"The Infrastructure of the Recording Industry Is About to Fail”
The entire Hollywood ecosystem is tottering on the brink
I’ve warned repeatedly that the Hollywood entertainment industry is dying. SoCal creatives have faced challenges before—but never quite like this. We may have reached a point of no return.
I’m not just talking about wildfires or COVID or AI. It’s everything, all at once.
They call it death by a thousand cuts—and most of them here are self-inflicted.
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For a start, the film industry is abandoning Hollywood. Huge new production facilities are getting built everywhere except California.
There’s a mad rush to build a huge new studio in Las Vegas.
Texas, New Mexico, Arizona, Pennsylvania, Louisiana, New Jersey and other states are also aggressively competing for projects.
Just last week Apple TV+ agreed to film more projects in France.
Pressure for more “local content” are coming from all over the world. Netflix recently bragged that it has 40 projects underway in Europe, and may be even more committed to Southeast Asia.
This is all happening during a period of declining investment in new TV series and movies. Even if Hollywood fends off these competitors (unlikely), there’s still not enough work.
And it gets worse. When a new movie does get made, few people care enough to visit a movie theater. Before the pandemic, box office receipts easily surpassed $11 billion per year.
That will never happen again.
“We’ve gone full circle—and have actually reached the point where stage plays have more upside than a Hollywood movie.”
Hollywood celebrated when it finally reached $8 billion in ticket sales last year. But even holding that low level will be difficult.
In a market saturated with lookalike franchise films, the best strategy Disney CEO Bob Iger can now offer is to “reduce our film output.” Like everybody else in the business, he’s focused on cutting costs.
Making movies is a much lower priority. Films are just too risky—especially anything fresh or different or daring.
It’s gotten so bad that filmmaker Quentin Tarnatino now says that he would rather write a stage play—and he’s doing just that.
He speaks out frankly, and with anger. But I can’t disagree with what he says:
Making movies? What the fuck is a movie now? Something that plays in theaters for a token release for four fucking weeks—and by the second week you can watch in on television? I didn’t get into all this for diminishing returns.
It was bad enough in 2019, and that was the last fucking year of movies. And that was a shit deal as far as I was concerned…. it’s gotten drastically worse and that it’s just a show pony exercise now….
In [stage] theater you can’t do that…In theater you pay a lot of money to get into that seat. But there’s no fucking taping, no fucking cellphones. You own the audience.
We’ve gone full circle—and have actually reached the point where stage plays have more upside than a Hollywood movie.
Give me that Shakespeherian rag—so elegant, so intelligent…
But others are even more pessimistic that Tarantino.
A few days ago, Oscar winner Peter Rotter released a public letter describing the crisis in the Hollywood music business.
The musicians are not able to make ends meet as the amount of scoring here in L.A. has fallen off the cliff….I see the infrastructure of the L.A. recording industry about to fail. It’s only a matter of time until this happens….Our town has become silent, still and devoid of music making.
If you expect Netflix or Amazon to solve these problems, think again.
Netflix has got a new religion, and it’s called selling ads and raising subscription prices. They’ve learned that this has a better payback than investing in content (ugh!).
“Our town has become silent, still and devoid of music making.”
They don’t even care about subscriber growth anymore. They once bragged endlessly about it—now they don’t even want to share the numbers.
Instead, here’s what they said in the company’s recent letter to shareholders:
As we continue to invest in programming and deliver more value for our members, we will occasionally ask our members to pay a little more so that we can re-invest to further improve Netflix.
Here is what that means for subscribers:
Standard monthly membership (without ads) gets raised from $15.49 to $17.99
A standard account with ads increases from $6.99 to $7.99.
The premium tier increased jumps from $22.99 to $24.99.
This announcement did not generate much enthusiasm. Here’ what Inc. had to say:
Does anyone believe that it is raising prices so it can “improve Netflix?” What does that even mean, because it doesn’t seem to mean “spend money to make better programming.”…
The thing is, Netflix isn’t really even trying to make the argument that it’s worth $25. In fact, it seems pretty clear that the company would rather you not pay that much. What it wants is for pretty much everyone to switch to the ad-supported plan because that’s where the growth opportunity is.
By the way, you should get prepared for other streaming price hikes for music and video. This is the fastest way to make money in entertainment right now—and if Netflix has figured it out, so has everybody else.
Amazon has already made a move—announcing yesterday a boost in its music subscription prices.
The result here is what I’ve been fearing for the last several years—namely that distributors will swallow up most of the money that previously went to creators.
In a fair world, creative talent would reap most of the benefits of their artistry. Distributors deserve some money—that’s why I’m happy to pay Substack a 10% cut. Bandcamp operates on the same small margins.
But that’s not how they roll in the streaming industry.
Netflix now wants to spend less on making movies, but charge more from the audience. Or skim off cash from advertising.
Spotify is an even more extreme case. It’s more of a pure distributor of music, with little interest in financing new projects from musicians.
Meanwhile CEO Daniel Ek has so little confidence in his own business that he is dumping his shares on the market at a pace I’ve never seen before.
I was shocked at how many shares he sold in 2024. But he’s doing the same in 2025.
This is unusual behavior, and tells us that even the people running the show are in panic mode.
The end result is a topsy-turvy entertainment ecosystem, where nothing is solid or enduring. Even worse, in the current environment you get rich as a distributor of somebody else’s creative work.
Creating itself feels like a sucker’s game for losers.
That should never be true, but especially not now when distribution happens via software, without warehouses or delivery trucks or any of the traditional expenses associated with moving product.
If I make a song, and you listen to it, how much should the intermediaries between us earn for their distribution software? If you ask me, they should be getting the pennies, while the creators get the dollars. But now, it’s the other way around.
I will write more in the future about the tyranny of the distributor. All I’ll say today is that this is a much bigger threat to the entertainment industry than the bosses realize. They are actually helping the distributors who will cut them off at the knees.
Businesses that depend on creativity need to nurture and reward it. But the exact opposite is happening right now. AI is the most obvious example, but it’s just one symptom among many.
It’s the perfect storm.
I’d like to believe that movie studios and record labels will take drastic steps to protect the creative talent that supports their businesses. But all evidence tells me that they are part of the problem, not the solution.
So I only see one pathway out of this mess—which is a new indie movement, a new alt culture. Even Hollywood creatives now need their own alternative platforms and organizations, similar to Substack or Bandcamp or Patreon.
These would be built on the idea that creative talent retains most of the cash. That’s a reasonable goal. And it’s attainable—although making this happen involves risk-taking and hard work.
If Hollywood still sees itself as the City of Dreams, this is the one dream they need to come true. And 2025 is the time to make it happen—or, even worse, the last chance.
I have been a full time musician the last decade and this week is the first time I've been applying for outside, full-time jobs. Even with my increasing fan base and listenership, the money just isn't there anymore. It's incredibly discouraging. Thanks for shedding more light on this for the public.
As someone who worked 40 years + in the film business (I can't honestly call it an industry; that ended long ago) I'll go out on a limb and say that I don't think moving the business to Vegas and the other cities mentioned will help much at all. The root of the problem has been explained by Ted numerous times, and he's right. It really boils down to a major culture change/collapse in which the attention spans of the mainstream have been reduced to the level of a goldfish whose sustenance now comes largely from social media. And the addiction to social media is worldwide. The tragedy now is that great scripts, books, music et al are out there, but 'nobody' gives a shit any longer. Our times fulfill Huxley's prediction that in the future no one would care, even in the midst of greatness.