As I wrote on Dec. 21, curious about the quality of the merchandise for sale on the street, I shelled out five bucks for copy of the movie "District 9," which was still days away from being available in your local retail store.Hiltzik correctly notes that claims of piracy losses are imprecise (as are estimates of any illicit activity). But there is no question that sales of pirated DVDs represent sales taken from the legitimate market. By definition, the purchasers of pirated DVDs (as opposed to some portion of Web pirates) are willing to pay money for product, and a dollar paid to the criminals who sell pirated discs is a dollar taken away from those who worked on and invested in the film.
As I've been informed, quite properly, by readers in and around the movie industry, that casual act made me part of a global problem that is killing jobs and eliminating opportunities for creative people everywhere.
Consider this the other side of that column.
What I expected to find in the case I bought from a street vendor was a traditional crummy camcorder copy, providing the view and sound of a screen somewhere on far the horizon but of the audience too, chattering, coughing, and getting up to go to the bathroom. Such low-quality copies are among the largest single categories in the international film piracy trade, especially overseas, though digital copies or online files made from stolen prints or discs are posing an increasingly serious threat.
Indeed, but what I got was a high-quality digital copy with up-to-date trailers, a navigable menu that (mostly) worked and even some special features. Plainly the source was a DVD diverted from the retail stream -- stolen from a warehouse, perhaps, or slipped to a gang of copiers by a confederate at a DVD factory.
In other words, the pirates have really got their act together. Product like this has a real, and frightening, capacity to take a bite out of the legitimate retail market.
One last point: the record $10 billion-plus earned at the US box office in 2009 is certainly to be celebrated, and is obvious evidence that piracy has not killed the theatrical business, whose unique experience can't be replicated in all but the fanciest living rooms. But the biggest film piracy threat has always been to the home entertainment (not theatrical) sector, where revenues are "plunging." The last thing the home entertainment business needs is for piracy, via hard goods or the web, to provide an accessible alternative to legal product.
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Home entertainment revenues are "plunging," but I'm not sure how much of it is to blame for piracy. Anecdotally, here's my own experience.
ReplyDeleteI used to buy a lot of DVDs when I was in college in the early 2000's. I don't now, despite actually having money and not being a poor college student. Today, I can't bring myself to buy a non Blu-Ray DVD. And I can't justify paying Blu-Ray prices when I have a perfectly good NetFlix subscription. I even stopped paying for HBO, whose subscription fees actually trickle to studios.
I like movies. I love well-produced television. I'm willing to pay for them. But right now the most convenient option that isn't prohibitively expensive is NetFlix, a service that doesn't (directly) pay royalties to the people who produce the content I love.
@Shane:
ReplyDeleteWhat do you mean by Netflix "doesn't (directly) pay royalties to the people who produce the content I love"? My understanding is that Netflix does rev share with the studios on DVDs, and I'm sure they pay for the right to stream them.
Ben,
ReplyDeleteI can't remember which article I had read about Netflix's arrangements, but I was under the impression that they paid for the DVDs legitimately one time (a portion of which, of course goes to the studios) and under the first sale doctrine could rent out the DVDs for home use without sharing revenue with the studios.
As far as the streaming service goes, I had understood that they did NOT directly have a licensing deal with the studios, but instead had streaming rights for all the movies that Starz had rights to under a deal they entered into with Starz (and not the actual studios), which is why movies disappear from the catalog after a while (when Starz itself loses the rights to certain movies).
I've gotta step out for a bit, but I'll leave this page open and find the link in the morning when I come back. And of course, Netflix DOES pay for its content, it just seems that if I remembered the licensing arrangements correctly, there's a middleman in between Netflix and the studios that own the films.
@Shane:
ReplyDeleteNetflix does rev share on DVDs with the studios. Here's a summary of their business model: http://apps.olin.wustl.edu/workingpapers/pdf/2004-03-225.pdf
As far as streaming, it looks like Netflix does deals both directly with the studios and through Starz. Either way, the producers are getting paid. http://blogs.zdnet.com/home-theater/?p=120
I can only speak for a sample of one, but after several years of binging on movie DVDs which piled up unwatched, my family has chosen to nearly zero out DVD spending. Piracy has nothing to do with it: we just ran out of time for watching DVDs in any significant quantity. Too much broadcast & cable TV to watch, and too many new movies in theaters.
ReplyDelete- wallow-T
"But there is no question that sales of pirated DVDs represent sales taken from the legitimate market. "
ReplyDeleteBecause I'm willing to pay 5$ means that I'm willing to pay 20$? Hmmmm. I'm not too sure I can agree with your logic there Ben.
That said, I don't buy street copies. Then again, I very very very very very rarely buy a store copy either. Even more rarely (in fact probably none since college and now that I make $$$) will I even have a desire to get a movie offline and burn it. Or even get it offline, save through netflix etc.
"But the biggest film piracy threat has always been to the home entertainment (not theatrical) sector, where revenues are "plunging.""
ReplyDeleteWell with 1$ movie rentals, 6 cents/hour movie rentals, and netflix/hulu what, specifically, would you expect? Piracy is the least of their worries. Seriously, 1$/6cents/netflix for the kill. Those models are simply driving down the costs to goods towards where they should be.
" Those models are simply driving down the costs to goods towards where they should be."
ReplyDeleteI'm curious what evidence or studies or training you have to make such a conclusive statement about what the appropriate price point is for a movie distribution?
"I'm curious what evidence or studies or training you have to make such a conclusive statement about what the appropriate price point is for a movie distribution?"
ReplyDeleteLet me say first that I should have said "costs of goods" not "costs to goods". And more precisely I should have said "costs of providing goods".
Because I wasn't actually referring to the price point, I was referring to the costs of movie distribution. Netflix distributes on the net, which is, self-evidently, cheaper than running a blockbuster video store. I don't think you need evidence to confirm that. Same goes for the 1$ rental boxes.
But, if you want to talk price point, don't take it from me, take it from the market. The fact that I would rely upon however is the fact that the market is sustaining a business model providing the movies at that cost which is much much much lower than renting them from blockbuster or buying them. That and the fact that netflix is making money and video stores are going out of business are facts enough I believe.
Besides that, the price point will necessarily go down if the costs associated with providing the goods goes down so long as there is no collusion in a competitive market.
For your consideration:
ReplyDeletehttp://finance.yahoo.com/news/Netflix-to-delay-delivery-of-apf-1311516316.html?x=0&.v=1
Netflix, bringin' em down.
As a consumer, the main problem I have with Netflix is the high number of scratched, broken, dirty, and unreadable DVDs. Nothing worse than having company over to watch a DVD, and then two-thirds way through the movie at a climactic scene, the DVD begins skipping and stalls. I don't know how prevalent this problem is for others, but I see direct streaming of content as eventually being far superior. I guess that's a matter of technology improvement, such as larger numbers of homes getting FIOS. I'd imagine streaming content also circumvents some but not all of the piracy issues. I think new technology in the not-too-distant future will alter the entire business landscape, although I'm not smart enough to figure out what that will be.
ReplyDeleteI'd love to hear others' thoughts.
"As a consumer, the main problem I have with Netflix is the high number of scratched, broken, dirty, and unreadable DVDs. "
ReplyDeleteThat's funny, that's the same issue I had at my local blockbuster.
But then, your milage may vary.
I buy a lot of DVDs, but it's not going to do Hollywood any good. I mostly buy British and Canadian TV shows, my collection is heavily biased towards the BBC.
ReplyDeleteLet's face it - most American TV is crap. There are a few gems. Mythbusters is fantastic. But the last mainstream drama that was worth watching was Babylon 5, and that was 15 years ago.
I think the lack of quality programming is what is killing Hollywood.
But I'll admit that I tend to be pretty picky about what I watch. I'm a writer. If I'm watching TV, I'm not getting any work done :)