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  The Making It! Business Blog
by Nelson Davis

Wednesday, January 16, 2008
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EVERYBODY'S CHEESE IS MOVING

Events of the past several days in Los Angeles solidified some thoughts I’ve been nursing for several years now. So many things on the business and economic landscape are changing, and most of us aren’t sure where they are headed. All we know is that insecurity and the unhappiness that breeds are top-of-mind feelings for a lot of people right now.

 

In the past I’ve written that the decades long super consumer era that America has known is coming to an end and we saw an example of that during the holiday shopping season. Also, I had fun a couple of years ago analyzing the importance of the best selling business tome, “Who Moved My Cheese?” The story of Who Moved My Cheese? was created by Dr. Spencer Johnson to help him deal with a difficult change in his life. It showed him how to take his changing situation seriously, but not take himself so seriously. Through waves of downsizing, rightsizing and workforce reductions, the book became a best seller and a favorite in corporate America.

Let’s get back to the weekend event. On Saturday, my lady and I went to a favorite restaurant (Orso) in west Los Angeles that is usually buzzing and crowded. By the fashionable weekend dining hour of 8pm, the place was only about 40% occupied.  The owner let us know that they were being adversely affected by the Writers Guild of America strike that is beginning to get a little gray at the temples after two months. There have been thousands of layoffs, and ancillary small businesses have been suffering as the film/TV production money spigot is only dribbling these days. Normally on this past weekend, there would have been parties and smiles everywhere because of the Golden Globe Awards. Instead, the caterers, limo companies and party planners were probably eating pizza while dreaming of last year’s caviar bashes.

 

You see, each group and business category has to learn that its cheese is not exempt from the forces that will cause it to move. Very old cheese or newly formed curd gets the same treatment. Just look at the 100-year-old automotive businesses in our country. Every U.S. automaker is weighted down with legacy expenditures to employees that were promised during their sunny business climate of the 1950s and ‘60s.

 

The writers who supply most theatrical film and scripted network TV with words haven’t yet absorbed the fact that their turn at torture may be coming soon. They are locked in a tussle over future residual payments for their work in new media and that may be the battlefield. Many of these men and women are somewhere between bright and brilliant with ideas and words but they often miss a fundamental tenet of the capitalist system. That obvious rule is that the person taking the greatest risk usually gains the greatest rewards when a venture is successful. Not only that, but they get to write most of the rules on how the largesse is doled out. The money and the cheese move in lock step.

 

The decades old fundamental system of residual payments to writers may be in jeopardy. We all have a natural inclination to want things to remain as they were if it was fun, easy and rewarding. I’m fond of saying that yes, the truth will set you free, but first it may kick your butt. In every business, there are structural changes emerging and some are much less than pleasant. Some of those people manning the writer’s picket lines are smarter and more visionary than others and they should see this with an entrepreneurial eye. That may mean creating content directly for online distribution and bypassing networks, studios and other gatekeepers. Isn’t that supposed to be one of the opportunities presented by the new digital world?

 

The writers aren’t the only creative artists whose cheese is strapping on roller skates. I noticed today that EMI, the legendary music company that brought The Beatles to the world is laying off up to one third of its 6,000 employees because consumers aren’t buying recorded music in the same way as they were just three years ago. Of course, newspaper circulation in the United States has been skiing down Mount Everest for years. There won’t likely be any pickets in either of these cases and no cries by newspaper writers that they are entitled to continuing payments for an article they wrote years ago. In Hollywood the sacred cow of residual payments is an endangered species that will prompt many more fights between the artists and money interests.

 

I worked for one of the big three TV networks in the 1980s when they didn’t fully recognize or respect the fact that cable TV was about to change their business lives. Now, the Internet is guaranteeing there will be further radical change in how content is made, marketed and distributed. While writers and other “creatives” are lamenting their state of affairs, the TV networks and studios themselves are trying to figure out how to chase the cheese.  There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Those are the words of Niccolo Machiavelli

 

 

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