For the older readers, harken back to the mid-1980s when mobile phones (hardly “smart”) looked like walkie-talkies and you were billed one minute minimum per dial-out or reception, even a re-dial for frequently dropped signals! Anybody remember their first phone bills? A hundred bucks? A couple of hundred? A thousand? A couple of thousand? In 1984-5? Wow! People without expense accounts were tossing those puppies… until some smart person decided to market “plans” with lots of minutes for a fixed monthly fee. When the phone companies listed to consumers, they started making even more gobs and gobs of money.
That “listening to consumers” part is how you can tell the purveyors of creative content (music companies, television networks and program suppliers and Hollywood Studios) from the rest of American business. Hollywood looks to Washington to save their cherished business models – copyright laws to protect what they create – not really comfortable figuring out how to cater to consumers. Folks tell me that the infamous Napster service decimated their music business model by making file-sharing too easy (and today BitTorrent services blow Napster-capacity all to hell). Few remember that Napster offered the “record industry” an economic model that eliminated 90% of “piracy,” but the record moguls responded that unless it got to 100%, Napster could suck eggs and die (which it did; the moguls did too).
What really tanked the music business is greedy record executives who stopped selling singles to force people to buy vastly more expensive albums to get a single tune they wanted. When “singles” were suddenly available in MP3 and comparable formats – even though the only place you could really get new singles “out there” were in “pirated” online “acquisitions” – the consuming public pretty much voted albums out.
Business plans at the big labels were totally predicated on album sales… and they were damned if they were going to let consumers change that. They prosecuted children, they mounted huge “stealing is bad” campaigns, the responded by attacking the very consumers they needed to court to restore economic sanity to their efforts. Wow! That’s good marketing, eh? Oh, those big record companies’ plans sank faster than the Titanic.
And whoever came up with the idea of telling teenagers what they had to do, expecting complete compliance? OMG! Rebellious teenagers hunkered down… they had their cadre of mega-tech-nerds ready to trump the system… and boy did they. Two complete generations of tech experts built hacking capacity, transmission capacity and virtually unstoppable file-sharing capacity, spreading their knowledge to anyone who cared. Usually not for money, but for the sheer joy of accomplishment and playing the system. Now accessing content from the Web is “normal.”
The music business as we knew it died, and the digital replacement, from iTunes downloading power to streaming systems like Spotify and Pandora, added incremental revenues, but the gravy train was shut down and the tracks sold for scrap. Today, according to Go-Gulf.com, 95% of downloaded music and over 35% of downloaded film is illegal, with 70% of online users seeing nothing wrong in downloading available content regardless of whether or not they pay for it. Go-Gulf estimates that the average iPod carries $800 of illegally downloaded music.
Why are the numbers better for the film industry? Well, for one bandwidth for a good download of a film is considerably more than required for music (but bandwidth is getting better by the day!), and with the exception of very young children (parents generally don’t steal as an example for their kids, anyway), who watches a film over and over again? And there is on one additional and huge difference: most people who love movies still prefer the big screen in their neighborhood theater.
The film industry has moved their production output to the kinds of product that does particularly well in that environment (comedies benefit from laughing audiences, we like to be scared in groups and huge special effects look best on a huge screen). Small, seriously-themed productions increasingly work less effectively on the big screen but are dominating the ratings in television. The film studios are still looking to prosecute where they can and those silly trailers in movie theaters are “popcorn buying moments.”
There’s no question that the artists who create mass-appeal film, television, music, etc. are special. Their gifts amuse, entertain, and give us short respites from the stresses and tensions of our everyday existence. They deserve to be paid, encouraged to create and cherished for their excellence. Unfortunately, too many artists have entrusted their gifts to commercial entities who know more how to alienate consumers than embrace and listen to them.
On the other hand, companies like Netflix and Hulu (the latter being studio-owned) have provided low cost (or ad-supported) and legal alternative access to film and television content, with startlingly great results. Major networks have learned to create parallel access to new television content in online delivery. Binge viewing has opened new doors to commercial television values. For those who have “cut the cord” (see my recent Television Wars blog), this is the new “television” model.
Remember that little thang about consumers wanting singles but record labels forcing albums? Didn’t work, did it… the second alternative of access to singles only occurred, the dam burst. Seeing that pattern again? That you have to pay for hundreds of basic channels (and can pay for more premium choices) when you order cable… but the average family only watches 17? Hmmm? A perfect storm? History about to repeat itself?
One more thing. How about those who create powerful new television content but insist that consumers only have access to those programs through some expensive and limited access system (like premium cable… which doesn’t work if you do not have cable) provided by a proprietary service? “The latest episode of [HBO’s] Game of Thrones has broken the record for the most people sharing a file simultaneously via BitTorrent. More than 193,000 people shared a single copy [April 14th] evening, and roughly 1.5 million people downloaded the episode during the first day…
“From all over the world people virtually gathered around the various pirated copies of the show, breaking the record for the largest BitTorrent swarm ever in the process… A few hours after the second episode came online the Demonii tracker reported that 193,418 people where sharing one single torrent. 145,594 had a complete copy of the episode and continued to upload, while 47,824 were still downloading the file.
“These are unprecedented numbers – never before have 193,418 people shared a single file simultaneously. The previous record was set last year, when the season finale of Game of Thrones had 171,572 people sharing on a single tracker.” TorrentFreak.com, April 15th.
Does HBO get it yet? Not exactly. Aside from its HBO Go – its parallel streaming service available to its premium Pay TV subscriber base – this cable giant generally holds off on making its content available in the digital after-market for about three years. To that end, on April 23rd, HBO announced an output agreement with online Amazon, as a subscription video-on-demand (SVOD) provider for many of its titles, all subject to that approximate three year holdback: [The deal] marks the first time HBO programming has been licensed to an online-only subscription streaming service — and it’s a big win for Amazon in its rivalry with Netflix, the SVOD category leader. All the programming covered under the licensing deal with Amazon will remain on all HBO platforms, including HBO Go.” Variety.com, April 23rd.
Does this arrangement with Amazon this provide sufficient alternative access to satisfy consumer demand outside of the HBO subscriber universe? With a three year holdback? That’s an easy answer. No!
What are the answers? How can you stem the tide of unauthorized downloads? First, you are not going to eliminate all theft. Second, you cannot create compelling content with a single expensive path to access without accelerating illegal downloads. Third, consumers like convenience, predictability (quality and monthly cost), they generally do not like pay-per-use (unless the sums are small) and rather have general access for a flat monthly payment, they still like special venues that enhance the consumption experience (big screen experience with an audience). Listen to them. Cherish them… and remember, when you use a word like “pirate,” you have prejudged a very large segment of an entire generation as criminals. Our kids, our friends and our future!
I’m Peter Dekom, and content purveyors need to listen to their consumers and provide the alternatives they demand or risk further erosion of their longer-term values.
Posts
No comments:
Post a Comment