from the regulatory-capture dept
A ton of folks have been sending over Steve Blank's absolutely awesome detailed analysis of
why Hollywood can't innovate... and the result is SOPA. It touches on many points we've raised separately, but puts it all together in such a fantastic and comprehensive package. Seriously: just go read it.
It kicks off by noting a key point that we've raised in the past, but which often gets underplayed: the vast majority of movie industry revenue these days comes from pay-per-view TV, cable, satellite, video rentals, DVD sales and online subscriptions/digital downloads. In fact, this is the part of Hollywood's business that it insists is most under threat from infringement. But, here's the thing: if the MPAA had had its way over the last century, none of those things would have existed. It fought tooth and nail against every innovation that resulted in those new and lucrative markets. Blank puts together a great historical list:
- 1920’s – the record business complained about radio. The argument was because radio is free, you can’t compete with free. No one was ever going to buy music again.
- 1940’s – movie studios had to divest their distribution channel – they owned over 50% of the movie theaters in the U.S. “It’s all over,” complained the studios. In fact, the number of screens went from 17,000 in 1948 to 38,000 today.
- 1950’s – broadcast television was free; the threat was cable television. Studios argued that their free TV content couldn’t compete with paid.
- 1970’s – Video Cassette Recorders (VCRs) were going to be the end of the movie business. The movie business and its lobbying arm, MPAA, fought it with “end of the world” hyperbole. The reality? After the VCR was introduced, studio revenues took off like a rocket. With a new channel of distribution, home movie rentals surpassed movie theater tickets.
- 1998 – the MPAA got congress to pass the Digital Millennium Copyright Act (DMCA), making it illegal for you to make a digital copy of a DVD that you actually purchased.
- 2000 – Digital Video Recorders (DVR) like TiVo allowing consumers to skip commercials was going to be the end of the TV business. DVRs reignite interest in TV.
- 2006 - broadcasters sued Cablevision (and lost) to prevent the launch of a cloud-based DVR to its customers.
- Today it’s the Internet that’s going to put the studios out of business. Sound familiar?
But that's just the preamble to his piece. From there, he explains how the industry set itself up to be so anti-innovation -- focusing on regulatory capture to help block innovation. The story reminds me of Andy Kessler's distinction between
political entrepreneurs and market entrepreneurs. Political entrepreneurs focus on connections in government to create protectionist policies. Market entrepreneurs ignore all that and just build cooler products. In the end, the market entrepreneurs win, but the political entrepreneurs can disrupt their lives for a while and make it difficult.
But the end result is SOPA/PIPA rather than technology or business innovation:
The SOPA bill (and DNS blocking) is what happens when someone with the title of anti-piracy or copyright lawyer has greater clout than your head of new technology. SOPA gives corporations unprecedented power to censor almost any site on the Internet. It’s as if someone shoplifts in your store, SOPA allows the government to shut down your store.
History has shown that time and market forces provide equilibrium in balancing interests, whether the new technology is a video recorder, a personal computer, an MP3 player or now the Net. It’s prudent for courts and congress to exercise caution before restructuring liability theories for the purpose of addressing specific market abuses, despite their apparent present magnitude.
What the music and movie industry should be doing in Washington is promoting legislation to adapt copyright law to new technology — and then leading the transition to the new platforms.
I actually think Blank underplays this a bit. The MPAA doesn't just have a "copyright lawyer" with more clout than a technology person... it's that the entire MPAA is
designed around anti-piracy, with a whole series of execs and staff whose sole job is "content protection" -- not business model or technology innovation.
Either way, I highly recommend checking out the full article.
Filed Under: copyright, crying wolf, history, hollywood, innovation, pipa, protect ip, regulatory capture, sopa
Companies: mpaa
