Where the Trade Papers Went Wrong

They still operate as though the business is still essentially L.A.’s West Side — not the breadth and depth of the world community

Last Updated: January 12, 2010 @ 5:56 PM

Over the holidays, Sharon Waxman, of TheWrap, wrote a piece about how the two Hollywood trade papers are facing their “end game.” Steering clear of the debates about the impact of leveraged buyouts, downsizing and the lack of Academy Award advertising, there is a fundamental reason why the trades have lost their way.

They’ve lost sight of the “community” they were designed to serve.

The entertainment industry is more in need of information and insight than possibly ever. The trades are perfectly positioned to provide this, and should be cashing in. But they’re not reacting to the changes that have seen the entertainment community burst from the constraints of Hollywood into a global enterprise.

Let me explain.
In 1988, when I began my career at the Hollywood Reporter, more than 70 percent of the world’s entertainment business emanated from within what could be called the “Hollywood Beltway,” a horseshoe-shaped, 150-square-mile geography, defined by Sony Pictures in the south, Warner Brothers, NBC, Universal Pictures and Disney to the north and Paramount Pictures in the east. That was Hollywood, not the 3,400 square miles of greater Los Angeles. 
 
It was a community. In fact most people working in the business referred to this small geography as “the town.” Its influence was recognized and deferred to throughout the world. What happened in this community was what counted. The community dominated the entertainment business.
 
The two trade papers were able to leverage the overwhelming influence Hollywood had on the world business by hand distributing their two papers daily to the industry professionals that controlled almost three-quarters of the business. Within that local trading area there was a large subscriber base and an advertising community looking to influence that local community. 
The two trades accommodated that interest and profited handsomely because of it.
 
So what happened? In less than a single decade everything changed.
Everything
Driven by a staggering array of new technology the industry faced challenges that overwhelmed it: Cables were laid, satellites were launched and cell towers were erected. Phone companies became entertainment distributors. And PC’s, digital transmission, the Internet, Napster, Netscape, Yahoo, Google, YouTube, iPhone, iTube, Facebook, texting, Twitter, Hulu, etc. all contributed to the colossal changes in entertainment.
 
The creative community then began taking advantage of the more powerful and less expensive technologies to create content outside the traditional avenues that catered to a new audience. Suddenly, consumers had a stream of content that was birthed outside the “community.”
Finally, partly fueled by these user-friendly production technologies, the majority of advanced nations found it more sensible and profitable to produce and distribute their own entertainment product, rather than importing it from the states. People around the world would prefer to watch their countrymen on local television rather than Americans, so locally produced domestic entertainment markets exploded all over the world, to the potential detriment of the American suppliers. 
 
To compete with the technical disruption and globalization of entertainment, the American majors responded through aggressive acquisitions, mergers and international co- ventures. They continued to seek control of every facet of the entertainment business from the creator to the consumer. They saw the world market as a vastly bigger opportunity but were still nervous about the impact technology could have on their business plans. 
 
The “community” is no longer that small geographic area on the West Side of Los Angeles. It is now a global “networked community.” Everyone is connected and everyone has access to everything. What happens in Europe, Asia and the developing world now counts and has to be listened to.  
Directors, actors, producers, financiers and all craft disciplines are only an email away. Competition for ideas, talent, money and material comes from all over the globe so no one has a unique advantage. It is not possible to even list all the companies, products and people who define their trade as entertainment. Everyone can be a customer, supplier and competitor almost simultaneously. It is still an expensive, competitive and risky “community,” but a vastly more complex one.
 
So where did the trade papers go wrong? They still operate as though the business is still essentially the West Side. Their focus remains largely on the “beltway” not the breadth and depth of the world community.
 
The best evidence of how the changes affected the trade papers comes directly from how the American major entertainment companies are managing their marketing and messaging. It is no longer important to tell people in this local community how a film fared in the boxoffice over the weekend, or to spend money to compliment local talent when a great deal of talent no longer lives here. 
Nor do they suspect an Academy Award will move the box-office needle as much as a good viral word of mouth on Twitter will. Maybe an Oscar for Best Picture will help, but one for best set designer, best technical director?
 
Should marketing money be invested to reach the L.A.-based community when many of the networked community don’t call L.A. home? 
This is the fundamental reason the advertising business for the two trades has declined. The local message is not as important as it once was and the size of the local community is only a small fraction of the total community. The net result is fewer ad pages, less revenue, and less profit … a serious problem for the trades.
 
Therein lies the missed opportunity facing the two trade papers. Why should this be? The business continues to get bigger. The domestic box-office hit a record $10 billion this year, yet the American market now represents a smaller slice of the world market.
 
The entertainment business is getting vastly bigger. There are an expanding number of companies with a stake in entertainment that did not exist just five years ago. They, too, have something to sell and brands to protect. The competition for talent, material and money continues to escalate, and with more players on the field the competition has grown more intense.
 
Information is disseminated at lightning speed. It is everywhere, instantaneous and free, so everyone knows the same thing at the same time. 
The ability to reach people has become so easy, the choices so numerous, but the cost so high it has caused marketing management sleepless nights trying to find where the audience is at any given moment and what interests them. 
Add it all up and it is clear. The business is bigger, more people are in it, its growth curve is rising, the dominance by one set of companies is gone, no one knows where the next big idea is coming from nor who will create it, and the competition for everything is beyond calculation.
 
This has become a networked community looking for leadership. The industry wants someone to lead them through the technical maze they face every day. The two trade papers were able to do that in the past and the local industry depended on them for their perspective on how to proceed.
With the overwhelming uncertainty in what is never going to be a risk averse business, where major money can be lost literally overnight, without warning, and where a new technology could render you irrelevant at any moment, there could not be a better time to be in B-to-B media.
 
In such an environment, everyone is searching for answers. They want and need leadership. That is where the trade papers could still play a role. 
They have access to everyone and everything. They have people who know the business and can find answers the industry is looking for. What they lack is a commitment to completely rethink their role and have it be one that is more reflective of the changes that have affected the industry.
The number of products, companies and people who are now a part of the multi trillion-dollar global entertainment community has grown exponentially. If the two trade papers invested their resources in identifying all the new participants and listened to what they are trying to say, the papers would have already determined from where and whom their revenue would come.
 
The axioms of the business are still the same — good story well told — but the scale has changed and that is a good thing for all those who believe in it.    Maybe, as Sharon suggests, the trade papers are facing their end game, but in my mind the end of one good chapter only leads to the beginning of an even better one.