More from Andreessen. I am not sure about the first proposition that there is a massive oversupply of content — once you get rid of the distribution constraint — even if one does not adopt the Ari Emanuel position. There is still a significant place for premium content, even if that premium content starts to be created in new innovative ways.
The second point about rebundling is more interesting, which suggests success on the Internet comes from creating new distribution models.
The challenge I think is that in newspapers, magazines, and television, in particular, and books to a certain extent, you had businesses that looked like they were content businesses but were actually distribution businesses. They had controlled distribution rights on the newsstand, on your front porch, on the cable or broadcast dial.
The problem is, you remove the distribution constraint, all of a sudden you get a massive oversupply of content in each of those categories, and then of course prices come crashing down. And then the adjustment process for an incumbent that’s used to being a monopoly and has a high cost structure, then has a big problem relative to all the new entrants that have tiny cost structures or, you know, user-generated content, like YouTube, with no cost structure. The interesting thing that’s happening right now, though, is what you might call re-intermediation?
Think of it as rebundling. My old boss, Jim Barstow, used to say there’s only two ways to make money in business: One is to bundle; the other is unbundle. Basically media is getting rebundled. And so you’ve got these new models—Spotify in music, Netflix (NFLX) in video, and Amazon (AMZN) in eBooks, right?—that are rebundling media together and, by the way, building very big companies around it, just very different kinds of companies than the ones that used to dominate.