Friday, November 5, 2010

Can Hollywood Prevent its Own Demise?

One of the fundamental laws of Evolution is if your environment changes, and you cannot or will not adapt, then you will die. This same analogy also goes for the world of business, and especially for the high-stakes entertainment industry. The movie and recording studios have often approached any form of change with violent, knee-jerk reactions. To them the 8 track tape, the cassette tape, the VHS tape, and the laser disc were going to be the end of their industries. Doom and gloom, fire and brimstone, dogs and cats living together, mass hysteria!

Then came the Internet.

Oh the Internet, that greatest of evils, that wild west of the digital age. They hated it too, but the market is changing and they're dragging the entertainment industry into the 21st century kicking and screaming. It began with the Napster trial.

Now most should remember the original Napster. It was a free service that let you search for music and download it, and you could also share music with others who accessed the service. The problems is, technically, that was illegal. The other problem is, the recording industry tried and succeeded in shutting down the service. This didn't solve the problem of Music Piracy. It set off a chain reaction that made it a thousand times worse and now its likely the music industry will never be able to totally stamp it out no matter how hard they try. You see, the recording industry missed perhaps the greatest opportunity to nip music piracy in the bud for good but they were too short sighted to realize it.

At the height of its glory, Napster was the single largest repository for music the world had ever seen. You could find music there that wasn't even being published anymore, and it was all available for free. Up until that time the only way to get music was to buy it from a store on cassettes or CD, and occasionally vinyl records. The Internet was changing how people wanted to get their music. They saw how wonderfully convenient it was to be able to log into a service, type in the name of a song or artist, and then find what they are looking for and download it. They got just the music that they wanted and completely avoided the songs they didn't want. People loved it, they love it a lot. Problem is, it was technically stealing. So, the music industry went after the people behind Napster in court and got them shut down.

This was a mistake, a mistake that is still haunting the music industry to this day.

They missed an opportunity, a big one, that could have changed the music industry forever and could have ended music piracy. Instead of shutting down Napster, the music industry could have made a deal with them. Remember, at its height the service was the biggest library of music in existence. The recording studios could have capitalized on this, but they didn't. They totally failed to see the golden opportunity right in front of them and now its too late to do anything about it. Or is there?

What the music industry should have done was turn Napster in a legitimate business that allowed people to share music online and download songs for a small monthly fee. They would have made more money than they could have dreamed of. Imagine a service that has more music recordings than the Library of Congress, that you could access for $9 or $10 a month, and download all the music you want. That would have made money, lots of money, but its an opportunity that came and went. The music industry screwed up in a major way and now they're paying the price for their lack of vision. They failed to adapt to a market that is changing, they aren't evolving, or to be more precise they are refusing to evolve. You know what happens next, right? Good, your paying attention.

After that began the whole sad sorted affair where the music industry was taking individual people to court for sharing music on the Internet. They used 9/11, one of the greatest tragedies in American history since Pearl Harbor, to try and get legislation passed that made sharing music on the Internet a Terrorist Act. Yes, you read that right. The rubble of the Twin Towers hadn't even stopped soldering yet and the recording industry was lobbying Congress to have that added to what would become the Patriot Act. Luckily, their plans failed.

Today we see insanely huge penalties for sharing music online. I mean $1.2 million for just sharing 24 songs. Its madness! Its ridiculous! And, its going to destroy the music industry if they don't stop, quit panicking, and figure out ways to adapt rather than try to find ways to keep the status quo. Sending out threatening letters, extorting consumers, suing grandmothers & children, and trying to change copyright laws is not going to stop piracy. Its a pipe dream.

The movie industry is in the same boat. You can pretty much find just about any movie you want online if you know where to look. Either its available for download or free streaming in your browser. Just like with sharing music on the Internet its technically stealing. Recently, both industries have started to embrace digital downloads, sort of. The problem is they're treating digital downloads like they're actually CD or DVD purchases. Meaning, they're imposing "imaginary" limits on stock, for things which are infinite. The old business models do not work in the digital age. They can't work, they won't work, and they never will be successful. Its a reality both industries have to face, but they refuse to see reason. Thus, they're suffering and its their own fault. I sound negative, but what can I say they did this to themselves. If you make your own bed, sleep in it.

Both the movie and recording industries are sliding very quickly towards extinction. But, even now, as things seem so bleak, can they really turn things around and save themselves from the cold embrace of the Corporate Grim Reaper?

Maybe, but it will mean they'll have to make a lot of sacrifices.

The first thing they have to do is stop attacking their consumer base. They need to stop treating consumers like their all criminals. Think about this way, imagine you went into McDonalds and bought a Big Mac. When you go to your seat to eat someone from the staff comes with you and stands there watching you. You ask what they are doing and they say they're making sure you don't steal anything.

How would you feel?

Well, guess what folks! That is what the entertainment industry is doing to you right now. Every DVD and Blu-Ray movie you buy has software on it that assumes that you are a Thief. Its called DRM, or Digital Rights Management. Its the same thing as the example I made, they are standing over your shoulder making sure you aren't stealing their stuff. This sinking in yet? It better be because its gets worse.

After the Napter perfect storm, the entertainment industry lobbied Congress to pass a sweeping new law that radically changed the definition of copyright and gave corporations unprecedented powers. This resulted in one of the most horrible, shameful, and most destructive pieces of legislation since the Patriot Act.

The Digital Millennium Copyright Act.

The DMCA gives corporations the power to order something removed from the Internet if they believe it violates their copyrights. It makes it illegal to circumvent DRM even if its to copy something for your own personal use, and the list goes on. What was feared would happen is the law would be abused by corporations to stifle Free Speech and prevent fair competition. Both fears have been realized, over and over and over again. The law is pretty much a free pass for corporations to kill off competitors before they even come to market, and to silence those who speak out against them. Its like giving them a "get out jail free" card that never expires. For a time its worked in their favor, but judges these days are starting to get wise to their tactics. Their ability to use the law to break the law is starting to come back to haunt them.

As expected, our economy is suffering. The DMCA isn't the only cause but its a contributing factor. How on Earth can this be turned around? As I said, the entertainment industry is going to have to make sacrifices. The old way of thinking has to go away. The old business models that have worked for decades need to be shelved. Their dependence on the sales of physical media must end. They can still sell CDs, DVDs, and Blu-Ray disks but they shouldn't depend on them for the majority for of their revenue. That gravy train came and left town and it ain't coming back.

People want digital downloads. The immense success of iTunes is all the proof you need that this is so. Look at how Netflix has pretty much killed Blockbuster Video. Need I say more? The future of the entertainment industry isn't some new media format. Its the Internet. Its unrestricted access to content at prices that are reasonable. I don't mean just some of their content, which expires after a while then they add new stuff that expires after a while and so on and so forth.

No, I mean ALL of their content. Every song, movie and TV show ever made put together in a service or a series of services that deliver that content to consumers in whatever fashion they desire for a price that is affordable and easy on the wallet. Do you have any idea how much money they could make? The possibility totally boggles the mind when I think about it.

This would require a major fundamental change in how the entertainment industry does things. You'll probably say its impossible, and you might be right except for one thing. The status quo cannot continue, eventually something is going to give, and its likely going to mean the end of the entertainment industry as we know it.

It is obvious that they cannot survive doing what they are doing right now. Even the deplorable ACTA trade agreement they're trying to get passed without Congressional oversight isn't going to save them. Its like trying to plug a leak in the side of the Titanic using a cork from a champaign bottle.

This is all the symptom of one fundamental problem...

Greed.

Which stems from another fundamental problem, a much bigger problem...

Spirituality.

If you can change a people's spirituality, you can change the world. This is the source of the problem with not just the entertainment industry, but with everything that plague our lives today. We need to change ourselves, our Spirituality, in order to make this world a better place not just for right now but for our children in the future. It can be done but like any kind of change it won't be easy. But then, nothing worth while is easy to obtain is it?

Nameste.








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