Copying and DRM: Opportunity or death for Tellywood?

If you don't follow Bob Frankston's blog, it's worth a look. To know Bob, who co-invented the electronic spreadsheet (Dan Bricklin was the other guy), is to know a brilliant but tortured man.

If you don't follow Bob Frankston's blog, it's worth a look. To know Bob, who co-invented the electronic spreadsheet (Dan Bricklin was the other guy), is to know a brilliant but tortured man.  He understands and even appreciates how certain technologies like Universal Serial Bus (USB) and Bluetooth actually solve real problems for the masses.  He uses them.  But he stays up at night worrying about the the crutch they're turning into and the hex they're not only putting on the Internet, but on the world. 

There are hundreds of such crutches. But, there are probably 20 or 30 really dasterdly ones that get under Bob's skin. By themselves, some of them aren't so bad.  But Bob is one of few people that can visualize how they're connected in a way that the whole (in terms of the damage they're doing) is far greater than the sum of the parts. In Bob's brain, Hollywood and the telecommunications companies share the same disruptive plight, and engage in the same tactics (they're just different on the surface) in hope of stalling digital evolution.  For this reason, he efficiently refers to the two as the single entity "Tellywood." 

Bob's brained is wired to connect dots like that and visualize such complex big pictures.  As much as I'd like to think mine is, it isn't.  So, when he tells me that the Internet is broken and then attempts to explain why, it isn't long before I lose grasp of the image he paints.  I've often asked him to repeat what he just said hoping that another pass at will help me in my struggle to get my head around the problem the way his is around it.  Occasionally, though, he compartmentalizes one part of the big picture in a way that we can all understand (which is why it's worth it to subscribe to his feed).  After attending Pulver Media's VON event in Boston this week, Frankston compartmentalized a small part of the big picture and talked about why the very paranoid Tellywood shouldn't be so paranoid.

It's obviously correct to say that Tellywood fought against video recording.  But at the time that fight began, such recording (with VCRs) wasn't very scalable.  Copying could only do limited amount of revenue damage.  Resisting such copying was hardly worth the effort. Time is proving that Tellywood was better off spending those resources figuring out how to leverage the technology rather than resist it.  The limited scalability of the new copying medium meant that all corners of Tellywood could benefit.  For example, the producers of the TV series Lost could just as easily benefit as the producers of the movie Star Wars.  By putting a video tape of either out there, the risk that copies of that tape could seriously cannibalize the business that made that tape in the first place were pretty slim.

Today though, because of bits, things are a lot more scalable.  The result in my opinion is that it's harder for all corners of Tellywood to treat the technology as an opportunity.  Only some.  And that's the problem Tellywood faces.  For example, if say, in the summer just before the new television season begins, the producers of Lost put out a DVD with new creative on it, that business could very well end up cannibalized by the highly scalable process of rogue copying.  Particularly in China where my impression is that there are those who could care less about US intellectual property rights.

Sidebar: A friend of mine who goes to China once a month routinely comes back with DVDs that ranged in cost from US$1 to US$2.  Since our government apparently has no interest in protecting IP through trade policy (things like nukes in North Korea get in the way), enforcement happens either in the DRM or at the customs check when returning to the US. My friend rarely takes advantage of the US$2 opportunity any more.  Customs is apparently applying significantly more scrutiny to CDs and DVDs than they have in the past and he has no interest in getting caught with contraband.  So, there's *some* protection in place, but for the US market only and sure, DRM slows pirates down.  But the analog back door is always open and for two bucks, it's not such a bad deal.

As it turns out, the producers of Lost actually benefit from the copying in the ways that Frankston describes.  If for example, some percentage of the DVDs in circulation are counterfeit, all is not lost (no pun intended).  Viewers of those counterfeit DVDs may still end up developing interest in the new season of Lost.  So, that corner of Tellywood can turn copying -- even rogue copying -- into an opportunity.  Maybe Tellywood should just give away the DVD and treat it solely as a marketing expense.  How much does platter cost?

In contrast to television shows, the opportunity for movie producers seems less clear to me.  Being the co-inventor of the spreadsheet, Bob will appreciate how Tellywood's beancounters have spreadsheets that, based on box office sales (and other data), automatically figure out the optimal time for a movie to be pulled from theatres so it can move onto the remaining revenue generating stages of its life (movie channels, in flight performance, DVD/VHS, and eventually broadcast television).  Although a new creative release with extra scenes and new director/actor commentary is sometimes put on the market just before a sequel is due to hit the big screen, DVD/VHS sales are still a cash cow part of a movie's lifecycle. Unfortunately, because of what the spreadsheet is telling them (and also because not every movie has a sequel), movie producers don't have the luxury of delaying DVD's release until a sequel is on the verge of release.  So, in my opinion, the movie corner of Tellywood cannot be as opportunistic about copying as say, the television series corner of Tellywood. 

Don't get me wrong. As you read this, I'm sure that you'll think "David Berlind must be a fan of Digital Rights Management (DRM) technology (the technology designed to prevent such pirating)."  I'm most definitely not.  I can remember Sun CTO Greg Papadopoulos telling me how there are two reads on the R in DRM. He said the "R" can either stand for "rights" or "restrictions."   But, the more I think about it, the more I don't see a difference.  What I do see is that I've sunk close to $20,000 into building a state of the art digital audio/video home of the future -- one that can't play the 99 cent Carol King song that I just bought from Apple's iTune's music store.  DRM is the culprit.  So, on one hand, when Bob is trying to tell Tellywood to find opportunity in copying technologies instead of resisting them with DRM, I'm saying "Yes, Yes!" On the other, I realize that the opportunities are fewer and farther between and that all of Tellywood isn't going to have an easy time finding them, or leveraging them.  Even if it wants to.