Viacom's General Counsel Lecture On Copyright Leaves Out Certain Facts

from the well,-that's-something dept

Someone once told me that Viacom's top lawyer, Michael Fricklas, has been known to read Techdirt on occasion. I have no idea if this is true, but it still is interesting to watch him give a lecture to some Yale law students where he offers a somewhat nuanced position on copyright issues (thanks to JJ for being the first of many to forward the video to us), but which repeatedly seems to leave out certain pertinent facts: He starts out by saying that he's a strong supporter of fair use, and doesn't like the idea of having to get licenses for creating new works -- but is concerned about the "exact copy" problem. So, basically he's in favor of fair use for creating new works, but not direct distribution.

He discusses copyright vs. free speech -- and insists that there's no "tension" between the two (despite many recent studies suggesting the exact opposite). Of course, he does a bit of a twist there, by saying that copyright is pro-free speech because it creates incentive for speech. The problem with this statement is that while that's the theory, the evidence for it is somewhat lacking. However, there is tremendous evidence of cases where copyright is used to stifle speech -- and of all the massive extensions and changes in copyright laws over the past 200 years, almost all have served to stifle more speech than they have encouraged.

He then trots out the industry's own numbers claiming how much copyright contributes to the economy, even though those numbers are based on a variety of questionable assumptions, including the idea that all content covered by copyright is only created because of copyright. Along those lines, he also credits copyright for things like the iPod and the Kindle, saying that no one's buying those devices just to look at them. This is correct -- but note the trick. He did not say that it was content that drove the iPod and the Kindle, but copyright. He's wrong. It's content. Not copyright.

He notes that some say that "unlicensed IP" might drive this innovation, but he favors "sustainable innovation" (as if anyone doesn't). And then he makes this odd statement:

"A more sustainable innovation is one where, if you make an investment, you have the opportunity to make a return."

Now, that's a great (by which we mean, useless) statement, because it's obviously true. Who would ever deny that? But it's a sneaky and disingenuous statement, because it implies something that's simply not true: that without copyright or without restrictive licensing, the investors do not have an opportunity to make a return. As we've shown over and over again, plenty of content creators who "free" their IP have not only made a return, but have made a better return than they did under older models that relied on copyright. But it's a sneaky trick that's often used by folks in this debate. You set up this strawman argument and then knock it down, despite the fact that no one ever made the argument, and you argue that something is fact (that you can't make a return) when it's empirically false. It's frustrating that this argument still gets made and people should really start calling the folks who make it out whenever they state such falsehoods.

Later, he talks about the "losses" from piracy, insisting that the findings come from a "sophisticated" analysis, not just from counting all downloads as lost sales. Of course, these numbers came from the same study process that led to some results that even the MPAA (of which Viacom is a major member) had to later admit were bogus. This is also the same "sophisticated analysis" that includes ripple effects in one direction only, so it's actually double, triple, quadruple, quintuple counting some numbers, while totally ignoring how those numbers actually help the industry in other ways. So, sorry if I don't take those loss numbers seriously, no matter how "sophisticated" he thinks they are. They're not. They're only "sophisticated" in how misleading they are.

He does have a short discussion on RealNetworks' RealDVD offering, which he implies enables piracy -- even as he admits he wants the functionality, where he could move a copy of a legally purchased DVD to his hard drive for backup or other viewing, but says his "concern" is that people would do this with Netflix DVDs. He believes that the problem with this is that RealNetworks had to break the encryption put in place by the studios. Notice, again, what Fricklas conveniently leaves out. First, he leaves out the fact that it is already legal for people to make backup copies of content they legally own -- but, thanks in part to Hollywood lobbying, Hollywood itself can block that right, simply by putting encryption on something and then saying that you can't circumvent it without breaking the law (thank you, DMCA anti-circumvention clause). He also leaves out (conveniently) the fact that RealDVD doesn't actually "break" the encryption and that the resulting copy still includes DRM that prevents copies. The fact that he's "concerned" about the Netflix model is of no consequence whatsoever. McDonalds is "concerned" about Burger King, but that doesn't give them a legal right to block them from being in business.

Then he pulls out the ever popular "$200 million movie" myth, which I thought was a favorite of NBC Universal, but I guess Viacom is going with it now as well. It's not a myth that there are movies that cost $200 million. The myth is that people want movies that cost that much. No one watching a movie cares how much it costs. They want good movies, no matter how much they cost. I'm sure people would like some $1 billion or $100 billion movies as well, but that doesn't mean we need to grant Viacom extra special legal privileges to make sure it can make a $1 billion or $100 billion movie profitably. People like good movies. Viacom wants to make profitable movies. We agree. But the $200 million number is meaningless. There are ways to make good movies for both less and more than $200 million and there are ways to make profitable movies even in the face of piracy. The claim that piracy undermines the $200 million movie, which is some sort of "necessity," is simply not supported.

On top of that, he tosses out the debunked claim that if something is "free" it means it's devalued. That's simply not true, no matter how many times people repeat it. If it were true, and the content had no value, no one would want it. Value and price are two separate things.

Then, he discusses the "Kanye West" MTV Video Awards "Imma let you finish..." example, by talking about how Viacom used various filtering tools to pull that clip off of various "unlicensed" user uploaded video sites. But he also talks about how they drove people to use the official Viacom clip, which allowed them to "participate in the benefit" of the video. Now, that's interesting, and it's great that they put their own clips up and made them embeddable. But, again, it's important to note what he left out. In forcing everyone to view the content through Viacom directly, it also increased Viacom's own cost in terms of bandwidth. The advantage of letting others help host and distribute the content is that it actually eases that cost.

His discussion on kicking people off the internet via a "three strikes" mechanism is getting much of the attention on other sites, because he mentions, totally in passing, that suing users "feels like bullying." This may sound like a big deal -- and certainly some other sites (and industry lawyers) are making it out like a big revelation, but it's not. The movie industry has never sued individuals for such things -- only the recording industry has. And even way back in the Jack Valenti days, he talked about why he didn't like the idea of suing individuals. So, this isn't a shift in positioning at all. Rather, it's a repeat of the new silly strategy of some in the industry to try to pretend that kicking people off the internet is "consumer relief." Not quite. Shooting someone in the leg instead of the head is certainly "better," but I doubt that the person shot in the leg considers it "relief."

Oh yes, he also fails to explain how any of that will make more people buy.

Towards the end of that discussion, though, he makes another interesting statement, saying that: "there's no way to deal with this problem other than to move viewing into licensed contexts." Except, that's not true. There are other ways. It's called setting up a business model where people actually do have a reason to buy things, whether they view the content in a licensed or unlicensed manner. I recognize he's on the legal side, rather than the business side, but the idea that the "only" way to deal with piracy is to attack it, rather than embrace it, is a position that the industry long ago should have learned was a mistake.

His final point is discussing how DRM "enables new business models," and he more or less dismisses criticism of DRM as really just being criticism of "bad" DRM (of which there is plenty). However, what struck me, was how none of the "new business models" he described actually required DRM at all. You could do them all in some way entirely without DRM. All the DRM does is add restrictions. Of course, rather than adding restrictions, why doesn't the industry focus on employing new business models that give users more and make them want to buy, rather than trying to enforce artificial limitations?

On the whole, it is an interesting video, and well worth watching, but it conveniently misstates or leaves out important facts throughout. Unfortunately, the Q&A session that follows the presentation wasn't included, so I have no idea if any of the students challenged some of his assertions or pointed out some of the points that he left out. Anyway, maybe we can hope that Fricklas is, in fact, an occasional reader here and can stop by to address those questions and omissions.

Filed Under: copyright, entertainment, michael fricklas, movies, myths
Companies: viacom

Nasty Old People, Give It Away And Pray And Releasing Movies For File Sharing

from the another-one dept

We were just talking about some indie filmmakers who were happy with the extra attention they've been getting from having their movie "leaked" on BitTorrent, and ChurchHatesTucker alerts us to another story of filmmakers embracing file sharing. This one is actually from a few weeks ago, but a Swedish filmmaker made a low budget indie film called Nasty Old People and released it under a Creative Commons license, along with a request for donations. The link is to Metafilter where there's an interesting discussion about whether or not the experiment is a "success" or a "failure." It's a bit of a mixed bag, as at the time of the discussion, the filmmaker had made back 20% of the film's budget and there were questions if it would get much higher. Thus, it was easy for some to quickly call it a clear failure.

Of course, it's not really that simple. First, I've said for years that I'm no fan of "give it away and pray" business models, which really aren't business models at all. While it works sometimes, it's pretty much a crapshoot, and never strikes me as a real business model. So, on the whole, I'm not too surprised that it didn't bring in much more than 20% of its budget in 2 weeks (though some compare it to blockbuster movies that can often make about the same % of their budgets in the early going.

However, if we compare this situation to what would have happened otherwise (i.e., if the movie were not released this way) the situation becomes a little more interesting. This was a very low budget indie film that likely would not have received any distribution at all. At best, the filmmaker perhaps could have self-printed DVDs, and would have been lucky to have sold a dozen or two. She could have tried to enter it into various film festivals, but that's quite difficult, and even then there's a pretty good chance that the movie doesn't end up actually making any money. Yet, in this case, she not only made money from donations, but the film is getting picked up and shown in theaters around the world. So, compared to that situation, things actually look better than the alternative.

On top of that, while this particular movie may have been a net loss, she could use it for marketing herself. She can go around and show the movie to others, and perhaps use that to get funding for a larger scale project or another film that's released with a bit more of a complete business model. Nasty Old People becomes marketing and a promotion for Hanna Skold. It has to be better resume filler for a filmmaker to talk about tens of thousands of people downloading and watching your film than just going in cold saying you want to make a film. And, in fact, she's already hard at work on a new film script, with many people who became fans of Nasty Old People following along and interested in seeing what the new script is like. So, as a marketing tool, it sure seems like giving this movie away has been quite useful.

Filed Under: business models, creative commons, donations, free, movies, nasty old people

Zombieland Director Goes After Fans, Doesn't Understand Popularity

from the treat-your-fans-right dept

Charles Vestal alerts us to the news that Zombieland writer/director Rhett Reese has apparently be using Twitter to shame people who were mentioning that they were watching unauthorized copies of Zombieland at home, declaring to each one: "You realize we do what we do for money, right? Same as you." This comes soon after we highlighted some directors and moviemakers have found success by embracing those who were downloading their movie, recognizing that it was leading to more sales.

And, in fact, at least some of the people that Reese called out complained that they had actually seen the film multiple times in the theater and planning to buy the official DVD once it came out as well. In other words, the reason the movie is downloaded so much is because people like it, and yes, they still are supporting the moviemakers.

So, what made Reese lash out at these fans? You guessed it. He claimed he had just watched the 60 Minutes episode on movie piracy -- the one that we debunked for being factually incorrect, and it resulted in him getting angry at these fans, without thinking through the fact that the download might not be a substitute. But, even after the fans told him they had seen the film multiple times in the theaters, he's complaining that this decreases the chances of a sequel getting made. Given the massive popularity of the film -- both in the theater and online -- that seems highly unlikely. As we've seen before, the popularity of a movie in unauthorized downloads closely correlates with its box office take in many instances. It's rarely a sign of "lost revenue," and quite often a good indicator of actual revenue. In fact, the details show that Zombieland has done amazingly well, already earning back much more than it cost. Reese has a strong and loyal fanbase who want to support him and a very successful movie on his hands. Rather than attacking them, he should look for ways to embrace them and give them more real reasons to buy.

Filed Under: bittorrent, downloading, movies, popularity, rhett reese, zombieland

As Hollywood Insists Canada Is A Den Of Copyright Thieves, Movie Business Is Thriving

from the funny-how-that-works... dept

For years, Hollywood has pushed a totally ridiculous claim that Canada is somehow a den of copyright thieves, and it needs to make its copyright laws much more strict. This fantasy has worked on journalists and politicians, who insist that the movie industry is dying in Canada due to rampant piracy. Except someone forgot to inform the real world. An anonymous reader sends over the news that the owners of Cineplex in Canada are reporting record box office sales and revenue, even with the current economic downturn. Once again (and yes, we've been pointing this out for a decade), it appears that it's the actual experience that gets people to go to the movies. The folks at Cineplex note that a growing number of highly experiential films -- such as those using IMAX or 3D technology -- has really helped in getting more people into the theater and in getting them to pay more.

Oh, and as a special note to NBC Universal's General Counsel, Rick Cotton, who seemed so worried about those poor corn farmers who would be decimated by piracy, you can rest easy:

Concession revenues did well due to a film slate that catered to family audiences, who tend to be higher concession spenders.

Phew. Now Rick can go back to working on ways to stop people from watching the Olympics and figuring out ways to avoid paying copyright royalties to songwriters.

Filed Under: canada, copyright, movies, piracy
Companies: cineplex

OK, Hollywood Learns A Scary Lesson From 'Paranormal Activity'

from the sequels-are-never-bad dept

A few weeks back, I noted that the low-budget (but highly-profitable) Paranormal Activity movie might teach Paramount a thing or two about how the business of making movies could succeed without spending millions on big stars and overly-expensive sets. However, it doesn't look like that was the lesson learned here. Paramount's CEO Philippe Dauman was recently interviewed about the success of the movie and talked about plans to make a sequel that he said would require the right marketing to ensure a benefit to Paramount. There's also the following insight into Dauman's strategy:

Asked by an analyst if the "Paranormal" model of a low-cost, high-box office film could be easily replicated with other releases, he said no, pointing to how much time passed between similar surprise hit "The Blair Witch Project" and "Paranormal."

So apparently, the decade that passed between Blair Witch and Paranormal makes for some kind of justification that low-budget movies can't be made profitably at will. Um. But couldn't that decade also be interpreted to mean that a studio should want to try more low-budget productions, more frequently? I can certainly understand that Paramount might not want to adopt a "throw everything at the wall to see what sticks" kind of business model for its movies. However, the existence of two huge box office hits that were produced for a pittance sounds more like proof that such a business model could work -- not a "lightning sometimes strikes twice" argument against making low-cost movies. But on the other hand, looking at the returns from the $15 million sequel Book of Shadows: Blair Witch 2, that release grossed almost $48 million worldwide... and there's talk of another sequel for Blair Witch on the way. The scary ending to this story appears to be an endless cycle of horror movie sequels.

Filed Under: cheap, movies, paranormal activity
Companies: paramount

MPAA Tells The FCC: If We Don't Stop Piracy, The Internet Will Die

from the moral-panic dept

Never let it be said that the folks in Hollywood aren't good at coming up with a totally fictional horror story. I just have a problem when they use it not to entertain, but to create a moral panic to push the government to pass laws in their favor. In discussing the recent 60 Minutes piece that was really nothing more than an MPAA scare tactic, some suggested that it was really just a first step in the process of getting the government to make sure net neutrality rules had a special Hollywood exception. So, it's interesting to note that just before that 60 Minutes episode aired (and just before Halloween), the MPAA sent a "scary" filing to the FCC warning it how the US would always be a broadband laggard if it didn't stomp out piracy. The full filing (warning:pdf) claims, repeatedly, that piracy is sucking up all our bandwidth and getting rid of that would somehow make it cheaper to install faster internet connections.

The Commission has projected that it could cost $350 billion to ubiquitously deploy broadband networks capable of delivering 100 Mbps, which is rapidly becoming the international standard. The Commission, however, should not ignore that illegal content accounts for a vast amount of online traffic. Thus, it could generate substantial savings in this tremendous build-out cost -- to be borne by both government and private sector investment -- by encouraging construction of networks that are designed not on the basis of accommodating capacity-hogging transmissions of unlawful content but rather with the goal of providing consumers a rich broadband experience.

And, of course, it pushes for kicking file sharers off the internet (it hides this by calling it "graduated response," of course, rather than the more common term "three strikes"). The filing also goes on about how the MPAA is just so sure that ISPs can stamp out piracy, and because of that, it thinks the government should force them to get on it.

The MPAA wastes little time mocking those who disagree with its position, and suggesting that the FCC "pay no heed" to consumer concerns:

[The] Commission should pay no heed to assertions by some members of the advocacy community that the problem of content theft can be ignored because some amount of legitimate e-commerce already occurs through vendors such as iTunes.... The same holds true for the preposterous notion that the law should be ignored unless a property owner can demonstrate that a thief, in the absence of stealing, otherwise would have legitimately purchased a stolen product. A shoplifter who steals a DVD from a store in a mall is not immune from security intervention, let alone prosecution, simply because he might not have planned to buy the product that he attempted to steal.

Except, of course, there's a huge difference there. If someone steals a DVD it's no longer there for someone else to buy. If someone who never would have purchased the movie views it online there's no loss. it's difficult to see how the MPAA can simply ignore this while assuming that FCC commissioners are too stupid to grasp this rather simple economic concept.

But where the filing really comes into its own in being laughably funny is where it tries to claim that if the FCC doesn't do this, the internet will effectively die. How does it get there? Well, first, it claims that the reason people use the internet is to view content from Hollywood. And, if file sharing keeps up, there won't be any of that content left, and then why would anyone use the internet? Think that's an exaggeration? How else do you interpret this:

Quite clearly, it is the promise of access to the content flowing over the Internet's network architecture that motivates Americans to adopt broadband. The Internet without content would be nothing more than a collection of hardware; a series of computer links and protocols with great capacity to communicate but nothing to say. Television once was unfairly derided as little more than a toaster with pictures. In the absence of compelling content, the Internet would offer consumers even less value than that proverbial toaster. It is the content that flows over and through the Internet that makes the breakthrough technology so potentially powerful.

Yes, because even though the internet existed for decades before the folks at the movie studios had even heard of it, they had nothing to say, at all, until people could start sharing the latest camcorded blockbuster. Do they really think people are this stupid? Sorry, Hollywood, but it's not "the content" that you're thinking about that makes the internet so powerful. It's the ability to communicate. Sure, the content is a nice-to-have, but the internet grew and grew because it let people talk to each other, not because it was another broadcast medium. This fantasy story by the MPAA also leaves out the fact that more content than ever before is being produced today, even as "piracy" numbers have gone up. And, oh yes, once again, the movie business is hitting record highs at the box office. Funny that the MPAA seems to spend so much time insisting that its industry is dying, while leaving out the record revenue bit. Instead, it just keeps jumping out and yelling that piracy will kill the movie business...

And then it gets into rewriting history, by insisting that every new technology is only successful if the big media companies support it:

Throughout history, whenever transformative communications technologies have captured the imagination of consumers, compelling content has been the vehicle for forward progress.

Apparently, the MPAA is unfamiliar with the telephone. Hopefully, the FCC is a bit more familiar with that particular technology.

The filing goes on and on like this, designed to "scare" the folks at the FCC with a bit of a moral panic, but only inducing laughter (good show, Hollywood) from anyone with any actual understanding of technology, history and copyright. Another favorite tidbit is the MPAA's demand that the FCC not pay attention to how incredibly screwed up every single attempt at using technological measures to stop piracy has been in the past:

MPAA does not want the Commission's consideration of the important overarching issue of unlawful online conduct to be derailed by backward-looking debates about the pros and cons of any given technology, particularly those that already have been surpassed by new innovations. MPAA firmly believes that future developments will yield an entirely new generation of ever-more-sophisticated online protection technologies.

In other words, please ignore how badly we've screwed up in the past. Don't worry about things like rootkits and security vulnerabilities we've created. Also, ignore the fact that DRM doesn't work and only punishes our legitimate customers while driving more people to piracy. That would be a waste of time. Really.

And finally, I leave you with the most stunning statement of all, along those lines. One that I'm amazed the MPAA lawyers let go through in this filing, because it absolutely has to come back to haunt the MPAA in the future. In responding to concerns from lots of different people, including consumer advocates and consumer electronics firms that the various technological protection measures the MPAA wants to force on ISPs will harm, the MPAA states:

That a tool intended to stop unlawful conduct could be put to ill use, however, is not an argument for prohibiting the use of the tool....

Wait... isn't that exactly the argument that the MPAA has used for years against every new file sharing technology out there? Wasn't it the crux of the Grokster lawsuits? That because the tool could be put to ill use, it needed to be prohibited? Yet, now, suddenly it doesn't want its own technologies prohibited just because they can be put to "ill use." Double standard, much?

This is nothing but a typical moral panic from Hollywood. They are storytellers out there, and they know how to craft a horror story. Hopefully, though, the FCC reviewers of this particular fantasy will give it the thumbs down for simply being totally unbelievable.

Filed Under: broadband policy, copyright, fcc filing, moral panic, movies, propaganda
Companies: fcc, mpaa

60 Minutes Puts Forth Laughable, Factually Incorrect MPAA Propaganda On Movie Piracy

from the no-sense-of-history dept

31 years ago, in 1978, the television program 60 Minutes put on an episode about the awful threat of "video piracy" to the movie industry. Featuring the MPAA's Jack Valenti, the episode focused on how the VCR was going to destroy the movie business because anyone could copy and watch a movie in the privacy of their own home. Of course, in retrospect, that episode is hilariously wrong. You would think that, given how wrong they got it thirty years ago on this particular subject, 60 Minutes would be a bit more careful taking on the same subject again.

No such luck.

CBS's 60 Minutes has made itself out to be more of a laughingstock than usual when it comes to "investigative reporting," putting on an episode about "video piracy" that is basically 100% MPAA propaganda, without any fact checking or any attempt to challenge the (all MPAA connected) speakers, or to include anyone (anyone!) who would present a counterpoint. The episode is funny in that it contradicts itself at times (with no one noticing it) and gets important (and easily checked) facts wrong. And, of course, it basically mimics that old episode that history has shown to have been totally (laughably) false.

The report opens with the claim that counterfeit movies is where organized crime is making its money these days. Fascinating. Except they don't show any proof whatsoever that organized crime has anything to do with movie piracy at all. They just claim it, talk about Mexican gangs, and then assume it must be true. But, of course, most of the report actually focuses on the internet and file sharing of movies -- which completely goes against the claim that organized crime is "making its money" off of video piracy. After all, reports have shown that online file sharing has actually been putting DVD counterfeiters out of business. You would think that the "journalists" at 60 Minutes might have noticed this contradiction.

A big chunk of the episode is taken up by director Steven Soderbergh, who has come out in the past touting the MPAA's line before, so it's no surprise that he does so again. He claims that "piracy is costing Hollywood $6 billion a year at the box office." Does he mention that Hollywood has been making more and more and more at the box office every year the past few years? Oops. No. Did the reporters at 60 Minutes look into this fact and bring it up? Of course not. The entire story appears to be an MPAA press release, so you don't want to cloud it with pesky facts that prove they don't know what they're talking about.

Next up, Soderbergh claims that fewer movies are getting made thanks to movie piracy. Uh huh. Another checkable fact. Another one wrong. It was recently summarized, according to the movie industry's own numbers:

2004 Total Movies Released: 567 Total Combined Gross: $9,327,315,935
2005 Total Movies Released: 594 Total Combined Gross: $8,825,324,278
2006 Total Movies Released: 808 Total Combined Gross: $9,225,689,414
2007 Total Movies Released: 1022 Total Combined Gross: $9,665,661,126
2008 Total Movies Released: 1037 Total Combined Gross: $9,705,677,862
2009 Total Movies Released: 1177 Total Combined Gross: $7,596,626,766
(2009 figures incomplete, total movies scheduled to be released, gross to date)

So, actually, more than double the number of movies are being made today than just five years ago. Hmm. That's the sort of thing that a real journalist at a show like 60 Minutes might bring up to a biased director like Steven Soderberg, right? Nope.

The article mentions how to go to the movies these days, some people have to go through "airport-like security. Their bags are searched for cameras and they have to check their cell phones." Does it point out that this might be a pretty serious reason why people might not want to go to the movies? A reason why people might actually give less money to the industry? Nope. Why bother with details like that?

And then, 60 Minutes brings on our favorite industry spokesperson: Rick Cotton, NBC Universal's general counsel, the guy who warned that movie piracy put corn farmers at risk because people watching pirated movies eat less popcorn (never mind the fact that the corn industry is thriving, that people watching pirated movies still eat popcorn, and "popcorn" represents an infinitesimal part of the market...). Cotton was also the guy who thought it was a good idea to push people who wanted to watch the Olympics to pirate it rather than watch the crappy official online channel. Cotton is asked how many movies are released in the US:

"Ballpark, 400 to 500 movies are released in the United States."

Except, as we noted above, he's off by about 600 or 700 movies. Again, this is the sort of "fact" that a reporter, such as those employed by CBS and working on a television program like 60 Minutes might be expected to check, right? I would guess that most viewers of 60 Minutes expect the show's reporters and legions of other employees to do such basic fact checking. So, given that 1177 movies are going to be released in 2009, doesn't it make sense to, say, push back on Cotton's bogus number? Apparently not.

Random aside: I wonder how much money CBS makes from the big studios buying movie ads? That can't be important here, can it?

Most of the rest of the program is Soderbergh making a bunch of totally unsubstantiated statements, such as saying that no one would make The Matrix today. Why? No explanation. It's just that Sodergbergh says.

And, of course, beyond failing to fact check the most basic facts, no one at 60 Minutes thought to talk to anyone outside of the studio system to see if it made sense. It didn't talk to any one of the growing number of people who are making movies and embracing file sharing to help get those movies seen. It didn't talk to moviemakers who are embracing new business models. It didn't talk to copyright experts and consumer advocates who have shown how ridiculous the MPAA's claims are. In other words, it presented an MPAA press release as if it were news. Thirty years after it did the same exact thing and got the entire story wrong. It didn't even go back and note that earlier episode. It just repeated it with modern stand-ins.

Filed Under: 60 minutes, copyright, leslie stahl, movies, piracy, rick cotton, steven soderbergh
Companies: cbs, nbc universal

Internet Hating Sony Pictures CEO Insists Piracy Is Killing Movie Business; But Facts Show Otherwise

from the whoops dept

Ah, remember Michael Lynton? The Sony Pictures CEO who earlier this year insisted that nothing good had come from the internet at all. When everyone started mocking him for this statement, rather than back off, he doubled down and insisted it was true, using examples that were easily debunked. Apparently, he hasn't learned his lesson. He's back at it, pushing for the UK (and others) to pass laws kicking people off the internet (so-called "three strikes" laws) while insisting that due to piracy there's less money to make movies and fewer movies being made. Of course, those are things that can be fact checked, and the folks over at TorrentFreak did exactly that, pointing out that more movies are coming out each year and more money is being made. Oops.

The way Lynton tries to get around this is by not actually talking about how many movies are coming out, but just counting the number of movies that came out of "the leading studios." I find this quite amusing, because in the podcast we discussed last week involving Paramount's Scott Martin, part of his argument was that while the big studios were fine, the independents were all suffering and fewer movies were coming out because of it -- and, as a "fan" of independent movies, he found that sad. I didn't bother to check the numbers, but it appears that Martin was simply wrong. More movies are being made, and it looks like an increasing percentage of them are coming from smaller independent shops.

The problem, again, seems to be that the folks at the movie studios (just like those at the record labels) only like to count the big hits as successes -- rather than the smaller projects that actually make money and make up the majority of the actual market. It's the same sort of thinking that makes movie studio people insist that we need to explain to them how they can keep making $200 million movies. That's the wrong question. The question is how do you make profitable movies. The technology has advanced such that it's cheaper and cheaper to make movies (which is why we have more of them). But notice that the studios never focus on ways to make movies in a more economical way, but how can they keep spending. Perhaps that's a bigger problem than "online piracy."

Filed Under: copyright, intellectual property, internet, michael lynton, movies, piracy
Companies: sony

Could Redbox Crowdsource Its Way Around Movie Studio Blockades?

from the connecting-with-fans dept

Last week, we wrote about the legal battle Redbox is facing with some of the movie studios. Redbox, of course, rents DVDs at a $1/rental from vending machines that it places all over the place. Some of the studios are upset that (a) they don't get a cut of each rental and (b) that Redbox also sells those DVDs. So they've been trying to force Redbox to sign agreements that would give them a royalty cut and which would put limitations on Redbox -- such as not renting out videos until well after the DVDs are released and also having the company destroy, rather than sell DVDs when they were done renting them. Of course, the labels don't have much of a legal claim here. Redbox has every right to buy DVDs and to then rent them (right of first sale and all that). But, what at least some of the studios have done is to demand that DVD wholesalers not sell to Redbox, which certainly seems like a typical restraint of trade situation. In at least one case, a studio has also told downstream retailers, like Walmart and Best Buy not to sell to Redbox either.

Now, you might think that Redbox could just send employees into those stores without saying where they're from, but those stores probably don't carry enough stock for Redbox to buy enough DVDs efficiently. But what if they did something different? In the comments to that post last week, our rather insightful community started suggesting ways that Redbox could get around the sales blocks from studios by crowdsourcing the acquisition of movies.

There were a few different suggestions on how this could work, but the basic idea, presented by commenter "McBeese" laid out the basics:

• Consumers open online accounts with Redbox. The account contains a Paypal id for deposits.
• Redbox publishes how many copies of each DVD that they want.
• Joe Consumer buys the movie, watches it, and then logs in to the Redbox site and 'pledges' the DVD. Each pledge automatically reduces the amount of a particular DVD that redbox is seeking.
• Joe consumer mails in the DVD with an associated pledge number. When the DVD is received, the agreed amount is deposited into Joe Consumer's account.

A little slower than buying in bulk, but unstoppable.

I'd argue that rather than paying the user for it, Redbox could just credit their account for a certain number of free rentals. Then, not only does Redbox get these movies, but it builds up an even more loyal userbase... with really no significant way for the studios to block this out. There are some things that are tricky about this -- including verifying that the purchased DVDs are what they say they are, and coming up with a way to accurately handle the inventory management, but it is creative, and it shows that as much as the studios want to think they can control this market, there's always going to be some way around their restrictions.

Filed Under: crowdsourcing, dvds, movies
Companies: redbox

Dear Hollywood: Don't Be Idiots; Don't Delay Movie Rentals

from the seriously dept

Sometimes you just shake your head at ideas that come out of some executives that are just so incredibly dumb, it makes you wonder how anyone ever took them seriously. There have been some hints about this latest one, though. Just last week, in discussing the latest IP Colloquium podcast, we noted (with surprise) that Paramount's top lawyer thought the solution to business model problems in the entertainment industry was "more windows." Windows, of course, are the different time periods in which movies are released solely for different formats/media. So, it starts with the theater (the first window), followed by video, pay per view, cable and network TV -- each representing another window, and another chance to squeeze more money out of the same content.

Yet, with the industry facing some challenges, rather than actually looking at what users want, its top brains seem to think that the answer is more windows. It's hard to explain how incredibly short-sighted this is, because it's so monumentally backwards that it makes you wonder what they're thinking. At best, my guess is that the execs are extrapolating out in the simplest form that with the launch of each "window" they make more money, so the way to make even more money must be to offer more windows. Of course, this assumes two rather basic things that are totally wrong. One, is that these windows won't piss off users and two, that those users have no alternatives.

But, apparently not realizing that, these execs have hit upon a few different attempts to add more windows. First, they've been pushing for the permission to break your TV or DVR with selectable output control barring your ability to tape movies. This way, they can create a new "window" of movies on TV that you can't record, that they can offer before the movies even get out on video. Of course, this will (a) piss people off and (b) drive them to more piracy. Brilliant.

The other attempt, is to get video rental places to stop renting movies when the DVDs first come out. The LA Times had an entire article explaining this plan, whereby the studios would force all rental services, including Netflix and Blockbuster to not rent certain films -- but only offer them for sale. The idea (short-sighted as it is), is that this would somehow force people to buy more DVDs, which gives the studios a higher margin than rentals. We actually heard about this earlier this year with the contract terms that the studios tried to put on Redbox, but it's apparently trying to do the same with Netflix and Blockbuster as well.

This idea is so bad that even the LA Times, who tends to support its hometown industry more often than go against it, put out a separate opinion piece with the original article, calling this new idea "crazy" and "absurd."

In the meantime, what do customers actually want? Well, there's pretty good evidence they prefer choice not being limited by windows. They've been clamoring for so-called "day-and-date" release, whereby all these windows are compressed. If you don't want to see a movie in the theater, why not be able to get the DVD? It's as if the studios don't realize that part of what they're selling is the social experience of "going out" to the theater. Even better, if the DVD comes out at the same time as the theater version of the film, less marketing money needs to be spent to sell more DVDs, and you can do nice tie-ins, like having the ability to buy the DVD as you walk out of the theater. Giving people more value and more choice is what the market is asking for.

Instead, Hollywood execs are trying to take away choice and limit value. Incredible.

Filed Under: dvds, hollywood, movies, rentals, sales, windows