. The National Film Development Corporation (NFDC) was founded in 1975, with a view to undertake public financing of films. It has a pretty solid resume, being the primary producer of Jaane Bhi Do Yaaro and Salaam Bombay, as well as a co-producer on Richard Attenborough’s Gandhi. Like many of India’s PSUs pre-1991, the NFDC has historically been marred by financial viability due to a lack of concern on profit. But instead of outright privatizing it, the Indian government placed IRS officer Nina Lath Gupta to turn the place around.
Gupta took hard but necessary calls. She let go of more than half the workforce and shut down 3 of the enterprise’s branches. But the philosophy of funding excellent films not influenced by Bollywood convention probably didn’t excel more than it did under her. She revived the corporation with the help of SBI Capital Markets, and an equity investment[12] that included 3CR from the government of India. Gupta’s track record includes the following films: The Lunchbox, Court, Ship of Theseus and one of my favorite Indian films ever in Titli (Noida represent baby). At its peak[13] in 2017, the NFDC generated more than 100 crores in revenue annually, was profitable with 93 employees, and was still a public sector institution unthreatened by private concerns.
So naturally it appeared as a complete shock to many in the film industry as Nina Lath Gupta was sacked[14] the next year. Reports allege that she took decisions that went against certain rules and regulations, but if you ask me, it could very well be a case of a certain party favoring having someone else. Gupta is currently running her own venture, and has a wonderful newsletter of her own, which is called:
.Tejaswini Ganti, a professor of anthropology at NYU outlines state attitudes towards film. There is a significant shift between how the Indian government thought of film post-liberalization, where the focus went from being educational to being an economic force to bring India much-needed prosperity. Obviously, films started to portray wealth a lot more. With a line of movies that have pandered not just to NRIs in the West, but also the Chinese, the box office success Bollywood enjoyed abroad worked well for the country’s international relations.
But Bollywood is not inherently an entrepreneurial space to be in. The inertia of change it has to go through is really slow. It continues to be ruled by few production houses, some of which had unleashed their own wave of creative destruction years ago. Whatever one may think of him, Karan Johar was a category creator who took over his father’s production house at a bad time. Like many others in India, Dharma is a family business. In KJo’s words[15]:
“This is not an industry bound by contract or legalities or modalities, as much as it is bound by relationships. He always said that it’s so important to nurture relationships even outside of the films you are making—you never know when you need someone, or when someone needs you. This was, of course, before the industry became exceptionally corporate—but I think sticking to this philosophy has worked well for us.”
Which also explains the slowness of some of India’s legacy film producers. It’s taken a while for a production house like Dharma to expand beyond a particular kind of movie. It’s this relationship mindset which explains how stars in India — many of whom are children of yesteryear superstars — are often launched. Moreover, a popular argument for Bollywood’s recent decline is the idea that there was no one who took over the mantle after the Khans. It took a Pathaan or a Jawan, which had Shah Rukh Khan in it, to revive faith in the industry.
This isn’t to discredit many mavericks who tried to challenge this structure. Be it making grand films like Gangs of Wasseypur on extremely tight budgets (and high as fuck cinematographers and actors), or a wacky, funny, foul-mouthed zombie movie helmed by a Khan in Go Goa Gone, or a Rashomon-styled thriller inspired by one of India’s most appalling and still-unsolved murder cases in Talvar.
But none of this was very permanent, and we always seem to revert back to the mean. In a way, this is reflective of what kinds of films in India have the best chances of being financed. If it doesn’t scream blockbuster, an investor will not expect huge returns. This is changing now, because it has become much easier to distribute any type of movie today. A massive cost overhead to movies is generally (worldwide) marketing. It would have been arguable that there’s little point in marketing a new face by spending so much money on billboards. But it will take a while for Indian financiers to understand this wave.
Ain’t No Stress On Me, Lord
Markets are made from scratch, made to mature, and sometimes just die. With media, what constitutes the prolonging robustness of market activity needs a lot more explanation than just state policy. The easiest answer to this is innovation. But how do you innovate? How do you prolong the onset of stagnation? Companies eventually die, and so is true for forms of artistry, at least in the commercial sense.
This was a question that the film industry of Kerala had to reckon with after CoVID hit. Theatres had to be shut and ongoing production had to be stalled. However, this was only a worsening of a long financial slump, where only a handful of the numerous films Malayalis produced in a year were really profitable. In 2012, one-third[16] of all theatres in the state had to be closed. Revenue-sharing between film producers and single-screen owners — both of which have their own unions — has been a contentious issue[17] for a long time. And Keralites were very decisive about switching over to OTT as opposed to single-screens, whose owners invested heavily[18] in upgrading their halls but to little avail. With all of this gets included a lack of success in theatre distribution[19] outside of Kerala. 15 out of 220 films in 2023 barely broke even. Only 4 were profitable.
But it’s the Malayalam film industry, man. If OTT statistics are anything to go by, we love that shit. What runs the industry is a balancing act[20] between theatre owners, multiplexes, film producers, crew members and actors. And despite the “Kerala model” having become a moniker, state intervention in this industry is not all that huge. The risk of film production is very real here, and losses are not subsidized at all. And yet, this industry couldn’t be more thriving and innovative. As of Q1 2024[21], films from the state earned over 500 CR in revenue, blowing out any notions of disenchantment.
It helps that no one production house in Kerala bears a majority of the risk, and there’s plenty of private players. Some of them are actor-led, such as those of Faahad Faasil and Mammootty. It’s this nimble, fast-moving, risk-taking culture that has allowed the industry to evolve quickly from stagnant situations. The Kerala film industry has been going through a new wave since the early 2010s, which is in stark contrast to the superstar-led culture that was so pervasive before. These are gritty movies embedded in realism, stylish technique, and smaller budgets. It’s this new wave that took over OTT consumption in the pandemic.
The Kerala film industry doesn’t collapse because any one entity went bankrupt overnight. And innovation / creative destruction can come from anybody, anywhere, probably anytime. In fact, the first 3D film in India was My Dear Kuttichan[22] in 1980. India’s first smartphone-shot film, first 8K resolution-shot film, and first purely digital-format film are also credited to Kerala. Kerala’s film industry has become very non-reliant on any sort of external or even public subsidy to keep afloat.
What develops a culture of robustness depends on certain market factors — ease of investment, ease of distribution / search costs, availability of talent, and how quickly you can adapt to change, to name a few. Kerala doesn’t have to worry much about the latter two. However, investment isn’t always easy. Kerala doesn’t do a lot of blockbusters, and while one may associate that with more down-to-earth films, they don’t inherently believe in a “small is better” philosophy. Some of their highest-grossing films have heavy production budgets. Aadujeevitham was co-produced with 2 small American film companies. And if your backer is a Gulf businessman, you’re all the more in luck. Their distribution vis-a-vis other films in India (and a likely barrier in language when it comes to marketing) is hindering their true potential. Add to that a history of holdouts with multiplexes like PVR.
One of my favorite stories of market resilience in this context comes from my newfound hobby-bordering-on-profession of turntabling. Something I’ve lately been surprised whenever I watch a drum-and-bass set is how the audience — clearly very British — knows all the lyrics to all the songs. If there are no lyrics, they do an onomatope sing-along that’s loud enough to blow the roof off. Bristol, the home of DnB, has a Night Time Economy Advisor named Carly Heath, who was a rager herself. Notably, Bristol has gone through a powerful underground music scene where hip-hop, reggae, funk, and trip-hop flourished. Another scene where, like Toronto, immigrants drove the scene. Massive Attack are a product of Bristol sound, and their sole active member, 3D had this[23] to say about the city’s influence on the music:
“It’s like a town masquerading as a city, and what it’s always been good at is the underground scene, in both art and music. Bands would flourish locally before they reached a national level and because there was never a big media or music industry here, people were doing it for their own gratification. Creativity here never grew in a contrived way, people were just teaching themselves and beating off the competition to become a big fish in a small pond.”
Back to DnB. The city meets all of the criteria outlined above for market resilience: funding, talent, distribution, adaptability. Bristol’s clubs are mouthpieces for the genre — Motion is one of the UK’s best clubs. These venues have seen themselves through plenty of economic turmoil. Talent is not a problem at all, especially when you count other DJs from British cities. Artists like Bou, Hedex, Nia Archives, Chase & Status are likely regulars here. Bristol has labels for all kinds of genres, many of them run by A&R executives who have worked with some of the biggest British artists ever. On top of that, it has jungle and DnB-focused labels like Ruffneck Ting and Sofa Sound. Besides label funding, both universities with music programs and the city council provide music grants. Bristol City Council is also building a Grassroots Music Fund[24] through ticket levies. All of this shows in the outcomes: watch a part of Hedex’s brilliant show below. This is a regular thing for the Brits.
Market adaptability becomes pretty hard when faced with shocks. Bristol has been going through a rough cost-of-living crisis, not least because rents skyrocketed in the city after the pandemic[25]. This boxed in the city’s music industry in two devastating ways: a) musicians (and music students) had to end up paying a large chunk of what little they get already for rent, and b) the music venues that musicians relied on for touring themselves began to struggle. It didn’t help that essential commodities had also become a little expensive, even if just in the short-term. On the other hand, arena business is more than booming, likely because it can make use of economies of scale and bigger artists often undertake concerts on their own dime. The Grassroots Music Fund and potential ticket levies on arena shows are, in a way, responses to this issue.
Distribution has evolved in insane ways over the years. Kerala’s film industry aren’t just savvy with their movie techniques, but they’re smart about using the Internet to their advantage. Media marketing entrepreneurs like Sangeetha Janachandran[26] and Seetha Lakshmi[27] outline how hard it was to initially convince film producers why promotion of films was important. Now, the equation has been flipped, with agencies receiving inbound requests. Mollywood has eschewed huge billboards in favor of going aggressive on social media and making use of local influencers. For the legal drama Vaashi, the producers held a discussion in Ernakulam’s Government Law College. And marketers understand all too well that the objective of these promos has to be to convince people to watch the film on the big screen, not the television.
It has never been easier to upload your own music than today, thanks to Spotify, Bandcamp, SoundCloud, YouTube, and the like. But musicians who begin their careers find it hard to mass-market their creations, stand out from other songs. Which is why community-building has taken such importance for musicians. Be it a Discord server, or Reddit AMAs, community is increasingly becoming the marketing unit for music. You can get this fanbase to pay for anything you do — buy merch, pay for meet-and-greets, get access to hidden gigs. This is the approach that Indian hip-hop duo Seedhe Maut took to establishing themselves. They earned themselves a niche fanbase first. Only after that did they undertake their most commercial album in Lunch Break, which has some of their most reel-worthy songs. Many startups are also trying to crack community-building coupled with monetization.
The 4 pillars of funding, talent, distribution and adaptability naturally affect each other, and the mix of these 4 pillars also defines the form the market eventually takes. Multiple sources of funding create a market for interest rates, and market power and risk get fairly evenly distributed for someone who needs to raise capital. Talent requires strong educational institutions that create a seemingly never-ending feedback loop for the market — think of the inseparability and interdependency between Stanford University and Silicon Valley[28], which was by no means a story written in stone. Distribution depends on the market, but with the advent of the internet, it has grown less dependent on money with time.
Bottle Episode
Media industries are like any other. Incumbents will be subject to competition, innovation, and even problems of their own undoing. The latter will usually be expected in bigger, bureaucratic firms with large market share.
So it’s funny that I choose a firm in a country prolific with their media output to showcase this. Basketball, rock-n-roll, hip-hop, Hollywood, is there anything the US hasn’t done? It’s helped solidify their status as a “leader of the free world”, even if that status needs constant questioning (especially these days). From Michael Jordan to the Looney Tunes — and both of them together — it’s undeniable that the cycle of innovation in US media (as with other industries, I’m sure) is enviable.
But it just so happens that the Looney Tunes had a pretty wild time in the last 2 years. Ever since Warner Bros-Discovery hired executive David Zaslav to take charge of the legacy firm, he’s done nothing but run it down to the ground. He’s written off multiple nearly-finished movies — including one Looney Tunes flick — for tax write-offs. He’s gutting HBO Max by removing shows that people love, including a prospective Batgirl series. He cut much of Turner Classic Movies, that is the film preservation division of the company. All for an estimated cost reduction of $3B.
Instead, in response to these moves, WB stock dropped by $20B[29] in 2022. It reached an all-time low as of last week. Can you imagine a legacy company like Warner Bros not existing anymore? Or being acquired by somebody? They are the pioneers of synchronized sound in movies. They made landmark films. These guys have the most famous water tanker in movie fucking history! There’s a rot in the biggest media firms of the US today, and this is notwithstanding the way they handled the WGA strike of last year. They are failing to innovate anymore.
Disney is another case. Much of the House of Mouse’s growth in the past few years has been driven by parks and sports. When it comes to the studio itself, the company has been struggling with a string of flops critical and/or commercial. CEO Bob Iger plans to release one — only one — MCU movie next year, and that’s Deadpool v Wolverine. The MCU has been a disaster under Kevin Feige in the last 4 years, failing to have any movie notch over $1B in gross revenue since Avengers: Endgame, except one, which is the one superhero technically owned by Sony. The new Indiana Jones movie bombed. The most recent Pixar movie, Elemental did the lowest gross box office for a Pixar flick since Toy Story.
As for Paramount, I’ll let The Motley Fool[30] do the talking:
“This isn't a stock. It's a trash compactor.”
American legacy movie companies are in an existential crisis. It’s not uncommon for companies to have peaks and troughs, but much of this time feels like self-harm. And it’s not that streaming seems to be dead, as everyone (including me) declared[31]. Netflix has marked a killer comeback in the past year, posting a subscriber growth globally, and increases in both earnings and market cap. It feels as if the biggest movie studios in the US completely lost the plot on what makes for killer entertainment. And resorting to the same-old intellectual property that usually earns them free, passive income isn’t a strategy that’s working for them anymore. Like, do you honestly want another Star Wars TV show?
How does the private sector of US media bounce back from this crisis? In many ways, this moment feels like new blood replacing the old guard. Streamers like Netflix have had to pay humongous amounts of money to the major media firms as licensing fees for some of their prized property — like $100M for Friends back in 2019. However, the tables seem to have turned now that Netflix and Amazon are capable of creating their own, long-lasting IP. Big media has tried to open their own streaming platforms, and if that didn’t work out, they bought available solutions in the market. But these companies were effectively entering a different business with this move. Couple that with unprecedented pivots into an industry like gaming.
Paramount has been awfully struggling to make a comeback under Shari Redstone, the daughter of media magnate Sumner Redstone. Dad and daughter did not get together. Shari once told her son that Sumner told her — in true Logan Roy fashion (or reverse, since Sumner was part inspiration for the Succession character) — that she will “be chair over his dead body.” He was mostly right, but it’s not like parent company Viacom didn’t have its problems. In a way, this seems to be a family business like any other. No wonder Logan didn’t think highly of his kids.
Fresh blood is ready to take over this industry. The good thing about the US is its full of fast-moving companies ready to change the game. The popularity of Telugu hit “RRR” owes itself partly to its distribution by Variance Films, that specializes in bringing foreign films to American distributors. Or take James Cameron’s Lightstorm Entertainment. I doubt that deep sea filmmaking is an inherently profitable venture, but at least Cameron is willing to fuel money into innovative filming techniques. The Avatar sequel made a whopping $2.2B globally, too. And A24 is proof that you can make billions of dollars by making the most inventive, genre-bending movies in recent memory.
This piece[32] from an employee of Innosight — a consulting firm founded by the great Clayton Christensen — highlights how big media is facing extinction at all three junctures of film-making: distribution, marketing, and film-making techniques. It doesn’t help that major media companies reduced production of smaller-budget movies in favor of profit at scale, and indie producers filled the void that’s left. The result is that new-age companies like A24 moved up the value chain much faster. The bureaucracy of large firms is evident in their protectionist measures, be it charging $100M for IP or attempting to cannibalize theater revenue in favor of[33] premium VOD. It’s a story as old as time.
It’s hard to think of American entertainment beyond the usual suspects, and it’s obviously hard to imagine a world without them. These are generational companies that started out by inventing processes or technologies that defined the next few decades for them. There’s little doubt that their names will eventually survive via acquisition, because we’re so attached to legacy by name.
But the sun is setting on the mountain of big media. And this time, there may not be any stars that surround them anymore.
In 1966, publishing house McClelland and Stewart released a book titled Beautiful Losers. When the author finished the draft, he proclaimed that he had written the Bhagwan Gita of that era. But book sales said otherwise. It was a bit too provocative for the time, but most criticism was directed at how incoherent it was. The failure made the author — who was running fairly short financially already — ponder alternative careers. So he decided to make folk music as an “economic solution to the problem of making a living as a writer”.
After some hardship in New York trying to crack a music career, the author was able to meet a manager named Judy Collins. She persuaded him to record a poem he had written, titled “Suzanne”. Based on this success, this now-musician met with a man named John Hammond[34], who was instrumental in launching another poet who went by the name Robert Zimmerman till he changed it to Bob Dylan. Much like with Dylan, Hammond’s label, Columbia Records initially chastised him for signing a 40 year-old poet to a music deal. But when a middle-aged Leonard Cohen eventually did make it to Columbia’s studio, Hammond reportedly said,
“Watch out, Dylan!”
To me, movies and music are expressions of trial and error. You may make them for yourself first and foremost, but there’s little denying that you want the chance to have something you make change the world. And naturally earn a living in that process. The amount of uncertainty you bear in enlightening the world with something absolutely bonkers is both personal and socio-economic. It’s this kind of uncertainty that made mechanical assembler Bill Withers a seemingly overnight sensation with “Ain’t No Sunshine”. So many rappers say that music saved their life and gave them a shot at life that did not involve a cycle of violence. It’s the kind of uncertainty that made trained doctor George Miller one of the greatest action film directors of all time — with one of his creations releasing soon.
It’s the kind of uncertainty that gets Skrillex to say that The Netherlands and legendary Dutch group Noisia changed the world of music forever, and Noisia are his dads. That's Skrillex, the face of American dubstep and now cross-genre maverick, talking about a long-disbanded, niche electronic trio from a far country that had a dedicated economic strategy towards making partying in their land more successful.
If we want more, better music and movies, it’s crucial to understand all the uncertainties that underlie the creative process, how we can soothe them, and how we deal with the failures more than the successes. How we can create better markets for anyone regardless of what they earn or where they come from to enter, how we allow people to make a living making music, and how the strategies behind pursuing these goals will keep differing from region to region.
Special thanks to the following people for proofreading: Tanmay Mehra, Sunaina Bose, Molina Singh, Paridhi Puri, Rishabh Singh, Sarojini Sapru (who I’ll be co-writing something very fun with soon, and on music), Ritwik Tripathy for seeing a very early version of this, and Krishna Priya from the Delhi Writes group (that Molina and Paridhi run)!
As you may have noticed, Hot Chips has become a little more inconsistent over time. Some interesting life events have happened that are taking me into a really fun trajectory. This might involve being a little lax on the newsletter front, but it gives me a lot more time to create ambitious pieces like these. I was always afraid of writing a piece like this because it’s trend-analyzing at a huge scale, and I need to justify the patterns that I think I see.
So hopefully, you get to see more of it in the near future, I have 2 of my next pieces planned, and they’re both on music in India :)
And yes, in case you’re wondering about my newfound trajectory, it ALSO involves music in India :)) Toodles!
What a fantastic read. Congrats!
Love the depth, Pranav. What a read!