Why Hollywood's Idea Of 'Innovation' Is SOPA

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.

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Comments on “Why Hollywood's Idea Of 'Innovation' Is SOPA”

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That Anonymous Coward (profile) says:

Re: Re:

Well because everyone will just do everything exactly how we want them to!
They have become enamored with their own ideas, telling consumers how its supposed to be done. If they were a restaurant they would send out steaks done to what their system told them was perfect, and refuse to consider what the customer wanted. They would refuse to listen to the customer complaints, because they know best not the people paying them. They restaurant would be failing, so they would lobby for a bill forcing people to have to eat at their restaurant. Then the absurd idea of home cooking is killing the restaurant industry would come true.

They have money and power, and this has blinded them to the simple fact that the consumer is who they are supposed to be working for. Back in the dark days consumers had no choices, as they controlled every aspect of the process. Nowdays the process has vaulted forward making the consumer king, offering options and choices…
If you choose to try to delay the content to meet some plan made in the 1950’s of this the ONLY way it can be done, your hurting your own business.
It would be nice if they could look at the history of their chicken little story telling and just skip to the embrace the change and make more money portion without all of the hand wringing.
Instead we have SOPA, other horrible proposals, and the 6 strikes program waiting in the wings to piss customers off more. They are more invested in driving consumers away to maintain the illusion of control, they can not see the biggest driving force to hurting their business is… themselves.

That Anonymous Coward (profile) says:

Re: Re:

– He runs a company that would be negatively affected by the contents of SOPA.
– He is concerned about the effect SOPA would have on regular people.
– There is quite a bit of factual information in the article, showing all of the “death blows” to the content industry to be boogeymen in their own minds as they fear progress and loss of control.
– There is a demonstrable history of once they embrace the new, they make even more money than before.

Rather than suffer with the further slide towards a police state run for the benefit of corporate profits, people are speaking out against bad legislation. It saddens me that with all of this available to you, from multiple sources you insist on clinging to your irrational fear and hate.

2/10 – You got me to bother with you, but changed nothing.

Spike (profile) says:

Gotta love their war on file-sharing, all while waging an assault on affordable legal streaming services. Cat is already out of the bag, less people are paying $30 for a blu-ray movie, and instead want cheap streaming services with new releases.

Its like they want people to go back to piracy, instead of subscribing to Netflix or whatever.

Machin Shin (profile) says:

Re: Re:

Well when you look at the actions they keep taking, like how they jacked up the license cost for netflix, I think they are out to push people to other things. The movie studios jacked up their price and that caused netflix to pass that cost on to subscribers. I promptly left netflix.

Admittedly that was MOSTLY due to the way netflix handled it. I did not mind the price hike so much as the rude “we don’t give a fuck about our loyal customers” attitude they took.

End result though is that I used to pay netflix and was happy watching shows there. Now I’m just as happy watching whatever I want for free. It is not “instant”, but so what? I will not pay someone to treat me like trash. Until they show their customers some respect they can live without my money.

khory (profile) says:

Re: Re:

So true. If they would license the content to stream on Netflix and as a benefit to your sub you could download a high quality, DRM free version for $5-$8 it would be gold! They would make a boatload of money and piracy I bet would take a nosedive.

Why is it I came up with this idea in about 30seconds and the MPAA hasn’t been able to figure it out yet?

Anti-Fandom Association says:

Re: Re: Re:

In that case, we’ll just inject that DRM-chip into your little skull so that you can’t direct share brain to brain, think creative, or be productive. This DRM-Chip will force you to buy our products and you will think when we command you to think through that chip. And the only command is “Buy our products”. So be like a good little DRM-mind control consumer puppet and buy our products or we’ll indefinitely detain you under the NDAA, you effing terrorist.

Machin Shin (profile) says:

Re: Re:

Well I’m surprised they have not attacked 3D technology yet. Then again, maybe that is why it is FINALLY coming out. You realize all this “new” 3D technology is really over 10 years old? The fancy shutter glasses the new TVs use have been around for over 10 years easy. I have a pair that works on a computer that I bought over 10 years ago and it was not new then.

It really makes you stop and think. Where would we be today if these companies did not kill off anything that they did not want to compete with? What kind of technology has been suppressed and hidden from the main stream because those in power did not like it?

PaulT (profile) says:

Re: Re: Re: Re:

Erm, I’m not sure which propaganda you’ve been reading, but you’re wrong either way. There were numerous American 3D technologies as early as 1922, with other systems going back to the 1890s. The Nazis did use 3D at some point, but they definitely didn’t invent it – even they had been the first to perfect it (which I don’t think they were), they were working on concepts that had been around for decades.

However, Machin Shin was probably referring to the modern systems based on polarized glasses and/or the shutter glasses he mentioned. The technology has certainly been around for much longer than a decade, but he was probably thinking of modern systems such as RealD rather than the basic concepts themselves.

Anonymous Coward says:

Re: Response to: anonymous on Jan 7th, 2012 @ 1:47am

End of the world concepts are all Hollywood knows. Have you seen the movies they have been making lately? The only difference is that in theater its global warming and aliens that end the world as we know it, but in their commercials it’s copyright infringement. Maybe they should make a movie like that. Copyright infringement causes atmospheric disruption killing millions…

PaulT (profile) says:

Innovation – actual, solid, innovation that’s beneficial to the industry and consumers alike is HARD. It involves risks, no guarantees of success, and doesn’t instantly appear on the “profit” side of the balance sheet. These people aren’t in the business for the benefit of consumers, they’re in it for the money, and innovation makes their future much more cloudy. They don’t want to innovate, they want to ride the gravy train.

This is why they fight. They didn’t want the increased profits related to home video sales, for example, as it couldn’t guarantee and immediate return. They just wanted to ride the existing industry until they’d made their fortunes. Unfortunately for them, 3rd parties just won’t stop innovating new technologies that threaten to damage the status quo they need to maximise profits under the current models.

To truly “fight piracy”, they would have to make long-term and potentially risky changes to their businesses. For example, they would have to recognise that half the reason why “foreign rogue sites” even exist in the first place is due to regional and format windowing that leave most foreign markets feeling ripped off and left unserviced. They would have to totally revamp regional licensing regimes, create different licensing models for physical and digital markets, and numerous other things that would remove an area that’s currently easy, relatively risk-free profit for them. Or, they can just lobby for laws that force other people to block those sites for them – much easier.

It doesn’t matter to them that this will not work, nor that there’s unacceptable levels of collateral damage. By the time that the industry is shown that this has failed and that they need to adapt as they have in the past, those in charge will have retired with their fortunes intact, for as little work as possible.

Vincent Clement (profile) says:

Re: Re:

I guarantee you that if the movie companies eliminated copy protection and regional and format windowing that they would make more money. Most people don’t have the aptitude or time to download a movie.

My wife buys fewer DVDs these days because she has encountered problems playing legally-purchased DVDs. Fortunately, I was able to rip the problem disc and remove all the protection. But many people don’t know how to do that, so they just suffer through it. You may be able to get a replacement disc, but I’m sure they the companies will make you go through hoops – after all we are all pirates to them.

James Smith Jo?o Pessoa, Brazil (profile) says:

Sure, it will work

SOPA will do exactly what it’s supposed to do. The same way laws about gambling, drinking, drugs, and prostitution have put a stop to those activities. One thing politicians refuse to learn is that you cannot legislate morality.

If the music and entertainment industry cannot adapt to the real world and develop a business model that works with that reality, they deserve to die. It’s survival of the most adaptable.

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