The Entertainment Industry is its Entertainers, not Publishers

Some of my favorite games growing up were Lucas Arts adventure games like the Monkey Island series. Known for puzzles, humor, and story, Adventure games enjoyed a Golden Age in the early nineties before First Person Shooters and the like began attracting much larger audiences and making much more money. Publishers stopped funding adventure game makers, since they could only attract a small (but devoted) niche market, and the entire genre was killed off.

Recently Tim Schafer, a legend in the adventure game world (and the maker of my favorite game of all time, Grim Fandango), decided to go the independent route and fund the development of an old school adventure game through Kickstarter. He expected to make around $400,000, a shoestring budget in the game industry. In the end, he raised over 3.3 million, which he promised he would plow right back into making the game better. More importantly, he managed to circumvent publishers completely. He is going to distribute the game digitally through Steam.

According to publishers in music and film, the entertainment industry is dying, supposedly because of piracy. And it's true that if we look their profits, they have been falling since the growth of the internet. But it's unclear whether or not piracy really plays much of a role in their decline. Most people who pirate media would probably not be buying it if they couldn't get it for free, and changes in digital distribution allows people to, for example, save money buying singles instead of entire albums filled with filler, which obviously destroys profit margins.

But arguably the entertainment industry should be defined by the creators of media, not its distributors. For them, the picture might not be so bad, and may be getting better. There are increasingly easy ways to digitally distribute your product instead of depending on publishers to invest in creating and distributing physical media. There are increasingly easy ways of inexpensively promoting your products through social media instead of depending on publishers to finance an huge marketing campaign. And now with the Kickstarter example, creators may be able to get funding for development straight from the consumers instead of needing to sign a contract with publishers. Creators can now eliminate a very expensive middleman, and if publishers lose money and jobs, that's Schumpeterian creative destruction.

The other thing is, publishers are almost universally dicks. They use the RIAA and MPAA to sue poor mothers and teenagers for hundreds of thousands of dollars and spend billions in lobbying congress to pass bills like SOPA (they are also supposedly hypocrites, pirating content themselves in their offices). They screw creators out of royalties and use exploitative contracts. They do all kinds of things to piss off consumers, such as DRM protection that ironically drive buyers to pirate content because the DRM is so prohibitive and unwieldy.

Publishers have traditionally worked as the equivalent of risk pools. They sign ten bands in the hopes that one of them makes it big and subsidizes all the ones that don't make the profits they want. But the cost for content producers is much cheaper than it used to be. We increasingly have an ecosystem that can either limit publisher power, or bypass them altogether. That's definitely better for consumers, and arguably also better for creators. We will have a much richer variety of content (like adventure games), cheaper products through cutting out publisher fees as well as some overhead through digital instead of physical media, and possibly more money that goes into the pockets of creators rather than publishers. Win-win.