Wednesday, November 4, 2009

60 Minutes and the MPAA: Part V - Relevance

OK, so the L.E.K. study says that people who buy pirated DVDs say they would have collectively spent billions of dollars on legitimate fare if the pirated DVDs hadn't been available. Let's assume these people are telling the truth and are accurately estimating how much they would have spent. So we're done, right? That's how much money the studios are losing.

Actually there's another level of estimation involved. The $6.1 billion quoted was the amount the studios were said to be losing and itself is a portion of the larger total that the motion picture industry as a whole was said to be losing. But let's take that, too, at face value. Now we're done, right?

Well ... remember when I was discussing BitTorrent in Part I and mentioned the importance of carefully considering what problem you're trying to solve? The principle is just as vital here.

The MPAA, like the music industry before it, and the software industry before it, seems to be trying to solve the problem of keeping people from copying bits. Being no more able to do this than their predecessors, and with Moore's law catching up with them just like it did with everyone else, they -- again like everyone before them -- claim damages by comparing the real world with what they might have had if they could stop people from copying bits.

Fair enough, but they can't. No one can, and a false antecedent implies anything you want it to. Rather than trying to keep people from copying bits, would it not be better to frame the problem as how to make money from making movies?

The traditional way of doing that, selling tickets at theaters, is still bringing in revenue, on what I'd call a slight upward trend and what the site I got the figures from says is "not any substantial increase". That's not great news for an industry constantly trying to grow, particularly once you adjust for inflation, but neither are they falling off a cliff. Evidently "Let me take you to the movies" can sometimes have more appeal than "Let's go back to my grungy apartment and watch a DVD."

Leaving aside the TV networks, cable movie channels and pay-per-view (which is not necessarily a valid approach) the complaint, and certainly the thrust of the L.E.K. study, is that DVD sales are not doing as well as expected. They were supposed keep chugging along like video before them, but they appear to be levelling off or even falling. At the same time people are selling lots of pirated videos, so the difference is attributed to piracy. QED.

But correlation does not imply cause. Certainly one interpretation of those facts is that piracy is hurting DVD sales, but another one, which I personally find more plausible, is that since bits are getting easier to copy and watching digital movies no longer requires a DVD, DVDs just aren't that valuable any more and the original sales projections that they would be were just wrong. Another symptom of the same technological changes is that making shoddy DVDs is easy enough that you can still make money off of them by charging closer to what they're worth, but neither of these symptoms is the cause of the other.

I don't recall when I last bought a DVD and I can assure you it's not because of piracy. Why pay $20 or even $12 for a DVD to take home and unwrap when I can order up a movie on demand for $4 or (if it's not particularly popular) watch it over Netflix as part of my $10/month subscription? How many DVDs do I watch more than three or four times? The commentary tracks seemed cool at first, but I don't really have time for those, either. Manifestly, I'd rather blog about DVDs than buy them.

I would, however, gladly pay more than $10/month for some sort of "premium" Netflix subscription that would open up more selection. I suspect I'm not alone. There's certainly money to be made legitimately by selling high-quality video online that won't get you sued or arrested. It's not a foregone conclusion that there's enough money to be made to keep the movie studios going in the style to which they (and we) have become accustomed, but I'm quite sure that money is not to be found in trying to prevent bit-copying.

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