Investors Recognizing How ProIP Is Bad For The Entertainment Industry

from the it's-not-a-bad-thing dept

Kevin Stapp writes in to point out an interesting article over at the Motley Fool, where the author, Anders Bylund, points out why the new ProIP law is bad for the big entertainment companies from the perspective of an investor in those companies. Basically, he recognizes what some of us have been saying for years. If you rely on stronger copyright as a crutch to protect an old business model, you’re much slower to adopt newer business models that can greatly increase the size of your market. In other words, by denying the growth potential of infinite goods, you shrink the potential size of your market, and that’s bad for the company and bad for investors:

As much as I love my Walt Disney investment and the great entertainment the company has created over the years, it’s also part of a boneheaded industry that can’t deal with the digital revolution…. Disney, Warner Music, and their colleagues could handle rampant piracy in a much more delicate manner and turn today’s massive problem into free distribution and dirt cheap marketing. Yes, there are ways to make money when others copy your dearly beloved content for free. The PRO-IP Act is a step in exactly the wrong direction, though.

Exactly. And this reinforces the point that it’s a mistake to keep trying to find the right “balance” between content producers and content consumers. There’s no need for a balance if the content producers adopt business models that both expand their market (by properly defining the market) and leave consumers free to share and promote the content in a way that actually helps the bottom line of the content producer. It’s quite rare to see short-term investor-types recognize such strategies, so it’s quite interesting to see a discussion like this on a mainstream site like the Motley Fool. Hopefully others will start recognizing this reality soon as well.

Filed Under: , , , , ,
Companies: disney

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “Investors Recognizing How ProIP Is Bad For The Entertainment Industry”

Subscribe: RSS Leave a comment
6 Comments
LostSailor says:

Balance Isn't A Mistake

And this reinforces the point that it’s a mistake to keep trying to find the right “balance” between content producers and content consumers. There’s no need for a balance if the content producers adopt business models that both expand their market (by properly defining the market) and leave consumers free to share and promote the content in a way that actually helps the bottom line of the content producer.

Of course there’s not need to balance rights when one side gives up those rights. But most investors, businesspeople, and content creators are going to need to see some more than just a theoretical promise that the revenue they forgo from the sale of content can be not only made up, but increased by ancillary revenue streams.

Take the argument you’ve made for your “infinite goods” example in the music industry. You advocate “freeing” the music to theoretically expand the market for revenue-producing activity ancillary to the music, such as concerts and merchandise.

One problem with the model is that most musicians are already engaging in those ancillary activities, and I’ve yet to see a strong business case that shows that there is sufficient leverage in those activities to make up for the non-inconsiderable revenue that would be lost by not selling the music.

There are only so many concerts you can play and ticket prices are already pretty high for those concerts. There might theoretically be more play in merchandise, but there are only so many t-shirts you’re going to sell beyond what you’re already selling.

In this instance, the argument seems to be: give up the revenue from music sales and work harder to make it up elsewhere.

I’m not saying that the model doesn’t work in some instances, though most struggling musicians are already doing all this without seeing dramatic results, or even that it might not be the model of the future. What I am saying is that it’s still highly theoretical and in practical application does not necessarily make good business sense.

However, the alternative–seeking to balance rights of content creators and content consumers in the face of advancing technology by some relaxation of copyright protection–while not perfect advances toward the goals you’re advocating.

goldenrail (user link) says:

Maybe It's Not Just the Model that's Broken

Maybe it’s also the results. In the “Balance Isn’t a Mistake” debate above, there’s a lot of discussion about making up revenue lost by releasing some of the rights over artists’ music. But does that revenue really need to be made-up? Perhaps the consumers have decided there’s no reason record labels and artists need to make millions or billions of dollars. Artists work hard, and society values their contribution, but are they really that much more valuable than the contributions of a dedicated teacher or a skilled construction worker?

LostSailor says:

Re: Maybe It's Not Just the Model that's Broken

there’s a lot of discussion about making up revenue lost by releasing some of the rights over artists’ music. But does that revenue really need to be made-up?

The discussion was not just releasing “some” of the copyright protection to an artists’ music, but generally releasing all the rights.

Actually, it would be up to the artist (or recording company if the artist has a contract with one) to decide whether lost revenue would need to be “made up.”

My point is that if you want to convince the recording industry (and that’s the real point here) to release all their music freely and without reuse restriction, they’re going to have to be convinced that the revenue they would lose by doing so would be returned by increase in different activity.

Mike’s point is that the free release of music will nearly always result in a wider market for the music and the artist, allowing for increased market for specialty CDs, concerts, merchandise, and other marketable products or services. The “make up” (and hopefully increase) in revenue will come from those activities.

It’s not a matter of whether a record label or artist “deserves” more than a teacher or construction worker, but a plain business case. Record companies are in business to earn as much money as possible, just like most other businesses. You’re not going to get them to change their business plan without hard numbers. Simply having a different model isn’t enough.

Androgyn says:

my opinion

I think “giving away free music” is alredy happening in the old busines mondel too: The plays in RADIO is free music distribution. Actually peolple can hear the tracks for free from it..for many times. So it build the musicians brand, and it pumps up the merchandise sale already. There is no “wider market” in my opinion. Every teen listen raido,and watch music tv. The guy who heard britney’s song for atleas 30 times,and he still would not want to pay for her song ,just wants to download it, doesnt gonna pay for merchandise eighter.

Add Your Comment

Your email address will not be published.

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...
Loading...