That headline is 100 percent pure clickbait, the finest in the world.
Can you answer these 4 questions and save the media industry from Taylor Swift?
Let’s talk about why after you answer the following four questions, which I adapted from Boyd Multerer, Microsoft’s brilliant head of Xbox platform development. Be careful with your answers: you’re looking straight at the disruption currently upending the entire media industry.
What these questions demonstrate is the disquieting idea that art itself might be worth nothing — the prices we pay for it are entirely set by distribution and scarcity. When I wrote that Taylor Swift doesn’t understand supply and demand, this is the issue I was trying to highlight. It’s all well and good for Taylor Swift to think artists should charge for music, but even Taylor didn’t make what Forbes estimated at $64 million in earnings last year selling records. “It’s safe to say that, even in an album year, the bulk of Taylor Swift’s earnings total comes from touring, merchandise sales and endorsements, not album or single sales,” says Zack Greenburg, the Forbes senior editor who compiled the estimate.
Just think about the first two questions. The raw materials for an oil painting cost about $200, while an oil painting by Picasso costs $155 million. Simple subtraction should tell you that the art itself is worth $154.9998 million — that’s how much value Picasso added to the raw materials.
But that can’t possibly be true, because a print of the same painting only costs $60, and images of the same painting online cost $0. This is supply and demand at its most brutal: as the cost of copying falls and the supply heads towards infinity, the price you’re willing to pay falls to $0. Picasso adds massive value to oil paints and canvas because it requires massive effort for him to make a single copy. Picasso adds a little value to paper and ink because it only requires a little effort for printers to make a lot of copies. And Picasso adds zero value to pixels on a screen because it requires zero effort for computers to make infinite copies.
This is a fundamental truth of media; trying to create artificial scarcity with technological solutions that prevent zero-effort copying causes so many problems that that Steve Jobs once wrote an angry open letter to the music industry demanding that it drop digital rights management technology from song files. Museums are trying to figure out how to get people to pay for GIFs, but there are entire artistic movements dedicated to stripping away copyright-protection tech from digital artwork and sharing it widely. The physical scarcity that built the media industry is gone, and it ain’t coming back.
This isn’t a particularly new idea; it’s just a threatening one. If you’re Sony Records or Paramount Pictures or whatever, digital media is an existential dilemma: the price of art itself is falling to zero because it’s not inherently scarce anymore — in fact, it’s inherently ubiquitous. That’s why Transformers 4 is setting worldwide box office records even while romantic comedies are rapidly going extinct, and why aging rockers keep coming back for tours years after their expiration dates: all the money right now is in experiences and spectacle.
But there are other solutions to creating value when scarcity of distribution goes away online. The tech industry has been completely driven by the need to create value from something other than scarcity ever since smartphones took over the world and app distribution moved completely online — software used to be really expensive when it came on disks, but now the most popular price for apps on Apple’s App Store and Google’s Play store is $0. Unlike the music industry, the software industry knows CDs aren’t coming back, and they’re trying all sorts of things to deal with it:
- Multerer, who works on the Xbox, is of course fond of pointing out that games and interactivity create tons of value: he often describes American Idol as nothing more than a video game. "It is a two-hour cut-scene followed by one hour where everybody picks up their game controller (their phone) and votes, followed by a one-hour cut scene," he writes. "It is brilliantly designed so that you can't DVR it (skipping the commercials) without losing your ability to vote. The act of copying it lowers its value. The voting is a virtual scarcity."
- Ephemerality creates literal scarcity; things that go away have incredible value while they exist. That's why TV networks pay enormous amounts of money for the rights to broadcast sporting events like the World Cup and awards ceremonies like the Oscars: they force people to tune in and watch in real time, because once they're over their value falls to zero. And it's why ephemeral messaging apps like Snapchat are worth billions: the app makes messages from your friends feel valuable by simply deleting them after a few seconds.
- Communities also create value: a bunch of people talking about the same thing is great, and a bunch of people you know and trust talking about the same thing is incredibly valuable. Twitter pops up alerts letting you know when a lot of people are talking about the same thing; Facebook drives so much traffic when people start sharing things that it's changing journalism. It's spectacle on a five-inch screen, and you're checking your phone just to keep from missing out.
And these efforts to create new business models that don't rely on physical scarcity are making huge amounts of money. In-app purchases tied to game mechanics are so effective at getting people to pay for things that the FTC settled a lawsuit against Apple earlier this year over what it deemed to be confusing and unfair in-app billing practices; the agency just filed another against Amazon a few days ago over the same thing. (Apple also tattled on Google during its proceedings, of course.) A little bit of scarcity in a market defined by infinite supply can create unstoppable demand. Just ask anyone who's shelled out cash to keep playing Candy Crush Saga.
And then there’s the journalism industry, which is currently in the middle of a frenetic period of investment and invention as it moves from the inherent scarcity of bundled physical distribution to the inherent abundance of disaggregated digital distribution on social networks. What’s the biggest, most visible trend? Clickbait headlines.
Clickbait headlines are so out of control that The Onion just launched an entire site to make fun of them. They irritate and annoy. But they're also super effective at driving traffic and attention, because they're basically just games. Upworthy's now-infamous "You'll never guess what happened next" headline construction is a one-question pop quiz; a call for the reader to actually guess what happened next, and then verify that guess by reading the article. It creates value because there's a chance you'll be rewarded with the smug satisfaction of being right. (And if even you're not, you still get to share that question on Facebook to trick your friends.) Clickbait irritates when the real answer doesn't live up to the wildest guesses of the reader; no one cares if what happened next is actually boring. The virtual scarcity of the game doesn't create any value.
So yes, that headline up top is super clickbaity. This post has a list in it. I even added a quiz to increase its interactivity so other people can’t copy it as easily as I copied it from Boyd. (I hope he’s proud of me.) All because I want you to stick around and think about what Picasso’s masterpiece Le Rêve should really be worth when you look at it online.
Somebody should tell Taylor Swift what happens next.
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