All the Entertainment Gatekeepers Are Gone

How do you wield control over distribution channels when everything is available to everyone through the Internet

From the early days of the modern entertainment industry, each sector of the business has been controlled by a handful of powerful companies and individuals. Typically, these people gained and held their power by controlling access to necessary resources and markets. They were the gatekeepers, and they charged a hefty toll to anyone who wanted to pass through their gates.

For example, in the early days of film, the studios controlled everything — the writers, directors and actors, the entire production process, distribution and even the actual theaters where the movies were seen. From inception to conclusion, the studios held the reins on almost every film. This control was so complete that in 1948, the U.S. Supreme Court declared it a vertical monopoly and forced the studios to sell their theaters and discontinue other anti-competitive practices. This eased the stranglehold somewhat, but even today, the majority of theatrical film dollars still flow through one of just a few large distributors affiliated with the major studios.

In the music industry, the major labels traditionally controlled much of the access to distribution and radio. This put recording artists at a tremendous bargaining disadvantage. As a result, the typical recording contract was always weighted very heavily against the artist. There is no other business where a minor profit participant, who owns none of the company or product, is responsible for paying all of the costs of making and selling the product. But that was the cost for an artist to get through the gate that was controlled by the major labels.

One more example — in the cable television industry, the cost of wiring a city for cable was so expensive that it could only be justified if there was no competition. In other words, the only way to get a cable operator to spend the money to install a large system was to guarantee that anyone who wanted cable service in that city would have to get it from that cable operator. They got an exclusive franchise, i.e., a monopoly – the ultimate gatekeeping model.

Thus, for decades, the culture of Hollywood has dictated that control of resources – especially distribution resources – is the path to profits. Control and money have gone hand in hand, with money being spent on gaining more control, and that control being used to gain more negotiating power and make more money.

That paradigm is now dissolving before our eyes. We see it in the downsizing of record companies, the falling numbers of cable subscribers, lower television viewership, shrinking film budgets and every other significant development that is occurring throughout our industry.  

Why are the gatekeepers no longer prevailing? Because there are very few gates left to guard. In truth, there aren't even very many walls. How do you wield control over distribution channels when everything is available to everyone through the Internet? The record companies and studios complain about piracy, and it’s a legitimate point, but their true unspoken complaint is that they no longer have the control which allows them to unilaterally dictate the terms of every deal. Because the Internet gives every creator direct access to the audience, the gatekeepers have lost their bargaining power, and they don’t like it.

As the old gatekeeper model dies, what’s the new model? If bargaining power is no longer obtained through iron fist control, then who has the power?  In a world where consumers have an endless number of choices from an infinite number of sources, anyone who can influence those decisions has a lot of power. The age of the Gatekeeper is dead; the age of the Influencer is upon us.

For example, how did Perez Hilton become a rising force in the entertainment business? He started with very little financial investment. He didn't control any distribution. He wasn’t even in the business of making records or films. But he was bold and honest and outrageous, and he caught people's attention. Now, when he talks, consumers react.  That’s influence, and today that translates to power and money.

The power of influence is so strong that last year the Federal Trade Commission instituted new rules strengthening the disclosures required by endorsers of products, including bloggers like Perez. That’s a significant indication of the kind of power they wield.

The gates are gone; information and products are flowing freely. We now make our buying decisions based on what we read and hear others saying about a product. Certain individuals have more influence than others, but we all have a little piece of the power now. The ability to expand your influence is the new key to success. It is no longer an exclusionary restrictive environment, but rather an inclusive outreach available to anyone. When the walls are gone, being a gatekeeper is no longer very useful.