Dear MPAA: DRM Is Not A Requirement For Releasing Movies

from the nice-try,-but...-no. dept

We've written about the request from the MPAA to the FCC to grant a waiver that would allow the MPAA to use "selectable output control" (SOC) in order to block DVRs from recording their movies. As we noted, the movie studios basically would like to add in another movie release window, letting movies appear on television before they're released on DVD. Of course, there's absolutely nothing stopping them from doing so today. However, they claim that it's impossible for them to do so unless they get to implement DRM via SOC to stop people from recording these movies. The MPAA's own defense of this plan was exceptionally weak, but now some others are actually coming forward to defend the MPAA's position.

Ryan Radia, over at the Tech Liberation Front, has a long and thoughtful article where he tries to paint the MPAA's position as being pro-market and anti-regulation: "Consumers are willing to pay to watch new movies at home, and content producers are willing to transmit them, but government is standing in the way." It's a neat twist, but it's 100% wrong. The government is not standing in the way. If consumers are willing to pay, the movie industry can absolutely offer up the movies and let them pay.

Radia's claim is based on the entirely false premise that the MPAA needs this special kind of gov't approved DRM in order to release its movies. Radia plays a neat trick in spinning this the other way, claiming: "But content owners aren't required to ensure that all movies can be easily timeshifted and archived." Yes, indeed, nor are movie studies required to use DRM.

There is absolutely nothing stopping the movie industry from making use of this "new business model" other than its own unsubstantiated fear of non-DRM'd content. It's not a government regulation. It's not some weird FCC rule. It's the MPAA itself.

Mark Cuban gets it right when he points out what a huge mistake the MPAA is making in even bringing this issue up in the first place:
For all the money the RIAA wasted on trying to stop digital piracy, about all they accomplished was explaining to everyone exactly where and how to steal music. Please do not make the same mistake. Right now its a hassle to unitlize the analog hole to copy movies. Most people have no idea how to do it, particularly for HD delivered movies. Please do not go through a big process of teaching people exactly what the analog hole is in hopes of getting companies to prevent its use. All you are going to do is turn on the lightbulb for many who would otherwise not have a clue.

The theatrical exhibition industry just experienced a phenomenal several weeks with The Dark Knight setting record after record. People by the 10s of millions went to the theater, many multiple time to enjoy the unique experience of going to a movie. Could you please, please, please use the money you are going to spend fighting the unfightable and instead spend it on promoting the fun of going to the movies ? More people going to the movies is more people getting excited about movies. More people getting excited about movies means more people watching movies on TV, which is good for revenues, and more people buying DVDs or legal downloads of the movies. Again, good for revenues.
Piracy is not, and has never been, a real threat to the movie industry. The movie industry is doing incredibly well by releasing good movies that people want to see. Even if they're available for unauthorized download, movie watching is a social experience, and the better the industry makes that social experience, the better it will do. Wasting time demanding unnecessary DRM isn't necessary. It's not blocking any business model. Wasting money fighting for this "analog hole" to be patched won't stop piracy at all. If anything, it will attract more attention to that analog hole, while pissing off more viewers and making it that much harder to get movie fans to want to pay money to see movies. Even if the MPAA prevails, it won't put a dent into unauthorized file sharing. People will figure out how to get around the SOC protection, and once a single copy is out there, it's everywhere. Focusing on stopping file sharing is a lose-lose proposition.

So, please, movie industry, stop pretending you need DRM for your business models. You don't. You never have. And the more you pretend you do, the more trouble you're causing.

Filed Under: business models, drm, movies, mpaa, selectable output control, soc

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  1. identicon
    Anonymous Coward, 7 Aug 2008 @ 6:33pm

    Re: Re: All part of the same business model...

    I hope i get the tags right! LOL

    They're saying that if a product is *infinite* then the supply curve suggests there are other business models that embrace that infinite nature in a way that is helpful.

    Sorry, but there's more to real life than meets the eye. Theoretically everything is possible. But we haven't seen that one yet.

    And just as we write, movie execs at Warner are happy they successfully delayed a pirated copy of The Dark Knight for almost 40 hours after the film opened (contrary to what happened in other films like the mega flop Speed Racer and other non-flops). They are happy everybody who wanted to see the film first hand had to go and pay for it. And bingo: a record box-office. In other words, they take measures nobody ever did and successfully delay pirates. And the film in case has a first day opening no one ever saw.

    ...In fact, as you know, for the first time in ten years there is a serious contender to the Titanic crown. Ten years ago, movie piracy was a fraction of what it is today. Coincidentally, in these last ten years, movie sales have dropped (with slight exceptions) and if you look at things, studios are just starting to get good results from the fight against piracy. There's still a lot to be done. DRM is just part of it. Just you wait, Mr. Higgins.

    There is a HUGE difference, which is that the supply of the first group is scarce. The supply of the second group is not. And, as your basic economics should have taught you, supply is a big part of determining price.

    What you say is good for apples and oranges. Not movies and other things where supply and demand are thoroughly manipulated. Films cost according to what they're expected to make (that one is true). But each viewing means one pay. The infiniteness of files containing movies has nothing do with their price... Otherwise no software company would sell you multiple licenses of the same software. What you pay for is the right of experiencing it, owning it. May be a DVD or a file. An Ipod does not cost $200 because demand is much higher than supply. There can be enough supply in order to feed enough demand that will make the Ipod price drop to $30. But then, Apple would not have a great profit out of it. So they play with demand and supply, keeping prices within certain margins, while diversifying their line of products. You know very little about Economics and even less about marketing.

    The history of any sort of artificial protectionist system says that you are 100% wrong. Not a single one has ever stuck around for very long -- because others eventually learn how to embrace the non-artificially-restrained market to their advantage. And then, those of you relying on artificial scarcity see your business models disintegrate.

    Really? Either you know very little about History or very little about Protectionism. DRM has nothing to do with protectionism. As the name says, it has to do with rights: commercial rights, copyrights and intellectual rights. No studio is preventing anyone of selling better films or cheaper films or both. Nobody is protecting itself from competition.

    They are enforcing rights. That's all and it's very different. What DRM does is to ENFORCE the respect for the existing rights. You can be as misinformed as you want and call it protectionism. It's your problem, really. Do you call it protectionism to protect your child from diseases? Is it protectionism to lock your doors or put burglar alarms in your house? It's called prevention and protection. Protectionism is something else.

    We are not the French Government who protect their Camembert cheese makers giving them subsidies (otherwise, it will cost you 10x more). Nor we are the American Government burning money on gas to keep the gallon at $4 while Europeans (who produce none of it and subsidize it less) pay $8 a gallon... or $10.

    You can spin it anyway you want. You know very little about theses things.

    You seem to be under the wrong impression that the supplier sets the price, rather than the market. That might explain why you don't seem to understand supply and demand either.

    I'm talking about the film industry... and you keep bringing the most basic high school Economics: demand and supply. Is that all? Would you like to know who sets the price of movies? I'd love to know who do you think sets prices for movies.

    Have you note noticed that both the software industry and (finally!) the music industry are moving away from DRM?

    Well... I cannot speak about the software industry. I can't even get theses tags right :P But... no, I'm not seeing the music industry moving away from DRM. On the contrary, both the music and the film industry are more active in the development of DRM tools than ever! Don't believe for a second that just because you see some places selling DRM-less music it means they are abandoning DRM. As I said, DRM is at its infancy and you are more naive than you think. But it's ok.

    Which part of the business model did you not understand? You are falsely assuming that DRM is necessary to make money. It's not.

    No... SELLING is necessary to make money. PROMOTION is necessary to make money. CUSTOMERS are necessary to make money. UNDERSTANDING CUSTOMERS is necessary to make money. ENSURING THE BEST EXPERIENCE is necessary to make money. Lots of others things are necessary too. DRM is not necessary at all UNLESS a percentage of people try to meddle with any of the above - which will affect making money. Tiffany's & Co. (who sell well, promote well, understand their customers and gives them a great experience - and everything else) does not need security in order to make money UNLESS they feel there are people who prefer not to pay for it. Louis Vuitton (who also do their homework) do not need to fight Chinese counterfeited bags to make money - or do they? Of course they do. Otherwise their brand will be so common they would never make money.

    But nor Tiffany's nor LV can use DRM. Movies and music can. Broadway does not need DRM because they are a live performance. But still they forbid taping of the show. Movies do that too. And Madonna left Warner because she thinks the real money is in live performances (where you can charge $60 a-cheap-ticket. But how many Madonnas are out there? 300? You bet. How many musicians? A lot more than 300. Millions!

    No one said they're evil. Short-sighted? Yes. Clueless about economics? Yes. Self-destructive? Yes. Evil? No.

    The Dark Knight is on its way to 600 million dollars and you say the film industry knows nothing about Economics? Come on! Self-destructive? Please! The European film industry used to say the same thing about its American cousin. Look what's left of them. Again: you know too little of it. All you say is cliché and myth.

    LOL... To be completely honest with you, the American film industry really does not have to know pretzels about Economics... just as long as they keep giving us all films we will die to see like Iron Man, Pirates of the Caribbean, 300, I Am Legend, Sex and the City, Batman This, Batman That.

    Honestly, that's the best Economics knowledge any producer needs.

    Yes, they know a lot about Economics! If you believe this or not is up to you.

    Because if allowing those people to consume for free INCREASES demand for a different aspect of your business model, you come out ahead.

    Now you have to explain this one to me because I cannot understand your thought.

    We're pointing out that those of you in your industry can actually EMBRACE these trends to DO BETTER and MAKE MORE MONEY by NOT treating your biggest fans as criminals.

    No, we are not treating our fans as criminals. In fact, we are spending more and more money on marketing so we can know them better and let them know more and more about our films so they will get disappointed less and less often. If this is not good, than I do not know what good is. DRM is not perfect. Again, it is on its infancy. And in the future it may even get other names. But its function is to ensure that all rights are correctly enforced. For many years that was not an important issue. Today it is. DRM is not aimed at consumers who legally get our products. As DRM evolves, the constraint on them will be minimal to none.

    It's become quite clear that many in the industry do NOT know that difference. Study after study after study has shown that your industry has gotten it wrong repeatedly.

    Study after study after study? No. That depends on who you ask. The industry is fine. Piracy is serious but it's not cancer. DRM is uncomfortable but very few people will care about it in the future... because the future of DRM is to be invisible.

    Hilarious. This is from the industry that once insisted that the home video market was "the boston strangler" of the movie industry. But it "knows" when something helps and when something hurts, right?

    Yeah... ok...

    Well... that shows how little you know about what you are talking about. You think that just because Hollywood did not go broke because of home video, then that (I admit) laughable phrase was wrong? Well... it was true.

    ...So true that the Hollywood that said that funny phrase changed the focus of their business from production to distribution. They understood that the production business was too risky and left it to the independents (those logos you see at the beginning of every film, Village Roadshow, Wienstein, Revolution Studios and thousands more)

    ...So true that Hollywood and Television started merging into big conglomerates in the next decades so they could optimize all the threats coming from unknown technologies. It is no accident that Universal=NBC, Disney=ABC, Paramount=CBS, Warner=HBO, etc.

    So the analogy that home video is The Boston Strangler while Hollywood is a woman alone was an act of conservativeness. It failed, it is true... BUT Hollywood (call it anything you like) quickly and fully restructured itself and solved the problem before it became a problem.

    A similar thing happened 40 years before when TV was invented. Don't burn Hollywood. It always comes back.

    Now... it can be that Hollywood it conservative about future business models. It's understandable. But one thing is sure:

    Nobody will get anything for free.

    And yet you expect that it's consumers who need to change rather than the industry? Sorry, that's not how marketplaces work.

    Both consumers and the industry will change.

    Infinite goods are hear to stay. Embrace it, or perish.

    The kids are alright.

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