For a decade Hollywood has been at the mercy of digital pirates as sales of music and movie seats have fallen. Legal digital downloads have not replaced lost CD sales. The studio outlook seems worse than ever. Digital piracy is destroying valuable industries and thousand of industry jobs. Right?
Consumer piracy isn’t the problem, and anti-piracy measures aren’t the solution. What we are seeing are far stronger societal changes, and the inability of studio executives to make the business model changes necessary to keep-up with their customers.
Anti-piracy technology, on which Hollywood has wasted tens of millions of dollars and over a decade, doesn’t address the issue. It simply is a set of new clothes for the emperor, getting in the way of needed changes. As in the fable, only the emperor is fooled.
Convenience is what consumers pay for and iTunes® is more convenient than file-sharing services. iTunes and others provide the convenience for which consumers are willing to pay. It really is as simple as that; there is absolutely nothing new or complex about the iTunes business model.
Realizing this, iTunes announced digital-rights-management-free music. Notice these songs cost 1/3 more than anti-piracy-encoded songs? Think anyone will care? Think iTunes revenues won’t increase?
A decades-old model through which singles had been sold (remember 45s?) was discarded in the 1970s. As soon as technology allowed the acquisition of singles again, that’s where consumers went. Studios didn’t get this change in the 1990s, and viola! Napster. Nothing then prevented music studios from putting their catalogs online other than antiquated business models they didn’t realize were as long-gone as the dodo.
Why has the old business model become obsolete?
In the 1960s and ‘70s, Baby Boomers sat around passively listening to music. (Usually plugged-in to a bong.) FM radio was kick-started by the large differences in how what we now call content was consumed by Boomers, and by their parents.
Time moves on. Kids today don’t sit around listening to music. They don’t buy in-place music systems. They buy mobile players and listen on the go; they download video games, music and movies to their iPod® or phone – and move.
Spending an afternoon with their minds disengaged ala Baby Boomers as kids is anathema to today’s youth; this is evident in listening patterns for music as well as watching patterns for visual content. Boomers’ grandkids play computer games to actively occupy their minds; passively watching boring movies isn’t their idea of time well-spent.
This is a societal change and has nothing to do with digital piracy; a change going unremarked because of the inability of Boomer industry executives or industry pundits to fathom it.
What’s the last movie you saw that engaged your mind? For decades Hollywood has produced only the “3Bs”: Bombs, Boobs and Bullets. Hollywood today wouldn’t even make 12 Angry Men or On the Waterfront (other than as remakes).
Attendance down at the multiplex? Duh.
Either Hollywood produces visual stories engaging the mind of the consumer, or consumers will find other things to do. Financial evidence would seem to indicate that consumers are well on their way. There is little indication Hollywood gets it.
If Hollywood wants content sales, they’ll need a compelling reason for consumers to buy. And more of the same 3Bs isn’t it. Make an engaging story, make it available, and consumers will buy it.
Because Hollywood hasn’t grasped this seat sales are down and the theater model has collapsed into a loss-leader for packaged media (DVD, CD) sales. As soon as existing digital download technology is installed to allow consumers to get movies their way on their schedule, on their devices, when they want it, they will – and packaged media, too, will tank.
This will happen as soon as your telco puts fiber to your home.
Any content anywhere on any device in any format at any time.
iTunes will still profit, and so will studios that adjust to this reality. Those studios will provide content that engages their audiences, and make it available simultaneously in any format anywhere in the world.
Studios that don’t get it will continue to try unsuccessfully to use technology to make it impossible to watch yet another 3B movie Hollywood executives just spent $300M to make – for people to watch.
And, guess what? Consumers won’t watch it.