Tech Industry Versus Content Industry

gambit3 writes "Business 2.0's Cover Story this month asks whether Andy Grove is a Pirate. Interesting read on the mainstream media about the battle between Hollywood and Silicon Valley. Read about in Business 2.0"

Comments

Give me a break...

[Quadrature]

Chairman Hollings was only slightly less infuriated than the two CEOs. "Where did you get all this nonsense about ... 'irreparable damage'?"

The same place you got this nonsense about treating the average consumer as a criminal.

Positive feedback and IP

[xxSOUL_EATERxx]

The central problem of the Tech vs. Content industry conflict is the postive-feedback mechanism involved.

To wit: "pirates" use some technological device to "steal" copyrighted material, which leads to an intrusive technological "solution" to the problem (i.e., CD's that break your computer and damage your speakers), which leads to some ingenious workaround, which in turn leads to an even more cumbersome technological countermeasure...

What the Content folks need to realize is that eventually, this fedback mechanism will hit a point of diminishing returns, and the anti-"piracy" measures will make the media more trouble than it's worth to purchase and use, and consumers will simply stop buying, and seek out some other form of entertainment, like going outside and playing softball...

You know, maybe the Tech v. Content struggle isn't so bad after all... :D Seriously, though, it would probably behoove the Content industry to try rethinking the idea of intellectual property as it is presently understood, before their frantic efforts to protect their "property" end up wiping out their source of profit.

I don't know about Grove...

[j09824]

But I do know that Eisner is a pirate. His company has been stealing from the public domain and denying people their legal fair use rights.

Disney's Michael Eisner and others say Hollywood will defend its intellectual property at all costs

It's obvious that he will do whatever it takes: he is already going as far as bribing our politicians, giving free speech rights only to the wealthiest, and destroying our democracy.

And what for? Disney rarely if ever produces anything other than useless fluff. The company is optimizing the same thing the drug industry is optimizing: a quick, addictive product that gets our children hooked early and lacks intellectual content or social merit. Disney shouldn't be censored, but we certainly don't need to make any special effort to protect their trashy content beyond the minimum.

He "gets it". He actually does.

[VValdo]

I almost cried tears of joy when I read the transcript of W. Brian Arthur (economist), Andy Grove (Intel chairman), and Lawrence Lessig's (law professor) discussion about these issues. A lot of the same points are made that you see daily here on /., and a lot of comparisons to the nineteenth century railroad industry and various information revolutions of the past 200 years.

A very interesting read that helps put current events in an historical context...

If Disney and co get their way...

[dipfan]

... then this could hurt the US tech industry in more ways than one. Groves is right when he says in the article "Suppose I use my personal computer now to create a playlist and burn music onto a CD. Suppose in three years, the only PCs on the market won't allow me to do that? What is my incentive to buy a new computer?" And what's the incentive then for companies to invest in R+D for new consumer devices, if they can't be used because of zealous copyright laws?

Someone should point out an example to Sen. Hollings: the eurobond market. In the 60s and 70s some too-stringent US regulations meant that it was difficult for foreigners to use the US capital markets to sell bonds in US dollars. So the market grew up in Europe instead, where the trade remains enormous today. Overbearing copyright legislation could do the same thing: the innovation in creative industries could easily move abroad to a more relaxed regulatory environment.

(BTW, this was a very good article - although the number of cookies the site tried to place on my machine was ridiculous - about 20, just for reading one article, sheesh. How about some legislation against that?)

Quid Pro Quo, then...

[pedro]

Let the tech producers that enable such products as Toy Story, or whatever else CGI driven film, or even, say, a CD that exploits a sonic effect, or a book that utilises a typesetting tool charge these media bozos a per-frame, or per-second, or per-page royalty.. enforceable via the very hardware protections that they are clamoring for.
Even better.. how about a CGI actor's union that charges a per-actor fee for all of the 'extras' in the background of scenes in films like The Mummy, or Star wars?

If we choose to strike back along these lines, the Eisners of the world will be begging for mercy by the time we're done with them. Just go crazy with licensing terms, and let 'em bend over.

Fire with fire, I say.

Killer app

[u01000101]

"Piracy is the killer app."

This is interesting; the other two killer apps, pr0n and games, were NOT so terrified about piracy - or they didn't have so much power.
Come to think of, we're talking about the *entertainment* industry here. Stop reading for a second and think "entertainment"... ok, now how does this fit with all the big words/phrases like "intellectual property", "innovation", "loses of billions of dollars"...? If Disney goes bankrupt tomorrow, how will the life of the average American change? Will millions of people starve, or freeze to death? Extend to African, Asian etc.
I think all this has gone way out of proportions.

Mainstream

[blankmange]

One of the earlier posts mentioned that Time needs to cover a story like this - and then it dawned on me how very true that is. The mainstream media have covered very little of the consumers' side of issues such as Fair Use, DCMA, or any other "us vs. them" issues, especially those involving their advertisers ... We will never see our side of the story covered by Time or on CNN because their paychecks are by the media/recording industry/producing industry. Unless we (the users/consumers) start making all kinds of noise about our rights and how we want to use music and digital media, nobody will hear a damn word except for the blather from politicians like Hollings or whats-her-name from the RIAA... mainstream media only reports what is important to their parent companies...

Retroactive loophole?

[KlomDark]

This part of the article I found rather interesting, as far as the possible potential of using the new wording in the 95 year copyright act. This could really cost Disney a lot of money if we could find the right people (descendants of the original authors) to sue them.

What am I talking about? Notice the words I bolded in the bottom section - "and applied retroactively". If this 95 year extension is applied retroactively, then aren't quite a few Disney movies now based on works that had fallen into the public domain, but now possibly (due to the retroactive wording) would be considered to now actually be under retroactive copyright at the time they were 'pirated' by Disney? Thus making Disney's claims to things like The Jungle Book, Pinocchio and others, completely void, as they were stolen from people who are now protected by this retroactive copyright? How far back does this retroactive thing go?

"Since 1960 the term of copyright -- originally 28 years -- has been extended 11 times, most recently from 75 to 95 years, and applied retroactively. It is ironic -- and deeply pertinent -- that when motion pictures themselves were fairly new, Hollywood dipped liberally into the public treasury it has since done so much to reduce. Many of Disney's classic children's movies were based on stories, like Pinocchio , on which any copyright claims had lapsed. Had the current law been in effect in 1939, David O. Selznick would have required permission from Emily Bronte's heirs to make his film of Wuthering Heights, a book written in 1847."

My thoughts on reading this article

[Catiline]

While reading this article, I stopped at one point and thought:

If I go and buy a washing machine- pay all of the cost up front and it is 100% mine, once I've left the store (assuming the vendor isn't going to install it for me) they don't care what I do with it. I could never use it to wash clothes, just as a big drinking fountain, and nobody (except maybe those who saw me do so) would care.
If I walk into a car dealership and buy a brand new Porche (or whatever)- again pay all of the cost upfront- the dealer doesn't care what I do with it. If I drive it home and disassemble it for parts, there's no issue someone else will take up with me (except the police when I try to drive said car on the roads after its' no longer street legal, ofcourse).

So what does Hollywood really want? They can do the "we care" controls: as the article stated, streamed content alone could handle that. As of today, the technology exists to prevent consumers from working their will on Big Media's content even after it has arrived in the home. So why did the have the CBDPTA introduced? What has them so scared of even their own shadow they want DRM in every device, including handhelds too small for media and camcorders? What is the real point of the restrictive legislation?

The only answer I can think of is very, very frightening. They realize that their billion-dolar studio lots could very easily be turned into housing subdivisions right now, because computer technology has advanced so far that anyone with a decent new machine and some rather easily obtained software & hardware can make movies to the same quality as they do, but at a far lesser cost. And no doubt, this keeps Eisner (& co) awake at night: I'm sure he knows the difference between Disney's Peter Pan and his Peter Pan 2 leave poor Walt doing 1 million RPMs in his cryogenic chamber.

What the big Hollywood studios fear the most from technology isn't piracy (or at least, that isn't their main concern right now); I am rather certain they wake up each morning, wondering what they're going to do to keep their trust alive when everyone with a camera and a PC can be a movie studio. I think they believe they've gone this far by buying up all of the big talent in both producers and actors, and I don't see why they're so worried that some amatuers might up stage them (after all, Blair Witch didn't do all that well, did it? Only grossed a few millions, not the hundred millions of the blockbusters.)

Re:My thoughts on reading this article

[ewhac]

Not so long ago, I would have agreed with you. However, having been in the computer industry for over 20 years -- primarily computer games -- has taught me there's still a huge gap between what one guy can bash out in his garage, and "studio quality" stuff.

Put simply, creating a computer game these days is unbelievably expensive. The sheer amount of work required to build maps, draw textures, create FMV cutscenes, score and record music, and write the software occupies the full time of a couple dozen people for upwards of two years. Occasionally you get a Tetris out of nowhere, but that's sadly very rare.

By extension, creating a "studio-quality" movie will continue to require a lot of production staff and infrastructure. So Hollywood does not yet need to worry about the next Spielberg creating a blockbuster in his garage (and if one does, they can simply buy him/her out).

One thing the Internet might do is break the current logjam of banality and lack of imagination shown by most screenplays these days. But until every home has 3Mb/sec, effective distribution will remain in the hands of big players.

Schwab

Re:My thoughts on reading this article

[GospelHead821]

Your comparrison of entertainment media to a washing machine or to a Porsche is erroneous. Allow me to explain. If you purchase a washing machine, you may rightfully allow anybody to use it, that you wish, as often as you wish. There is a finite limit to the number of people who can use your washing machine. The same goes for a Porsche. If you buy a CD, and immediately rip an mp3 of it, which you then make available on the net, the "finite limit" to the number of people who can use that mp3 is the number of computer users with access to the internet. And furthermore, because the mp3 is readily reproducable, it may be used by many of them all at once.

In my eyes, it's easy to sympathize with both sides of the conflict. On one hand, I agree that obtaining music without paying for it just because the technology to do so is available is theft. Is it right to use a cable descrambler or coin-sized slugs to buy things from vending machines? And if the providers of cable television or of vending machines design technologies to prevent you from doing so, are they violating your rights?

On the other hand, Hollywood wishes not only to control possible theft of content, but also the precise form in which we receive the content. I don't think that they are not within their rights to do this, but obviously, as a consumer myself, I don't appreciate content holders failing to provide content in the form I prefer (mp3, for example) because they are ignorant and paranoid. If every song currently on my playlist were available for download at a fair price, I would gladly bust out my credit card and pay for the music (assuming I didn't already own a tape or CD with the song on it). However, content providers are so mistrustful (perhaps with good reason; I really don't know) of consumers, they're unwilling, to a large extent, to do this. Perhaps the solution to this quandry is, in addition to informing our congress-critters of our opinion in these matters, so that we aren't shafted, legally, we should also consider informing content-holders, by mail or by petition, of how we feel about this matter. I suspect if Disney were to have tangible evidence of how many people there are who would be willing to pay a fair price for a professionally-designed digital copy of one of their movies, they might soften toward the idea of not giving their customers (who are not pirates) the shaft.

Re:My thoughts on reading this article

[imadork]

What the big Hollywood studios fear the most from technology isn't piracy (or at least, that isn't their main concern right now); I am rather certain they wake up each morning, wondering what they're going to do to keep their trust alive when everyone with a camera and a PC can be a movie studio.

I think you almost have it.

What is the "job" of the executives of these content companies? To keep the stock price up.

How do they keep their stock price up? Keep the company growing at a decent clip.

How can you keep the company growing if your business model is solely based on producing and distributing other people's content? Make sure that creators of content have no other options for production and distribution.

I don't think that Hollywood studios are afraid that garage directors will put them out of business. I do think they're afraid that the next Great American Director will be able to edit the next Great American film on his Powerbook, stream it himself on the Internet, and not have to use their distribution system to get known. There will be many other content creators that do use the studios. But their oligopoly will be broken, and their will be more competition. At least, you won't be able to see the next Great American Movie in theaters, and more people will associate the Internet with movies.

This won't put Hollyood out of business. But it will erode their control over the content distribution of the process, which will lead to reduced profits and no growth. Which, from the Executives' perspective, is just as bad.

Re:My thoughts on reading this article

[Schwarzchild]

I do think they're afraid that the next Great American Director will be able to edit the next Great American film on his Powerbook, stream it himself on the Internet, and not have to use their distribution system to get known.

It almost sounds as if you're talking about George Lucas. Lucas owns his own film company - Lucasfilm. He owns his own effects company - ILM. He owns his own sound company - THX. He isn't beholden to any studio or consumer, IIRC. Heck he even said that he made Phantom Menace for himself and not really for others. That explains why it's such an awful movie. He didn't care what others thought. Anyway, he can deal directly with each theater or whatever and doesn't have to deal with the studios unless he's trying to deal with studio owned movie theaters.

Yeah, I guess they'd be afraid that other directors would go his way too.

Re:My thoughts on reading this article

[Reziac]

But as George Lucas proved, it only takes one serious money-making product, a good contract that gives you a major cut of the intake (note I didn't say "profits") so you've got your nest egg, and the desire to start your own production house, and suddenly you're out from under the existing big studio system (read: MPAA).

What happens when it becomes *easier* for small producers to make this transition?? The MPAA "loses" -- those revenue streams are now out of their control. Most folk here are probably too young to remember, but there were major screams from Hollywood when Lucas decided he didn't need them anymore. (Of course by now he's become one of them, but that's beside the point.)

There ARE small filmmakers out there who have the potential to accomplish this, but if they're technologically prevented from doing so (such as by draconian DRM requirements), they're locked into the MPAA Way, which of course is exactly the MPAA's desired result. "Either you play with our ball on our field by our rules, or you don't play at all."

It's an exact parallel with the music artists who are eschewing RIAA methods in favour of doing their own small distributions. As technology advances, this becomes more and more practical. Nowadays a garage band can afford to produce a master and press a few hundred CDs, and they'll make more money selling those CDs at live shows or over the net than they'd ever make in a lifetime of RIAA bondage. Twenty years ago, this would have been impossible, simply due to the high cost of the required professional production equipment.

It's no different in the film industry, it's just a matter of the scale involved (it takes more people, and more different types of expertise, to make an original film, as compared to making an original music CD).

BTW, the **AA and its minions should perhaps read http://www.baen.com/library/palaver6.htm, which has some hard figures regarding how free downloads significantly *enhanced* sales.

Re:My thoughts on reading this article

[GospelHead821]

You're right that it would take a massive, coordinated effort. In fact, when used for distribution of any sort of information, be it a news article or an illegal copy of a piece of music, that's exactly what the internet is. Suppose I copy that piece of music to one other computer every minute. But also assume that half of the people I spawn also copy the music to one other computer every minute, and that half of each . In two minutes, there are two people distributing music. In four minutes, there are four. In six, eight. It grows exponentially. No, it's not finite, but it grows very fast. Supposing the model I just described, that song will be in distribution by more than 4 billion people (and will be in the hands of twice that many people) in a little more than an hour (32 iterations, 2 minutes per iteration).

Re:My thoughts on reading this article

[GospelHead821]

Not that I agree with the ability of content holders to increase prices unchecked, but I still don't think it's inherrently wrong for them to seek to prevent theft of their content by technological means. To continue the vending machine analogy, if vending machine companies found it more cost effective to reinforce the glass and to strengthen the locks and hinges of the machine, to prevent people from stealing their six-dollar candy bars, would they be doing something wrong? Not at all! They are rightful to charge whatever they wish for their product and the market should adjust accordingly. In this manner, a vending machine relies on the honour system. The seller asks that you will kindly not break open his machine and steal the candy. Granted, part of the opportunity cost of stealing a candy bar is incurring the risk of punishment; if people are willing to face charges for doing so, they are also, economically speaking, within their rights. However, if the seller finds it economically feasible to protect his product from theft by reinforcing the vending machine, he may be wise to sell it at $6 per bar. After all, the seller's profit is maximized at the point where his willingness to produce at a certain price matches the market's willingness to purchase at a certain price. We can debate all day whether it is right for the company to sell at this price, but speaking from the standpoint of business ethics, so long as it is legal, a business must, ethically, seek the greatest possible benefit for its shareholders.

Re:My thoughts on reading this article

[GospelHead821]

I think this is nitpicking. However, the loss to the store is NOT zero. Supposing the quality of the mp3 is equal to that of the CD, which is not particularly farfetched, then the store will lose money from all the customers who would have purchased the CD, but instead did not, because they got a free copy of the mp3. Supposing there was only one seller of music (to simplify the example), you have effectively stolen their product from and illegally reproduced and distributed it, causing their business to suffer. It is all well and good for you to say that they don't deserve as much money as they're getting, but the correct solution is NOT to take the product, reproduce it yourself, and distribute it.

Who need�s em?

[Xamdam_us]

I for on have just about given up on the Movie, TV, and Record industry. When I was in High School I used to watch a lot of TV, buy lots of CD's and go to the Movies.

Now I'm hard pressed to find anything worth my time to watch or hear. All the big Networks seem to rush to make copies of the crap that the one of their competitors made. The recoding industry keeps pushing crap out onto the market. The Movie industry keeps pushing out crap.

For the past five or six years I've just about completely stopped watching TV or buying CD's. I rarely even go to see a movie in theaters now.

As far as I'm concerned the only thing that will hurt me is the crippling of technology that will come from the Disney bill.

I can live with out the media companies. Can they live with out the consumer?

Re:Time for TIME

[Lonath]

Now let's see an article like this in TIME magazine. Something more mainstream.

Not gonna happen. TIME is part of AOL/Time/Warner, a giant MEDIA company that makes its money by generating copyrights. Err generating stuff that's protected by copyright.

This is the biggest problem we face when fighting this. There aren't any giant media corporations that are independent of the content industry.

FOX likes the law and makes TV shows and movies. Vivendi owns CBS (I think) and makes records and movies (Universal). Disney owns ABC, and GE owns NBC. Finally AOLTW owns CNN. The only possibility I could see is NBC owned by GE which makes machines, not strings of bits.

So, the problem is that the government has let the media concentrate itself into a few giant corporations and they are filtering this news. This is something that most people would hate if they knew about it, but most people don't read and if they do, it's one of the major magazines or websites that are already owned by the giant media conglomerates. That means that most people will not be able to find out about this. I wonder if people here paid for a PSA about this whether the networks would even run it. :P

To me this is proof that there isn't the major media companies aren't watching out for the "little guy" because if they were, this would have been page-1, top-of-the-hour news in every corner of the media world. Especially since this kind of law will cause loss of privacy and give corporations an extreme amount of control over peoples' lives.

So, don't ever expect the "media" to take our side in this and actually report this stuff. The "media" is just another arm of the "content industry". Also, it isn't even that I want them to take our side in this. All they have to do is accurately report it, and even if they're putting a positive spin on the bill, people will figure out how bad it is. So, the only option they have is to never report on this at all. Hence, it will not happen. Remember that, and spread the word yourself.

Re:Time for TIME

[weave]

Not gonna happen. TIME is part of AOL/Time/Warner

According to a disclaimer in the story in that magazine, Business 2 is owned by AOLTW...

Re:The Celine Dion phenomenom

[morgajel]

my favorite is when artists who support the stuff START gettting big because they're doing it.

John Mayer is this posterboy of this phenomenon. he started off locally and posting mp3s on mp3.com, and the next thing he knows, he's on conan obrien, leno, vh1 mtv, etc...
check him out if you get a chance. his 2 cds are the only one's I've bought in the last 4 years- I mainly listen to hippie music from the 60's and blues.

Re:Correction...

[jo42]

> I'm a proud owner of a Mensa membership card.

Please give it back to its original owner.

Re:Grow up, this isn't THAT BIG

[jeffehobbs]

Look, the content industry is doing some disasterous things to copyright, granted, but it really isn't something that should be front and center right now. In case you forget, we're fighting a war in Afghanistan because we believe that the coordinators of some Kamikaze attacks on us happened there.


It's precisely because of that fact that we should be paying attention to this kind of stuff... it's my opinion that our government is now *deep* into the "opportunism" phase of post September 11, where our government can get all sorts of crap laws they wanted to get passed anyway, all in the name of "fighting terrorists". From oil drilling in "ANWAR" to funding Columbian shadow governments to new provisions in attorney/client privileges, it's all shady fucking bullshit and I'm kinda ashamed to be an American right now.

~jeff

From the Poll

[Odinson]

I read the poll like this.

• 83% percent of people do not own media stocks, or are more concerned with the perfromance of their tech stocks.
• 14% of people own media stocks and think people who own tech stocks smell.
• 2% of people don't know what stock is.

:)

Re:We're all guilty of piracy...

[DannyO152]

(New York, NY) Sheet Music Publishers call for national registration of musical instruments.

"We find that users of musical instruments frequently reverse-engineer popular recordings and their underlying melodic and harmonic structures. This practice threatens the viability of sheet music sales and decreases royalties to artists," according to Fenster Johansen, IV, Assitant Senior Adjutant Vice President for Media Relations for a very very very obscure and virtually unfindable sheet music trade organization.

"We also have reports that musicians who have learned a piece of music, often by just listening, will then teach other musicians 'the riff'. Some musicians will write down the melody in musical notation on a piece of paper. They call it 'by ear' and transposition, we call it sheet music theft networking."

"We propose that all sales of music instruments be accompanied by a EULA in which the buyer promises to not learn any copyrighted musical compositions, except through purchase and study of that composition's legally sanctioned sheet music. Failing that we ask that legislation be enacted to tax the sales of instruments and these moneys be distributed to sheet music publishers as reimbursement for lost revenues."

When asked about sales of synthesizer sound cards which can convert a personal computer to a musical instrument, Mr. Johansen added "while we have not taken an official position regarding this, we are developing technologies to block this form of sheet music theft. Essentially a personal computer synthesizer would match against a database of controlled compositions before playing any sequence of notes. In order for this to work properly, we believe that this form of rights management must be mandatorilly included in operating systems. We need to determine how much it will cost to get such protective legislation before we take an official position."

Re:Business people: Sometimes enemies of business

[Dyolf Knip]

Right up there with "Capitalism's worst enemies are successful capitalists."