Monday, July 18, 2005

Movie Grosses Back Up

The tone of this Globe piece is really funny:
You could almost hear the sighs of relief all the way from Hollywood last Sunday, as movie moguls got their first look at the weekend's box office returns.

After 19 agonizing consecutive weeks when North American movie revenue was down from a year earlier, a surprisingly successful release of The Fantastic Four from 20th Century Fox helped propel box office returns for the July 8-10 weekend to $148.9-million (U.S.). That was just a few hundred thousand dollars over the same period in 2004, but enough to cause a collective wiping of brows.
Wow. Next week, revenue will be lower than last year again and the heart attacks will start anew. Does anyone seriously think that Fantastic Four is going to have legs? No, the movie industry is in a lot of trouble, though not because of this:
The biggest threat to the movie business may come from people such as Ian, an 18-year-old computer whiz who lives in Toronto.

Ian, not his real name, has a customized computer with four hard drives, two video cards and a large memory that allows him to do a wide range of heavy-duty computing, including downloading full-length movies.

It currently takes about an hour and half to download a film, but he foresees that dropping to about five minutes in the near future.
Yeah, right. Movies are being released on torrent sites that are now gigabyte-sized files. Bandwidth may increase, but that will just let pirates increase the size (and quality) of the movies they're distributing.

But let's say that Hollywood gets it's wish, and manages to create an Internet where nobody can commit any piracy whatsoever. Ignore the impossibility of this scenario for a moment, and go with me here.

People don't just listen to any music that flits through their computer. It's well understood that people follow the trends of certain opinion leaders within their social group. This was first really understood by Paul Lazarsfeld in the election of 1940 - despite a hostile press, Roosevelt did well in the election because most people didn't really care about what the press said. Rather, they looked to the most-informed members of their group to advise them on who they should vote for - so-called "opinion leaders." Ironically the opinion leaders were the most well-informed about the election because they consumed the most campaign news, while the undecideds were the least informed on the election, and the least inclined to learn about the election. Some things never change...

Anyway, the point is this: In any group of friends, there is the Music Nerd. I know several. These are the guys who buy every CD they can get their hands on, even from groups they know nothing about. These are the people from whom the rest of us learn about new bands, new music, etc. Given the sad state of commercial radio these days, the Music Nerds are often the only way for non-music nerds (like myself) to learn about new music. Like I said, people don't listen to just any music - they listen to what their friends are listening to.

This poses some real problems for music and movies. I may not own all the music and movies I want, but I almost certainly wouldn't have a hard time finding anything I wanted within my circle of friends. And most of my friends don't listen to CDs, per se. Rather, they rip what CDs they have, and listen off their computers. This is incredibly common among my friends, and I'd be willing to wager within my generation. And it's going to get more common, not less.

So what does it have to do with Internet piracy? Well, let's examine some prices. Napster is offering unlimited music downloads for $15.00, but is having a hard time competing with iTunes. iTunes, the elephant of the industry, is still charging $1.00 for a song. Meanwhile, the cheapest new hard drive you can buy costs $60.00 Canadian, and holds 60GB. So for 4 months of Napster, or 60 songs of iTunes, you've got a hard drive that is relatively portable, will last years, and will hold a lot of whatever you want to walk around. For smaller denominations of memory, USB flash drives continue to fall in price. Simply put, even if the content industries manage to shut down all internet piracy, people will walk their data around. And suddenly stopping piracy has become analagous to trying to stop marijuana or crack - it's easy to produce, easy to hide, and extremely portable. It would simply be a nightmare for law enforcement.

I'll say it again: If Hollywood thinks it can win this game by lawsuits, they're deluding themselves.


andym said...

Hi John--nice post. I've been following this story myself, and couldn't help but notice that everything is compared to last year only. They finally came out and admited that 2004 was a banner year. But not before alienating the masses with their sob story. You missed one point though. Quality always finds a market. Films have sucked a whole lot of ass this year.

LeoPetr said...

Hollywood can't win this game, but they have enough money to -- Gosh darn it! -- try to win it. If, by doing so, they spoil the game for everyone else, so much the better.