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April 19, 2009

The Future of the Entertainment Industry a.k.a. More Thoughts on Piracy

The Pirate Bay trial is over, the defendants are in jail, and copyright is protected forever.

 

Except, of course, none of these statements are true. The Pirate Bay trial will go to an appeal court (possibly more than one), the defendants are free, at least for a few more months until that trial is over, and copyright is far from protected.

 

No matter what the outcome of the Pirate Bay trial, or the sentence, it was never going to have an effect on intellectual property theft. The Pirate Bay defendants could have been publicly hanged, drawn and quartered; and still somebody else would have popped up to replace them. The people behind The Pirate Bay don’t consider intellectual property theft a crime. To them, and people like them, being able to take whatever content you like without paying isn’t a crime, it’s a right.

 

Since the creation of the Internet content has been free to view. Although some companies, particularly newspapers, initially tried to sell their content to subscribers, most of those businesses moved to an advert supported model very quickly, because of reluctance on the part of readers to pay for information they could get elsewhere for free.

 

Similarly, much of the software that runs the Internet is funded either by advertising or through government subsidy; and that creates a sense of entitlement, and a reluctance to pay. Even the most ardent critic of The Pirate Bay would be furious if they were asked to pay every time they searched Google.

 

As the downloading and live streaming of video became viable, with widespread uptake of broadband, that sense of entitlement Internet users felt was extended to video content, whether that was an online video made by a fourteen-year-old in his parents garage, or the latest Hollywood blockbuster.

Even people who would never dream about buying a pirated DVD have no qualms about watching a streamed version of a movie that’s been out for a few months; and as long as there are people wanting to watch that content there will always be people willing to provide it, legal or otherwise.

 

In recent years Hollywood has woken up to the need to provide content itself rather than leave it to the pirates. Hulu has been a resounding success, reaching a daily average of 0.3% of US internet users* over the last eighteen months; and with the deal signed by You Tube to stream films and TV episodes from Sony, MGM and Lionsgate the number of internet users streaming movies from a legitimate source could explode. Outside the US online TV is equally popular, with the BBC’s iPlayer service streaming over 1.3 million videos per day in December 2008.

 

These deals aren’t perfect. In most cases the service is supported by advertising, but there has been talk of You Tube charging for some services, either through one-off payments or through a subscription service. If a subscription model becomes the norm, then many people will be driven back to piracy, particularly in the current economic climate, where entertainment budgets are already squeezed.

 

There are also holdouts. Paramount, Disney and Warner Brothers are all still not streaming any movies or TV shows for free, and even the existing new arrangement with You Tube is pretty anaemic, with only a few, fairly old movies being streamed.

 

In addition there is the issue of users outside the US: the content is barred from view because the Internet rights to for content in any particular territory are tied to the TV rights for that territory. Consequently many non-US users are still pirating shows just to keep pace with their American counterparts.

 

There are ways, however, of avoiding these pitfalls.

 

The first is for all the studios to truly embrace the Internet. This means streaming everything. The entire back catalogue. Movies from the turn of the last century all the way to the most recent DVD releases. TV shows as well. Anything else will leave gaps in the market, which bootleggers will fill.

 

Once everything is available there need to be a number of different ways for users to stream the content. While many will be happy with interruptions for adverts in exchange for free viewing, there will be viewers who would be willing to pay to not see those adverts. It would make sense for studios to allow this. They could even charge more money for higher quality videos, and could offer both one-off payments to watch an individual movie, and a monthly subscription service for unlimited viewing.

 

Finally, there’s the issue of worldwide access to content.

 

Over the last ten years or so there has been a slow march towards synchronised cinematic releases. If this continues it should make simultaneous online releases viable, at least in the case of most films.

 

TV programs are a slightly different case, as they are currently sold around the world based on their success in the US. Taking that into account, the new model would have to separate television broadcast rights from Internet broadcast rights in each territory. This way the Internet broadcast rights could be sold in advance of the US screening of a show, allowing viewers in the UK, or other English speaking countries to watch the show at the same time.

 

In addition to reducing the need for piracy, this would also generate word of mouth for the show in question, as well as giving the network with television broadcast rights a far better idea of how to market the show, based on the demographic categories of the online users.

 

The world of home entertainment is changing. Because of the Internet, and on-demand cable and satellite services, consumers expect to be able to watch what they want at a time to suit them, and without having to wait for delivery, or even the full download, and yet most Hollywood studios are still using distribution networks that are antiquated at best.

 

The current distribution system for home entertainment came about as a reaction to the release of video cassettes in the late seventies. The way TV shows are sold around the world hasn’t really changed since the sixties, and both need to be updated to cope with new technology and with the new expectations consumers have. Internet piracy may well be the catalyst, but it is far from the only reason for Hollywood to change.

 

*0.3% translates as 660,425 users based on 220,141,969 internet users in the US]]>