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. icon
    Mike (profile), 8 Aug 2008 @ 12:01am

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

    I hope i get the tags right! LOL

    Good job. I hope you paid the HTML royalties, since, you know, it's important to make sure the folks who "own" HTML make money. Otherwise, there wouldn't be an internet...

    Oh wait, sometimes freeing stuff up opens up much more opportunity. You might want to look into how that works.

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

    You haven't seen what? How giving away stuff for free can create a bigger market opportunity? Then I'm afraid you haven't looked very hard.

    Trust me, your competitors are figuring it out.

    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.

    You know that Warner lied about that right? The movie was available at the time it opened.

    It wasn't preventing piracy that made people go see it, it was the fact that it was a GOOD MOVIE, and watching a GOOD MOVIE in a theater with your friends with a great sound system (and, with Dark Knight in many cases, with IMAX quality scenes) is an EXPERIENCE worth paying for.

    People are paying for the experience, not the content.

    The fact that the movie is STILL bringing in record numbers of folks paying to see it is because of the experience. It has nothing to do with piracy.

    ...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.

    Last summer was the biggest the box office ever took, despite movie "piracy" being at an all time high.

    You really ought to go back to school to learn a few things.

    Piracy is not the issue. Making good movies and providing a good experience are all that matter.

    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...

    Ah. So movies violate the fundamental laws of economics?

    That's not particularly convincing.

    You're basically saying that protectionist markets make sense when they're protectionist. But, a little economics lesson would teach you that you're wrong.

    Otherwise no software company would sell you multiple licenses of the same software.

    Yes, and that model is going away as well.

    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 might want to take an economics class. You seem to be confusing quantity demanded and quantity supplied with demand and supply. They are different things. Learn the difference and you'll understand why this statement is wrong.

    You know very little about Economics and even less about marketing.

    So far only you have shown a lack of knowledge on those things. I write and consult on both topics and have for many years. I've built a large and growing business based on helping companies (including your competitors) better understand these factors.

    I hope you enjoy watching them pass you by. :)

    Really? Either you know very little about History or very little about Protectionism

    I know an awful lot about both, so if you'd like to test my knowledge go ahead. But I get the sense that you have a false vision of history.

    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.

    Then you are totally blind to the competitive market you face. The movie industry is in the distribution and promotion industry -- and both of those are being undermined by new *competition* from file sharing. And DRM is designed to block that competition. It is absolutely protectionism of the same variety as the sugar monopoly of years gone by.

    They are enforcing rights.

    Rights are not something you enforce. DRM is not about enforcing rights, it's about taking away rights from people. It's about restrictions and protectionism from an industry too blind to see what it's real market is.

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

    I'm glad your competitors think differently. :)

    I'm talking about the film industry... and you keep bringing the most basic high school Economics: demand and supply. Is that all?

    If you want to get into deeper economics I'm more than willing to. But so far, you've demonstrated that you don't understand those most basic concepts, so I figured we should start there.

    If you don't understand supply and demand (which you have proven you don't) then it's no surprise that your view of the market is as warped as it is. No worries. When the competition drives you out of business, you'll be left wondering what hit you.

    At that point, I'd suggest picking up an econ textbook (or giving us a call).

    Would you like to know who sets the price of movies? I'd love to know who do you think sets prices for movies.

    The market sets the price for movies, just as it does for other goods. Again, an econ textbook would be of tremendous help to you right about now.

    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!

    You keep believing that. And keep writing those checks to those developers and watch them laugh all the way to the bank as piracy increases.

    Then watch as those other companies, who actually understand economics clean your clock in the marketplace.

    And then give us a call. We can help.

    Don't believe for a second that just because you see some places selling DRM-less music it means they are abandoning DRM.

    Oh, I know some of the short-sighted ones are sticking with DRM and even wasting tons of money on it. But it will never matter to the marketplace again.

    No... SELLING is necessary to make money.

    Indeed. Who said anything otherwise. But where you're confused is you don't even know what you're selling.

    PROMOTION is necessary to make money.

    Indeed. So why do you make it so hard for others to promote stuff for you?

    CUSTOMERS are necessary to make money.

    So why do you treat them as criminals? Why do you DECREASE value by making your content less useful and less valuable?

    UNDERSTANDING CUSTOMERS is necessary to make money.

    Yes indeed. But, you obviously don't understand customers if you think that DRM is somehow helping them.

    ENSURING THE BEST EXPERIENCE is necessary to make money

    It is impossible to ensure the best experience when you're working on software to STOP them from experiencing the content.

    If you were to simply focus on improving the experience, you'd be amazed at what would happen. Just look at the Dark Knight. That's all about the experience, not the piracy.

    DRM is not necessary at all UNLESS a percentage of people try to meddle with any of the above - which will affect making money.

    It only impacts making money for those who don't know how to leverage it. Such as folks like yourself, apparently.

    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.

    Actually, there's a ton of research showing the opposite (but, yes, I know, you don't want to learn).

    Do some research. Learn a little economics.

    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!

    Yeah, actually, it was those less well known musicians that embraced making money from live performances long before the big players did. For someone who keeps insisting I don't know what I'm talking about, you seem to be the ignorant one.

    The Dark Knight is on its way to 600 million dollars and you say the film industry knows nothing about Economics?

    The reason it's going to make so much is because it's a worthwhile EXPERIENCE. But the problem is the industry doesn't seem to recognize that. It has nothing to do with piracy. Focus on the experience and you'll make plenty of money. Stop worrying about protectionism and give people a REASON to buy the EXPERIENCE.

    Again: you know too little of it. All you say is cliché and myth.

    Supported by two centuries of economic research and history, but you don't want to know about any of that, apparently.

    You just want the myth that the industry tells itself. That people are buying "content" and that you need gov't granted monopolies to make money. You don't. The sooner you learn that, the faster you'll increase the size of your market.

    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.

    Yes, focus on the experience.

    What does that have to do with DRM?

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

    Until the company that makes the next great movie understand economics better than you. He doesn't waste his money on DRM. He encourages file sharing... and then he starts raking in money using new business models where you're left wondering why you lost so much money (just as the bill from your DRM developers shows up).

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

    The size of a market is determined by the resource inputs. Limiting the resources via DRM shrinks your market. Opening it up increases your market if you know where to put the cash registers.

    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.

    You're using DRM, you're treating them as criminals. Learning more about your customers is good -- but thinking they want DRM shows you haven't learned much about them.

    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.

    You don't seem to understand. DRM doesn't do ANYTHING but annoy your legitimate customers. It doesn't stop pirates. It never has and it never will. It's a fundamental impossibility.

    And, all that needs to happen is for a SINGLE COPY to get pirated. Then all the DRM in the world doesn't matter. The horse is out of the barn and you're still talking about how to make the lock function.

    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.

    The only way it's invisible is if it doesn't exist.

    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.

    Are you the ghost of Jack Valenti? I've never spoken to anyone other than Valenti who believed that his statement 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)

    Yes, exactly. So why can't the industry recognize that internet downloading just means they need to change their focus away from distribution and focus on experience?

    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.

    Just as it will restructure again to embrace file sharing, and do so in a way that will make it a ton more money.

    The only reason to embrace DRM is to try (and fail) to prevent that inevitable change.

    Nobody will get anything for free.

    History says you're wrong about that. And, trust me, some of your competitors do too.

    Both consumers and the industry will change.

    So why are you resisting that change so much?

    The kids are alright.

    But it seems like some of the parents are a little confused.

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