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Record Box Office Indicates MPAA 'Piracy Problem' Hot Air
Kinescope writes "The motion picture industry has said that its profits are at risk due to piracy, but a record-setting 2007 box office has some wondering if the industry is crying 'wolf.' Last year, the US box office totaled $9.63 billion, a 5.4% increase over 2006. 'Piracy is so bad, according to the MPAA, that we need special legislation to target the dastardly college pirates who are destroying the business. It's so bad that Weekly Reader subscribers will learn about the $7 billion a year "lost" to Internet piracy. It's so bad that the MPAA wants ISPs to ignore years of common carrier law and the promises of "safe harbor" and start filtering their traffic, looking for copyright violations. The real world isn't quite this simple, of course. It turns out that the MPAA's college numbers were off by a factor of three, a revelation that came after years of hiding the study's methodology but continuing to lobby Congress with its numbers.'"
When the governator (Arnold!) made a visit to canada to discuss this 'problem', there was new legislation that was made law within two months. That shows you the power of the governator (or perhaps, the power of american influence). The problem was that 'Canada was responsible for over half the pirated movies in north america'. The legislation enacted was almost EXACTLY what was requested by Gov. Schwarzenegger... and STILL they cry 'Blame Canada!'
... is that it ISN'T actually a problem!
The only problem with it all
Just a nitpick, but the summary says $9.63 million, when it is in fact billion
Also, the box office figures don't correlate directly to lost profits, because the DVD industry is so big now, and I think that's where they're losing most of their money. Getting a copy that was taken by a video camera sucks compared to a movie; however, once a DVD comes out, you can download the same quality for free.
What do you expect from an industry that produces products that gross many times more than they cost to make, but still supposedly fail to turn a profit? "The Lord of the Rings" movies apparently grossed ~$6 billion, but didn't make a profit, all thanks to Hollywood accounting. Why should it be different for their other numbers, whether their "lost profits", stats on movie piracy, or any other number they decide to make up for the need at hand?
What it really all boils down to is that people pay what they think the production is worth. If they want the experience of the theater they will pay for it at the theater. If they want to watch it at home the majority of them will pay to rent it. I think the logical fallacy taking place is that the studios are losing money because of piracy. I'd bet that over 80% of the people who pirate a movie would simply go without if they suddenly couldn't get a free copy of it. Most of my friends who are into movies and really like movies want to support the studios and they cringe at the thought of having a "movie collection" in a CD case with the names scrawled on them in Sharpie.
Despite the "losses to piracy", the studios continue to put out a good quality product and employ large numbers of people. They don't seem to be hurting that much. The large majority of Hollywood is unionized. Those people make relatively obscene amounts of money for what they do, and the perks are top notch.
I realize I didn't really address the original question of "What alternatives do we have." I don't see many. Like I stated earlier, people pay what they are willing to pay. Hollywood could identify the conduits of piracy and increases the cost to compensate. For example, they could charge movie rental places more for the original copies. Those places would then charge their customers more to rent them. The people who make copies of the rentals would then in essence be "paying" for the movie. I think that would have the opposite effect though because suddenly a large number of people would decide that they didn't want to rent movies because they were too expensive, and so they'd pirate them or wait until their neighbor rents the movie and makes them an archival copy. The only other option is to lower the cost of the movies to the point where people who are pirating them decide to buy them instead. In theory they could then reap their benefits by sales volume instead of individual unit price. That won't happen though because I truly believe that the people who really want to buy a DVD movie are already paying the price that Hollywood asks. Everyone else just doesn't place a high premium on having a bookcase filled with plastic boxes with pretty pictures on them. They're happy with Sharpie labelled Memorex discs that play the movie as soon as you put it in the player and don't require skipping through warnings, previews and choosing menu options.
Here is how the MPAA / RIAA / ISP logic works:
Year-End Loss: Piracy is to blame. It's not our fault.
Year-End Profit: We had great artists/writers/engineers that made some great products.
Not Enough Bandwidth: Piracy is taking up all the bandwidth. It's not our fault.
Excess Bandwidth: We have a better system than the 'other'guys. We're better ISP.
Low Box Office Turnout: People are pirating movies instead of going to the theater. It's not our fault.
High Box Office Turnout: We made really great movies.
Low Record Sales: People are pirating all their music instead of buying it. It's not our fault.
High Record Sales: We have great artists who produced great songs.
Anybody see a pattern here? Whenever the MPAA/RIAA or ISP's have problems, they blame pirates for "taking away" sales and clogging networks. The MPAA and RIAA don't realize that if they continue to pump out crappy content (films/music), then people are going to want to make sure thay what they are going to spend $25 on is worth it (would you buy a song or movie without listening or viewing it first? A 30 second preview isn't enough.). The MPAA/RIAA doesn't understand that people are pirating because the industries are prducing horrible music albums and over-hyped movies that nobody feels is worth their hard-earned money. Every film t hat comes out of Hollywood is over-hyped and inflated, so there is no way to tell a great film from a bad one. Record labels use the trick of putting 2 or 3 good songs out of 10-12 tracks on an album, and then charging $25 for the whole thing. If you produce crappy content, people are going to do what they can to make it better, or at least save themselves from being duped by record labels and film studios. ISP's have a similar reaction: Comcast blames p2p file sharing ("pirating" in Comcast's eyes) as the reason that it's service is horrible, rather than acknowledge that it spends way to much on advertising for customers that it already doen't have the bandwidth or infrastructure to support.
Whenever these guys have problems, they shift blame to other people, namely, "pirates". BUT, when they have a windfall, they are pretty damn quick to shift the attention towards themselves.
Basically:
Successes: We're just simply a company of experts who know what we're doing!
Problems: It's your fault, not ours.
The problem isn't only limited to these groups, but can be seen in other companies that don't understand how to run a business:
MAINTAIN your infrastructure. If you lose it, you have nothing.
INFRASTRUCTURE is everything. If it suffers, your customers suffer, and ultimately, you will suffer the most. (Just look at AOL.....)
DO remember that your customers chose you. You didn't choose them.
DO keep your customers happy.
DO provide good service.
DO give the customer what they want. If you do, they will give you money in return.
DO remember people want a product, not more advertisements. (AOL again.....)
DON'T spend more than you make.
DON'T advertise things you can't deliver.
DON'T try to pull a fast one by your customers. You will always lose.
DON'T overvalue your product. (AOL again.....)
DON'T treat the customer like an ATM. It pisses them off.
Word-Of-Mouth is the best and most effective way to get a new customer.
A happy customer is far more likely to convince a friend to buy from you than your commercial is.
Money from a customer is good, but get greedy and it will disappear.
And lastly:
DO remember that your competitors would be more than happy to buy your company from your creditors if you ever went belly-up.
Knowing Google's lust for data collection, the Soviet Union is still alive and well inside the psyche of Sergey Brin....