The Long Tail

Responses to Blockbuster post

Lots of comments on the stats in yesterday's blockbuster post. Here's some additional data and other responses:

First, the source for most of this data is Box Office Mojo. My spreadsheet of underlying data is here. As always, if you've got a better/different analysis, please post it and I'll link to it.

Second, some of you wanted more detail on the blockbuster share of box office data. Here it is, year by year, with a linear regression to show the trend:

Third, many of you noted that domestic theatrical revenues are now just a minority share of most films' business, which is true. But it's a very good proxy for how those other businesses will do, because how well a film does in theaters heavily influences how well it will do in DVD and abroad. In other words, it's a safe bet that the directional trends of blockbusters as a percentage of the overall business that we're seeing in theaters are showing up in those other markets, too.

Finally, Nat Dykeman queries my assertion that there's more music out there than ever before.

During the same time that labels were crying that people were downloading their cds, and revenue was down 8%, they were quietly cutting the number of cds produced by up to 20%. Personally, I think if you cut your expenses by 20%, and your sales drop 8%, you're doing better than before.

Another example of seeing the world through the lens of the music labels, I'm afraid. MySpace has hundreds of thousands of tracks that were never released by music labels, CD Baby has many thousands of bands who have never been signed, and likewise for the peer-to-peer networks. It's not clear whether Nat is referring to the number of CDs manufactured for each band or the number of bands signed and released. Obviously the former isn't meaningful in this discussion, and I've addressed the latter above.

Just to repeat, most bands aren't signed to major labels. Now that there are ways other than the labels to distribute music, such as those I've mention above, that's no longer a barrier to finding an audience. That's why there's more music than ever out there, even as the music industry--defined narrowly as the labels--shrinks.

Death of the Blockbuster, Part IV

[UPDATE: I've revised the bottom chart, where the scale went funky for some reason, and responded to all the comments with some additional data and clarification here.]

First, apologies for the absence. For most of the past two weeks I was at the World Economic Forum in Switzerland, with a full slate of moderating duties. Then I zipped down to the Entertainment Gathering in Los Angeles, where I spoke about the end of the blockbuster. Before I share some slides from that speech, a few notes about the book.

The fact that I'm done with the manuscript (but not the edits, thus the late nights this week) does not mean that I'll be ending this blog. Just the contrary--once I'm through with this last flurry of work on the book, I hope to be blogging more often than ever. Just a few more weeks....

Amazon is listing the book for pre-order already, but please note that the subtitle and cover are not the final ones and will almost certainly change over the next few weeks. The ISBN won't so you can safely pre-order from that page (please do!). The publication date now looks like it will be June 30th.

Now back to the theme of this post. In my previous posts on the death of the blockbuster, I focused on music. But for my EG speech, I added some additional research on movies. Here's some of that data:

At first glance, the blockbuster looks alive and well in Hollywood:

But let's look a little closer. Box office revenues peaked a few years ago:

And that picture would have looked worse if theaters hadn't raised prices. Here's the same period expressed in terms of per capita movie theater attendance (adjusted to a constant population size):

Meanwhile, the fraction of total box office that comes from the blockbusters (top 25 films) has been steadily falling, even as the cost of making those films (expressed here as a percentage of total box office revenue) has been rising:

Bottom line: even in Hollywood, the home of the blockbuster, hits are losing their power. It's not nearly as dire as in music, but it's trending in the same direction. Does this mean the end of movies? Not at all--there have never been more films made, just as there has never been more music available than today, despite the fact that the bestsellers sell less.

It's not that people aren't watching films and listening to music, it's that they're watching different films and different music--we're just not following the herd to the same hits the way we used to. I'd guess that most of the decline in box office is due to the rise of the DVD, not a loss of interest in movies. Likewise for music, where the ubiquitous white earbuds suggest that music has never been a bigger part of our culture, despite the fact that CD sales are back to mid-90s levels.

Here's a good Denver newspaper story (pegged to the closure of a local music store) that considers the music industry after the hit. Key sentence:

While sales are down, more music is being produced and heard than ever before in history.

That's only a paradox if you're thinking of music through a hit-colored lens. Only a tiny faction of musicians are professionals. The rest do it because it's fun. They keep their day job and make music because they want to. Never underestimate the motivational power of fun.

Death of the blockbuster (part III)

Today, Musicland, which operates more than 800 stores under the names Sam Goody and MediaPlay, filed for bankruptcy: "The company attributes their financial difficulties to a diminishing music and movies marketplace, growing competition from big box retailers and the increase of music downloading."

This seems a good moment to reflect on the current fortunes of some of the other retailers of the once-great music hit machine:

• Wherehouse/F.Y.E: Closed 53 stores, lost about $30m last year
• Independent music stores: 1,000 closed in the last three years
• Tower Records: recently emerged from bankruptcy protection

The TV broadcasting business stinks

Terry Heaton says "Broadcasting is an industry in deep trouble, and it will take innovation and integrity to save it from a real disaster." He then shows the stock charts over the past year for the 12 publicly listed companies that own TV stations. While the number of lines going south is striking, it's a bit hard to see them in context that way. So I've re-run the numbers and expressed them below in percentage terms.

(Note: some of these companies, such as Gannett and the New York Times company, are primarily in the newspaper business, although they also own some TV stations. But since Terry listed them I'm also including them here for the sake of completeness.)

Stock performance over the past 12 months:

• Belo (BLC):  -11.6%
• Emmis (EMS):  +8.7% 
• Fisher (FSCI):  -3.1% 
• Gannett (GCI):  -24.2% 
• Gray (GTN):  -38% 
• Hearst-Argyle (HTV):  -6.9% 
• Media General (MEG):  -17% 
• Meredith (MDP):   -2.4% 
• New York Times (NYT):  -30.7% 
• Sinclair (SBGI):  +29.1% 
• Tribune (TRB):  -24.8% 
• Young (YBTVA):  -80.2%

-------------------------------
        Average: -16.8%
        Dow:      +4%

Thanks to Lost Remote for the pointer.

Mainstream Media Meltdown II

On the occasion of today's gruesome statistics on the continuing fall of newspapers, here's an updated look at mainstream entertainment and media in decline (April's version is here).

Down:

• Box Office: down by 7% this year (tickets per capita have fallen every year since 2001). 
• Newspapers: circulation, which peaked in 1987, is declining faster than ever and is down another 2.6% so far this year. 
• Music: Sales are down another 5.7% this year; although digital downloads (still just 6% of the business) are climbing nicely. 
• Radio: down 4% this year alone, continuing a multi-decade decline.
• Books: down by 7% in 2004 (but see comments  below for discussion)

Mixed:

• DVDs: sales growth is slowing dramatically, from 29% last year to single digits this year.
• TV: Total viewership is still rising, but as channels proliferate and the audience fragments the rating of the average show continues to decline.
• Magazines: Ad revenues are up a bit although the number of ad pages is flat (they're charging more per page). Circulation is also flat, while newsstand sales are at an all-time low. 
• Videogames: it's the final few months of the current generation of consoles, which tends to the trough of the buying cycle. Sales were down 20% in Sept, but will probably pick up by Christmas with the launch of the Xbox 360.

Up:

• Internet advertising:
  --Banners: Up 10% this year
  --Keywords: Google revenues up 96%

The Lost Boys

Adding to the evidence of a shift from mass culture to niche culture, the latest Nielsen numbers (link coming it turns out this was custom research for us, so no external link I'm afraid) confirm that network TV is losing young men at an accelerating pace. For the September 04-April 05 period, broadcast (network) TV viewership by 18-34 year old males was down by 7.8%.

Where are they going instead? Ad-supported cable TV (ie, Comedy Central and the Cartoon Network, but not premium channels such as HBO), which were collectively up 5.3% over the same period, and videogames, up an astounding 16.7% in equivalent viewership terms.

Source: Nielsen Media Research

Mainstream Media Meltdown

In the spirit of endism, here's a list of all the forms of major media and how they're trending. Make of it what you will.

Flat to Down to Way Down:

• Music: sales last year were down 21% from their peak in 1999
• Television: network TV's audience share has fallen by a third since 1985
• Radio: listenership is at a 27-year low
• Newspapers: circulation peaked in 1987, and the decline is accelerating
• Magazines: total circulation peaked in 2000 and is now back to 1994 levels (but a few premier titles are bucking the trend!)
• Books: sales growth is lagging the economy as whole

Up:

• Movies: 2004 was another record year, both for theaters and DVDs
• Videogames: even in the last year of this generation of consoles, sales hit a new record
• Web: online ads will grow 30% this year, breaking $10 billion (5.4% of all advertising)