Finance

Are the MPAA and RIAA out of their minds?

Current syndication and distribution business models are dead and so too will be the MPAA and RIAA if it does not embrace change.

Written by Doug Hanchard, Contributor March 29, 2010 at 7:24 a.m. PT

I wrote yesterday (published earlier this morning) that some form of the Anti-Counterfeit Trade Agreement (ACTA) will likely become law around the world in the near future. In the U.S. the user has few resources available to defend against ACTA violations (if treaty passes in its 'rumored' current form) except to hire your local 'specialist' lawyer. Many argue that ACTA's proposed laws will create anarchy in cyberspace. Downloading is a fact of life. The arguments used for and against protect intellectual property rights are crisscrossing the internet. The battle lines have been drawn: Internet users vs. Media syndicates.

The giants ABC, CBS (owners of ZDNet), NBC, and Fox have operated in the same manner since the early 1930's. Radio led to motion pictures and eventually television. The industry began its evolution with BASF's invention of magnetic tape to record audio and eventually video. All through the 1950's when it became popular to record audio and video to archive programming, media companies never felt threatened until blank media became popular to purchase by consumers in the 1960's. At the same, media companies began to see the value of syndication rights, monetizing their intellectual property. The first modern clash of copyright infringement over selling of blank media had begun. The lobby for strong copyright protection is a common front, not just with the MPAA and RIAA, but also with the Actors Guild, Entertainment Software Association and others.

Marketing dollars drives media consumption. The Internet has drastically changed where those dollars are now spent. It's a multi-trillion dollar global market. How media collects advertising revenues goes beyond the scope of what can be discussed in this article. There are ways conglomerate media companies can compete with the independent media outlets. They did so believing it was an equitable playing field until the Internet changed the world and for now, they do not know how to change their ways. Advertisers have evolved while adapted media moguls have not.

Advertising can be embedded into content, which enables distributed content for free. Producers of content argue against this model because it dates marketing materials and potentially 'locks' in the value of the product's distribution channel. Technology exists that allows rotation of advertising content. Media companies are so used to template distribution channel methods (syndication) of their content that it is hard to change their ways. New 'digital' media is forcing change. They need to learn how to adapt to the new world or die. To argue that that dilution of their revenue sources is a poor argument, let alone a defense.

Internet distribution of media creates classic double entendre meaning of copyright protection. How users listen or watch media no longer is pigeon-holed into television and radio. From a user's point of view, what difference does it make if watching a copyrighted works via cable, over the air or on the internet for free? Cable TV fee's to watch programs known as carriage is a red herring to any argument. In some markets you can pick packages of content, often forcing users to purchase provider content they don't want with ones they do. What is the MPAA and RIAA stand on this issue? No comment.

VCRs have been accepted for decades. A user can record and archive content and share video tapes. They have never have been charged for infringement on a wide scale basis. It has been argued that a user could be charged for copyright violation if the user lends the recorded material to a family friend but I have never heard of wide spread copyright case reaching court of users. A search warrant for tapes makes it almost impossible. How do you prove a user did so in the first place? The Internet changed all that with the ease of use to distribute content with the creation of peer to peer.

Because it is now easier to find copyright infringers, is that sufficient rationale for the change of tactics? If it has been going on for the last 40 years without equal prosecution of ALL users, does that not make ACTA advocates look pretty stupid?

The manufactures of blank media were sued often, but not end users. How ironic media producers wanted to restrict use of blank media that they themselves required to syndicate their content. Did the MPAA or RIAA sue Sony for the Walkman, or generic MP3 players, iPod and win? How blatant can it be to talk out of both sides of their mouths? Sony makes recording devices and owns one of the largest collections of film and music. It should sue itself.

DMCA / DRM protection rules should be understood and acknowledged as recognition of creativity and intellectual property rights. Every author owns their content. How one monetizes the content is a different issue. File sharing of protected works in what traditionally is published for a fee, is not what should be argued. How the revenue model works is the question. If an author does not want to have users read, listen or watch their materials free, don't fall for the trap that you should have free and pay models working in tandem. The distribution of content has been stuck in legacy business models that have not changed in 50 years. Advertising revenues are open to new formats like Internet TV or Web portals. The media industry needs to wake up and get with the new world and educate its members on how best to use the Internet to create revenue. It can protect its content value without draconian laws. If the law is to be enforced, enforce it on everybody, not just a select view. The MPAA / RIAA should go door to door for every alleged copyright infringement, of every type, including tape, CD, DVD and hard drive stored in a 'consumer' home. Better hire a few million lawyers too.

The government's stance on this issue is puzzling. On one hand it wants to protect intellectual rights while on the other it wants to open up the internet to be a free and open world to all. It is even going so far as encouraging users to bypass security measures of closed countries like North Korea, Iran, and China. It is encouraging the use of Internet applications and media that are banned in countries through a variety of technologies like proxy servers and encryption methods that by-pass government controls, the very same technologies file share users use every day. Negotiating the ACTA treaty in secret is only fanning the flames. The MPAA and RIAA have been adamant on this requirement for the past two years. Public distrust of such tactics will only fuel further opposition to any sense of property rights.

If the MPAA and RIAA are going to restrict how viewers can see content then it should enforce pay rights across the board for every method it uses for distribution. Radio broadcast of music for free should be banned. Over the air T.V. signals should be banned for any television production that offers free viewing of material that is chargeable elsewhere. Public viewing rights at movie theatres should be free if the content is to be redistributed on television at a later date. There's only so many ways you can bake the same cake. The syndication business model has to change. Middleware agents are a dying breed in the digital world. Internet multimedia producers which create content solely for the internet audience will win if the moguls fail to change their ways.

Going after teenagers because they have downloaded 500 songs for their use and sharing them with friends is going to backfire. Music distribution services have opportunities to offer revenue streams increasing their profits, not diluting them. The more aggravation the MPAA and RIAA create within the Internet world, the more likely their content will be ignored. Rather than spending money on lawyers and tying up the judicial system, invest in new distribution content web portals, advertising software applications and content delivery technology. Doing so creates wider audience, thus revenue opportunities, than being stuck with a piracy war that cannot be won. The industry fails to recognize the potential self destruction as this unfolds. Some actors and musicians are beginning to realize this and are taking matters into their own hands. The era of the rich getting richer is tilting from the select few and leveling the playing field.

I don't blame the writers, actors and production companies so much as I do the broadcast and syndicate middlemen in this fight. The food chain -- Paramount, Twentieth Century Fox, Sony and others which are addicted to this revenue for seed money for programming and music -- is what is fueling this debate. Current syndication and distribution business models are dead and so too will be the MPAA and RIAA if they do not embrace change.

Additional resources:

When is an employer allowed to read your email?

Internet vs. US Constitution

Warner Bros. recruiting students to spy on file sharers

The FCC should be the regulator of ACTA treaty

FCC's National Broadband Plan: Net Neutrality, R.I.P.

FCC releases 'Connecting America: The National Broadband Plan'

FCC may set aside free wireless spectrum for Internet broadband

FCC, Comcast, others testify before Congress: NBC Universal-Comcast merger

Online piracy laws: Is it just about the money?

Canadian MP: Tax media devices to pay for copyright infringement

British Telecom chief: File share users should be fined, not disconnected