by Mike Masnick
Wed, Jul 28th 2010 12:04pm
by Mike Masnick
Fri, Jun 25th 2010 6:14pm
from the keep-whac-whac-whacing dept
- Napster was a Silicon Valley, venture capital-funded startup that tried to bend over backwards to figure out a way for the industry to embrace it and work with it legitimately. The entertainment industry had every opportunity to work out a reasonable deal, and instead took a hardline position, suing the company effectively out of business (though the brand later lived on).
- After Napster, just as many people warned, the file sharing market began to fragment and shifted to slightly more distributed operations, such as Grokster, Kazaa and Morpheus. These were a bit more difficult to work with, but all still involved company entities that had an interest in working with the entertainment industry. Once again, they were sued out of business.
- After Grokster, again the market fragmented even more, and a lot of the interest shifted to BitTorrent and tracker sites. These sites were often outside of the US, and not particularly interested in working with the entertainment industry to actually set up any kind of business relationship. And, still, the industry sued to get them shut down (a process that is still ongoing), while also seeking to pass specific laws against them.
- So here we are, and the market has fragmented even more and people have been driven even further underground to things like private cyberlocker sites. Hollywood is claiming that many of these sites are run by organized crime groups, though, we've yet to see any evidence to support that.
"Sometimes these sites look better than the legitimate sites," Huntsberry said. "That's the irony."That's not irony, Fred, that's your company and your colleagues failing for over a decade to come up with a way to properly satisfy consumer demand.
All in all, you actually start to wonder if Hollywood has this need to make up some big scary bogeyman to keep pushing its legislative agenda of granting more and more control and taking away more and more user rights. At first it was "file sharing sites." Then those were sued out of existence. So then it was BitTorrent trackers. And now its lockers. In fact, it's amusing that as part of Huntsberry's talk he basically admitted that three strikes laws aren't enough because they don't do anything to stop these file lockers. In other words, "we fought, and are still fighting, for three strikes laws that we know are useless." It's as if the entertainment industry has to just keep pointing out some huge new threat so that the government keeps paying attention to them.
Along those lines, techflaws.org points us to a German publication's coverage of the same Huntsberry talk, and it's interesting that The Hollywood Reporter version of the story appears to have conveniently left out the part where Huntsberry blames Google for all of this (that's a Google translation of the original). In that one, he calls Google the "biggest leech." Of course, the courts recently shot down that claim, but it looks like Viacom and its subsidiaries are sticking to the claim.
What's amazing, of course, is that if the folks at Paramount and other studios and record labels stopped looking for enemies everywhere, they would have realized there were tons of opportunities to adapt and embrace these things a decade ago. But each step of the way they've made things more difficult for themselves. It's a living case study in how not to respond to a disruptive market change.
by Mike Masnick
Wed, Jun 16th 2010 8:53am
from the good-for-them dept
"There were two conclusions we came to," said Dennis Maguire, president of Paramount Home Entertainment. "There hasn't been a cannibalization of DVD sales from Redbox, and Redbox was allowing us to expand our business and ultimately make more money" than if the studio held back its DVDs to Redbox for a period of time.Of course, this is exactly what many people said when studios like Warner Bros., Universal and Fox demanded the 28 day release, but it's nice to at least see Paramount actually looking at the data and realizing that Redbox isn't the evil destroyer of Hollywood that some of its competitors have made it out to be.
by Dennis Yang
Fri, May 14th 2010 7:34am
from the you're-doing-it-wrong dept
Yes, it appears Paramount promptly filed a DMCA takedown -- which seems like a fantastic way to kill excitement for the movie. According to the takedown, Brown's video "matched third party content," which, of course, is impossible since Transformers 3 has yet to be finished (let alone released) and obviously Brown took the video himself. The filming took place in a public alley, so anyone around is totally free to take pictures or video and share them.
Now, not only is it ridiculous to claim that these videos are covered under Paramount's copyright, it's hard to fathom why Paramount would want to bother quashing these videos at all. After Brown and Krimmel posted their videos, entertainment blogs picked the story up and started to build buzz about the movie. Isn't that a good thing? Personally, I really disliked the last Transformers movie, and this latest round of DMCA shenanigans isn't doing a very good job of convincing me to give the next installment another look.
On top of that, this is Paramount we're talking about -- which is a subsidiary of Viacom. Viacom, of course, is in the middle of a big lawsuit with YouTube, where one of the things Viacom has been claiming is that Google should just know what content is infringing and which is not -- and yet, here, again, Viacom is falsely claiming that videos infringe. This was actually a big problem in the lawsuit, where Viacom had to withdraw clips from the lawsuit, after it was determined that Viacom had uploaded them on purpose. Also, after being sued for bogus takedowns earlier, Viacom came to an agreement with the EFF that it would carefully review content before issuing takedowns. So, with all of that combined, you would think that Viacom would be a bit more careful than to take down videos taken by others of something happening in public.
In the meantime, to make things even more confusing, while Paramount issued a takedown on Brown's video, it apparently left Krimmel's up... for now, despite being basically the same thing. You can see that one (while it lasts) here:
by Michael Ho
Thu, Nov 5th 2009 4:35am
from the sequels-are-never-bad dept
Asked by an analyst if the "Paranormal" model of a low-cost, high-box office film could be easily replicated with other releases, he said no, pointing to how much time passed between similar surprise hit "The Blair Witch Project" and "Paranormal."So apparently, the decade that passed between Blair Witch and Paranormal makes for some kind of justification that low-budget movies can't be made profitably at will. Um. But couldn't that decade also be interpreted to mean that a studio should want to try more low-budget productions, more frequently? I can certainly understand that Paramount might not want to adopt a "throw everything at the wall to see what sticks" kind of business model for its movies. However, the existence of two huge box office hits that were produced for a pittance sounds more like proof that such a business model could work -- not a "lightning sometimes strikes twice" argument against making low-cost movies. But on the other hand, looking at the returns from the $15 million sequel Book of Shadows: Blair Witch 2, that release grossed almost $48 million worldwide... and there's talk of another sequel for Blair Witch on the way. The scary ending to this story appears to be an endless cycle of horror movie sequels.
by Mike Masnick
Fri, Oct 23rd 2009 6:50pm
from the dancing-about-architecture dept
While I realize that the podcast is a legal podcast, it still strikes me as odd to bring together four lawyers to have them discuss business models, when their expertise is not in business at all, but in the law.
The podcast starts out with a discussion on the Google Book search and settlement, but oddly no one even seems to give any credit to the fair use question. But, again, since these are lawyers we're talking about, there really isn't much of a discussion on business models around Google Book Search, but on legal questions -- including a hope that Congress steps in to solve it. Amusingly, Microsoft's Smith early on suggests that it's a question Congress could solve "if the industry got behind it; if copyright holders got behind it." Striking, huh? He basically admits how copyright law works in this country. It's not about what's best for the overall society or economy. It's not about the politicians fixing things where they see a problem. It's not about consumers. It'll happen if the industry gets behind it. Welcome to the way things work in DC. The rest of this part of the discussion is interesting -- and it's one (rare) case where I mostly agree with Lichtman, that as a resource, Google's Book search is incredibly useful, and we should figure out some way for it to happen.
From there, the discussion moves on to other business models, and quickly seems to head off in directions that I don't think are accurate from a business model standpoint. It starts off with two premises set forth by Lichtman, each of which I think is suspect. First, he claims that piracy is a problem because "you can't compete with free." Frankly, I'm sick of this argument because it makes no sense economically or from a business standpoint. Economically, saying that you "can't compete with free" is the same thing as saying you can't compete -- period. It assumes, falsely, that the only way to compete is on price, but the history of the economy shows that's not true. You compete on price or you compete on benefits, and competing on price is often a losing battle anyway. Saying "you can't compete with free" just means you only know how to compete on price. If that's the case, you shouldn't be in business.
And, to make that point clear, tons of companies compete on benefits, and allow other companies to offer lower priced offerings. The popular example, of course, is "water," whereby it's free (or near free) to drink out of the tap, but the bottled water business is a multi-billion dollar business. Why? It tries to compete on other factors -- such as convenience, quality or safety (though, there are arguments that many of these benefits are perceived rather than real). But it's true in just about any other business as well. In the automobile business, a BMW costs more than an entry level Ford, and that's because BMW is seen to have a lot more scarce value. Ford could "copy" BMW, but BMW has its reputation and some amount of prestige that Ford simply can't copy.
Anyone who's in business recognizes that you don't just compete on price. So why is it that so many seem to assume that the only way to compete in the content market is on price?
Lichtman's second premise is that online business models don't work. He says that Hulu hasn't been a success because it doesn't make as much as TV, and that if Hulu displaces TV we "won't have the money to pay for" expensive TV show production. He claims that even if Hulu is really successful, it'll never make enough money to pay for the production of a show like Battlestar Galactica. First off, huh? How does he know that? If Hulu is successful, it absolutely could pay for such production. Already, we're seeing that some of the online ad rates are higher than TV ad rates. Hulu's barely been around for two years at this point. I'd be willing to bet that Hulu's revenue today greatly exceeds the revenue of television two years after it was invented. Give it time, Doug!
He then jumps on Redbox -- sarcastically saying "we're renting movies at a dollar per day?" Suggesting that this will never sustain the development of movies. Really? I always find it amusing when people insist that problems in the DVD market will mean the death of Hollywood. It really was just 25 years ago that Hollywood insisted that the VCR would kill the industry (Boston Strangler, anyone?). Now they finally get their "original" wish, and find that putting movies on recordable media is going away, and it's the worst thing in the world?
Either way, the economic fallacy that Doug seems to be relying on here is twofold. First, he assumes that early business model experiments are set in place and no further innovation will occur that allows them to flourish. He assumes that the markets won't grow, and some of these experiments won't click and get much bigger. Second, he seems to assume that the old revenue numbers for these industries need to be sustained. He doesn't consider that the old revenue numbers may have been a result of monopoly rents, limited competition or technological limits. Markets change all the time, and usually what comes out in the end is much better (subjective, I know, but I'm a believer that the world is a better place today than it was 25 years ago -- and that it will be even better 25 years from now).
But, of course, no one challenges him on this. Scott Martin at Paramount, of course, worries quite a bit about piracy of movies. While he admits (finally!) that he's just the lawyer, rather than the business guy, he discusses it in the terms of adding more windows to movie releases, rather than any discussion of adding more value to the product, or giving people reasons to buy beyond just the content. Then Martin repeats the myth that you can't compete with free, but leads in with a different myth -- claiming that the "copyleft" people say that piracy would go away if they just priced their movies better. That's a strawman argument. Perhaps someone out there made that argument, but it's hardly common. Then he says that "the idea that if we charged $2 a download instead of $10 a download, we'd get rid of piracy is a myth." Sure, it's a myth, but no one said that. You can't get rid of piracy. No one thinks you can get rid of piracy. No one suggested anything you do would "get rid of piracy." What many of us are suggesting is that you can build business models where that piracy isn't a problem. Even the people suggesting you just charge $2 instead of $10 aren't saying it would "get rid of piracy," but that at $2, enough people would pay for it that it would increase profits beyond what the $10 DRM'd version gets you.
Anyway, the discussion goes on from there, including a discussion of the DMCA that again doesn't make much sense to me, but the business/economic analysis throughout doesn't strike me as accurate at all. It's still an interesting discussion, but frustrating because I wish there were at least someone on the panel who would challenge a lot of the "accepted wisdom," put forth by everyone, that doesn't seem to be accurate. Brad Smith, at one point, does point out that this is all a "revenue" problem, and does a pretty good job describing the revenue problem... but then falls into the trap of saying the law needs to "fix the piracy problem" because without that, business models can't be built up.
The last analysis I'll talk about that is again faulty from an economics standpoint again comes from Scott Martin at Paramount, where he tries to defend the importance of DRM, noting that if he flies into JFK he has various price options on transportation: he can buy a car, rent a car, take a cab or take a train. So there are price differentials. He says that without DRM, content is like saying his only option is to buy a car. That is, if he had DRM, they could offer different "rental options" for content, with "one day pricing or one week pricing." But that's totally wrong again. There's a reason for the differential pricing in the transportation options: it's related to the marginal cost of each option and the competitiveness of the market. That's what sets the prices. But with content, the marginal costs are zero, so what he's doing is trying to set up an artificial barrier to pretend the markets are the same.
While I like listening to these discussions, I just find the economic fallacies frustrating.
by Michael Ho
Mon, Oct 12th 2009 11:40pm
from the Blair-Witch-wannabes dept
They wised up indeed, and they also started promoting this movie in an interesting way, too -- by getting potential fans to demand it be shown in their neighborhoods and nationwide. Paramount promised to distribute the movie nationwide if a million requests for the movie were logged via Eventful. And it looks like they've already reached that goal.
Goodman also admitted that DreamWorks, formerly a leg of Paramount co-headed by Steven Spielberg, had swooped in and pocketed 'Paranormal Activity' with every intention of leaving it on the shelf and remaking it with a big budget and marquee stars. Then they wised up.
As I said, I didn't like Blair Witch very much, and I'm not exactly looking forward to this movie, either. But from a pure business angle, it seems a bit shocking that movie studios wouldn't be trying to find/create more low-budget films that would appeal to moviegoers. Promoting the distribution of films in a way that actually target fans is a smart move, too. So with this example, there are about a million customers (or at least thousands, if you don't believe the Eventful numbers) willing to pay to see this movie that was made for (much) less than a $1 per fan -- and the movie studio's first gut-instinct was to try to re-make the film and drive their own costs up? It's a strange industry where insiders are always asking "how can we make a $200 million movie?" rather than how can they make good, but profitable movies, no matter what the cost. The industry seems so focused on what movies cost, that it so rarely seems to consider spending money more intelligently. Creating quality works for less, and targeting your best customers is a plan that's foreign to Hollywood, but perhaps it's about time they start exploring that plotline.
by Mike Masnick
Wed, Sep 23rd 2009 7:30am
from the funny-how-that-works dept
Paramount's COO, Frederick Huntsberry, not only was given twice the amount of time to speak as the rest of the speakers had (10 minutes, instead of five, as Gigi was told), but also was able to convince the FCC that his talk was "owned" by Paramount, and should not be placed online -- as the FCC has done with all its other hearings. Wow. Yes, this was a public government hearing. Thankfully, the folks at Public Knowledge went through a low quality video of the whole proceeding and pulled out Huntsberry's part, where he not only demonstrates how file sharing works for the FCC, but goes on to implicate plenty of companies as aiding in the process, including Google, Yahoo, eBay, Boxee and others:
Mehan Jayasuriya points out the many problems with the way the FCC handled this whole event:
And, again, uh.... what does copyright have to do with broadband policy in the first place? And where is it in the FCC's mandate that it has any say in copyright policy?
- Any presentation delivered at a public government hearing should be made available to the general public in a convenient format. Not everyone is able to travel to Washington D.C. for hearings and those who cannot should not be excluded--rather, they should be encouraged to participate in the debate. The mission statement on the Commission's new Broadband.gov site seems to agree: "A great way to create a connected America is to involve all Americans in the development of a National Broadband Plan. The FCC welcomes civic participation, and we look forward to more interaction through this website." If Paramount was concerned that its video would encourage "piracy," then the company should not have presented it at a public hearing. It's as simple as that.
- All of the other presentation materials for all of the other workshops are available on the FCC's website, so that citizens can download, read, comment on, reference and critique them. Why should Paramount's statement be treated any differently?
- During the presentation, Huntsberry seems to suggest that a number of legitimate technology companies, including Drop.io, Twitter, Google, Facebook, Apple, Boxee, Sony, LG, Yahoo!, PayPal and Rapidshare, are arguably acting to enable or encourage unlawful filesharing. These companies and the users of their products should have an opportunity to respond to this allegation.
- In the beginning of the clip, Huntsberry walks us through a timeline of when various camcorded copies of Star Trek were leaked to the Internet. This timeline provides a great example of how widespread the problem of camcording is, though it's worth noting that camcording is already illegal in most U.S. States and has little relevance in the context of this workshop (it's also worth noting that Star Trek made over $200 million at the box office regardless of the fact that camcorded copies were available within hours of its theatrical release). This evidence that films are commonly pirated while still in theaters undermines many of the arguments made by the studios in the FCC's Selectable Output Control proceeding (i.e. "We need to be granted the power to shut off outputs on the back of your A/V gear, otherwise you will unlawfully copy the films that we broadcast via cable").
Not only did the FCC treat Paramount's presentation with kid gloves, the agency also treated the Hollywood execs preferentially throughout the course of the workshop. Upon entering the room where the workshop was held, attendees were greeted by a massive vinyl banner--presumably belonging to Paramount--on which the aforementioned Star Trek timeline was printed. While I appreciate the fact that a visual aid can be helpful, I can't help but feel like a PDF file submitted to the record would have sufficed.
But that's not all. Though these workshops were technically less procedural in nature than a formal hearing would be, MPAA Chairman and CEO Dan Glickman was repeatedly allowed to call his technical expert, MovieLabs CEO Steve Weinstein, up to the stand to chime in with additional comments--even though nothing he said was actually technical in nature. The Commission allowed Glickman to do this so many times that Weinstein also started calling others from the audience up to the stand, including Disney Executive Vice President Preston Padden and Disney Vice President Troy D. Dow. Perhaps I'm being overly cynical but I doubt that the Commission would have allowed any of the other panelists to engage in this kind of behavior.
by Mike Masnick
Wed, Mar 18th 2009 2:34pm
from the it's-all-about-the-money dept
This wasn't just a one-off misunderstanding. Ellison has a long history of being economically and technologically illiterate about these sorts of things, as was made clear in this video that made the rounds a few years back:
Either way, that's all prologue to the news that Ellison is suing yet again. This time, he's suing Paramount Pictures and the Writers Guild because he wrote an episode of Star Trek that aired in 1967, and Paramount hasn't paid him for certain Star Trek books that include elements from that show or other merchandise like a (not making this up) talking Christmas tree ornament. He's suing the Writers Guild because it apparently told him that he was nuts and they weren't going to take on Paramount over this issue (he's accusing the Guild of too narrowly interpreting its contract).
And, in classic Ellison fashion, his statement on the matter is all about the money:
It ain't about the 'principle,' friend, its (sic) about the MONEY! Pay Me! Am I doing this for other writers, for Mom (still dead), and apple pie? Hell no! I'm doing it for the 35-year-long disrespect and the money!Given these antics and ridiculousness, you have to wonder just how many folks won't be hiring Ellison in the future, knowing he's likely to blow up and potentially sue them, as well. You also should wonder how much "money" he's missing out on from folks like me who will never buy any of his works. If it's "all about the money" perhaps someone who writes sci-fi like Ellison can think about the future a little bit, and how many opportunities he kills off by demanding every penny today at the expense of dollars tomorrow.
by Mike Masnick
Thu, Nov 20th 2008 1:11pm
from the blame-someone-else dept
While the industry has been able to get some politicians and ISPs to agree (amazingly, often against their own best interests), it's now gone a step further. A bunch of the biggest movie studios (Village Roadshow, Universal Pictures, Warner Bros Entertainment, Paramount Pictures, Sony Pictures Entertainment, Twentieth Century Fox Film Corporation, Disney Enterprises, and the Seven Network) have teamed up to sue Australia's largest ISP, iiNet, for failing to stop copyright infringement. iiNet, you may recall, is the same ISP that has been mocking the Australian government for requiring filters. So, naturally, it's response to this lawsuit is rather direct. While the studios complain that iiNet isn't doing anything, iiNet responds that this is not true at all. They pass each complaint on to the police, because if there's a crime, then the police should deal with it:
They send us a list of IP addresses and say 'this IP address was involved in a breach on this date'. We look at that say 'well what do you want us to do with this? We can't release the person's details to you on the basis of an allegation and we can't go and kick the customer off on the basis of an allegation from someone else'. So we say 'you are alleging the person has broken the law; we're passing it to the police. Let them deal with it'.Even better, iiNet's CEO Michael Malone gets to the heart of the matter:
We are not traffic cops. We can't stand in the middle of it and stop the individual items that might be against the law. These guys are asking us to be judge, jury and executioner.
I think they genuinely believe that ISPs have a secret magic wand that we are hiding and if we bring it out we can make piracy disappear just by waving it. And it doesn't exist.Indeed, but that might mean that the entertainment industry has to actually take responsibility for their own business model failings, and they can't do that. So they have to blame others.