Film Industry: Less stick & more carrot please!

Posted: 16/09/10

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I've started to become a little surprised by the methods some content owners are adopting to protect their intellectual property, and with it (they believe) their profits.

Now let's imagine I'm not me and I'm a 21 year old student. I want to watch a movie, and I've decided I want a pirate copy of a movie, because I'm (a) too skint to buy it and (b) too lazy to go to the shops and get it… besides, it's raining. What are my options?

1) I phone all of my friends to check they don't already have a copy (legitimate or otherwise). If they do, and they say the quality is good I'll leach it of them.

2) I browse on a torrent site for a HQ file or .mkv rip that I can download and watch.

3) I Google “watch NAME OF MOVIE free" and hopefully find a site that has the movie and not a load of spam links.

4) I go to a site that is selling the movie as a download, buy it, download it and then watch it.

5) I do the same again, but stream the movie instead of downloading it, meaning I can watch it immediately.

6) I go to a site that is selling the movie as a download, buy it, download it, then upload my purchase for other people to download.

7) I go to the same site, buy the movie, download it, then record the graphics output through my VGA graphics card and upload the resulting file for other people to download.

8) I do the same again, but stream the movie instead of downloading it, record the streamed output through my VGA graphics card, and finally upload it for other people to download for free.

Now let's look at each of these 8 options and look at how they fit with what I'm trying to do. First, we can dismiss option 3 because this seldom yields anything but sites that distribute viruses and porn dialers. Next we can dismiss options 6, 7, 8. Why? Because we already said I'm lazy, and more importantly, this isn't what I'm actually looking to do on this rainy evening. I'm ultimately selfish in my immediate requirement to watch a movie and I'm simply looking for a cheap or free way to watch a film; I'm not looking to help everyone else out here! Besides, that sounds like a fair bit of hassle when you take a look at options 1 and 2. If my mate already has it, I'll get it from him using some shared online storage - easy. Failing that, I'll punch the name of the movie into one of the many torrent sites out there, safe in the knowledge I'll get a fair few results. Depending on my broadband speed, the entire file could be with me as quickly as 10 minutes. But what if I'm one of the 75%+ of people who'd happily pay a fee to obtain the movie from a legitimate source where the quality is guaranteed? Then I'd opt for options 4 and 5. The problem is that there are major blockers on the accessibility of these services.

First there is the DRM. If I want to download a file from a legitimate movie site, it has to be protected with a DRM solution approved by the studio that owns the content. This restricts me to only being able to play it on devices that support that specific DRM technology. This reduces the portability of the content I buy, and in extreme cases may require me to change my home entertainment hardware to be able to play it.

Secondly there's content output protection. This is a relatively new and fairly unfamiliar technology to most home entertainment consumers, but is rapidly become a massive blocker to their ability to consume video content obtained from legitimate sources in whichever way they choose.

Right now the film industry is working hard to get High-bandwith Digital Content Protection implemented on as many home entertainment devices as is possible. HDCP digitally encrypts display data as it travels from the output on one device to the input on another, stopping interception and capture by recording devices. If your display doesn't implement the HDCP protocol, the movie will not be able to be played on it, as it won't be able to decrypt the video signal.

Back in 2006 Ken fisher wrote a great article: The content industry is going to walk away from this with a certain amount of egg on their face and a fat stamp of "greed" burned into their foreheads. And a few will realize the ultimate inanity of it all: that while the studio's HD content won't play on their TV or their computers, the HD content put out by the pirates will. Source: The truth behind HDCP and video card support

Content owners are also refusing to allow content to be made available to devices without this feature on-board. This is yet another restriction being imposed on consumers, alongside the long-standing DRM debacle… and we only need to look at the music industry to see how that all played-out. Consumers hold the power here, and with music they voted with their wallets. They weren't prepared to pay the same price for a digital copy of a track as they did for a physical piece of media, like a CD. There are little or no production and distribution costs associated with this type of media, and consumers know this. They also weren't prepared to accept restrictions on how they used the content once they'd paid money for it. They didn't have to accept this in the past, so why should they accept it now? Eventually, recording companies and distributors woke-up and realised they had to change, and since then they're enjoying a greater sense of equilibrium with their consumers.

For convenient, consumer-led, video-on-demand services to take-off the film industry needs to relax its current stance. This is a huge change in culture for them, as they've developed this belief that the only way to stop digital piracy is to throttle it with uncompromising restrictions. The reality is that, like the abseiler terrified about going over the edge, the industry needs to relax and sit back in the harness. The rest is plain sailing after that.

No-one batters an eye-lid when someone lends a boxed DVD or Blu-ray of the latest release to a mate to watch. But this damages sales of the title, as the person borrowing the title won't pay any money for it. What if 10 mates watch the same copy? Technically it is illegal, as the notice at the start of most DVD/Blu-ray movies states "All rights reserved. Unauthorized Copying, reproduction, hiring, lending, public performance and broadcasting prohibited." So the guy who lent it to 10 of his mates could be prosecuted. Are the film industry working tirelessly to stop this practice? No.

The reason? Because it's prohibitively expensive to track and collate sufficient evidence to prosecute.

Will the studios be blocking anyone without HDCP on their TV from watching the Christmas Day movie on BBC One? No. So what about all those people who press record on their VCR, DVD-R or DVR device? Apparently that's different.

The reason? Because it's prohibitively expensive to track and collate sufficient evidence to prosecute. Furthermore, a a large number of the British public would find themselves in court, and there'd be uproar.

Look at the blog post top 10 torrented films of 2009, collated from torrent tracking data. The data seems to show no correlation between an excessively pirated title and its worldwide revenue earnings. Transformers 2 was downloaded almost the same number of times as Star Trek, yet grossed twice as much. Was piracy to blame for Star Trek's lower revenue? The data would say not.

Now this isn't a defence of piracy - Piracy is wrong, it damages future film production and funds criminal activity - This is observation of the current state-of-play in the online film distribution market. Let's for a second see what happens to Star Treks revenue if we rent each one of the torrent downloaders a legitimate digital copy for $10 USD… The total worldwide revenue goes up by 26%. So by these numbers we could assume that torrenting has cut revenue on Star Trek by 20%. But, are people realistically going to pay $10 for a non-tangible product that they watch once? I think not. They simply wouldn't see the movie at all. I think the sweet-spot for this would be around $5-6 (so in reality illegal torrenting cut revenue on Star Trek by 14%). It would appear that Sony has got this pricing about right with its PS3-based movie service, and blinkbox is somehow managing to undercut this. This is a price at which people making impulse viewing decisions on easily accessible on-demand viewing solutions will be willing to leave piracy behind.

It's already well-documented that the majority of people who pirate movies would be prepared to pay for them provided the service was at least as convenient as BitTorrent. In fact, music and movies top the list of online content comsumers are willing to pay for. So why are the concerned parties in this industry doing the utmost to make their offering as deliberately inconvenient and restrictive as they can to the people that are choosing a legitimate source?

The reason? Because this technology will allow them to track and collate sufficient evidence, in cost effective manner, and prevent license infringements before they even happen. Pre-crime anyone? Consumers first have to accept this; but music proved beyond any doubt how opposed they are to any form of control or restriction. Whilst the film industry continues to try and force these restrictions onto their consumers, they will never fully realise the potential of film distribution over the Internet, and piracy will continue as well as evolve.

Make the product easily consumable, don't mandate what can be done with the content after purchase, provide it at a price-point that consumers believe is fair, and they will consume; I strongly believe there is no doubt about it.

Further reading:

Even pirates will pay for music

Illegal downloaders spend the most on music

TV tops illegal downloads

Music industry must change the record

Here's what the UK's current Deputy Prime Minister thought about the issue of illegal downloaders back in 2009:

“How are you going to justify cutting people off?"

“Every single attempt to control the uncontrollable doesn't work."

“Openness not control."

Keywords for this post: movies, music, downloads, piracy, drm, content protection, hdcp, BitTorrent, ps3, blinkbox, nick clegg, digital economy bill