Movie Industry Cries All the Way to the Bank

shandrew writes: "Jack Valenti, president of the Motion Picture Association of America, has reported that the year 2001 was the "greatest box office year in film history" with movie admissions reaching their highest level since 1959. Isn't this the same industry that is complaining that piracy is putting them out of business?"

Comments

Same for the music industry..

[Chicane-UK]

It does seem pretty surprising. They stil try and push through these stupid laws & bills to prevent piracy, yet here is another example that the market is booming.

I can't exactly lay my hands on figures, but I know the same is true of the music industry - not necesessarily their best year or anything like that, but I know that they are definately not hurting from lack of revenue.

Now maybe they can cut some of the cinema prices? I couldnt help but notice that the prices keep ticking up, whilst the adverts get longer and longer..

Re:Same for the music industry..

[Idolatre]

But people aren't stealing movies/music as much as the MPAA/RIAA claim to justify the SSSCA.

So they should stop bothering us honest customers who rip every CD they buy to their personal hard drive which is not shared in any way. I want to be able to use my personal MP3 CD player with copies of any album i BUY, and I want to have backups in case the original CD gets damaged (it's rare, but in my 250 cd collection, at least 5 of them are damaged)

The next they'll do is to say I'm denying them the right to profit by not buying a second copy of the same CD I already have, because I have a backup.

Re:Same for the music industry..

[Dr. Evil]

Umm.. Just because its a record profit year, it still doesn't make it legal to steal movies/music.

Has anyone told the recording industry about this?

Re:Same for the music industry..

[jmb-d]

Now maybe they can cut some of the cinema prices? I couldnt help but notice that the prices keep ticking up

This is my major beef with box office statistics -- they're reported in $$ instead of the number of butts in seats. That metric would hold across time. Sure, Harry Potter (as an example) made lots of money, but did more people see it than Gone With the Wind?

Re:Same for the music industry..

[smagruder]

That's funny. A big question that has been on my mind recently is "Why do the cinemas think they have the right to show *any* advertising before the movie, basically lying to me, the customer, about the movie's actual start time?" I paid a huge admission price, for 's sake! Not to mention the lofty prices for the refreshments! If that revenue can't keep them going, then maybe they shouldn't be in business to begin with.

Am I the only one who actually feels economically insulted/assaulted by having to sit through these ads?

Check out Commercial Alert for their ongoing campaign against commericials before and during movies and other rampant commercialism.

I'm still haunted by the rampant, conspicuous product placement in Mission to Mars, a crap film otherwise but even crappier with all the ads.

Re:Same for the music industry..

[Cramer]

• But people aren't stealing movies/music as much as the MPAA/RIAA claim to justify the SSSCA.

Indeed. They've never said it was putting them out of business. They claim repeatedly that piracy is costing them billions in lost revenue every year. To date, however, they have offered ZERO proof or statistics to back up their claims. They make sweeping generalizations based on anything from rumor to flawed market studies (polling 10 high school kids isn't very statistically valid) to extrapolations from what they think they should be making.

This kind of theft is very hard to quantify. People aren't breaking into a warehouse and taking thousands of CDs. The contents of one (paid for) CD is distributed to hundreds or thousands of people. How much revenue does that divert from sales? Likely far less than it generates. People are much more likely to purchase CDs of the music they have heard and liked. Case in point, I never would've known Gus Gus existed if WB hadn't placed one of their music videos on the jukebox -- Believe. I've bought every CD they've produced. I've bought numerous CDs from 800.com (recently defunct) beacuse they had samples of the songs.

Basically, the MPAA and RIAA are stupid and greedy. Organized piracy (factories producing bootleg CDs and DVDs) costs them a lot of money -- and that's very proven. However, they have taken no actions at all to thwart such piracy. Instead, they harass, berate, and criminalize their actual patrons who are the very foundation of their billion dollar a year industry. They draft one stupid (useless) law ontop of another. They throw one horrible, non-compliant, hack after another at us to "combat piracy" that just makes the disks useless almost everywhere.

Re:Same for the music industry..

[BobGregg]

I attended Sen. Hollings' SSSCA hearing last week, and can tell you a few of the things that Valenti (and Hollings, who practically repeated everything Valenti said, so it was transparently obvious that the "hearing" was nothing more than a one-sided sham to drum up interest in the bill) said there. The comments were not the same as those I've seen posted in the "official" transcript of prepared texts.

Valenti said that, sure enough, piracy is costing them money. He said that only 2 out of 10 movies made actually make their money back at the box-office; the rest have to do it through video and overseas sales, merchandising, etc. Of course, he never said how many movies make their money back in toto - I suspect it's close to 10/10, or they wouldn't be making them, would they? Still, the 2/10 stat resonated with the Senators.

He said that the *average* cost of producing and releasing a movie today is $83 million. (Hint to the MPAA: if your product is so expensive it's reducing your profit... maybe you should cut expenses, instead of asking Congress to prop up your non-functional business model?) What the hell costs $83 million? Oh yeah - a few stars' mega-contracts. Boo-hoo. I wonder if you took the top 20 stars' contracts out of the financial picture (since those vastly skew the distribution of costs), what the "average" cost would be then. Probably much, *much* lower. So tell me again why I should care... And by the way, the linked article states that the average cost in 2001 was $43 million - about *half* what Valenti just testified to Congress. Talk about talking from both sides of your mouth!!

Valenti said the one "moat surrounding their castle" that prevented the movie industry from totally being taken down (!!) was that broadband wasn't widespread yet. He said it was critical to get all these new restrictions in place on the Internet and in home electronics before broadband bacame widespread. Of course, even if they did, the Internet is international, and as soon as a pirated movie makes it overseas, it will no longer be subject to our laws. It was obvious from comments during the hearing that they haven't figured this out yet.

At the same time he was decrying the impending rollout of broadband, he had the balls to claim that his industry was the very reason broadband hadn't gotten accepted yet! Valenti said that the reason people didn't want broadband was that "producers haven't made their highest quality content available" yet. He also turned around and said that the only reason why someone would want to have broadband today was if they were a pirate (!!). Quote: "You don't need broadband to do email; you can do that on a 56K modem." So to Jack Valenti, the two possible uses of a computer are email, and viewing video/audio content, which today must entail piracy since *his* content isn't legally available. The fact that *other* people might have legal content available - CNN, MSNBC, independent movie producers, amateur artists, countless Flash animations - or that there might be other bandwidth intensive applications besides wanting to watch a Disney flick pay-per-view, is something that apparently isn't even worth consideration. It's a totally Narcissistic mind-set - they're the only ones that exist in their minds.

As an extra-scary note, at the same moment Valenti was saying this, over in the House they were passing Tauzin-Dingell, which practically locked in the one thing that *is* preventing broadband rollout: the unacceptably high monthly cost, caused by monopolistic control over the network by the Baby Bells. Yet at least one of the Senators sat there and praised Valenti and the MPAA as being "critical" to the economic recovery, because they had to succeed to drive broadband rollout, to create the next round of economic growth. It all seemed utterly clueless to me.

Now for some scary "justifications". Valenti said that it was critical to the economic recovery in the US that his content be protected. He said that "intellectual property" production makes up 5% of GDP. He listed IP as including movies, music, books, and software. Right... which of those things is not like the others? :-) Guess which one also makes up more of that 5%? Last year's MPAA member revenues, according to Valenti, were $30 billion. Try adding up the US software industry's revenues from last year: start with Microsoft's ($27 billion), and work from there. Estimate an order of magnitude (MS is just one company, after all), so maybe $300 billion. One of the other speakers estimated it at $600 billion. Tell me: Which one of these is more relevant to the economic recovery? Which one needs more safeguards to make sure it succeeds? Right... so WHY ARE THEY KOWTOWING TO THE MOVIE INDUSTRY? Oh yeah - because they pay the Senators more than we do.

There's more - I could go on at length about what was said. Valenti proclaimed the movie industry "the crown jewel of American industry", because it's the only major industry that has a trade surplus with every nation. Well, that's true, technically. However: A) given that the MPAA's member companies have a virtual monopoly on distribution to the number-one revenue market (the US), that's not terribly surprising, is it? And B) since many of the distribution companies are majority foreign owned (!!!), claiming that giving them money consitutes a US foreign trade surplus is downright disingenuous.

Watching him talk, it was all so obvious. But hey, what's a little song-and-dance to misdirect attention? Look at the pretty lights, people; don't watch the man behind the curtain taking your rights away. And frankly, I'm still not sure that they "get it" at all. Valenti said (regarding the inability of Intel or Cisco to utterly prevent copying of copyrighted materials in their devices), "I can't believe there aren't two young geeks in San Diego in a garage somewhere who can't figure out how to make this work." As if some "geek" is going to figure out how to undo the mathematics that make "Turing completeness" a reality. But then, explaining a Turing machine to one of these guys and getting any reaction other than slack-jawed disbelief is a trick that nobody seems to have figured out yet. That, friends, would be an awesome hack indeed.

Re:Same for the music industry..

[Dirtside]

Actually, number of tickets sold (i.e. number of butts in seats) does not hold across time (although it does so better than $$), for the simple reason that there are more people than there used to be.

A better metric is the percentage of people who saw a particular movie in each period, out of all the people who saw any movies in that period. Basically, you take a particular movie's number of tickets sold, and divide it by all tickets sold for a given time period. This gives you a metric that holds across time, because if (for example) The Matrix has a 20% share, and Episode I has a 15% share, and Gone With the Wind has a 50% share (the numbers are made up), then it doesn't matter how many people saw the movie -- of the available movie audience, half of them saw GWTW, but only 1/5 and ~1/7 of the audience saw the other two movies (each of which have grossed more than GWTW in real dollars).

Of course, no matter how you cut it, it's an inexact science -- GWTW has had 63 years for people to view it, and The Matrix has had 3. Plus, there's no exact count kept of who saw the movie more than once, whether 1 person seeing it twice counts as much as 2 people seeing it once, etc.

Ultimately, I wish people would stop obsessing over the financial/numerical popularity of movies and instead focus on how good (or bad) the movies are -- the artistic, social, or political impact of a movie instead of its box office. Every week, hundreds of publications (newspapers, magazines) have stories about how much business each movie did, but you never see a discussion of the movie from an artistic standpoint except for the initial review -- too rarely do publications come back later and have any kind of in-depth discussion of any film.

Well they could have made more!

[phunhippy]

Don't forget if there wasn't 350,000 downloads(hehe yeah right) a day of pirated music online this banner year for the film industry would be even great which is of course more reason why we should support all of their digital copyright ideas right away and with out any debate!!

hehe i got a bridge in brookyln i can sell ya reall cheap to :) hehehe you could even charge people
$25 for a once a year fee
$ 2 per hour of use
$ 5 for 1000 views of the bridge from the road

ok that was cruel :)

Well, The RIAA was having the same luck a year ago

[autopr0n]

Hey, lets not forget that the RIAA was bitching the same bitch and making the same kind of profits a year ago, and now. Now things couldn't be bleaker, many people are predicting the demise of the recording industry entirely.

A year ago napster was in full swing.

Also, one thing you'll notice is that the MPAA isn't making exactly the same claims that the RIAA was. And honstly movie piracy isn't such a big deal. The quality isn't as good, and the download times are insaine. Back in the modem days it used to take me just about 20 minutes or so to d/l an mp3. But snagging a 1gig divx of a new feature film off the campus lan can take an hour, and it can take days to get off filesharing services like morphius.

Movie trading just hasn't caught on the way napster has.

What the MPAA is saying is that movie piracy is going to hurt them in the future and it's also keeping them from jumping on the digital TV, movie thing (thats why we need the SSSCA!).

You'll also note that these are box-office results, not home video rentals or DVD sales. Piracy wouldn't have any affect on that anymore then music piracy would affect concert sales.

Re:sick

[fmaxwell]

If you work harder and earn more than the common man, you should be brought to justice.

The wealthiest people in the world are hardly the most hard-working. Look at the cast of the TV show Friends: They will be paid one million dollars per episode to film a 1/2 hour TV show. How does that compare to some guy that's doing construction work for 8 hours every day? Think of the pity that the average coal miner would feel for the hard-working cast of Friends.

People like Jack Valenti aren't hard-working. They're just greedy.

75 years of copyright + Region-locking

[mirko]

though a little "trollish" because of the way it was written, AC above actually has a good point : (Babelfish was there)

The peculiar thing is that they are able to amortize the film in less than 1 year. So to that it comes that the right of Copyright lasts 75 years? I believe that with 5 years of Copyright they would have time to sell the film in the CINEMAS and to even sell a few DVDs to price of " opening ". But to more money they make more money want, and more case is arranged has to do the government to them.

I also consider that DVD-Region locking should *at least* be limited in time.
Listen to me: Valenti and his hord consider that DVD Region-ing is a way to prevent a film to be seen in a place in which it has not previously been played in theater.
they could schedule some 2-year period (hard-coded on the DVD, if they want) during which the DVD would only be playable in a given place, but after this period, it could be played worldwide with *no* limitations...

Re:Potential profits are important!

[Ami Ganguli]

In addition to stealing your stuff the guy is depriving you of potential profit.

There's the fundamental weakness of the arguement. When dealing with intellectual property the stealing doesn't cost you (the owner) anything directly. You're only losing the potential profit.

Now the problem is figuring out what that potential profit might have been. Only a small fraction of the people who downloaded your CD for free would have otherwise purchased the music. Against that you have to (or should) weigh the benefit of additional exposure - more people will hear your music and will tend to make it more popular, thus selling more CDs.

I don't think anybody really knows what the impact of all these free downloads is. It is clear that the figures the RIAA throws around are nonsense, since they count each download as a lost sale.

Goals and methods.

[Znork]

The goal of the media giants has nothing to do with piracy really. They want the infrastructure for pay-per-view/play, which will make their profits skyrocket beyond comprehension. Watch that movie again? Pay again. Play that song twice? Pay twice.

Piracy is a good excuse. If they can use the 'piracy threat' to force DRM technology to be adapted, it opens the way for a pay-per-view model.

Is this the same industry claiming losses? No.

[NanoGator]

Can DVD sales suffer from internet piracy? Possibly. Can box-office sales? Nope. Pirating a movie in the theaters cannot hold a candle to going and seeing the movie. Frankly, if somebody is going to download the pirated movie, then the chances are they aren't going to pay to see it. It is too big of a hassle.

DVD sales can be seriously hurt by P2P sharing. The MPAA has a few things they can do to prevent that, though. Loading DVD's up with features is one idea. The DVD still has value if the movie's getting downloaded, but the extras aren't. (Or am I in the minority of DVD purchasers because I care more about the bonus footage and making of scenes...?)

Another good approach would be to get a handle on why people download the movies. Are they just curious if the movie is any good? Well here's an idea, the MPAA should release an edited version of the movie, free to watch on the net. Maybe insert some ads into it or something to get some money per view. Edit out the language, and maybe cut out a few scenes. This way, somebody can watch the movie to see if it's interesting to them. Then they can go buy the DVD if it's interesting to them, or move on if it's not. If they can get ad revenue that way, then it's not wasted time for the MPAA.

Hopefully the MPAA will look at why people download movies and try to provide a profitable alternative to them, instead of trying to sue them out of existence. It works better for both sides if they take a more mature attitude about it.

Re:Potential profits are important!

[ishark]

The loss of potential profits is a serious problem,


DAMMIT DAMMIT I have lost my lottery ticket, I have lost 1 MILLION EUROS!!!

..wait..

What do you mean with "you should check first if it was the winning one"?

(Potential is exactly that, potential. What next? Suing your employer because he didn't fire you, depriving you of the possibilility of getting a better job?)

They Don't Claim to be Hurting Right Now

[Schlemphfer]

The summary reads:

Isn't this the same industry that is complaining that piracy is putting them out of business?

I don't think so. I don't think the movie industry is claiming that piracy is putting them out of business, or even causing great harm at the moment. I think that their argument is that emerging broadband and internet technologies could soon put them out of business, if effective legislation and anti-piracy measures are not enacted.

The primary difference between the recording industry and the movie industry is that the recording people are complaining about what's happening right now, whereas the movie people are acting to prevent a "Napster for Movies" from being possible three years from now.

A pox on both their houses, of course. But I think it's wrong to suggest the movie industry is complaining about piracy ruining their profits today. It's all about what they fear will happen in the near future.

I speak only for myself

[Treeluvinhippy]

I'll admit I'm guilty of "Movie Trading". It's how I decide what I'm going to buy. For example none of my friends have Neon Genesis Evangelion and I'm sure as hell ain't going to find it at my local blockbuster. Since 25-30 greenbacks is way to much for me to spend on something I'm seeing for the first time, and might not even like.

So I became one with the devil one fateful day and fired up Morpheus. And on that day the worlds biggest evangelion freak was born.

I didn't play with linux for two weeks, cause I didn't want to reboot out of my win2k partion so I could keep downloading. Eventually I had the entire series all mine for free, some were fairly decent quality too.

Did I stick it to the artists who created such an animation masterpiece? Well some would say yes. Some would say they deserve to be ripped off simply for the fact that they charge so much for a three episode dvd. I'm not going to get into that. Plenty of threads covering that topic as it is.

In my case it dosen't really matter anyways. I purchesed all eight dvd's, have an almost complete collection of evangelion toys (Just need to get Unit 01). And a gorgeous Askua poster in a black frame hanging on the wall above my monitor.

Maybe my case is an exception. I never would have bought all this stuff if I never saw the crappy divxes. I relize they're is alot of freeloading on the p2p networks, but because of software like Morpheus and Gnutella I shelled out quite a bit of cash at my local Suncoast. This stuff isn't cheap!

other possible reasons?

[f00zbll]

I've been thinking about this and the problem is pretty complicated.

1. not all movies are block busters that people watch more than once and buy the dvd/vhs.
2. nitch movies like foriegn or art films may not make as much money in theaters. Most big theaters no longer play art films, unless they are produced and directed by famous people.
3. pirated version of "so-so" movies will have a harder time breaking even. Why spend 10+ bucks for a movie with no production value, which barely keeps you interested?
4. pirated version of popular or great movies tend to see a benefit.
5. pirating may affect movie budgets negatively and force movie makers to do more with less money.
6. pirating of movies before they are released to the public may kill any chance of it making money, let alone profit. Crap movies will be affected the most by this.
7. Pirating DVD disk image may become a bigger issue in the future, but for the most part it's professional pirating by organized criminals that are the biggest problem.

Just my opinion, but I think the movie execs just don't understand it and realize they need to change how they do things. In a lot of ways, art and foriegn films could see an increase in popularity if video on demand becomes reality. Someone might not spend 7.00 for a ticket, 3.00 for popcorn, 2.00 for a drink and 20 minutes to drive to the theater for an art film, but they might spend 3 bucks to see it at home. There are a lot of ways for the movie industry to re-invent itself and make more money. Now if only they would "think" instead of react, they could really see a whole new world of cinema.

I like watching short movies on the net, when they are good. I wouldn't spend 7 bucks on a questionable movie, but I would risk 1-2 bucks. As more people master the art of making short movies, the market will grow. Especially if hollywood continues to crank out formulaic junk.

Re:They have a business to run.

[TheConfusedOne]

Hmmm, let me see if I understand this now:

Rampant movie piracy in Asia means that we have to have region encoded DVD's and electronic devices that won't copy anything without going "mother may I" to the RIAA and MPAA?

Have you seen some of these pirated movies? Someone walks into a theater with a freakin' cam corder and films the film. Or, they borrow the actual film from a friend who works there and they do the transfer that way. How do ANY of the proposed DRM (Digital Rights Minimization) tools going to prevent that?

The single biggest complaint that most of us have is that there is no logic to support the laws that the industry is asking for. The last time the MPAA went this crazy against a technology it was the Video Recorder. Fortunatly, they picked on Sony and ran up against a company that was willing and able to fight. This lead to the fair-use laws and one of the largest ancillary markets for the movie industry ever. You think they'd learn from the past and look for the money making angle.

Napster as well

[gorehog]

Funny thing, now that the popularity of napster has waned CD sales have gone down. Dont get me wrong, I know there's still plenty of music sharing going on out there, but I remember when DJ's at radio stations were developing massive libraries of music off of napster. Now that napster is by the wayside and music sales are dropping the industry still blames piracy for waning sales although, when music sharing was up and popular sales were high, now that sharing is dying sales are going down. It is odd how a scapegoat remains a scapegoat long after he's been served up with mint jelly on the side.

Re:Is this the same industry claiming losses? No.

[Raindeer]

Can DVD sales suffer from internet piracy? Possibly. Can box-office sales? Nope.

Though I mostly agree with you I want to add a bit of insight from a different location in the world. Here in Europe (and most of the rest of the world not being Northern America), we have to wait a couple of weeks to a couple of months, before a movie that has been released in the US, is shown here in the cinemas. If it ever shows up in the cinemas at all, because many movies, even good ones, go straight to video here or never are released at all. If you download a movie during that waiting period and watch it, you generally won't go to see it in the cinema, nor rent the DVD. So here downloading movies is hurting (in a small way) the sale of cinema tickets, though in my opinion it is mostly because the studios restrict when and if we can see a particular movie.

The big record, movie and tv-companies haven't yet caught on to the fact that the world is a village and that people want to see and hear stuff when it becomes available, not when/if a company decides they can see or hear it.

Re:But of course no film ever makes a profit!

[phillymjs]

Remember, this is the same industry in which no film ever makes a profit, thus negating the need to pay royalties...

Yup, just ask the guys who wrote Forrest Gump (the novel, and the screenplay)

The movie industry is like Microsoft with concession stands.

~Philly

Even More Complexity

[virg_mattes]

> So how come executives of companies that are making losses still command huge salaries?

Generally there are two reasons. First, the pay for a CEO is commensurate with responsibility. Because they make decisions that guide the entire company, they get paid better, because mistakes are much more costly at this level than down on the shop floor, so companies are willing to pay quite a bit if that's what it takes to get a qualified person in the job. Second, companies don't generally keep CEOs if they feel that the CEO is the reason the company is losing money. So, in the case where a CEO stays on the job while a company racks up red ink, it's usually because (A) the company doesn't directly blame the CEO for the loss (for example, when the economy tanks), or (B) the company is buying the talent to engineer a recovery.

> Or why do civil servants get paid so well when they don't make any profit for anybody?

Civil service isn't a for-profit venture, so the "profit" isn't monetary. In public service, the goal is to maximize service levels within a budget constraint, so a civil servant who can do this well is earning the "profit" of lower costs and better (or more) service.

Virg

i'm gonna bring them down

[circletimessquare]

hey doodez...

i just spent the laugh half-hour downloading the divx version of "panic room" with 6 unexplained jumps/ black-outs, graininess, audio that sounds like it's on the inside of a washing machine, and some guy standing up in front of the handicam 30 minutes into the movie to go to the bathroom. i'm burning it on my cdrw now man!

come on over to my place, i'm showing it at 1:30 pm today on my 17 inch! the movie tends to hang in a few spots because my cdrom is a scsi, and i can't figure out which of my scsi devices down the chain is causing this periodic freezing, but no problemo! we're gonna bring down the movie industry man! you'll see!

They're lying.

[El Camino SS]

Hey, lets not forget that the RIAA was bitching the same bitch and making the same kind of profits a year ago, and now. Now things couldn't be bleaker, many people are predicting the demise of the recording industry entirely.

Think of this as the last days of disco. NO real musical acts got signed during disco... and it was all performance music. Everyone thought it was great at the time, and Arista and other groups cleaned up.

Everyone loved disco. But like all fads, it got old really quick. Then they got tired of it. Then overall record sales slumped. Then they had to find real musical acts... people wanted to listen to real music instead of dance. The same analogy can be about raving. It used to be about dancing, then it became all about the drugs. Very quick.

Do you think anyone will care about Britney Spears in five years after we have been Britney bombed? Honestly, did anyone care about the superbowl ad? I personally am getting tired of her ass, bigtime. The rest of America is too.

It's limping. The proof? O-Town. That fucking boy band couldn't make it, even with 50 hours of network television to back it. See? Aren't we all just getting a little tired of Justin Timberlake? Aren't we all just a little ashamed that we know his name when we see his face?

In about a year, they'll have to look at real musicians again... whereas my little hometown of NAshville, TN will just keep chuggin' along. But even they had a country fad about 4 years ago... and yes, they whined that they were "dying" afterword. Yeah, after record breaking profits.

Give it a year, and make sure you turn off MTV so that those idiot rappers that talk about thinly veiled anal sex references to nine year olds watching MTV don't get any money... although I think that they are propped up by all of the morons out there. That is the one trend that I wish would die, grassy knoll style. Because I cannot put up with a woman flapping her ass on camera to crappy Casio SK1 sounds.