Theater Owners Still Oblivious To The Fact That They Can Compete With Home Viewing

from the sad dept

We’ve been arguing for nearly a decade that movie theater owners were overreacting to the threat of people viewing movies at home eating into theater revenue. After all, they’ve been complaining about this for decades. As we talked about last year, back in 1959, Mary Pickford, who was a Hollywood star (or, rather, at the time, the Hollywood star) who also cofounded studio giant United Artists and the Academy of Motion Picture Arts and Sciences (the folks who put on the Oscars), claimed that cable TV would kill theaters. Then, of course, Jack Valenti famously said the VCR would be the “Boston strangler” to the movie business.

Yet, now, with home theaters, video on demand, streaming services and (yes) infringement, the theaters are once again insisting that this time theaters are really in trouble.

The BBC has a good article discussing the details of the fears of theater owners, and even mentions both the Pickford and Valenti quotes. It talks up how theater windows are decreasing, and the theater owners are decrying how that’s just going to make things worse and worse.

But what’s amazing is that not once in the article does anyone mention that theaters compete on more than just the content. This is the core blindness that seems to effect most (but certainly not all) folks in the theater business. They keep whining about how they can’t compete with the ability to watch movies at home. But what they’re really admitting is that their theaters suck. Yes, the movie itself is a key part of deciding to go out to the theater, but it’s the overall theater-going experience that really drives people. Lots of people decide they want to “go out to the movies” before they even decide what movie to see.

Going out to the movies is a social experience, and the problem that theaters are facing isn’t that home theaters get the content too early, but that the big theaters have made the theater-going experience suck. The theaters are cramped, uncomfortable, noisy. The food prices are ridiculous. The sound quality or video quality sucks. But that’s not the fault of home theaters. That’s the fault of theater owners not making the experience good.

There certainly are some who recognize that making the theater experience better is the strategy that will work, but they’re in the minority. The big theaters just keep worrying about windows and online streaming and “piracy,” and don’t seem to make any effort to give people reasons to go to the theater. People want to “go out.” People want to have a special experience and enjoy being out with friends. That’s what theaters should be capitalizing on. People can stay home and eat, but restaurants still do fine business, because people want that better experience of going out to eat. The same is true of going to the movies, but only if the theaters recognize that they have to make that an experience worth going out to.

And, yet, oddly, none of that makes it into the BBC article. Even worse, the theater owners in the article seem to want to blame everyone else. Check out this discussion, where a top lobbyist for theater owners seems to pretend that theaters are helpless here and at the whims of everyone else:

“Our concern is people won’t go for this eight-week window,” says Patrick Corcoran, California operations chief of the National Association of Theatre Owners.

“If [studios] are really intent on making this sort of thing work, they have two options: one is to shorten the window, the other is to put it at a lower price, or both.

“The closer it gets to the theatrical release and the lower price it gets, you start to get into this self-competition market that already affects the home entertainment market.

“The theatre business is a fairly marginal business so a few percentage points loss in admissions will end up closing some theatres.

“And if film companies do focus on [home entertainment more], they won’t be able to justify current budgets so you will just end up with a lesser film.”

Or, you know, the theaters you represent could spend some time focusing on improving the experience so that even if they have options at home with the identical content, it’s still worth going out to the movies. But, apparently, that line of thought just hasn’t occurred to many theater owners yet.

Filed Under: competition, movies, release windows, theaters, value

Another Example Of The Difference Between Value And Price: Free Mosquito Nets Are More Valued

from the economics-at-its-finest dept

We’ve pointed out time and time again how price and value are not the same thing. They may be related, but value tends to explain the demand curve, whereas price is determined by the intersection of supply and demand. To think about it logically, we buy stuff all the time because we value what we buy more than the money we’re paying for it (the price). That’s why the economic transaction happens. Or, to put it another way, you’ll pay the price for something if it’s lower than what you value it at, but that doesn’t automatically change the value of it to the price. Now, there are some reports that suggest that the price, acting as a signal, can impact perceived value, but that appears to be limited only to a few specific situations.

We saw another example of the difference between price and value in a recent episode of Planet Money, which involved a discussion with the authors of the book Poor Economics, about their very data driven look at various economic questions. An early part of the discussion looked at the question of whether or not people in poor countries don’t value mosquito nets when they get them for free. Apparently some economists have argued that you have to make poor people pay for their mosquito nets or they won’t “value” them. Tragically, it seems that even some economists don’t recognize the difference between price and value.

Thankfully, the folks who wrote this book went out and did real research, and the data shows that people in poor countries actually seem to value the free mosquito nets even more than when they have to pay for them. That is, people who received free mosquito nets seemed even more likely to use them than those that were paid for. I’m a sucker for data driven economics, so it’s always nice to see stories like this one.

Filed Under: free, mosquito nets, price, value

RIAA Says There's No Value In The Public Domain

from the true-colors dept

While I’ve already written about the hearings for the Copyright Office concerning copyright on pre-1972 sound recordings, but I wanted to call out one particularly egregious and ridiculous statement from the RIAA. The RIAA’s Jennifer Pariser claimed that there’s no value to a work in the public domain. Apparently Pariser is unfamiliar with the works of Shakespeare. Or Beethoven. Is she serious? I mean, you could make the argument that it makes life more difficult to sell those works for the labels she represents, but those works have tremendous value. Pariser, of course, is famous for making ridiculous statements, sometimes under oath. Back when she worked for Sony-BMG she made some statements, on the stand and under oath, in the Jammie Thomas trial that were blatantly untrue. Only much later, after the jury had ruled, did the RIAA admit that Pariser “misspoke” while on the stand. One hopes she “misspoke” here as well, but I get the feeling she actually believes the blatantly incorrect statement she made.

Filed Under: copyright, cost, economics, jennifer pariser, public domain, riaa, value
Companies: riaa

Don't Try To Make Sense Of LinkedIn Share Price

from the it's-a-game dept

The big Silicon Valley IPO today was LinkedIn going public. In many ways, it’s a great story, in that LinkedIn isn’t an overnight sensation by any means, but really was a company that built up a strong and loyal user base over many years. However, Silicon Valley has been pretty starved of “celebrity” IPOs for quite some time. Of course, in typical Silicon Valley celebrity IPO fashion, the stock shot up much, much higher than its offering price. In the past I’ve talked about how this is really about a company having left a ton of money on the table (i.e., LinkedIn only got $45 for all of the shares that hit the market, so the stock trades over $100 are between others, and doesn’t directly — immediately — impact LinkedIn’s cash position, though later stock sales can obviously benefit).

I’ve always found the obsession with the “first day pop” kind of a weird infatuation in Silicon Valley, often done by people who don’t recognize what it really means (i.e., that it was priced low). However, there’s been a lot of hand-wringing about how LinkedIn’s valuation from the super high share price seems ridiculous based on its revenue. And, I agree. It’s nearly impossible to match the valuation to the company’s actual financial situation. However, this is the nature of the game. Certainly one part of the problem is that some of the buyers and sellers in the market don’t really understand what it is they’re buying and selling and how to value it. That’s just the way things are with the stock market. However, the bigger issue is that people buying and selling the stock are really judging price on two separate factors. The underlying value of the stock is certainly important, but for many people, rather than betting on that, they’re betting on everyone else. That is, they’re not buying and selling based on a long-term concern for the actual value of LinkedIn, but they’re trading short-term by betting on what they think everyone else will value the stock at. In the long-term, that’s not sustainable, but it’s the simple nature of “the game.”

On the last Planet Money podcast, they explored whether or not there’s a “gold bubble,”, but they actually do a nice job explaining how bubbles form, even though “rational economists” suggest it shouldn’t be possible. In the podcast, there’s a great story about some experiments, in which students (including business students who should understand this) are given opportunities to buy and sell a single stock with a very clearly defined value… and yet bubbles still form, where people (who can’t even explain why) overbid on the price of the stock, even though the real underlying value is known.

To some extent, it’s that people don’t intrinsically understand statistics and value. Part of it is that people get tied up in “the game.” And part of it is just psychology. But the fact is that bubbles form all the time, and trying to rationally value something in a bubble isn’t a particularly fruitful game in the short term, because the length and extent of a bubble are nearly impossible to determine (long term is a very different story). So, for everyone fretting about the price to value question on LinkedIn, unless you’re looking for a long term investment, at this point, it’s a meaningless question. What’s happening now is gambling and entertainment masquerading as a serious “investment” issue.

Filed Under: ipo, price, value
Companies: linkedin

The Secret Contagious Mojo That Makes People Value Stuff Connected To Famous People

from the celebrity-cooties? dept

There is sort of an odd article in the NY Times that looks at some of the psychological research that goes into why people like to own stuff that celebrities owned or touched. The report suggests that it comes back to a subconscious belief in “celebrity contagion” and “imitative magic.” That is, people sense that if they own something that someone famous touched, they somehow get to “capture” some element of that person’s essence. The report covers two separate things. First there is the obsession with owning something someone touched — where it’s noted that people value it less if it’s been washed (highlighting the whole “essence” concept). Second, is a look into why people want to buy exact replicas of a celebrity’s things. For example, the report highlights an exact replica of a famous Eric Clapton guitar. The replica is right down to the specific nicks and scratches on the guitar — even though Clapton has never touched this one. So if it was just “essence” this guitar wouldn’t be valued that highly. And while it’s obviously valued less than the real version it’s based on (which sold for just under a million dollars), it’s expected that the replica will still sell for $20,000. The thinking here is the value of “imitative magic.” That if you have something just like what a famous/successful person had, you’ll be able to get some of the same “magic” powers out of it.

Frankly, some of this sounds pretty ridiculous — a sort of inflated market version of cargo cult science — but if you’re looking to understand the psychology behind people who go to great lengths to feel some sort of connection to celebrities, it seems like worthwhile reading just to understand the underpinnings. Indeed, over the years, we’ve seen artists incorporate this kind of thinking in their own business models. They can often sell off things that they’re closely connected to, for a premium, and the buyers are quite happy. We sometimes hear from our usual critics that these business models involve finding “suckers.” But the buyers don’t seem to feel like suckers, and some of this research seems to explain why.

Filed Under: contagious, culture, eric clapton, mojo, value

Why The Arguments That The Huffington Post Must Pay Bloggers Is Misguided: Payment Isn't Just Money

from the you-made-the-choice dept

We didn’t mention the whole AOL buying Huffington Post story earlier this week, because there just didn’t seem to be that much to say about it. It was an interesting deal, to be sure, and I’ll be curious to watch what AOL does with the property, but, beyond that, it seemed like just another content acquisition deal. However, almost immediately after the deal went through, I started seeing some rumblings on Twitter, picking at the scab that has always annoyed a certain group of people about The Huffington Post: that it doesn’t pay most of its writers. Sure enough, it didn’t take long for this issue to start to spread, with the inevitable summary line of: “Hey, HuffPo became famous because all these people worked for free, and yet, they don’t get a cut of the sale.”

That story is now snowballing. Dan Gilmor wrote a blog post arguing that it was the “ethical” thing to do to start paying bloggers. Douglas Ruskoff said that he’d no longer blog on the site for free. And, of course, a bunch of cranky HuffPo contributors have created a whole campaign arguing that Arianna Huffington had no right to sell the site, since it was built off of their free labor.

They’re all wrong.

Of course, we’ve been through this before. Five years ago, Nick Carr tried to argue that all the various big Web 2.0 sites like (at the time) Digg, YouTube and MySpace were really digital sharecroppers exploiting labor. As we argued at the time, this was hogwash. People were using those sites because they provided a valuable service. The reason they provided labor was because they got something of value in return — whether it was attention or hosting or distribution or reputation.

Three years ago, we saw an almost identical controversy after AOL bought Bebo and musician Billy Bragg demanded some of the $850 million AOL paid (in retrospect, a massively bad decision). Bragg argued that Bebo made this money based on all of the “free labor” of musicians who used the site. But that ignored the fact that those musicians got tremendous value in using the Bebo platform to connect with fans and distribute their music… all for free. The folks who got to keep the money were the ones who took the actual risk. The ones who had to cover the expenses to keep the site and the service running, even when it wasn’t making enough revenue. They took the risk, they should get the reward. The people who used the site did so of their own free will knowing quite well that the benefit they got from using the service was worth it to them at the time. Along those lines, if Bebo had struggled and faced bankruptcy instead of a massive buyout, would Bragg have felt obligated to give them money to keep it going? Similarly, if HuffPo had been running out of money, and Arianna had gone back and demanded that those who used the platform pay up retroactively, how would these people have reacted?

There are more ways to “get paid” than with money.

The reason that people chose to blog for free at the Huffington Post was because it’s a fantastic platform for exposure. It brings traffic like no one else out there, and if you want to present something in a way that’s likely to get more attention than on your own blog that no one visits, posting at HuffPo can be quite a good way to go.

And that’s the point: the people who chose — of their own free will — to post at the Huffington Post for free did so because they clearly got value out of doing so. Otherwise, why would they have done so in the first place? To then say that the only proper thing is to pay them is completely missing the point. It’s an attempt to retroactively go back and change the terms of a deal. If you wanted to get paid directly for what you write, fine, don’t write for the Huffington Post. It’s that simple. Go out and pitch your stories to publishers who pay freelancers. But don’t go back and complain afterwards when the folks who actually did take the risk of putting together the site, financing it, organizing it, hiring the staff, buying the servers, paying for the bandwidth, and building it up so that it was such a successful platform, then get paid for their efforts.

Filed Under: business models, payment, platforms, value
Companies: aol, huffington post

If Artists Don't Value Copyright On Their Works, Why Do We Force It On Them?

from the questions-to-ponder dept

In William Patry’s book, Moral Panics and the Copyright Wars, there’s an excellent chart that highlights the fact that many content creators who have copyright available to them clearly don’t value that copyright very much. The chart looks at the rates of copyright renewals in 1958 and 1959. As you hopefully know, back then, you had to register your work to have it covered by copyright, and you had to renew it to keep that copyright. Yet a huge percentage of content creators simply chose not to renew their copyrights, because they knew there was little or no value in the copyright itself. Depending on the type of product, the lack of renewals paints a pretty stark picture: only 7% of books had the copyright renewed. Only 11% of periodicals. Only 4% of “works of art.” Music was only 35%. In fact, the only type of work that had a renewal rate higher than 50% was movies, which came in at 74%.

If looked at with a common sense filter, it seems obvious that this suggests that the content creator clearly is no longer getting any benefit out of the copyright at that stage, and thus reverting the work to the public domain makes the most sense. So it was quite disappointing when we changed our laws in 1976 to the point that people didn’t even have to register their copyrights in the first place, and never had to review, but that they automatically get a copyright for a ridiculously long amount of time (much longer than was available in 1959). Now, you can still register, and there are significant benefits to copyright holders for doing so, so many people still do.

So it’s interesting to see Tunecore ask the musicians who use its service whether or not they register their copyrights, with only 56% saying they absolutely do (found via Hypebot, who incorrectly suggests that the others don’t get a copyright at all):

What’s fascinating here, of course, is this means that there are 44% of the musicians on Tunecore who don’t really see the need to have a registered copyright, and yet they still end up with a copyright which they’re unlikely to ever use or enforce. That suggests a system way out of whack with the stated purpose of copyright law. This is content that can and should be available to make the public domain more fruitful and to enable new creative works — and yet it gets locked up anyway, even though the very people copyright law is supposed to protect clearly don’t value what copyright gives them. So why do we still automatically give them copyrights, thereby harming the public domain, while adding little to no benefit to the content creators themselves?

Filed Under: copyright, formalities, registration, value
Companies: tunecore

Will Hollywood Kill The Golden Goose By Squeezing Netflix Dry?

from the watch-those-numbers... dept

Back in December, we did a little back-of-the-envelope calculating to show how much more expensive it is for Netflix to license movies for streaming, as compared to just buying DVDs and shipping them out. The differences are staggering. And apparently it’s only getting more expensive. The Hollywood Reporter has an in-depth article highlighting the love-hate affair that Hollywood has with Netflix, including details on the sorts of prices that the various players are demanding (and often getting) from Netflix. What’s not surprising is that they keep asking for more and more (and some are still complaining that Netflix doesn’t pay enough). But the numbers being thrown about are simply staggering. And at the rate they’re going up, it will make it increasingly difficult for Netflix to actually afford all of those deals. Once again, it seems like a situation where the content providers are overvaluing their content, and undervaluing the services that make that content more valuable. That is, they look at how Netflix is succeeding (especially as they’re failing to adapt themselves online), and they start to get jealous, and assume that Netflix really should be paying them more money. Basically, they don’t think Netflix deserves to profit at all, since it’s really all “their content.” What they ignore, of course, is that (despite multiple weak attempts) they were the ones who failed to provide a compelling streaming service themselves. Either way, if Hollywood keeps pushing those numbers up, they may discover that they end up killing the golden goose.

Filed Under: content, licensing, movies, streaming, value
Companies: netflix

Movie Studios Purposely Crippling Rental DVDs In Misguided Effort To Get People To Buy

from the taking-away-features-is-not-a-strategy dept

What is it about the entertainment industry that actually makes them think that it’s a smart move to take features away from consumers? They seem to focus on building business models by pissing off as many people as possible, and then wondering why those people seek out alternatives. Case in point, visual77 points us to the news that movie studios are increasingly offering up feature-limited DVDs for the rental market, and then encouraging you to buy the DVD itself if you want all the features. As Consumerist reports:

Consumerist reader Joseph brought this to our attention after he spent $3.99 to rent the DVD of Scott Pilgrim Vs. The World from Blockbuster. When he went to the disc’s main menu and attempted to watch the Blooper Reel special feature, he was greeted by a screen telling him: “This disc is intended for rental purposes and only includes the feature film. Own it on Blu-Ray or DVD to view these bonus features and complete your movie watching experience.”

This is the same thinking that leads the studios to seek to have rental places delay movies for a month. The entire business model seems to be centered on creating artificial scarcities that piss off people. Is it really so difficult for the industry to realize that they can make more money by adding value and actually delivering what people want?

Filed Under: dvds, features, movies, rentals, value

Viacom Plays The Insane Hyperbole Card In Claiming YouTube Ruling Would 'Completely Destroy' Content Value

from the get-real dept

It should be no surprise, of course, that Viacom has now officially appealed its rather complete loss at the district court level concerning YouTube’s liability for users’ posting infringing works. What is a little surprising is the level of insane hyperbole Viacom chooses to use in its filing (included in its entirety after the jump) — where it claims that if the ruling is allowed to stand it, would “completely destroy” the value of content:

If affirmed by this Court, that construction of Section 512(c) would radically transform the functioning of the copyright system and severely impair, if not completely destroy, the value of many copyrighted creations. It would immunize from copyright infringement liability even avowedly piratical Internet businesses.

To put it mildly, this is hogwash. First of all, it’s exactly how the system has functioned since the DMCA came into being in 1998. If you see infringing content on a site, you issue a takedown and the site takes it down in order to keep its safe harbors. The idea that it would “completely destroy” the value of content makes no sense at all. First, you have to understand why it makes no sense that YouTube should be liable: it has absolutely no way of knowing, for certain, whether or not specific content is infringing. As it showed in the case, even Viacom itself had trouble figuring out what was infringing, and had sued YouTube over a bunch of videos that it had put on YouTube itself. How do you make YouTube responsible for determining such things when even the copyright holder can’t figure it out? It makes no sense.

Second, the idea that the value of the work is “destroyed” again makes no sense. After all, the value of any particular content is intrinsic to the content and how any individual feels about it. The value of a piece of content doesn’t change if someone puts it up on YouTube. Furthermore, YouTube quickly does remove content when it receives a takedown notice, so if Viacom is that concerned, it can send the takedowns. In fact, that’s exactly what it did and the company complied. That’s exactly what the law says it should do. On top of that, nothing in the DMCA’s safe harbors immunizes those who actually upload the content, who are still very much liable for their own actions.

But the biggest evidence that Viacom’s claims are complete and total hogwash is the simple fact that even after the ruling, there has been no “mass destruction” in value of content. As we’ve pointed out for years, the overall revenue for the entertainment industry continues to go up all this time — though, perhaps less of it goes to the gatekeepers like Viacom. But those are normal market changes, not anything nefarious. Who knows how the appeals court will rule in the case, but Viacom seems to be going off the deep end with hyperbole in making its own case. They must be hoping that the judges don’t do much thinking for themselves.

Filed Under: copyright, dmca, hyperbole, safe harbors, value, videos
Companies: google, viacom, youtube