Why Chris Dodd Is Doing Everything Wrong With The MPAA

from the you're-not-helping dept

We've certainly suggested that Chris Dodd was making a big mistake by focusing on the MPAA's old talking points in his new role as chief of that lobbying organization. Rather than leading Hollywood to a future of new business models and smarter embrace of what consumers want, he's kicked things off by being anti-consumer, anti-technology and a supporter of previous policies that have failed massively. It's not exactly a recipe for success. Marty Kaplan, a professor at USC, is pointing all this out in a wonderful opinion piece, explaining to Chris Dodd why he's focused on the wrong things. He uses the recent SSRC Report to explain why Dodd is barking up the wrong tree in claiming that the two things to focus on are "education" and "enforcement," a two-pronged strategy that has failed to do anything useful for the industry for over a decade:

The problem with this is that there's no evidence that education works. There have been hundreds of vigorous anti-piracy educational campaigns all over the world -- more than 333 in developed countries alone as of 2009 -- and they've failed. It's not that consumers don't get that media piracy is wrong. They know what they're doing. They're weighing moral considerations against price and availability, and they're deciding to go with cheap (or free), and now.

[...] Not only is there no evidence that education has been building a stronger "culture of intellectual property." There's also little evidence that enforcement works. Splashy raids haven't reduced piracy. Two weeks ago the judge in a lawsuit by 13 record companies against LimeWire called their demand for $75 trillion in damages "absurd," and the infringement judgments that have actually been handed down also haven't stemmed the tide of illicit file sharing. In the SSRC report's words, "Strengthening police powers, streamlining judicial procedures, increasing criminal penalties, and extending surveillance and punitive measures to the Internet": to date, none of them "have had any impact whatsoever on the overall supply of pirated goods."

Of course, we've pointed this all out as well, and the response has been for people to yell about how we're "defending piracy." Yeah, or trying to prevent Hollywood from continuing down a strategy that has been proven not to work. Instead, we agree with Kaplan that this is a business model issue, and if Dodd were a real leader, he'd actually help move Hollywood into new territory of embracing new business models and new technology:

Sooner or later -- and judging by Chairman Dodd's speech, it'll be later -- the industry will have to move from moralism to pragmatism. Their business model has been digitally disrupted, irrevocably, and they are already vulnerable to the kind of game-changing innovation, and carnage, that Apple's iTunes visited on the music industry. If the studios are lucky, before a Netflix or a Facebook does that to them they'll figure out that neither education nor enforcement will rescue them from creative destruction. Pivoting from Moses to merchant will be an awkward adjustment, but they will eventually be forced to conclude that their other options just aren't working. It won't matter that they have righteousness on their side. If they have to spend less on producing and distributing content, distraught fans won't repent of their downloading ways. If jobs are jeopardized, it will be just as wrenching, and just as stoppable, as the transformation that globalization and rising productivity are wreaking on the rest of the economy.

What will the new business model look like? It's hard to imagine that the sequenced distribution of product over a controllable period of time through an orderly series of "windows" -- venues and platforms and formats and pipes and territories, each with their own license deals and consumer prices -- will survive unbroken. In that future, a practical agenda for handling piracy is suggested by this 2009 comment from Robert Bauer, then director of special projects for the MPAA, as quoted in the SSRC report: "to isolate the forms of piracy that compete with legitimate sales, treat those as a proxy for unmet consumer demand, and then find a way to meet that demand."

Wow. Suggesting smarter business models that involve actually delivering customers what they want? Why that's just someone who is a piracy apologist, I guess...

Filed Under: chris dodd, movie industry, strategy
Companies: mpaa

'The Movie Business Is Dying!! Blame TV!' -- The 1959 Edition

from the the-sky-is-falling dept

We've noted, multiple times, that the entertainment industry has an incredible ability to simply declare that any new innovation is clearly going to kill the old industry, and every single time they've been wrong (often ridiculously so). Of course, the most famous may be Jack Valenti's claim that the VCR was the "Boston Strangler" to the movie industry. But this kind of ridiculously wrong predicting happened throughout history. One of our readers, Craig, points us to a fantastic program put on by the CBC radio up in Canada, culling through the archives of old interviews and re-airing them, including a series of interviews with "leading ladies of Hollywood." That link is actually to the second part of the series. You can find the first part here. Each episode is a series of interviews. The final interview in the first part is a few minutes of a talk with Mary Pickford, who not only was a huge Hollywood star in the early days of Hollywood, but also cofounded the movie studio United Artists (with her husband, Douglas Fairbanks, and Charlie Chaplin), and was one of the founders of the Academy of Motion Picture Arts and Sciences (the folks who put on the Oscars). The interview then continues into that second part of the series.

So why do we care? Well, take a listen to the interview in part 2, done in May of 1959 with the CBC's Tony Thomas, where Pickford starts complaining about how television is killing the movie industry, and warns especially about the pernicious intent of pay TV. Starting around 27:40 in the recording, she claims that TV is going to takedown the motion picture industry:

Pickford: I, in my short life, have seen the birth and the death of motion pictures.

Thomas: You think the motion picture has died?

Pickford: Mm hmm.

Thomas: But why should it?

Pickford: Because of the competition. Uh, you know. You can see the old motion pictures, that are just as good... or better than some of them today. And why should people leave their house?

Thomas: But you can see a picture so much better on a big screen in a comfortable theater than you can on a box in your living room.

Pickford: Well, that's true. But it's very expensive, and we have to face the fact that at one time there was 17,000 theaters -- I don't know what the number is today -- but it breaks my heart to go by them today and see them... bowling alleys and skating rinks. Certainly, the motion picture will always be there, but I believe when paid TV comes in, and I'm sure it'll be less expensive than going to the theater, that it'll be the real death knell of motion pictures.

Sound familiar? Of course, there's nothing wrong with making a bad prediction. We all do it. But, when the industry "insiders" are so consistently dead wrong about how every new technology will "kill off" their existing industry, at some point, shouldn't we be asking why people still take them seriously when they do it again?

Filed Under: cable tv, history, mary pickford, movie industry, tv

What Is So Special About A Movie's Theatrical Release?

from the put-the-horse-in-front-of-the-cart dept

The complexities of Hollywood economics are something of a mystery to most Hollywood outsiders who don't understand how the money flows from movie-goers to the producers, movie distributors and the studios behind major films. Despite a ton of reporting (and even some studies) focusing on ticket sales at the box office, Edward Jay Epstein points out that box office revenues are far from being the bread-and-butter of Hollywood:

Box office sales no longer play nearly as important a role. And yet newspapers, as if unable to comprehend the change, continue to breathlessly report these numbers every week, often on their front pages. With few exceptions, this anachronistic ritual is what passes for reporting on the business of Hollywood.

So what is the actual business model for Hollywood movies? Epstein notes that only about a tenth of the total revenues for the major movie studios comes from American theaters -- and the lion's share of revenue comes from licensing deals in the form of DVD sales, TV broadcasting rights and all sorts of other distribution deals. It's no wonder, then, that the industry is so anchored to intellectual property rights and so focused on doing anything to preserve its lucrative licensing business.

We've seen a lot of alternative proposals for making money from movies, but if the box office sales are really just a fraction of the movie industry's revenues, why are theatrical releases made out to be such a big deal? Perhaps instead of delaying the release of movies to home theaters, certain movies should be released to Netflix/RedBox/Blockbuster first -- and then only the titles that have enough demand for the big screen should make it to a theatrical release. Obviously, there's the argument that if an audience could watch a movie at home for ~$1, there would be no reason to pay $10 to see the same movie in the theater. But that assumes there is nothing special about seeing a movie on the big screen.

Given the example of how Paranormal Activity only screened in nationwide cities after fans demanded it, offering movies that people actually want to see in theaters may be a better way of filling seats. Or maybe there really is no reason to go to movie theaters anymore.

Filed Under: economics, hollywood, movie industry, movies

More Movies Trying Out Tiered CwF+RtB Support Models

from the fun-to-watch-this-in-action dept

We're getting so many examples of content creators making use of CwF+RtB business models lately, that it's difficult to figure out which ones are worth posting. Mostly, of course, we're still hearing about the music industry, where these sorts of models are becoming more common, but here are two interesting ones that are in the movie business, where such models haven't been as common. The first, pointed out by rosspruden is about a Spanish film called The Cosmonaut which has a few unique features surrounding it. Ross listed them out:

1. the filmmakers are releasing their work under a CC license to let others mix and reuse their film.
2. the film is fully funded from fan donations (so the film never needs to turn a profit)
3. profits are generated from sales of scarce goods
4. fans are allowed to invest in the project for real financial profit (not virtual profit), which isn't allowed according to SEC regulations (yet)

The fan funding element is definitely interesting -- though I'm still not convinced that investing for real financial profit really works that well in these situations. As we've seen with things like Sellaband's problems, those can have downsides as well. Money is one incentive, but certainly not the only one. And, with crowdfunding projects, it often seems like giving the crowdfunders financial (as opposed to non-financial) incentives can lead to problems. People get less into supporting the content creators and then start worrying about what they might get back out of it. This isn't to say it can't work, but it has pitfalls. Still, either way, it's definitely nice to see the Creative Commons license on the film, and the plan to let others not just watch it, but remix and reuse the film.

The second example comes from Ryan Estrada, who is involved in a project to create an animated romantic horror-comedy that is using a crowdfunding model as well, with the focus on being able to get "in the movie" in some manner.

This isn't entirely new. We've seen some other movies do the same -- and even just the idea of getting your name in the credits (the cheapest option) was something that filmmakers like Kevin Smith have done in the past (though, not for money). However, I think this actually works especially well in an animated movie. One of the (quite reasonable) concerns that filmmakers have expressed in hearing about fan funding movie projects that involve "get a part in the movie" is that this could seriously diminish the quality of the movie if the fans can't act. But with an animated film, the idea is that you send in an image, and then an animated "you" shows up in the film. That seems to work a lot better, and to build a real connection with the fans.

Again, I'm not saying either of these will be success stories, but they're two recent attempts at trying something new in filmmaking, and both seemed worth mentioning and discussing here.

Filed Under: crowdfunding, cwf+rtb, filmmakers, movie industry
Companies: sellaband

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.

Filed Under: content protection, dan glickman, jack valenti, movie industry, movie studios, piracy
Companies: mpaa

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.

Filed Under: critic, mark kermode, movie industry, uk

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.

Filed Under: movie industry, movie studios, piracy, rick cotton
Companies: nbc universal

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.

Filed Under: futures, hedging, hollywood, hollywood stock exchange, movie industry
Companies: cantor fitzgerald

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.

Filed Under: australia, blame, busines models, copyright, isps, lawsuits, movie industry, movie studios
Companies: disney, fox, iinet, paramount, seven network, sony, universal, village roadshow, warner bros

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.

Filed Under: business models, drm, movie industry, open, standard