What Kind Of Industry Sets Up A Group To Purposely Limit What Consumers Want? Apparently Hollywood

from the you're-doing-it-wrong dept

Jack Valenti ran the MPAA for an astounding 38 years, and was an amazingly effective lobbyist. Listening to pretty much anyone talk about the job he did -- whether they were on his side or opposed him -- you hear nothing but admiration for his skills as a lobbyist. Of course, he was wrong about almost everything, pointed the movie industry in the wrong direction multiple times, and did a lot more harm than good. He claimed that the VCR would kill the movie industry. He insisted that fair use does not exist. He practically ruined a bunch of movie awards shows by forbidding studios from sending out DVD screeners to the awards judges, since he was afraid they'd put them online. And, of course, he insisted that file sharing was terrorism designed to kill the industry (just like the VCR, obviously).

Still... he was a media and Congressional darling and could talk a great game. Amazingly, when confronted with his "Boston Strangler" comment years later, he actually had the gall to insist he was right about his comments on the VCR -- even as the industry was making more than 50% of its revenue on video sales and rentals.

Given all that, you had to imagine that his successor, Dan Glickman would have tough shoes to fill. And, indeed, to date about all that Glickman has done is repeat the same ridiculous claims as Valenti, but without the colorful and charming language. We've been hearing rumors for a while that the movie studios have been quite upset about Glickman, and may even look to push him out before his deal is up next year. Greg Sandoval, over at News.com is apparently hearing the same thing, and notes that the studios recently pushed the MPAA to totally revamp its antipiracy operations, upset about the way things had been handled.

Now, if you were hoping this meant that it was going to take a more reasonable stance to online file sharing and new distribution methods... you'd be wrong. Apparently, the complaint is that the MPAA hasn't done enough, because file sharing has only become more of an issue. It would appear that the studio folks don't seem to realize that this is inevitable. The answer isn't to demonize it, but to look for ways to take advantage of it. But, that's not what they've done. They've put new folks in charge and decided to stop calling it the "antipiracy" operation. Instead, it's the "content protection" effort. Both are absolutely the wrong way to look at things. If they're looking to protect the unprotectable, they are going to fail. Instead, they should be setting up a group that looks at how to use these new technologies to their advantage, rather than setting up a division that pretends it can stop the constant tide of progress.

We've been hearing from more and more movie makers who are recognizing how treating their fans right, while giving them a reason to buy is a much more effective means of reaching an audience than starting off on the assumption that everyone is a criminal. The movie business has always been based on selling ancillary products. Marshall Loew recognized this years ago, when he said: "We sell tickets to theatres, not movies." Yet, for years, the industry has done everything it can to treat its biggest fans like criminals. FBI warnings about punishment before movies. Searching people as they enter a theater and demanding they leave their cameraphones outside. Making the theater going experience less enjoyable. The reason the industry has faced problems isn't "piracy" but because the studios themselves never learned to treat customers right. Setting up a "content protection" division is like setting up a "performance limiting" group at a car company, or a "picture scrambling" group at a TV company. It's about purposely limiting what the technology allows and what consumers want. It makes no sense at all.

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Movie Critic To Movie Industry: Wake Up, Start Giving Consumers What They Want

from the exactly dept

We're seeing a ton of bogus claims coming out of the UK lately about how movie piracy is somehow destroying the industry. So it's good to see not everyone is buying into these false statements. Gavin King points us to a great rant by Mark Kermode, a well known film critic in the UK who points out that piracy isn't a consumer problem, but an industry problem, because the industry still treats everyone like criminals (such as taking away mobile phones from viewers, not that anyone can film a whole movie on their phone) and refuses to give them what they want.

As an example of doing things the right way, he talks about a recent film in the UK that did a "day and date" release, launching the film in theaters, DVD, pay-per-view and online all on the same day, letting people decide for themselves how, when and where they wanted to see the film. Unfortunately, when they tried that here in the US, the theaters revolted, refusing to show the film. Still, if we start seeing more successes when that's done, eventually, the theaters will have to cave in, and focus on what's always worked for theaters: making the overall experience better.

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NY Times Buys Bogus Movie Industry Complaints About Piracy

from the let's-get-real... dept

The NY Times is running an article entitled "Digital Pirates Winning Battle With Studios." From the title, it's pretty obvious what it's about -- but the article seems to take a lot of talking points from the movie studios. It's not hard to figure out the main source of the article: NBC Universal's Rick Cotton is quoted throughout. Cotton is a lawyer who has proven time and time again that he's a bit clueless when it comes to business. It's unclear why NBC keeps having him comment publicly about business issues. Every time he does, it just gives people more reason to realize how poorly NBC Universal is managed. Cotton was the guy who proudly talked about how NBC made it more difficult for people to watch the Olympics. He's also the guy who (with a straight face, we believe) claimed that the US gov't should shift Justice Department money from stopping real crimes to focus on copyright infringement because (no, really) doing so would help poor corn farmers who went out of business because people weren't buying movie theater popcorn anymore. Apparently people who watch movies at home don't eat popcorn (and apparently, he forgot to check and discover that corn farmers have been doing quite well lately).

How he has any credibility on these issues is beyond me.

But, the NY Times reports, without a hint of skepticism, about the fact that The Dark Knight was so widely available online, representing a huge failure for the industry. You know which important part the reporters left out? That it was also the highest earning movie of the year. In other words, piracy is not the problem. People are plenty willing to pay to go to the movie theater if you give them a good reason to do so. In fact, The Dark Knight did a good job of that, offering special IMAX showings that you absolutely couldn't recreate on your computer screen or big screen TV.

Did the NY Times point this out? Nope, it said that the downloads were "a visible symbol of Hollywood's helplessness against the growing problem of online video piracy." No. That's not true at all. It was actually a visible symbol of the fact that the existence of free downloads is not the problem so long as the industry actually makes an effort to give people a good reason to pay.

Then, the reporters note that "each episode of "Heroes," a series on NBC, is downloaded five million times, representing a substantial loss for the network." Substantial loss? Really? Can they actually back up that statement? The people who are watching this show are fans of the show who want to consume the product from NBC. Downloading the show is a way for them to stay engaged -- making them more likely to later watch the show on TV (with commercials) or on sites like Hulu. It makes them more likely to go out and buy a DVD later. Or to engage in any of probably 1000 business models that could create compelling tie-ins with the show. Those business models aren't difficult to come up with, and we'd be more than willing to help, if NBC Universal just gives us a call. Nor does the NY Times mention that one of the big reasons why Heroes is downloaded so frequently is because NBC's braindead decision to not let Hulu be watched outside the US. Only an entertainment industry lawyer could think that having more people want to watch your show represents a "loss."

It's an opportunity.

It's really sad that the entertainment industry keeps trusting execs who view such opportunities as threats, and that the media takes their word for it.

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Cantor Fitzgerald Revives Hollywood Stock Exchange Plans To Let Studios Bet Against Movies

from the seems-like-an-odd-time-to-announce-derivatives... dept

Boing Boing has a post that caught my eye about Cantor Fitzgerald's plan to offer bonds based on the performance of movies, basically allowing movie studios to "hedge" bets on the investments they make in certain movies. Now, in theory that could make a lot of sense, but as we've seen with the credit default swap market and the resulting financial meltdown, what starts as a "hedge" can often turn into something very different. Either way, it struck me as odd that any financial firm would be rolling out some new, high profile, product like this in the midst of so many questions about similar products. The Boing Boing post also includes a pointed criticism of the plan.

However, the story was also intriguing because in the back of my head I vaguely remembered that Cantor Fitzgerald had purchased the Hollywood Stock Exchange years back. HSX had been something of an early web success story -- getting people to bet on the success or failure of certain movies and actors -- but it had all been with play money. In wondering about this, I did a quick search here on Techdirt, and actually found a remarkably similar announcement from seven years ago, all about how Cantor Fitzgerald was getting ready to launch a real futures market for movies. Of course, even more noticeable was the date on that post: September 4th, 2001. That's exactly one week prior to September 11th, and the attack on the World Trade Center... where Cantor Fitzgerald was headquartered. 658 employees from the company died from the attack in one of the many tragic stories to come from that day. I'm not sure if the Hollywood futures market actually will do very well, but it's still interesting to see them revive this idea.

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Movie Studios Sue Australian ISP For Not Waving Magic Wand And Defeating Piracy

from the blame-someone-else dept

A few years ago, after realizing that blaming consumers wasn't a particularly effective strategy in covering up for the entertainment industry's own inability to adapt to a changing market, industry insiders chose a new strategy: blame ISPs. That sent them down a path of trying to force ISPs to do a variety of things, such as installing filters, policing their networks for copyright-infringing material and, of course, kicking users off their networks. In the mind of entertainment industry execs, a failure to do any of these things should be a crime. Note how the industry totally shifts responsibility here. Rather than admitting that they should change with the market, it's always someone else who needs to change to protect the entertainment industry's obsolete business model.

While the industry has been able to get some politicians and ISPs to agree (amazingly, often against their own best interests), it's now gone a step further. A bunch of the biggest movie studios (Village Roadshow, Universal Pictures, Warner Bros Entertainment, Paramount Pictures, Sony Pictures Entertainment, Twentieth Century Fox Film Corporation, Disney Enterprises, and the Seven Network) have teamed up to sue Australia's largest ISP, iiNet, for failing to stop copyright infringement. iiNet, you may recall, is the same ISP that has been mocking the Australian government for requiring filters. So, naturally, it's response to this lawsuit is rather direct. While the studios complain that iiNet isn't doing anything, iiNet responds that this is not true at all. They pass each complaint on to the police, because if there's a crime, then the police should deal with it:

They send us a list of IP addresses and say 'this IP address was involved in a breach on this date'. We look at that say 'well what do you want us to do with this? We can't release the person's details to you on the basis of an allegation and we can't go and kick the customer off on the basis of an allegation from someone else'. So we say 'you are alleging the person has broken the law; we're passing it to the police. Let them deal with it'.

We are not traffic cops. We can't stand in the middle of it and stop the individual items that might be against the law. These guys are asking us to be judge, jury and executioner.

Even better, iiNet's CEO Michael Malone gets to the heart of the matter:

I think they genuinely believe that ISPs have a secret magic wand that we are hiding and if we bring it out we can make piracy disappear just by waving it. And it doesn't exist.

Indeed, but that might mean that the entertainment industry has to actually take responsibility for their own business model failings, and they can't do that. So they have to blame others.

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There They Go Again: Movie Industry Takes Yet Another Shot At DRM

from the wasting-time,-money-and-energy dept

It seems that every few years the entertainment industry thinks that if it can just create a better new form of DRM, all its business model problems will be solved. Usually, it talks about how DRM will somehow enable new business models, when all it really does is remove value from content, shrinking a market, annoying legitimate customers -- all while doing absolutely nothing to slow down unauthorized downloading. It's a huge waste of time, money and energy, but the entertainment industry still doesn't realize it. Because here we go again. The movie industry is working on yet another DRM standard, which it insists will be much better than everything before, because it will be more open and interoperable. But, the problem is that it will never be as open or interoperable as no DRM. Until the industry recognizes that, it will continue to throw away more money and more time when it could actually be focusing on improving its business.

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Old Media Industries At Different Stages Of The Grieving Process

from the denial-anger-bargaining-depression-acceptance dept

One of the interesting people I met at last week's Princeton workshop was Douglas Dixon, who points out that almost all 20th-century media companies are going through the five stages of grief, but different media industries are going through the stages at different rates. Back in 2006, we noted that the music recording industry was still in the denial stage. Now, Dixon says that it seems to be "stuck cycling between Anger, Bargaining, and Depression -- as it still lashes out by suing its own customers, and grabs on to each next new copy protection scheme while simultaneously going DRM-free in other venues." And indeed, as we pointed out a couple of weeks ago, Hollywood is still firmly in the denial phase, insisting that effective DRM is just around the corner.

In contrast, the news business has been responding pretty well of late to the disruptive technologies of the Internet. The newspaper folks at last week's conference seemed to accept that print was a dying business, and many of them declared their committed to making the painful changes necessary to stay competitive. As we've noted before, they've been dropping their paywalls and aggressively experimenting with new media. It remains to be seen if they'll be able to change fast enough to avoid large losses in readership, but at least they've begun moving decisively in the right direction. In contrast, the recording industry has been taking three steps back for every two steps forward, while Hollywood is still doing little more than shooting itself in the foot.

I don't think it's a coincidence that the lowest-bandwidth industry -- news reporting, which is largely text-based -- is showing the most flexibility, while the most bandwidth-intensive industry -- Hollywood -- still has its head in the sand. News organizations have faced serious competition from the Internet since the birth of the Web in the mid-1990s. Internet bandwidth was not sufficient to conveniently transfer music until the late 1990s. And there wasn't enough bandwidth to transmit movie files until recently. Arguably most peoples' connections still aren't fast enough to transmit high-def video. So news organizations have been facing serious competition for almost fifteen years, the recording industry for about a decade, and Hollywood for less than five. Industries that have been facing competition the longest are making the most serious changes.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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