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The Piracy Wars: No White Hats Here

It’s strange how the mind works; the odd connections it can sometimes make. I’ve been reading a few articles recently which have brought to mind the 2003 Errol Morris documentary, The Fog of War: Eleven Lessons from the Life of Robert S. McNamara, an extended self-critical analysis by the Kennedy/Johnson Secretary of Defense often considered the architect of the policies which went oh-so-wrong in Vietnam. Four of his eleven lessons in particular lit up for me:

Empathize with your enemy, meaning see the world through their eyes; understand their values, goals, what is important to them, what they see as a threat and why;

There’s something beyond one’s self, which I take to mean to avoid judging other parties by your own values;

Get the data which seems self-explanatory;

And be prepared to re-examine your reasoning which is a diplomatic way of saying never take off the table the possibility that you’re – at least in part and maybe en toto – really really wrong.

The odd connection at work here is that what brought these savvy tips to mind wasn’t the latest flap in the current extraordinarily vicious political campaign, or some foreign policy Quran-burning gaffe or anything like that.

Rather, it was several articles on content piracy (yeah, I know; it seems a reach, but I did say minds work in strange ways – at least mine does). The reason I made these connections to McNamara’s tenets was that after reading them it finally occurred to me the piracy debate isn’t about legal and/or moral rights, although it’s often positioned that way. No, it’s a culture war; a combat between two opposing worldviews, neither of which, I fear, quite understands the other, neither of which can – or is willing to — get past its own inflexible standards of what should and shouldn’t be, neither of which seems to have any clear idea of the possible impact their stands can have on the media terrain years down the road.

Or, to put it simply and bluntly, both sides are doing an awful lot of talkin’ but not a hell of a lot of listenin’…or, for that matter, much clear thinkin’.

*****

A few weeks ago, a student in one of my university classes emailed me a link to a February 3rd article on Forbes.com: “You Will Never Kill Piracy and Piracy Will Never Kill You” (). The author is a bright twenty-something gentleman named Paul Tassi. According to Tassi’s bio, he is the editor-in-chief of Unreality, a film/TV/gaming site he founded, and is also the movie news editor at JoBlo.com. He typically contributes to Forbes.com on the videogame industry, and prides himself on being “…part of the first generation of journalists to skip print media entirely.”

Tassi puts forward a couple of theses about video piracy in the article that tripped the McNamara warnings for me. For one thing, he doesn’t consider video piracy to really be piracy: “Piracy is not raiding and plundering Best Buys and FYEs, smashing the windows and running out with the loot…when you take a copy of (a) movie, another one materializes in its place, so you’re not actually taking anything…” ergo “The movie and music industries’ claim that each (pirated) download is a lost sale is absurd.

Tassi also suggests that content controllers – the movie studios, in this case – kinda/sorta bring it on themselves: “The primary problem movie studios have to realize is that everything they charge for is massively overpriced” and that they have also “…failed to realize that people want things to be easy.” The effort of going to the movies is demanding enough, says Tassi, but particularly onerous at current outrageous ticket prices and ditto for buying DVDs.

Tassi’s bottom line is that the studios will never gain a step on pirates. Pirating technology, he asserts, will always be ahead of protective technologies. As for the controls content providers advocate – like the defeated SOPA and PIPA bills – those are a form of censorship of the Internet for the purpose of “…studio and label executives (adding) a few more millions onto their already enormous money pile.” Their best anti-piracy strategy, says Tassi, is to provide content at the low prices and with the easy access Internet users want.

In a follow up article less than a week later (“Lies, Damned Lies and Piracy”), Tassi went even further positing that the entertainment industry’s Chicken Little run-in-circles-scream-and-shout attitude about content piracy is “…way more smoke than fire, and if you were to actually look at the numbers, the entertainment industry isn’t suffering the way they claim they are at the hands of file-sharers.”

Tassi’s comments jibe with a post which recently came up in Sound on Sight’s Tumblr account from Paralegal.net – “How Hollywood Is Using Piracy Against Us”. Paralegal looks at the 120-odd year history of the motion picture in America to call the movie industry’s current anti-piracy stance hypocritical, and also that Hollywood’s own numbers don’t justify its assertion that piracy is a dagger held against the industry’s financial jugular.

As it happens, about the same time I was mulling over these pieces, the issue spilled over into the mainstream press with a 2/19/12 Associated Press story by Martha Irvine. According to Irvine, piracy – at least at a certain generational level – is so rife as to be some kind of norm. She cites a recent Columbia University survey which found “…that 70% of 18- to 29-year-olds said they had bought, copied or downloaded unauthorized music, TV shows or movies, compared with 46% of all adults who’d done the same.” Irvine reports there is a view among users that their piracy isn’t the problem. “The real problem,” according to a quoted Drexel University law student, “is…a failure to innovate on the part of content providers.”

Going to my point that this is less about who deserves to get what and for how much than it is about two mindsets trying to decide how to define the alternate media universe, Irvine quotes Joe Karaganis, vice president of the American Assembly, a public policy institute at Columbia University, as describing the anti-anti-piracy voice as signifying “…the emergence of a real social movement around these issues.” (italics mine)

This isn’t a business issue. This isn’t a copyright issue. This is war!

And caught in the crossfire between the content users and the content providers, unheard when not simply ignored, suffering – as they usually do – the collateral damage from the bombs being dropped by both sides, are the content creators.

But when did anybody ever care about them?

*****

If you want to put forth the proposition the studios and TV networks and record labels are run by a bunch of money-grubbing robber barons, you won’t get much argument from me. Or talent, or craft unions, or anybody else who doesn’t sit in the executive suites, hold a desk at the banks providing them with their credit lines, or own a share of stock. Just don’t expect me to be terribly surprised or shocked and appalled – shocked and appalled, I say! – at the news. Telling me these companies are driven by greed is like telling me Al Capone was only in business for the money. No kidding.

Without disagreeing with content users who do seem – God knows why – shocked and appalled by this, I would only point out that outfits like 20th Century Fox and Warner Music and Rainbow Entertainment and all the rest of the media empires are not PBS. They were never set up with the intention of being only modestly profitable enterprises. Charlie Chaplin didn’t make movies for scale, so none of this is exactly news.

Nor is it any great revelation that Hollywood – or much of the rest of the traditional entertainment business – is behind the curve on effectively adapting to the Internet. Hollywood, for one, has a long, sorry history of being a late adapter, and only then of making belated changes out of desperation. The movies didn’t want the expense of converting to sound; they were doing quite well without it, thank you. But a struggling Warner Bros. needed a gimmick to stay afloat and sound was their Hail Mary pass. Wide screen, color, stereophonic sound – more woefully late advances to beat back TV after Hollywood had already underestimated both the staying power and popularity of the upstart medium. Cable, the home VCR – the same initial denial, then panic, and then a shamefully tardy recognition that, “Hey, ya know, we can actually make money with this!”

About the only time I can recall the movie business getting the jump on a new technology was with the introduction of the DVD. Hollywood had always felt burned about how the VHS business had played out. The high prices set at first-issue for VHS releases had meant few individual consumers bought tapes; most were purchased by video stores and used as rentals. Hollywood looked at all that rental revenue in which it didn’t share, and never forgave itself for mis-designing its business model and missing out on those piles of dough. Instead, DVD was priced as a sell-through product, and the proportion of private purchases to rentals reversed itself. It was one, shining – and sadly singular – moment of industry smarts and foresight.

I spent 27 years at Home Box Office. I don’t want to come off that I was privy to the inner, upper level councils of the company because I wasn’t. But I saw enough of how the company worked to think of them as one of the shrewdest, savviest, just plain damned smartest TV companies in the business. Through them, I got a peek at the thinking in other media companies as well. From that viewpoint, I’m thinking here’s where Tassi et al don’t know their enemy. Traditional media organizations may be greedy, but they’re not stupid. It’s not like they don’t see the impact the Internet is having – and is going to have – on their business. Tassi writes, “They have failed to realize that people want things to be easy.”

Tassi’s wrong. They know that. That was the founding principle behind HBO and all the other pay-TV services, just as it was the driving idea behind home video. Hell, it was the idea behind commercial TV in the late 1940s. That “they” Tassi likes to regularly lambaste knows people want things easy, and they want them cheap.

That’s the problem.

*****

Both the Tassi and Paralegal pieces throw around a lot of revenue numbers to make the case that Hollywood hand-wringing over piracy is like Ebenezer Scrooge boo-hooing over the pocket change he’s lost in his sofa.

True, piracy isn’t driving anybody out of business, nobody’s going home poor and having to break the heart-breaking news “Honey! Kids! There’ll be no villa on Lake Como this summer thanks to those nasty, copyright-violating movie pirates!”

But the movie business does have its health problems, and these stories take a very un-analytical, carelessly superficial view of revenue numbers.

Paralegal, for example, looks at the monumental worldwide grosses of the “Most Pirated Movies of All-Time” to make the point “Despite Hollywood’s claim that piracy will deal a huge blow to ticket sales, Hollywood is still continuing to break box office records.” Paralegal picks 10 titles – two of them the top-grossing movies of their release years, and none coming in lower than #6 — including Avatar (2009; $2.5 billion worldwide), The Dark Knight (2008; $1 billion), Pirates of the Caribbean (2003; $960 million), Inception (2010; $832 million), and Transformers 2007; $709 million).

Those are some pretty staggering sums, granted. But the year Avatar became one of the biggest-earning movies of all time, 82% of the 521 movies released that year grossed less than $30 million domestic. In fact, of the combined 2800 films released in the five years cited above, a little over 2300 – a hair over 83% — didn’t make $30 million domestic. The worst batting average was in 2007 – the year the first Transformers was released – when 86% of the year’s 631 releases fell below the $30 million domestic mark. What that means is that nearly nine out of every ten movies hitting screens that year was probably a money-loser in theatrical release.

How do I figure that?

The Motion Picture Association of America stopped disclosing average production and marketing costs in 2009 (maybe because the numbers always made people blanche – outsiders at how profligate it made studios look; studio people because of how profligate it made them look to outsiders). But as of 2007, the last year stats were disclosed, on average it cost $106.6 million to make and market a studio feature, and there’s no reason to suspect the price tag has gone down since then. The rule of thumb is that since not every dollar at the box office goes back to the studio, a movie needs to gross two-three times its cost to reach breakeven (or more depending on how much revenue is siphoned off by profit participants) which means the theatrical side of the movie business is a Harvard MBA’s nightmare in terms of Return on Investment.

Granted, in any given year, the tally of low-grossers includes a fair number of low-budget art house indies and foreign language flicks, all of which have extremely low breakevens. But the bottom line is that most theatrical releases flop. In fact, most releases from any given studio flop.

More than half of Hollywood’s revenue comes from overseas distribution, but in terms of the ROI on individual titles, overseas money is no panacea for domestic box office weakness. While one often hears about movies which stiffed here at home but made a killing overseas, that’s not a rule. More often, movies that flop here flop overseas. Look at the 2011 $90 million remake of Conan the Barbarian. It died almost immediately on release, grossing just $21.2 million domestic. Despite being the kind of empty-headed actioner which is supposed to travel well overseas, it didn’t play much better anywhere else pulling in just $27.5 million from all out-of-country markets combined.

And then there are the movies which are hits here, but the success doesn’t travel well. Oscar-contender The Help (2011) did a huge $167.7 million domestic, but its situations were too specifically American for the overseas audience where it pulled in just $37 million.

Nor is any of that foreign revenue free money. It comes with additional marketing and distribution expenses for each language-specific market.

The typical major studio might release 20 or better titles in a year. It hopes two or three will be breakout hits; blockbusters. It hopes another few will earn some good midrange coin. And then it prays the combined revenues from those winners will outweigh the great proportion of losers.

Paralegal wants to talk about Avatar? That same year, 20th Century Fox – which distributed the James Cameron sci fi epic – released 23 other titles. It was a good year for Fox. They had some other major hits (including Alvin and the Chipmunks: The Squeakquel, Ice Age: Dawn of the Dinosaurs, X-Men Origins: Wolverine), and some nice art house-caliber moneymakers (among them: Crazy Heart and (500) Days of Summer). But – using a 2:1 ratio to calculate breakeven, and not including marketing costs — 14 didn’t make their money back during theatrical release, even after including overseas revenue. Overall, the studio had a good year pulling in about $2.9 billion against total production costs of $793.7 million. Even after figuring in marketing costs, Fox still ended 2009 well into the black ink on its theatricals.

But the breakdown demonstrates that moviemaking is a crapshoot, and the plan in releasing so many flicks is based on not knowing which ones are going to hit (and for how much), which are going to miss (and by how much), and praying the winners win enough to pay for the losers.

Nor does the wealth get spread evenly around. Fox may have had a good year in 2009, but the average domestic take for each of the 521 movies released that year – and mind you, this was a year when the Top 20 releases pulled in almost $8 billion domestic out of a total US box office of $10.8 billion — was just a hair under $21 million. And studios are nothing if not inconsistent. The year of Avatar, Fox had five other films in the domestic Top 20. In 2010: zero. In 2011, four, but all in the bottom half of the Top 20.

Another aspect of box office revenue neither Tassi nor Paralegal touch on is just how shaky the theatrical business is once you get past the impressive size of the numbers. Last year’s domestic tally was down 3.5% from 2010, and the only thing keeping the decline from being sharper was rising ticket prices and 3-D surcharges. In fact, ticket price inflation has been puffing up box office numbers for several years. The measure of the vitality of the theatrical business is attendance, and it’s not a great measure. Attendance for 2011 was down 5.2% from 2010 which was down 6% from 2009. Generally, attendance has been heading south since 2003, with last year’s stats representing the lowest attendance in 16 years. In other words, despite those fat-looking revenue numbers, the theatrical business is eroding, and has been for quite some time.

To boil all that down, the commonly held industry view is theatrical release is, more or less, a breakeven business. Some years you’ll do better than others (and vica versa), but theatrical’s primary value for all but a handful of breakout titles is to create enough visibility for a title to carry it through its ancillary markets: commercial and pay-TV, On Demand, DVD, downloads, etc.

The aftermarkets: that’s where the gravy is.

*****

The impact of movie piracy on theatrical is, I’m guessing, modest. With so many aftermarkets – both legit and otherwise – the only reason to go to the movies is either because you’re one of those I-gotta-see-it-first obsessives, or you’re in that shrinking audience which still enjoys going to the movies and/or seeing a flick on the big screen. Pirated copies can’t replace that experience.

But DVDs? Legal downloads? Television broadcasts? That’s a different story, and since that’s the revenue flow keeping Hollywood afloat and studio execs in their Bel Air mansions, that’s why the studios get all foamy at the mouth about piracy.

Tassi claims because a physical object isn’t being stolen – that illegal downloads can never cause a shortage of supply – that it’s not really/not quite stealing.

But content piracy is about degrading the value of content, not about diminishing its quantity. Or put it another way: only saps shell out for the cow when everyone else is drinking pirated milk for free. And we’re not just talking about other users here. The Columbia survey limits prevalent piracy to a young demographic, but do some forward projection to where that cohort ages into being the foundation of the consumer universe. If more people are pirating than not, what’s the value of movies to pay-TV? To commercial television?

Tassi’s generation is too young to remember, but as late as the 1970s, the then three broadcast networks had theatrical movies on in prime time every night of the week. Pay-TV channels like HBO, and then home video, devalued movies for the nets to the point of — … Well, how many movies do you see on network TV these days? It is not inconceivable that both legal and illegal downloads could devalue theatricals to the point where premium and basic cable channels pay less and less for telecast rights.

One aftermarket that is already bleeding is the DVD business. Once one of the crown jewels in the ancillary market crown, DVD sales have been sliding since 2007 and there’s no sign they’ve bottomed out. Tassi’s right: people prefer downloading rentals – it’s easier, it’s cheaper. Then why, writes Tassi, are the Hollywood powers-that-be threatening “…to put Netflix out of business by charging them huge amounts of money to have access to their content”.

Because, at the moment, online delivery hasn’t shown it’s going to generate the same kind of revenue DVD sales did – and still do. Downloads and streaming have grown, but not nearly enough to offset the overall decline resulting from the fading appeal of DVD purchase, and it’s an open question at this point whether or not they ever can.

I suspect any number of studio and TV execs look at these stats and are haunted by what they saw happen to the music business. Yeah, music company execs still get to drive around in stretch limos, rock stars still trash hotel rooms, but in terms of revenue generation, the music industry is a shell of what it was just a little more than a decade ago. Downloads haven’t even come close to making up for what’s been lost in CD sales: From 1999 to 2008, worldwide music sales dropped 25%; in the US over the same period, by almost 29%. Financial analysts see the numbers continuing their southward march for the foreseeable future. That in mind, Tassi & Co.’s demand for cheap, easy access doesn’t exactly set the studios drooling.

So, on the one hand, you have content providers trying to protect a fading revenue model and digging in their heels with efforts like SOPA to forestall what I’m sure they see as an inevitable eventual reconfiguration of how home entertainment works; and on the other end, content users who want cheap, liberal access to that content.

Ok, so that’s the money end. What about this “culture war” I’ve been talking about?

Well, in my view, that’s where it gets really ugly.

*****

There’s a certain Power-To-The-People/Death-To-All-Tyrants/Robin-Hoody flavor to this anti-anti-piracy view, from Tassi’s and Paralegal’s pieces down to the attitude of that Drexel law student quoted by Martha Irvine. The title of the Paralegal post – “How Hollywood Is Using Piracy Against Us” – hints at some nefarious scheme to deprive all Americans of their inalienable rights.

Let’s be clear about what this fight is over. There’s a lot of militant blather going back-and-forth about First Amendment and censorship and freedom of information and blah blah blah. I won’t deny there’s legitimate spillover into those issues, but at heart, what’s driving this fight only collaterally has anything to do with those more noble-sounding, comparatively abstract ideas.

Right now, you can go on the Internet and find out whatever you need to know to self-diagnose your suspected cancer, do your taxes and learn how your Federal, state, and local government are wasting them, discover the skeletons in any big-mouthed politician’s closet, find out the “truth” behind every conspiracy from the Lincoln assassination to what the Air Force really has tucked away in Hangar 18. From porn to foreign policy details, it’s all available to you for the price of Internet service. Other than that, it doesn’t cost you a damned dime, and it’s all (well, mostly) provided to you legally. Whatever your appetite is for pictures of naked celebrities or the Face on Mars or trying to track how many times Mitt Romney has flip-flopped on the pivotal issues of our time, there are no inhibitions on your ability to access this stuff.

This fight is about the ability to get movies cheaply at home. That’s it. Don’t let anybody fool you, but that’s the bottom line, the endgame, the Big Enchilada everybody’s grabbing at in the middle of the table.

The anti-anti-piracy gang takes an NRA slippery-slope tack – “Let them take away your Teflon bullets and the next thing you know they’re kicking down your door and taking away your God-given right to defend yourself!” – suggesting controlling entertainment content might be just the first step in controlling the free-flowing stream of info on the Internet. But the dialogue is almost strictly based on entertainment content which – let’s face it – has all the practical value of Kleenex; it’s nice to have but your well-being hardly depends on it. This is a fight over what seems to be an assumed inalienable right to be amused in your home at consumer-friendly prices. Yup, that’s what the boys suffered for at Valley Forge to win for you.

I’m in strong agreement with Tassi and his peers that the entertainment industry is driven by a bunch of overpaid execs turning out empty-headed entertainment in wasteful fashion and then offering it to the public at ungodly prices. I practically have to take out a second mortgage to take my family to the movies, particularly if it’s in 3-D. But I’ve solved this problem in simple fashion: I don’t go. I don’t find that this gives me less fit air to breathe (well, as fit as air in New Jersey gets), less potable water to drink (ditto), or starves me or my kids (we do have some great pizza in this state).

Call me old-fashioned, but I still think if it’s your property, you can do any stupid, selfish, short-sighted and ultimately self-destructive thing with it you want; it’s yours. You want to spend $200 million to turn some comic book nutbar in tights and a cape into an action figure/videogame/Happy Meal-shilling franchise, and then spend another fortune hyping the hell out of it to get the ComicCon geeks to shell out way too much of their hard-earned stock-boy-at-WalMart pay to see it? Well, that’s American enterprise for you. I think it’s a waste of your time and money and theirs, but that’s just me. And, if I don’t like it – either because the movie is crappy and/or it just costs too damned much — I don’t go.

Tassi, Paralegal, that law student (which I find terrifically ironic – what the hell kind of law are they teaching at Drexel these days?) in the Irvine story blame piracy on content providers. “If you made it cheaper, people would stop stealing it,” which is as prized a bit of self-serving sophistry as I’ve heard in a long time.

Besides, I don’t know that that’s true. Hollywood can never lower the price enough to beat “free.” But I take their point. And I interpret that point is being, “If a Lexus didn’t cost so much, I wouldn’t have to steal one.” That’s not some oppressed group railing about the exploitative policies of some power elite; that’s just a brawl between two different kinds of greed.

(Or maybe three kinds. Aggregators – like YouTube, The Huffington Post, and so – make their living, to some extent, by attracting audiences through content produced by others. Ya gotta love the irony of New Media living and dying by its ability to freely use Old Media content.)

What you’re dealing with, I think (Alert! This here’s the culture war bit) is a changed generational worldview on proprietorship, and – in my highly, highly, highly subjective, retrograde, atavistic, and undoubtedly stone aged view – it extends well beyond the issue of paying or stealing to watch junk like Transformers: Dark of the Moon (2011) at home. The fallout from the Internet’s greatest asset – free-flowing data and communication – has been an erosion of traditional concepts of boundaries, both personal and professional.

You see it in the epidemic of plagiarism on college campuses. It doesn’t happen because students are lazy (although you’ll probably get some argument from some instructors) or because they’re malicious. By the time they’re college-aged, they are so used to accessing information without any sense of it “belonging” to someone, the traditional concepts of attribution and proprietorship seem antiquated if not downright irrelevant.

People post online the kind of personal information they used to reserve for their bartender after a couple of tall scotches, and then, having posted it on a universally-accessible platform, seem shocked there’s any kind of blowback. Here in New Jersey, we’re witnessing a trial in which the defendant – a young college student – allegedly thought it was ok to spycam his gay roommate during a date, and then tweet to his followers to view a second show (the prosecution alleges the resultant embarrassment pushed the gay roommate to suicide). The personal has become public, the private the communal. And this social movement Joe Karaganis referred to regarding entertainment content – “If it’s there, I should be able to get it, and get it cheap!” — seems (to me) to fit right into that sensibility.

Throw that up against Hollywood’s corporate sensibility – “Our goal is to squeeze every last penny out of every last bit of content!” – and you wind up with a brutal war between two, unforgiving, all-or-nothing views of how media is supposed to work.

Somewhere in between, with everything to lose – and they probably will – are the content creators.

*****

When people like Tassi write about Hollywood corporate greed, I have to laugh. Oh, I don’t disagree with them, but they tend to take a very simplistic view of the industry. It’s like judging the financial health of the average American by what Warren Buffet makes. What Tassi doesn’t see nor the studios overly care about is that the matter of aftermarkets – particularly residuals, and trying to protect that revenue stream – is a bread-and-butter issue for an awful lot of people in movies and TV.

Tassi may rail against the “A-list actors (who) do not need multi-multi-million dollar salaries,” but the erosion of residual value of films and TV shows – either through legit lower-value online downloading and streaming, and/or piracy – isn’t going to hurt them. After all, they have those multi-multi-million dollar salaries. But the average annual pay for a member of the Screen Actors Guild as of March 2012 is $40,000. For Hollywood-based actors, the average is $13,000. Considering that in any given year, most of the membership doesn’t work, and those multi-multi-million dollar salaries are pulling the average up to $40,000, it means most of the membership at any given time is living on air. When they do get a residual-paying gig, that’s gold.

Or take screenwriters. They’re not all Akiva Goldsman. Most screenwriters – providing they ever do get traction in the business – do not have extended careers nor do all that much better than scale. Most screenwriters are like the rank-and-file players in pro football: with luck, you’ll have a few hot years, but then it’s selling used cars for the rest of your life. In any given year, somewhere around half of the members of the Writers’ Guild of America don’t work, and the average annual income for a WGA writer is about $40,000.

Talent has a long, appalling history of being exploited by studios and producers. Shady (but somehow legal) bookkeeping, one-sided contracts, etc. are as much a part of Hollywood history as sprocket holes. No news there. But if piracy – and here I agree with Tassi et al – is survivable by Hollywood, at least to some degree, simply because the entertainment industry makes so damned much money, not so the talent at the rank-and-file level. Tassi may think this conflict is just Old Media execs defending their ability to “…add a few more millions onto their already enormous money pile” – and he’s not completely wrong about that – but below those execs are people who will take a hit (if they haven’t already) by this new paradigm which eats away at aftermarket value.

But, as I said earlier, when did anybody ever care about them? They’re just as invisible to the Tassis as they are to the industry that’s always exploited their talent. The sad irony here is that without them, there’d be nothing to exploit or steal.

*****

Tassi’s prediction the online terrain is going to change for Hollywood whether Hollywood goes along with it or not is probably true. I’d be surprised if the sharper execs in the business didn’t feel the same. And for any of those with dim foresight, YouTube is providing a glimpse of the future rolling out nearly 100 channels of original programming. It’ll be TV – and it won’t. It’ll favor short form, it’ll be accessible at the user’s convenience instead of based around an anchored schedule, and it will feature niche-oriented content to try to grab that advertiser-coveted 18-34 demo. It’ll be TV tailored to the tastes and impatient, insatiable viewing habits of a totally-wired, constantly-stimulated new generation of entertainment consumer.

The movie-going audience will continue to shrink, and those ancillary markets that are not already downtrending may take a hit as a more Internet-focused, Internet-weaned breed of consumer takes the keystone position in entertainment spending. The movie business will try to prop up revenues by bumping prices, but that’ll hit a point of diminishing returns (if it hasn’t already), and overall revenues will decline.

Tassi and his peers will not weep for a Hollywood which winds up contracting along the lines of the music industry. Tassi thinks “Projects with bloated budgets and massively overpaid talent might start to fade away, but that can only be a good thing creatively for all the industries.”

He’s probably right about the former – or at least there’ll be less of it – but I doubt it’s going to kick off an explosion of better, more moderately-budgeted fare. There’s plenty of writing here at Sound on Sight about how many small, terrific movies – including Oscar-winners – go ignored by the general public. I sincerely doubt not having Ghost Rider: Spirit of Vengeance or John Carter around would have driven more people to The Artist. Besides, Hollywood doesn’t need big budgets to make crappy movies; the industry already makes plenty of crappy cheap movies.

Box office for the year so far is up 24% over the same period 2011 (though still behind 2009 and 2010), and admissions up 25%. It’s still too early to tell if this signals 2012 as a turnaround year or just an uptick. A recent Entertainment Weekly story looking at the hot start to the year attributed it to the strong performances of movies like The Vow, Safe House, Journey 2: The Mysterious Island, Dr. Seuss’ The Lorax, Contraband, The Devil Inside, Underworld Awakening, Chronicle, Act of Valor, and Project X. That’s the good news.

The bad news – at least for anybody who, as Tassi seems to, likes a good flick – is that most of these movies range, by critical consensus, from weak to downright suckiness. Only found-footage sci fier Chronicle received good reviews (an impressive 84% positive on Rotten Tomatoes). Every one of the other titles was rated “Rotten,” with all but two not even breaking the 50% positive mark. Among the bottom-crawlers, combat movie Act of Valor (29% positive; $51 million worldwide gross so far against a $12 million budget); teen-party-out-of-control found-footage flick Project X (26% positive; $32.6 million and still earning against $12 million); horror franchise sequel Underworld Awakening (30%; $152.5 million against $70 million); and the box office story of the year, the brilliantly marketing but monumentally awful The Devil Inside (the year’s record-holder so far with a microscopic 7% positive; $77.5 million worldwide against a cost of just $1 million).

So, I agree with Tassi to the extent we may get less big budget crap…but we won’t be getting less crap.

If Tassi’s right about how the scenario will play out, however, Hollywood may very well cure its piracy problem though inadvertently. Tassi may not think much of those big, overpriced, air-headed blockbusters, but according to Paralegal’s chart, they’re driving piracy just as much as they’re driving the legit box office. The only movie remotely resembling a drama on Paralegal’s “Most Pirated Movies of All-Time” list is crime flick The Departed (2006). The rest of the list looks pretty much like any year’s box office toppers with movies like Avatar, Transformers, and The Hangover (2009). In other words, the numbers suggest movie pirates don’t want a more cost-effective Hollywood turning out higher quality films they can make available at lower prices. What they want is the same crap everybody else wants; just cheaper. Changing economics could push Hollywood toward following Tassi’s prescription; curing piracy by no longer being able to make the kinds of things most people want to steal.

*****

I honestly don’t know how much of this is probable, but a lot of it does seem possible. The currents – unwanted or no – seem plain, and Tassi and Paralegal and that Drexel kid seem to be on the side of history, however one judges the morality of their view. As an occasional content creator, their casual attitude about proprietary rights does bother me, and I’m even more bothered by how I see it reflected in the attitude of many of the students I teach, but maybe that’s just old fartdom at play.

One thing I’m sure of. There are no Good Guys in this fight. This isn’t about competing needs, but competing wants. The final irony I’ll cite is that list a few paragraphs up about the movies currently energizing the box office. I look at them and think, “Hardly seems worth the fight.”

Bill Mesce

 


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