Dear Congress: It's time for a real fix on unlocking and the DMCA
sina.is
sina.is
I am on first name terms with the CEO and execs of a mid-size film studio with a good number of Oscar nominations and statuettes to its credit. They have no particular love for DRM or desire to screw people, but they do want to monetize their content. I think this is reasonable considering that they sign their names to checks for tens of millions of dollar so that good films can go into production. Gripe about Hollywood not producing great films all you like, but the reality is that a) almost everyone I know still enjoys watching good movies and b) good movies typically cost quite a lot of money to make, and c) it's a very high-risk business model in that films are more likely than not to lose money.
If someone were to suggest some innovative methods of monetizing content while simultaneously making it more accessible to a wider audience, that'd be very interesting. You can assume we're talking about young and tech-savvy people here, as opposed to people who spend all their time at the country club or on the golf course.
You're talking about business models rather than the DMCA, but let's go with it. Maybe there's something there. Here's Paul Graham:
"[T]he record labels, [] are effectively a rogue state with nuclear weapons. There is nothing we or anyone else can do to protect you from them, except warn you not to start startups that touch label music."[1]
[1]http://ycombinator.com/atyc.html
Hollywood pretty much falls into the same category. You do something novel, they sue you. That's a problem. Asking for new business models on a message board... is not very likely to be fruitful. Thinking up that stuff is work. A lot of times you don't even know whether it'll be effective until you spend six months implementing and testing it.
And people want to get paid, right? Well, hackers are people. And we get paid when we make something that succeeds, not when we try to implement something ridiculously cool but go out of business because of a lawsuit before anyone can even try it. So big surprise, there are thousands of start-ups not working on anything that could help Hollywood, because they don't want to get lawyered into the dirt. You understand that we don't have a budget for that; the possibility of a lawsuit means nobody is going to touch it with a pole, because there are a million other things with a much lower risk of that.
So this is a "let us help you" kind of a situation. Hackers love to make things. A lot of us watch movies. We aren't the bad guys; we get paid, remember? We buy stuff. You don't see a lot of epic shit happening in that space though, do you? Because we're not allowed to do it. That's what the DMCA does. It gives the veto to the guys who would have vetoed the VCR.
Nobody can tell you what people will invent before they invent it. That's not how it works. You have to let it happen first.
Piracy, in one way, is getting shit for free. Another way, it IS the balancing factor mass media must consider. We multitudes do retain the power, but are told that we are small and cannot effect much change. Except, we have allied and defeated the voting of some pretty horrific laws regarding the Internet and technology.
Do I believe that the major studios would have a honest to goodness discussion regarding copyright and piracy antagonism? No. The studios would rather pay for laws like the Sonny Bono copyright extension act, or slip the US a SOPA.
Do I believe that the major studios would have a honest to goodness discussion regarding copyright and piracy antagonism? No. The studios would rather pay for laws like the Sonny Bono copyright extension act, or slip the US a SOPA.
I'm offering you a communication channel to studio executives right now. I post regularly about these topics on HN. How about telling me what you think might be a better business model than the existing one? right now, film studios depend on DVD sales to make their investment back, because relatively few films break even at the box office; when you see those big numbers for weekend grosses you have to recall that over half of that revenue stays within the theater chains (film studios are forbidden by law to operate their own chains [1]), and up to half half of the cost of producing a film is in the marketing campaign, which has to be spent before knowing how the film will perform. So rare are box-office profits, in fact, that there's a saying within the film industry that a theatrical run is basically the marketing campaign for the DVD - people are much more likely to take a chance on renting or buying a movie that they know was in theaters (even if they didn't go to see it in a theater). The difficulty and expense of promoting a theatrical run is what distinguishes a film as a 'real movie' in the eyes of consumers. You could make the most awesome little film ever, but if you launch it straight to video your chances of finding an audience are pathetically low - not quite zero, but close enough that you'll have a hard time raising any money.
So there's the problem: you need a strong brand to be perceived as a 'movie' and make your money back in the secondary market (DVD sales and streaming), but it's hard to get that strong brand without spending a lot of money up front on marketing or waiting years and years on the off-chance that you'll build an audience through word-of-mouth. If you finance the production of multiple films, your winners are going to subsidize the losses of the underperformers, even after all the 'Hollywood accounting' tricks. It's a pretty tough industry, which is one reason that every Oscar ceremony includes multiple speeches about never giving up no matter how long it takes.
Now the problem for Hollywood is that piracy is almost all downside risk; you can offer your film for free on the torrents and use that to build an audience, but that only works if your production costs are very very low. Past a few thousand dollars, you'd better have a plan for how you're going to recoup the money. In the music industry, the new model is that you give away the music or sell it very cheaply, and make the money back on live performance, because people will pay a lot of money to see their idols perform in person. (This kinda sucks if you are the sort of musician who doesn't want to or can't easily play live, but that's who arts grants are for.)
Unfortunately, that model doesn't work for movies because the vast majority of films do not translate well to stage performance; and it is also true that very few people will pay to buy a movie theater ticket or purchase a DVD of a film they've already seen for free. Within the industry, this is a particular problem for actors: an actor who does to many TV shows stats to see a decline in his/her bookability for film roles, because many years' worth or aggregated data suggests that people are reluctant to buy tickets for actors that they're used to seeing for nothing on TV - Tina Fey is the latest victim of this phenomenon. To quote an entertainment writer [2] 'Hollywood Boulevard is littered with the corpses of TV actor careers that almost were.' TV is a ghetto, and I promise you that the Internet is even more of a ghetto.
Because the barriers to entry are so low on the Internet, the residual income prospects for film producers are also very low - much worse than for musicians, because the cost of producing a film is much higher than the cost of producing a music recording. The most expensive album ever produced was Guns'n'Roses Chinese Democracy, which took 15 years and the breakup of the band before making it to store shelves in 2008 [3]. Total cost? $13 million. That's the worst fiscal trainwreck in music industry history, but by Hollywood standards that's a typical budget for an Indie hit with a famous lead and two character actors. Big Hollywood projects routinely risk 10 times that amount.
Now when you consider that even conservative estimates of industry income lost to piracy are measured in billions, there's a lot of pressure on the MPAA from producers to stem those losses. Now I hate Disney's copyright lobbying just as much as you do, if not more, but that is not the fault of the individual movie producers whose movies fail to break even. But tech people don't like legislative approaches, don't like DRM, and frequently refuse to give the film industry the time of day when invited to do so.
If you won't even attempt to engage, why should they? If you could get over your disbelief that the industry would like to discover a solution that works for both producers and consumers, then what would you suggest?
1. http://en.wikipedia.org/wiki/United_States_v._Paramount_Pict....
2. http://www.pajiba.com/seriously_random_lists/9-tv-actors-who...
3. http://en.wikipedia.org/wiki/Chinese_Democracy
4. http://www.the-numbers.com/movies/records/allbudgets.php
You should take inflation into account here as well; a discount rate of about 5%/year is a good rule of thumb.
They should drop any kind of DRM - point blank. DRM in unethical, doesn't protect anything against piracy and only hurts legitimate users. If they want to prove that they don't have ulterior motives that are cloaked in DRM schemes (like desire for broad control and attempts to stifle innovation and so on) they should start respecting their legitimate users / customers. By using DRM (unethical preemptive policing) they show that they treat users as criminals by default. Why should they get any respect in return when they act that way? So any model should be built on mutual respect. This excludes any DRM from the equation. And DMCA/1201 should go away with it.
If they'll insist that DRM / DMCA should exist, it will demonstrate that their real motives are not about preventing piracy (since they prevent nothing like that), but really completely different. I.e. they intend to 1. insult their legitimate users by treating them as potential criminals, 2. stifle innovation by controlling any new technology by DRM cages, 3. invade users' privacy with all kind of sick control mechanisms and etc. and etc. I wish someone could clearly communicate this to various studio executives who push for DRM all around. Either they'll continue to hypocritically claim that unethical preemptive policing is "needed to prevent piracy", or they'll start acting honestly and stop forcing DRM on everyone (like pushing it into HTML standard, building it into hardware interfaces like HDMI and so on).
they intend to 1. insult their legitimate users by treating them as potential criminals, 2. stifle innovation by controlling any new technology by DRM cages, 3. invade users' privacy with all kind of sick control mechanisms and etc. and etc.
sorry, I think this is delusional. They just want pirating a movie to be more trouble than it is worth for most people, so that they'll pay to rent or buy the movie instead. The reason they push DRM is because they don't have a better idea for how to prevent/impede people from distributing the movie for free before the studio can make its money back. If you're selling a movie, it's hard to compete with people who ae giving it away for free. If you can't make the money back, then you find the money o produce more movies.
I'm asking for suggestions on what you think would work instead of DRM.
That's exactly my point. It doesn't work for preventing piracy, which only leads one to conclude that since these studios push for DRM so fiercely, they have some other motives at play, while claiming that it's about piracy. This only doubles the reasons to oppose them, since they are hiding their motives, which are most probably not good for the public.
> The reason they push DRM is because they don't have a better idea for how to prevent/impede people from distributing the movie for free before the studio can make its money back.
If you claim they are so innocent, but just clueless, then there is a known rule for them - if you don't know what to do - sit and do nothing (until you figure out what to do). Doing the wrong thing (DRM) only makes things worse! They are naturally upset about piracy, but it's not a valid reason to push for unethical and crooked methods like DRM which achieve the opposite purpose - insult legitimate users and have zero effect on pirates.
DRM is always unethical. I'm not delusional about it. It's prone to abuse, like any kind of overbroad policing scheme. Such kind of examples are to be expected from DRM: https://en.wikipedia.org/wiki/Sony_BMG_copy_protection_rootk... I.e. users should never trust DRM schemes to respect their privacy, since DRM by definition doesn't trust the user. Trust is always mutual. I also explained why DRM is unethical in essence here: https://news.ycombinator.com/item?id=5381153 Please try to explain this idea to your contacts amongst studio execs, if they have hard time understanding that they are supporting such unethical practices (DRM).
> I'm asking for suggestions on what you think would work instead of DRM.
That's a valid thing to ask. The answer is well known. Treat customers with respect, and you'll get respect in return. It was proven time and again by various DRM free distributors (like GOG for gaming), which have a loyal following of users who respect them for treating users as normal beings, rather than despicable criminals by default. That's the way to reduce piracy - increase the legitimate user base using respect and encouragement to buy, instead of using preemptive policing stick. Make content easily accessible, instead of making it barely accessible with DRM electric fences.
> If you're selling a movie, it's hard to compete with people who are giving it away for free.
In order to compete with piracy, legitimate content has to, you know - actually compete! I.e. compete where it's possible to compete. Not in price (that's not possible, even though prices often can be lower than they are), but in usability and ease of access and etc. DRM always degrades usability and quality of the content. Always - let this settle in the mind of studio execs. DRMed stuff can not possibly compete with what pirates offer (quality and usability wise).
In practice, for film industry (or for any other digital industry - gaming, book publishing, music and so on), this would mean - start selling files. No DRM and strings attached. Easy and simple. People buy - they watch it where they want, on any device they want, whenever they want and etc. That's what pirated content offers. Streaming should be actually made a convenience, and not as a method to reduce usability. I.e. streaming service should explicitly offer an option to save the stream as DRM free file for time / device shifting and etc. Currently streaming is presented not as convenience, but as a restriction (i.e. come and see only here, only on this platform and only now, but not elsewhere or other time). This should go away if studios really want to reduce piracy. Let them offer the same level of usability as pirates do. Without such option, how do they possible even expect to compete with superior (but pirated) option? This will encourage people to buy, rather than pirate stuff. Since many are surely willing to support the creators.
There always will be some who pirate - they have to come to grips with that. But there is a big chunk of "pirates" who are simply put off by DRM idiocy and disrespectful behavior of distributors. These people can be won over to become legitimate users, if distributors would treat them with due respect. The idea is quite simple, but somehow it "escapes" the understanding of many distributors/publishing/content producing execs.
But to be honest, I'm not convinced yet that they are just clueless. Too many things point in different direction - i.e. some ulterior motives which drive them to push for DRM/DMCA. I'd be glad if that wasn't true.
Look, I used to run rave parties. We started with just a donation box, but eventually we switched to selling tickets because when we used the donation box we always wound up losing money on the costs of renting the soundsystem and the location. I hate to tell you this, but relying on the innate goodness of others - something that I naturally and greatly prefer to do - is a fast way to go broke.
Instead of going on and on about how awful DRM is - which I largely agree with but which frankly makes you sound a little unhinged - please show me some evidence that the honor system works on a larger scale. Because if I'm selling files for $5 with no copy protection and Joe Pirate is giving them away for $0 (but he doesn't want me to disrespect him by filing legal action against him or hurting his feeling by labeling him a pirate), tell me why people are going to give me $5 for the same thing that they could get for free?
'I hope people will do the right and give me the amount of money I ask for' is not a workable business plan. Nobody is going to write a large check for production costs based on that, because they're virtually guaranteed to go broke.
> Because if I'm selling files for $5 with no copy protection and Joe Pirate is giving them away for $0 (but he doesn't want me to disrespect him by filing legal action against him or hurting his feeling by labeling him a pirate), tell me why people are going to give me $5 for the same thing that they could get for free?
I thought this is simple. People already can get it for free by pirating it. I.e. you have such choices:
1. Sell for $5 with DRM that reduces usability by limiting platforms where this can be used and etc. etc. By using DRM the distributor also offends paying customers by default by treating them as potential criminals. Joe pirate breaks DRM, and gives this out for $0 with no DRM, which can be used anywhere.
2. Sell for $5 with no DRM. It gives wide platforms availability and shows respect to the customer. Joe pirate gives out the same thing for $0.
Note, Joe pirate will give it away in either case. So what is better for the distributor, to act like a jerk, and still getting pirating in result, or to act decently and with repsect (and still getting pirating in result)? Obviously the second is better, since more people will in return pay, rather than pirate. That's how respect works - it's mutual.
I.e. what can be improved, is making it easy to buy and treating the buying customers decently. I'm repeating myself really. People will buy - out of respect in return, and naturally out of willing to support the creators. Since studio execs see everyone as a thief, they can't grasp this simple truth.
Great example is CD Projekt Red company, owners of the GOG.com games distribution service, and creators of the highly acclaimed Witcher games. They had multiple talks about piracy and complete uselessness of DRM. They sell only DRM free games on GOG - as a matter of principle. Search for their interviews if you are interested. People gladly support them, because they treat people with respect. They even brought an example, that DRM gives an incentive to pirate - i.e. people break DRM and pirate out of the opposition spirit. But when there is no DRM - there is less incentive to begin with. (Here is a great article about it: http://www.forbes.com/sites/danielnyegriffiths/2012/05/18/th... ).
If you want to put it in practical terms for video industry, let some studio become vocal about their opposition to DRM and their willingness to break this sick trend. And let them put it in practice (the way I described above). They'll see the increase in sales and the number of legitimate customers. I'm not joking. But such studio needs to be brave and bold when they come out with principal DRM free stance, because naturally others in the industry will try to attack them. But they should simply ignore and persist - and they'll be victorious.
I.e. to make it more formal - instead of focusing on reducing piracy (negative), focus on increasing the sales (positive). The second includes building the loyal fan base (fans gladly support the creators), producing high quality and unique stuff (people would rather pay for really good things, than for low quality) rather than following the "mass market" approach, treating people with respect (no DRM) and so on. This is proven to work. Note that CDPR whom are brought above excel in all these. They communicate with their fans actively, they pay high attention to details and don't ever produce mediocre stuff. They are original and unique. And really high quality. See their talk about their approach: http://en.thewitcher.com/forum/index.php?/topic/31748-cdprs-... I can agree that those who can't come up with something original and follow the "mass market" are at a disadvantage. But that's the nature of competition. Even DRM won't help mediocre stuff to become really good.
However DRM gives publishers/distributors the taste of power and control. And it's one of the basic lusts in people. Which is even greater than lust for money. So it's not so much about piracy - it's about them playing "the boss", or "the big brother" for that matter. So many aren't ready to give up the taste of power.
I'd also recommend your studio execs friends to listen to this very insightful talk from Cory Doctorow: https://www.youtube.com/watch?v=HUEvRyemKSg - you should watch as well, if you didn't yet. He addresses the issue of DRM and how it affects the technology adversely, and especially how wrong are attempts to abuse the legal system to enforce DRM (i.e. DMCA and Co.).
http://kotaku.com/everything-ive-learned-about-the-witcher-3...
"We are trying to get rid of DRM," said Szczesnik. "If someone wants to pirate a game, eventually he will." "Which is bad, of course," Badowski interjected. "But you can't do anything about it, so. We want to give the best user experience possible. When we removed DRM, people on those torrents were actually asking people not to download our game, because we [weren't using DRM]." While they were clear that they don't want people to pirate their games, both Szczesnik and Badowski said that invasive DRM isn't the answer.
President Whitmore: "What is it you want us to do?"
Alien: "Dieeeeeeeeee."
It may sound cruel, but the movie studios (especially the large ones) are watching their business model get swept away and I have no sympathy for them. TV has been drinking their milkshake the last few years by producing quality original programming that we can watch from the comfort of our own home. This is the way of progress. It's also not a valid reason for rent seeking and protectionism.
I think you're making my point for me.
1. Ignore pirates. They are not customers. Spend your energy/money on customers. Research indicates that piracy has negligible (and sometimes positive) effect on revenue levels.
2. Don't punish buying customers with anti-customer technology. The pirates don't have DRM. Don't turn your customers into ex-customers.
http://xkcd.com/488/ <=== READ this carefully. Show this to your connections.
I beg to differ, actually. Here is some scholarly research of the kind you'll never find on Techdirt. First one needs library access, sorry.
http://link.springer.com/article/10.1007%2Fs11151-007-9141-0
http://www.cba.edu.kw/krouibah/Publications/2010-The%20fight...
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1782924
http://kastoria.teikoz.gr/icoae2/wordpress/wp-content/upload...
I'm not trying to be an apologist for DRM. It's a failure in many ways, but you know what - I feel the same way about cookies, login/password hassles, and two-factor authentication.