Can't Compete With Free, Or Just Won't?
from the lack-of-effort dept
One of entertainment executives' favorite clichés is that "you can't compete with free", a comment that's little more than a cop-out. Rather than evolve their business models to compete with piracy, they just utter the line and throw their hands up. The statement's not only frustrating, it's also wrong, because whether they like it or not, they're already competing with free -- and, in many ways, succeeding. Every time somebody buys a movie ticket or a CD, the studios and labels have successfully competed with free. The challenge for these companies then becomes figuring out how to make money from those people who want their content, but don't want to pay for it in the current market. While groups like the RIAA, IFPI and MPAA try to resist the changing market through the courts or other brute-force means, some companies are actually embracing it. For instance, Electronic Arts didn't think that it would be able to sell many copies of its latest FIFA soccer video game in South Korea due to piracy, so it gave the game away, choosing instead to sell small enhancements to the game for small amounts of money. It's since sold 700,000 of the add-ons. Advertising offers another avenue for media companies -- even some record labels are licensing their libraries to companies hoping to build ad-supported subscription services. While many (or even most) of these efforts will fail, they'll lay the groundwork for the future of the entertainment and content business -- a future that doesn't revolve strictly around the direct sale of content. So just remember, the next time a big-media bigshot says "you can't compete with free", they really mean "I can't be bothered to try competing with free".
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Reader Comments
Subscribe: RSS
View by: Time | Thread
Hay, I got a good one
[ link to this | view in chronology ]
Re: Hay, I got a good one
For the home user and about 70% of the business user...open office is just ducky...but what comes stock on most computers? MS Works. What gets installed anyway on most corporate computers wether its needed or not? MS Office.
...hmmmm...
[ link to this | view in chronology ]
Re: Re: Hay, I got a good one
[ link to this | view in chronology ]
Why compete?
[ link to this | view in chronology ]
[ link to this | view in chronology ]
MS has to play by different rules
the DOJ decision, flawed though it was, is proof even the gov't agreed MS wasn't behaving properly.
[ link to this | view in chronology ]
You guys are missing the point
Microsoft is not only competing against Linix and cheaper than itself operating systems but also piracy. They made there billions on windows even when people were copying it. The trick is that they have better marketing, support, and the money to pay off the correct people. I guess they realised that those things won't work with XP and Vista so they had to implement the activation. and they did all these things while not making the customer feel like a criminal. (Excluding XP and Vista.)
[ link to this | view in chronology ]
it's a fight for survival
take the RIAA, and music labels. you can now distribute music easily via the internet, bands can produce their own music with computer software. so really, they only need to spend the money for studio time to record it, then can do the rest themselves. take comedian Dane Cook who became a top seller simply from viral internet marketing. bands can do this all themselves now also. so the RIAA is useless.
the MPAA is also becoming useless. any one can get DVD's made, and movies can be distributed online with broadband. now to make a big budget movie is still costly, but, a smart film maker, like George Lucas was, would go to private investors and get back, such as banks and lending firms, and then make their movie the way they want to, with their own financing. upcoming film makers would get backing from their mentors, such as already successful film makers. much better movies would get made, that's for sure, and budgets wouldn't be wasted on big names like Tom Cruise, Mel Gibson and Lindsey Lohan who only end up embarrassing the movie studios. With digital camera's, all the "film" can be edited on computers, cut, and sent off for print, all digitally.
so the RIAA and MPAA aren't fighting against piracy, they are fighting for their own survival. they realize they aren't needed any more, that their business model is dying quickly, and they are scared as hell. just like actors were protesting against reality tv stars, because they felt they were becoming unneeded, so are the RIAA and MPAA fighting against the new digitally connected world.
so the only reason the RIAA and MPAA have been screaming so loudly lately is because they are trying to survive, they are screaming for help, and they are just waiting for the public to put them out of their misery. so please, help them out, go shoot an RIAA or MPAA executive today.
[ link to this | view in chronology ]
Re: it's a fight for survival
You are completely correct.
You would think that the MPAA and RIAA would scramble to buy up successful web based music services, but no. Perhaps they have had a monopoly over entertainment distribution for so long that they don't even know how to compete!
[ link to this | view in chronology ]
Re: it's a fight for survival
These companies actually serve a purpose: they finance and market entertainment. To the extent that these functions become cheaper to deliver, they are easier to compete with. But these functions will never be free, because they intrinsically take human effort. Ditto for the product itself. It can't be free if the director, actor, musicians etc. want to get paid for their work.
Some bands can market themselves, but Kelly Clarkson couldn't do the job they did for her (I'm not talking quality, I'm talking money). They package, promote, and ram it down our throats. I don't like it (I'd never acquire any Kelly Clarkson, even for free), but it makes a boatload of money.
George Lucas can self-finance because he's already made about 5 of the most profitable movies in history. Why do Cruise and Gibson get paid? Because the investment in their salaries is returned many times over in increased ticket sales.
They marketing machine works because too many people don't have the time to search it out themselves. Financially, it is too risky to invest in any one entertainment project. They cost a lot, and 19 will lose money. The 20th will make up for them all.
[ link to this | view in chronology ]
Re: Re: it's a fight for survival
The problem today is that companies get big and huge and then spend their money on lawyers trying to keep control while not providing the public the service they desire.
There are plenty of great movies out there that didn't pay their actors $20 million for their services. In fact, in the long run, that money hurts their cause, that of the movie studios. The public see's these people get paid insane amounts of money only to piss all over the public at large, thus, turning the public away from these huge stars. It's an old way that's dying off, because you can get great, new talent that doesn't cost that much, and can do the job just as well, if not better. The problem is that they forgot how to market things properly, or just make good movies.
As for downloaded music, the reason why free is still winning is because it's still easier. With DRM, the music you download for purchase just doesn't always work, and can (and will) eventually become useless data because of DRM. DRM cripples content too much, it makes all legit users suffer, while those who download illegally, have no DRM, and can use the media without problems.
Until the give the customer what they want, in the form and delivery system they want, the customers will continue to look elsewhere.
[ link to this | view in chronology ]
Linux distributions compete well with free
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Hay is for horses
[ link to this | view in chronology ]
Can't compete
Once eveyone embraces the same model you're back to square one. The advertising value goes away, you're competing with everyone else, and all of the users start feeling nickle-and-dimed by every game at every turn. At which point a pirate market in "add-ons" appears.
Rant against it all you want, but I tend to LIKE the current system, whereby tens of thousands of people create content for me on spec, after which I and others can evaluate it before deciding to buy it, and then obtain it by paying for a miniscule fraction of the developmental cost.
Too many of the other schemes assume that I don't want the content and need a t-shirt instead to "support" the band. Wrong. I want the content, don't wear t-shirts, and prefer to pay for value received.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
frees
i guess the difference is that water companies came along after the free offering and thus knew they had to offer something on top of what you get for free (no matter how much of it is pure marketing)
[ link to this | view in chronology ]
sorry, your fault, record companies, not mines
[ link to this | view in chronology ]
Re: frees
[ link to this | view in chronology ]
iTunes
2 billion and counting :p
[ link to this | view in chronology ]
For the CD experience, I want (in the regular release, not the special ones) extensive notes on the production, maybe a DVD with videos or the studio sessions, interviews with the artists, producers, and engineers. Hell, I would even buy CDs I already have if this was offered (and no, not just a remaster, I have bought these remastered CDs and the expereice fell short for the price). Also, maybe more pushing the benefits of joining a fan club to get advanced info on concerts. I think the labels don't put the marketing power into this because that is not how they make their money. The artist can go an make really cool websites, but this is just to push the sales of CDs or downloads. What if the model was turned around so that the music was free but access to the artists, notes about production, songwriting, etc was through a website behind a pay wall?
You already see extras on standard DVD releases (directors cut, comentary, trailer, behind the scenes, etc). The music industry needs to catch up to this extended experience.
[ link to this | view in chronology ]
Guess it all depends on what type of quality you want in life :)
[ link to this | view in chronology ]
The Ultimate Proof You Can Compete With Free
Next?
[ link to this | view in chronology ]
It is truly pitiful. They just use "copyright infringement" as a code phrase. We know what the real problem is, and it's not legal ramifications. It's their inability to compete in a market that's becoming more and more consumer-based. We, the people, are more and more in control everyday thanks to the Internet. New technology is allowing us to shape the market, and we're finally getting a voice in this so-called free market. I don't see why I shouldn't be allowed to give away free or costly copies of something I already own. It's bullshit. That FBI warning on all vhs and dvds can go to hell! Why shouldn't I be able to compete and make my own tapes? Copyrights are stupid and archaic in this day and age. We need to repeal laws like the DMCA. They stifle creativity and free expression. They allow the idiots at Youtube to take your videos off the site simply b/c corporate assholes bitched and complained. It's censorship.
And don't let anyone else tell you otherwise.
[ link to this | view in chronology ]