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Comment by ericcholis | Hacker News Reader

“The cloud also represents a threat in that it facilitates piracy, and the pirates seem to have gotten into this space first.”

Sorry, am I to understand that you are upset because pirates did something for free that you could have charged for? Not that I defend piracy, but this is the same song as VCRs, DVD burners, Napster, etc...

This argument is rehashed to the point where it's laughable, just like everything else that comes out of Hollywood.

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OK, so where is the revenue stream for filmmakers? Filmmaking has been my day job for a decade, and they're not that cheap to make, even with every technological shortcut and agile technique that there is. So how can a producer recover the cost of making a film, and ideally make enough to cover the rent, bills and so on? Even the cheapest no-budget feature represents about a man-year of cumulative effort.

One possibility is to bundle your work with others and create your own stream-on-demand network. A walled garden where you publish trailers and maybe one or two free-to-access programs to YouTube with your branding on them, charge a nominal fee for access to all content and comment privileges on site, and a larger fee for site supporters who get some extra perk, signed stuff, or whatever. Stream live events on the site from time to time, allow users to interview talent, etc.

If you only have one or two things you're selling, and somebody has already downloaded and watched them, you're out of luck. But if you're bundling with other content serving diverse interests, offering the promise of new content down the road, and giving your audience something for paying that they can't get for pirating, you can set a better hook. Suddenly, when content from you or your partners is pirated, it becomes a loss-leader advertisement for your venture, and the cost of that (and benefit from it) is shared across your group. There's a site that just got featured on Reddit not too long ago, http://www.swearnet.com, that really captured my interest in this regard, if you want to see an example of how this type of thing could work in action.

Piracy always struck me as something only the biggest interests could gain anything from worrying about; an efficiency problem where so much product is being moved that getting 1-2% more of it paid for could make more sense than trying to reach 1-2% more audience, perhaps because they've already saturated their target market.

This is sort-of how the distribution industry works right now, and I agree that over the long term technology should allow us to exploit long-tail effects to do more with less, just as technology has made the movie production process much more affordable and accessible. The problem at present is that between a fall in (some) costs and the disruption of existing and long-established distribution networks (accompanied by an apparent fall in revenue), finding the investment capital is ironically tougher than ever.

http://blogs.wsj.com/speakeasy/2010/09/18/film-school-roger-...

and http://www.jstor.org/discover/10.2307/1803469?uid=3739560... are very much worth a read to understand why the film industry views piracy with such trepidation.

I don't see anything in the WSJ article about piracy. The JSTOR article is behind a paywall, but from the preview it looks to be discussing much the same thing: The major studios are destroying the independents as a result of more control over distribution channels, greater economies of scale, larger budgets to make better movies and their ability to spread risk over a larger number of productions.

If anything that makes the argument for new distribution technologies that could allow the independents to reach greater audiences without using the distribution channels under the control of the major studios.

>OK, so where is the revenue stream for filmmakers?

Where is it right now?

There is a lot of movie piracy. Making movies is very profitable. Both statements can be, and are, true at the same time. So where's the problem?

New technologies tend to increase the amount of piracy and the amount of purchasing, because making media consumption better or easier means that people do it more, both legally and otherwise. In many cases the rate of piracy increases more than the rate of legitimate consumption, but when both increase as a result of the innovation, why prohibit it?

Making movies is very profitable.

I love how you just throw that out blithely as if it were a well-established fact. In fact, the odds of a given film turning a profit are about 1 in 30. For a detailed examination of the economics of the film industry, I recommend the book Open Wide. For a brief introduction, try this: http://www.baselineintel.com/research-wrap?detail/C8/what_ar... and other articles on this site.

Now, part of this is skewed by the fact that many films are just bad. Not so bad they're good, so bad they're bad - incomprehensible dialog, blurry photography, murky lighting. Let's dismiss 2/3 of films as bad - that's excessive, but let's be harsh. So about 1/10 of the remaining films can make money. Half of those lack commercial elements, they're competent but terribly dull and hard to sell. Of the 5 films you have left that are competently made and have potential commercial appeal, one will sell. There's a <1% chance it will be a hit; more likely it will eventually recoup its costs via foreign sales (as a sweetener in a package) or from rental income via Netflix or the like. That takes about 5 years.

That's indie films. Big studio films tend to lose money more often than not as well. I am on first name terms with one billionaire who writes a single check to pay for all the costs of a big famous film you probably saw 4 or 5 times a year (I would prefer not to mention names). 4/5 of those films lose money despite stars, critical acclaim, excellent technical elements, and a great story. Eventually, most of them will break even - that's why you cast stars, you can extrapolate sales with reasonable accuracy once you know the opening data. But the financial destiny of most films is to offset tax liability for the small number of films that do make bank.

I own a financial interest in a number of the films I've worked on. I keep the documentation mainly for souvenir value, but I have zero expectation of ever seeing a penny from them. I find it amusing but also frustrating when you roll in here and tell me how profitable it is.

There is also the well-known phenomenon of numbers being juggled to make the movie look like it came out a loss to screw people who are only paid out of profits.

That doesn't mean films are necessarily profitable, though.

I didn't say making a movie is very profitable. That's the nature of art. Some works are going to be wildly successful, others will never make a dime. But that isn't a result of piracy, it's a characteristic of the market for artistic works regardless. And on average they make a lot of money. The major studios are posting record profits.

You're also not addressing the point: If a new technology increases piracy a lot and increases sales a little, why should it be prohibited? Why not allow it and then give the market a chance to convert those new pirates to purchasers over time by experimenting with different distribution models, so that eventually (like the VCR) it can be made to increase sales a lot and piracy a little?

It is ridiculous. This is endemic to the entertainment industry. And you're right, they (companies that the MPAA represents) have had a long time and plenty of great examples to create a service and charge for it. Pirates aren't costing them money -- they are costing themselves money.

I'm reminded of this: "HBO co-president Eric Kessler has said he thinks the move away from traditional television to an internet-based model is just a fad that will pass – a 'temporary phenomenon' tied to the down economy" [1]. This is in reference to Game of Thrones being the most pirated show two seasons in a row.

So in 2012, a major entertainment company's president thought a move to an internet delivery model is a recession induced fad...

1. http://www.dslreports.com/shownews/HBO-Boss-Thinks-This-Whol... (the original forbes article seems to have changed)

Yeah, it's nothing new, but it continues to amuse in a rather depressing way.

How long until the general public accepts disruption of the status quo as the new status quo?

Are we dreaming to think that that will actually happen, are change resistance and hoarding immutable properties of human nature?

A related question: will we, ourselves, be unwittingly holding back the next next big thing in 30-40 years?

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