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Some Barclays analysts explain “why Hollywood writers misunderstand AI’s role in content creation”


Want to know what it takes to make a hit movie? Ask a banking analyst.

That’s one of the takeaways Signal in the noise, a compendium of deep thoughts released annually by the Barclays Media and Telecoms team. The 2023 edition weighs in at 133 pages and contains a lot about how artificial intelligence can influence the creative process. Edgar Degas, Vincent van Gogh and Aaron Hertzman are all quoted in the first few pages of the first essay, which reflects extensively on the nature of art:

In some ways, the unpredictability of the experience, the complete surrender to the artist is the point of art – whether it’s the worlds James Cameron imagined in Avatar or the simple strokes of a Picasso. That surrender is not possible with technology alone, because technology is context-independent and only a tool. Art, on the other hand, “. . . requires human intention”. Technology in itself independent of the artist has no real purpose.

Art and content is about the interaction between the context of the creator and the consumer, which is why the same work can touch people in different ways. This is why art is never “complete” and disconnected from a creator, it cannot really change contextually.

And so forth.

One theme that emerges is the difference (in terms of monetization) between big budget video and more passively consumed media such as streamed music. It’s a distinction that’s central to Chapter 3 — “Why Hollywood Writers Misunderstand AI’s Role in Content Creation” — and it’s timely. Hollywood studios yesterday reached a tentative agreement with the Directors Guild of America union to prevent a writers’ strike that would halt production. Their agreement includes a clause that “generative AI cannot replace members’ duties.”

Pah! says Barclays; a point it illustrates by comparing writers’ rooms to the second industrial revolution:

While understandable, in our view this opposition represents a fundamental misinterpretation of the role of technology in content creation. In fact, the impact of AI may be the opposite of what content creators seem to implicitly assume, in terms of relative power balance between studios and creators.

Technology tends to fundamentally restructure pre-existing workflows into different forms, ultimately resulting in new possibilities. These changes are often out of sync with the emergence of new technology, one of the factors often overlooked during the hype cycle associated with new technology. For example, as the world transitioned from steam engines to electricity, counterintuitively, productivity levels declined for decades. Based on the evolution of the industrial economy over the past 100+ years, when society sees major shifts in such general-purpose technologies away from steam to electricity and now the shift to AI, the tendency is to push the innovation into an existing business process . For example, steam-powered factories were largely designed around a central engine room that was then connected via a shaft to other parts of the factory to power various equipment. However, due to restrictions on how large these shafts could be, most of the factory was clustered in layers around the central steam engine. During the early days of electricity, factories replaced the steam engine with an electric motor, but kept the rest of the factory layout the same, limiting the productivity benefits of using electricity. Over 30 years, as the ‘electricity first’ generation gradually came to replace the older generation, factory layouts were fundamentally redesigned to take advantage of the decentralization enabled by electricity, which then drove productivity and changed the manufacturing paradigm .

And so forth.

The purpose of the above analogy is to suggest that a company’s first instinct when confronted with a new technology is to cut costs. Capabilities can turn into radical changes in the long run, but redesigning workflows is costly, so would negate the quick benefit.

Moreover, industrial revolutions don’t really apply to media, because “technology and capital don’t necessarily allow for more scale,” Barclays continues. “For example, does it really make sense for Disney to create more content simply because it can do it more efficiently with AI?”

🚨🚨 McLuhan horn:

For technology to affect scale, it must change the nature of the content itself. changing the nature of the content rather than just enabling more content. Photography was not so much about replacing paintings as about creating a new art form. ( . . . )

The current assumption, as evidenced by the Writers Guild’s demands, is that capital governs technology intent independent of the maker, which we think is a very reductive argument. We note that Ted Chiang, one of today’s most acclaimed science fiction writers, sees AI as a way to extend capital’s control over labor.

In our opinion, this does not apply equally to every technology and to every use case. Even if AI is capable of writing reasonable stories, as Hollywood writers seem to fear, it’s not clear what problem it actually solves. Netflix probably receives thousands of scripts every year, and it’s not clear why the company has to lean on AI to create stories when it probably can’t handle even a fraction of what it receives today.

And so forth.

What follows another section on the nature of art, this one specifically on how it reflects society and culture.

Human artists tend to repurpose existing material based on whatever is current – the examples Barclays chooses include Kurosawa using Shakespearean plots and the cross-fertilization of ideas between The Beatles and The Beach Boys – but what if AI can throw a curveball? AlphaGo defeated Lee Sedol at Go on their first match round playing a completely alien moveso maybe the same can be done for sitcoms or true-crime podcasts?

Viewed from this perspective, the role of AI could theoretically be to enhance and accelerate creativity by enabling creators to see countless iterations on demand without a long drawn-out tail and error process. While this could be more about increasing productivity in the short run, in the long run it could spur the creation of new art forms that wouldn’t be possible without AI.

Given the above, AI should theoretically be used by the best content creators to become even better and more difficult to replace, as technology in itself has no intention, independent of the creator. The best talent will become even more valuable as technology enables further enhancement of their work, in the same way that Walt Disney or James Cameron integrate technology to broaden the canvas for storytelling.

Does that sound like a conclusion? It’s not. The team has more reflections to share on the nature of art, this time around the theme of concept versus execution.

Essentially, AI will make it cheaper and easier for amateurs to make things that look and sound professional. That means more things. But that doesn’t matter, because the professionals will continue to be better at making money off stuff.

Talent that is good will be able to express themselves in more ways without a lot of capital, but capital does not automatically get economies of scale from technology. In fact, the quality gap between Disney and the average amateur creator may be smaller due to technology.

However, it is interesting to note that in this era of content fragmentation, Disney and Netflix have reduced the amount of content they support and increased their share of their relevant content categories. Likewise, the lifetime value of music stars like Taylor Swift, Beyoncé, and Drake has once exceeded any other star in history, despite the number of streamed songs exceeding 100mm. Scale for a company like Disney comes from taking every piece of content and maximizing revenue, while for YouTube, scale comes for the fat tail. The latter depends on broad access to technical tools; the former has very little to do with technology and, in fact, technology has little or no impact on maximizing revenue for Disney. AI may not change Disney’s content volume, but Disney may be able to improve content.

The reason that both ecosystems (user-generated and premium content) do not overlap is because volume explosion typically gives rise to new distribution channels such as social media, YouTube and TikTok that do not necessarily overlap with the channels for other forms of content. The evolution of the creation technology is normally accompanied by the evolution of the distribution technology as well and as of now there is hardly any discussion about the latter.

And so forth.

“We believe that the current debate is very limiting and that the impact of this technology is likely to be asymmetric towards creators rather than media companies, contrary to the popular narrative,” concludes Barclays, this time for real.

Clients aren’t given any specific advice on how to trade this brave new media landscape – although there’s a lengthy chapter a few pages later entitled “Why NFT’s Entertainment Will Change,” so at least they understand that.

Read further:
— Fourteen reasons why AI doll won’t eat itself (FTAV)
— Disney and the Death of Cultural Transmission (FTAV)

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