At OnCopyright2014, sponsored by Copyright Clearance Center, Film and TV producer Jeff Sharp, Google executive Patrick Sullivan, and journalist-turned-entrepreneur Tomoko Hosaka shared with CCC’s Chris Kenneally what they are doing today to respond to the challenge of digital disruption and to anticipate the direction of future disruption.
KENNEALLY: Good afternoon everyone, again. I’m Chris Kenneally for Copyright Clearance Center, and if you’ve been sitting through this conference about copyright and the creative industries, it can leave you with the impression that copyright has a lot of catching up to do, at least when it comes to technology. In my own mind, that seems pretty fair. After all, while there are many good reasons, and we’ve heard about them, and appropriate occasions to seek permission, innovation isn’t one of them. You don’t ask permission to hold a revolution.
A quarter century ago, a British computer scientist working in Geneva presented his boss with a proposal for a new kind of network, one able to link documents and data across the Internet. The manager had been gently encouraging this employee in his work, but he wasn’t ready to commit resources. So he wrote, vague but exciting, at the top of the memo, and Tim Berners-Lee had to work on his own.
Vague but exciting. Thinking about the future will give you that kind of feeling. It’s all very exciting – Google glasses, smart watches, 3D printing – and it’s also a little vague. The Internet of things.
Making predictions is notoriously difficult, especially predictions about the future, so on this panel about the future is already here we won’t ask for predictions, per se, because we know how that would turn out. It would probably turn out like all those 11 million brackets in the ESPN Fantasy Tournament Challenge. Instead, I want to ask my guests what they are doing today, right now, not only to respond to the challenge of digital disruption and the impact it has on their creative endeavors, but also to anticipate future directions. So this is less clairvoyance and more like weather reporting.
I’ll introduce them for you right now. So on the very far end is Jeff Sharp. Jeff, welcome.
SHARP: Hi.
KENNEALLY: Jeff is president/CEO of Story Mining & Supply Company, a Los Angeles-based production company committed to acquiring, developing, financing, and producing multi-platform premium content through unique access to quality material. Jeff Sharp has produced a series of Academy Award winning and Golden Globe nominated films over past 10 years including Boy’s Don’t Cry, You Can Count on Me, Nicholas Nickelby, and Proof. Prior to Story Mining, Jeff co-founded the digital publisher Open Road Integrated Media with former Harper Collins CEO Jane Friedman.
Beside Jeff is Tomoko Hosaka. Tomoko, welcome. Tomoko is a journalist turned digital media entrepreneur. As COO of Plympton, she oversees business operations and strategy there, as well as management of their online product, Daily Lit. She’s previously worked at Ustream, the world’s largest, live interactive video platform, where she led news, content, strategy, and partnerships. It’s critical to say that before moving to Silicon Valley in late 2011, Tomoko Hosaka covered Japan as a business and technology writer for Associated Press. She was part of a team that won awards for its coverage of the 2011 earthquake, tsunami, and nuclear disaster.
And then finally to my left is Patrick Sullivan. Patrick, welcome. Patrick is an innovative technology entrepreneur and investor who is CEO and co-founder of RightsFlow, a music licensing and royalty management company which Google in 2011. As strategic partner develop manager at Google today, he spearheads key content licensing, monetization, and copyright identification initiatives.
So with all of that, I thought I’d start with Jeff because there’s this quote from William Gibson, which is, “The future is already here – it’s just not very evenly distributed.” You’ve just returned from Hong Kong, you were there for the Hong Kong Festival. What’s interesting about the China example is that it’s the largest smartphone market in the world, but it’s also a place where they’re building movie screens, still, something like 10 a day on average, more than any other country. So what we’re seeing there is really sort very new technology, and, if you will, legacy technology. It’s interesting, I think, as a way to get you to tell us about your experiences in that marketplace.
SHARP: Sure, absolutely. China is a real area of fascination, I think, for many of us. For us as filmmakers and publishers, the market offers up all sorts of opportunities to innovate, to look to new ways of collaboration, new forms of collaboration. I’ve always looked to publishing relationships to supply the content strategy for the films and TV shows that we produce in China, based on the IP situation. Publishers control the rights in partnership with their authors. So it makes partnerships with traditional publishers and online publishers quite easy to form.
So we’ve made partnerships with some of the leading publishers in China, including Shanda Cloudary. Shanda Cloudary is the largest online publisher. The reason I use them as an example is you mentioned all the screens – proliferation of screens and mobile devices in China. So mobile reading is extremely popular in China right now. So we source a lot of our movie ideas from these online novels which are basically serialization. They go on for hundreds and hundreds of pages, though authors are paid by chapter to continue writing these stories that their audiences are addicted to.
So we’re taking that large, large content pool and adapting that for films which are designed to be released theatrically. So you’re taking this very, very new innovative publishing technology and adapting it for a very traditional format, which is really interesting. So a lot of different things are happening at the same time.
KENNEALLY: Yeah, you have to hold a number of different ideas in your mind at the same time. I was looking online to what some of the top grossing in China were last year, and so Iron Man earned 124 million, Gravity at 71 million. But one of these films I think you were speaking about, Tiny Times, it’s a tale of four wealthy Chinese girls and it’s apparently just captivated the country.
SHARP: Yeah, the last few years have seen domestic production, domestic films overtake U.S. imports dramatically. In fact, this last year, the box office was led by Chinese domestically produced films based on underlying Chinese Mandarin language content.
KENNEALLY: But the model that you have at Story Mining & Supply is to, as you say, work with the local players, particularly identifying authors who you can then partner with screenwriting talent in the U.S. Tell us how that’ll work.
SHARP: Yeah, it’s a little bit in-process, but the way we’ve designed this partnership is we’re taking Chinese IP, so Mandarin language content, a lot of it online, a lot of it, traditional, partnering with Chinese filmmakers, and then using a U.S. screenwriter to help ensure a quality, basic three act structure, a lot of things that are lacking from the market at the moment. It’s primarily due to the fact that there’s just such demand for content, there’s not enough talent to go around. So we’re leveraging our Hollywood screenwriting talent to ensure that these films are of a quality that might actually work on an international stage.
KENNEALLY: And the other thing that’s interesting is, again, another format that’s a very traditional one is the book. You’ve written that the book is a great conveyer of ideas. It’s a way to present something to a film director, for example, and say, what do you think of this? So the book still has a great value, as well.
SHARP: Book has great value, whether it’s online, digital, or it’s a physical book, not only for filmmakers, producers alike, but also for financiers. When we’re going out and raising funds for our China strategy, it’s great to have some tangible – the foundation for a story sitting right there. Investors get very excited about that. In fact, distributors in that market are willing to sign on and guarantee distribution for a film based on a book before there’s even a screenplay.
KENNEALLY: Remarkable. Well, Tomoko Hosaka, at Plympton, just last month at the South by Southwest conference, you launched a new reading app that takes the book into the future. Tell us about that.
HOSAKA: Right. We hope it takes the book into the future. So you talk about serialization, that’s part of our strategy. The previous speaker talked a lot about listening to your customer, and I think that’s what we really tried to do as we were developing this product – we just call it Rooster. We’re calling it a curated reading service for the smartphone. It’s not an online bookstore. We very much want it to be a service, and one of the things we kept hearing over and over in our market research, as we were developing was that there was a big population of people who say they want to read more but they just don’t have the time.
KENNEALLY: That’s me. I wish I had more time.
HOSAKA: Right, so we really thought about this a lot and thought about what kind of product we could create to address this population.
KENNEALLY: And can I just say, the people who are doing the thinking about this are writers themselves. Not only are you a journalist by background, but some of the others on the team come from journalism, there’s a novelist.
HOSAKA: Right, our CEO Jennifer 8. Lee, she’s a former New York Times reporter, and she wrote a best selling book on Chinese Food, and our other co-founder, Yael Goldstein Love, is a novelist herself, and she comes from a family of writers, as well.
KENNEALLY: These are people with real passion for writing.
HOSAKA: Yeah, absolutely, absolutely. What we ended up creating was a mobile first reading service where – one of the things we discovered was that choice was actually a barrier to people more, and that they were overwhelmed with hundreds and thousands of book titles coming out every year. So we kind of went the opposite way, saying, well, why don’t we kind of really eliminate that choice, and present people a very highly curated selection of titles every month, and say if you’re going to be reading, this is what you should be reading this month. Then each title we have is broken up into installments. So suddenly, length isn’t a barrier either because reading a 400 page novel may be very intimidating and hard to start, but if that’s broken up into smaller installments, which are delivered to you on your own schedule that you decide, so if you want it Monday, Wednesday, Friday in the morning, you can do that. If you want it every day in the evening, you can do that as well, or every weekend. So that’s the product that (overlapping conversation; inaudible).
KENNEALLY: So again, it really is about the importance of the customer in that relationship you have.
HOSAKA: Absolutely, yeah.
KENNEALLY: Because you also have relationships with the authors and the agents, too. Tell us about that, because how do they respond to this new way of thinking about publishing.
HOSAKA: Yeah, so the way we acquire content is we do a combination of – we commission our own fiction, so our own original, exclusive works, as well as we’re starting to work more and more with publishers, as well, who are interested in our platform. We really tapped, in our initial – because we’re a startup – in our initial round, really tapped authors who had a track record of really high quality writing and success, and really tried to find the ones who were excited about changes and new platforms and were willing to work with us on that. Publishers are a little bit trickier to work with because some of them have very established rules in place, and constraints, and things that they’re able to do and not able to do.
KENNEALLY: And you’ve learned some things the hard way, too, right?
HOSAKA: Yeah.
KENNEALLY: I think you had some contract that were on the subscription side of things, and now on the serialization side, this has made going back and –
HOSAKA: Right, right. We’re a monthly subscription service, so for 4.99 you pay – it’s a monthly fee and you get selections that we bring to you. For some publishers, working with us is a challenge because they’re allergic to subscriptions for various reasons, so that’s been a challenge. But there are enough publishers out there who are interested and recognize the need to engage new services and varieties.
KENNEALLY: Well, Patrick Sullivan, your job at Google is listening to a lot of great ideas. Some of the ideas you just heard and many that we’ve spoken about today, and sifting through them. What attracts your attention these days when you hear these presentations?
SULLIVAN: A company like Google is so big and it has a lot of innovations going, and development, internally. But for me personally, what I’ve seen in particular in the New York area, and I think it’s important to talk about the earlier discussion about technology innovations, how it impacts the publishing industry, copyright industry is really getting out there, talking to your customers more importantly, but seeing the trends and the future business model that will exist.
I spend a lot of my time with incubators, start-ups, accelerator organizations like General Assembly, Techstart, these are the evolutionary, the new businesses that could be the next publishing platform, media platform that could be acquired by Google or it could be a public company and be a next Facebook. I think that from my perspective, looking at that and seeing how that’s going to impact, whether it’s the movie industry, the book industry, I think it’s important you start to do that, your people to that.
I came from the traditional music publishing industry, and there was a hesitancy and resistance, I think, 10 years ago, to technology development because it was moving faster on a supply and demand level, as an economic level. They’d never seen – the supply was controlled. There was radio, Tower Records, and it was controlled by major record companies how that content was accessible. Along came businesses that technology innovated like iTunes and YouTube.
So I think that if I were in a position of where you are, I’d have a perspective on where that trend is going to happen from those young innovators that are building these companies, these startups, thinking how to solve problems with technology solutions that can impact your business and be aware and be maybe one of the acquirers that can change your business for the next 10 to 15 years, and not be in a defensive position on an island thinking the business will sustain and the model of they will come will continue, think the distributed way and those businesses will think how they can distribute your content in ways you’ve never seen. They’re thinking about it right now.
KENNEALLY: The example of Napster has come up a couple of times in the course of the day’s discussion. You feel that it has some lessons to teach us today, particularly regarding 3D printing, which we’ll see a demonstration of later. Tell us about it.
SULLIVAN: My interest – I don’t know if you’re familiar with 3D printing. Imagine a world we lived in before we could photocopy books and print it out at home or in a library, and all the copyrighted materials, printable and accessible to anyone, and you didn’t have to pay copyright owners in some instances. But the world of 3D printing enables anyone who’s created a digital design on a CAD file, computer animated design file, the ability to create a design and then print an object. The software on the scanning side – and the hardware’s still kind of in its infancy, somewhere around 30 years. Well, think of the mainframe computers, IBM, the photocopiers that we used to have years ago that were massive. That ability exists today and MakerBot here is presenting, has a technology and a hardware that allows you to print out works that they license – not MakerBot, but their consumers license IP around printing copyright or printing objects and creating new objects, derivatives, user-generated content. It’s a disruption, it’s something that, from my perspective, I see it’s inevitable. It’s here and it is the future. How advanced it gets in the next three to five to seven years contingent on technology development.
KENNEALLY: The point, though, is that in the case of Napster, the industry tried to step on Napster, and I guess what I hear you saying is embrace the 3D printing because it’s here.
SULLIVAN: Yeah, I think coming from the licensing in my background, it’s a challenge because in the Napster world, I was part of the Napster litigation team against Napster litigation team against Napster. It was very defensive because, I think, we weren’t set up at the time for scaled licensing systems. The ability to take music put it into a platform like a Napster system opened Pandora’s box for access. I think we’re all familiar with that.
The same thing is going to happen in 3D printing. There’s going to be a new world, a revolution evolution of manufacturing. For people that own designs and IP, with the scanning technologies and the print technologies, it’s going to be very resonant. The difference of industry on scale is much larger. We’re talking about a $70 trillion industry in manufacturing, compared to the industry I was in at the time, recording, was around 40 billion. There’s a lot of change/disruption, but I would say in the IP world, start to embrace.
Back to the earlier discussion I said the next technology is the technologies like MakerBot that exist today and see how you’re going to fit your business into the future. Talk to your customers. Your customers might want their copyrighted materials printed at home rather than going into Amazon – going to Amazon online or going to Home Depot. In the case of Napster, we weren’t ready, as an industry – as an IP industry to embrace that. The challenge you have is technology is here, and we’re still trying to catch up with times. But where we are still in the early gate, I think with 3D printing we have a chance, as IP owners, to look at where we’ll end up in three to five with our rights and licensing.
KENNEALLY: And Jeff, Open Road really jumped on opportunity fairly early in the cycle with e-books, and you put e-books, as a publisher, at the center of what you did. That was really important. But around that, you did all sorts of other really creative things.
SHARP: That’s right. Over the course of the last few years, we’ve experimented wildly with developing enhanced e-books, developing for television and film. Some of those things are coming to fruition. Some of those experiments were just that – experiments. We’re still really open to those kind of opportunities to pull together as a team and look at something with a slightly different focus.
KENNEALLY: It seems to me it’s not a either/or, it’s an and. So we put e-books at the center, and we have the film projects and the TV projects and so forth.
SHARP: That’s right.
KENNEALLY: Kind of build on it.
SHARP: We have a big in-house production department. We create a lot of original video content for authors to promote, primarily for marketing purposes. But it lives out there in the world, in a larger sense.
KENNEALLY: Right, and it’s unusual to see the words startup and publisher side by side. We’ll talk to Tomoko about her experience in that situation. But for Open Road early on, it made you an outlier, I think. Must have been an interesting experience in those early days.
SHARP: Oh, yeah, I’m a film producer by background, so to find myself in the world of publishers – start up publishing outfit was really surprising. It wasn’t what I expected at all. You know I ended up back into it. My obsession with finding the story first and getting to the content first led me to my business partner, Jane Friedman, when she was CEO of Harper Collins, which is how I ended up moving into the business. That’s my journey, but yeah, Open Road has always been a little untraditional. Non-traditional.
KENNEALLY: It’s untraditional for a journalist to be working at a startup, as well, although there are more and more and more of them. They call it the digital migration. Actually there was a report recently from Pew that documented just how many hundreds have moved into the startup space. They face the challenges that you face there. You moved from a really established organization where you can work almost independently as a journalist to being part of a small team where you have to do everything.
HOSAKA: Right, right, yeah. It’s an interesting transition. When you’re a journalist, your job is basically content that you produce yourself. That’s your entire focus, whether it’s a story or a video or whatever. When you move into a startup, whether it’s a digital media startup, you’re forced to do everything. So everything from worrying about the content, to product, to business development, to HR to all sorts of things. So yeah, it’s a very interesting transition. But more and more journalists, I think, are becoming very passionate about the changes happening in their own industry and in digital media, and are compelled to break free. I do think there are a lot of opportunities for journalists, not just at startups but more and more companies and organization are getting into the business of content. So there are opportunities (overlapping conversation; inaudible).
KENNEALLY: I was going to say that really there are great opportunities because these journalists have these storytelling skills. Jeff is looking for good stories. Journalists know how to tell a good story.
HOSAKA: Right, exactly.
KENNEALLY: In fact, some of the projects you’re acquiring are based on non-fiction, so it’s not entirely fictional works.
SHARP: That’s right, that’s right.
KENNEALLY: It’s important.
SHARP: Absolutely.
KENNEALLY: Patrick Sullivan, for someone contemplating this startup life here as either a mindset, and I know at Brian Kibby’s outfit, that’s what they try to think of themselves as. They don’t want to think of themselves as a publisher, they’re in the learning solutions business. Can you offer some advice? What’s a good way to approach it when you get in there for the day.
SULLIVAN: If you’re an established company or you’re a startup, the core things you got to look at, whether it’s new business that you’re trying to develop around your current customer base, or grow your business – I’m always in particular trying to solve problems whether it’s internally where I work today or trying to identify new problems that will be tomorrow, exist today as well, and then coming up with some solution around that. Hopefully there’s an economic model around that in some addressable market.
But I think when you’re starting your business, the main thing you got to have is some sort of problem you’re going to solve, you’re a startup. You can’t just say I’m starting a company and I’m going to do something similar to Facebook, which has solved a lot of problems for a lot of people that are addicted to social media, and compete with that. But I think that’s the main advice.
But execution is key, and without people and process and technology around that, you can’t execute your business. I spent a lot of time publicly speaking out there in the startup community, investment banking community, and these little things you may know, are aware of about execution. But really understanding the fundamentals of that and bottom-up management and looking at your team and how they succeed. I think management leadership has changed from since I started my career 20 years ago, and with the tools that are available online – social media, awareness, information sources that you got to be able to give that and empower so they can succeed.
KENNEALLY: This problem/solution situation is the solution has to be a certain type of solution, though. I think you look at as either a vitamin or a pain killer.
SULLIVAN: I think it’s a very hard thing for people to see. A good lesson that I learned, very important, was is your business a painkiller? I’ll use YouTube, Facebook, Google, the companies that I’m aware, those are pain. People need – they’re addicted. They need it to run their business. So Facebook, you can say, is a vitamin, but there’s a billion people using it, so it’s solving a pain for a lot of people, they want to connect with their friends and families and colleagues that they can’t get to. Or your vitamins, like, I don’t really need it today. I think it’s a challenge for some companies, I think, in the licensing space because people can get away with unlicensed content, and that’s a challenge. You have to create and empower great ways innovative around that to help empower people to get access to content so they can get access to it and license it, or license and get access.
But very important lesson, painkiller/vitamin. I talk to a lot of people, I’m like, that’s really not solving a lot of problems for anyone because they don’t really need it. If it’s something you use twice a day, it’s usually painkiller that you need to do and you need to use.
KENNEALLY: Well, certainly people go to films a great deal. They’re watching movies on their tablets, on their smartphones, and so forth. And I wonder whether they’re beginning to think about becoming involved in the process themselves. I was reading that Alibaba, which is the giant e-commerce site in China – the Amazon of China and much more – has just started an online fundraising for a couple of its film projects. I wonder whether you, in your travels in China, Jeff, have seen a movement toward bringing the audience into the development of these projects.
SHARP: Yeah, I think we’ve seen a lot of conversation around it. Amazon certainly, Roy has been doing some interesting stuff as well, with audience-generated, either with their TV pilots or with their feature program. They had Amazon Studios where Price was developing this idea. I think it’s really fascinating, it’s cool. It’s early days, we haven’t really seen a lot come from that kind of activity. But with the online novels that we’re using, those are audience-driven stories. So in some sense, the films that we’re making for that market are inspired by the audience. While it’s not user-generated content, it’s inspired by the kind of things that they want to see. Too soon to tell.
KENNEALLY: Tomoko, what about you? Do you get input from your readers? Are you listening to what they have to say? And what are they telling you?
HOSAKA: It’s still early but we’re definitely listening to our readers, both in terms of the technology and the content and feedback. Our launch title is a serial novel called I Was Here by Rachel Kadish, and that’s gotten incredible feedback. People are very excited about it, and excited about the format, as well – the serial format, because I think for most people who try our service, they’ve actually never experienced a serial novel.
KENNEALLY: Well, it sounds like you’re solving a pain problem for them. They want to read and they feel that they’re missing something in their lives.
HOSAKA: That’s our hypothesis.
KENNEALLY: How’s that in a hypothesis? In the publishing world, do people lack for content at all?
SULLIVAN: I definitely don’t think it’s a lack of content. It’s a challenge with filtering content that you want to read and watch. I personally believe everyone needs to read. You can’t exist – or to some, maybe not. You can be a vitamin approach to watching movies and TV. Some people I know don’t have TVs, and I understand that’s how they live. But I need to watch TV. I enjoy – and I think to me, that’s a need. The challenge then becomes, what’s the choices on the shelves of what you watch?
I think that as more and more content is accessible, it becomes a challenge to how to filter and curate. I think even the businesses that we’re seeing online and the Pandoras, these music companies, they still need to have a filtering system that’s just not a technology solution, it’s people curating content. Obviously there’s a technology component to it, but I think it takes great companies that can produce great content that meets the needs the use of their user base and it solves that pain for them, that want it and want to access it, and need to access it, more importantly.
So I think we’re not lacking content. I think everyone’s a creator. That’s why I’m interested in the 3D printing space where I’m looking at it from the next generation of children growing up in America. T he White House has initiatives and we’ve done a lot of talks with them on how they’re developing this maker approach where if you think of the personal computer in the home, imagine a world that can (inaudible) personal computer which most people have – not most, a lot of people have in their homes in the United States, will then have a printer associated with that, another piece of hardware that enables them to create, and it can create a whole new world of manufacturing, and then they need to manufacture and print, just like people to manufacture articles, movies, books, that they can do today on YouTube. Anybody’s a creator, a video creator. We can create a little movie right now about this, or a little documentary, and we’re all creators. It’s exci – it’s real. Will everyone make money? Maybe not, maybe some, but I think the idea of creation and that idea of where it becomes the new world of manufacturing hardware, which excites me a lot.
KENNEALLY: Absolutely. And it’s a global endeavor. And so Jeff, again, I go back to you, going back and forth, a bit jet lagged from Hong Kong, and ask you finally how difficult it is to find stories that have universal appeal?
SHARP: At this point, we’re really looking for material that speaks directly, specifically to a market. I’m not trying to tick all the boxes at once. Our belief is that quality travels everywhere. There’s an amazing group of emerging filmmakers in the market at this point in China as there are in the U.S. Great quality content travels well, so we’re really focusing on the domestic market for the projects. For instance, we’re producing a television series right now called Outlander which is based on Diana Gabaldon’s series for Starz and Sony. We just got a green light for our second season. We premier here in June. That’s something that is Scotland, 1740s, very specific. No stars, we’re all casting locally. It’s a primarily UK production, but we have great hopes and expectations it’s going to travel internationally as Diana’s books have. So I think it’s an example of you cultivate and develop stories for a very specific world and market and then hope that if you really work very hard on the quality and packaging the best talent available that you can find a larger market.
KENNEALLY: Does that resonate with you Tomoko, as well? You focus right now on the North American marketplace and then think about the world later?
HOSAKA: Yeah, yeah. We definitely want to expand globally, but I think right now, we want to make sure that we get North America right.
KENNEALLY: And, again, I think getting something right first, having a little bit of success under your belt seems really important for a startup or for any early project.
HOSAKA: Right.
KENNEALLY: Patrick Sullivan, Tomoko Hosaka, Jeff Sharp, thank you so much for a great conversation.
(applause)