Arrrrgh...Movie Piracy: A Big Deal? (1 Viewer)

[Brian Kidd]

You can download full dvd's RIGHT NOW. Sure, they take a while to finish but with a broadband connection left on overnight it's not that big of a deal. When Internet2 comes into full usage it will be an even bigger problem. We're talking speeds that dwarf todays fastest connections! Also, dual-layer DVD+R discs are going to market as we speak with Blu-Ray discs just around the corner.

I am not about to take the high road here. Most of us have experimented with downloading something off of the 'Net. Would I be willing to pay for a full dvd that I could download and burn myself? Sure I would! It would be convenient as hell. It's more and more expensive to go to the theaters. As much as I love movies and seeing a film in a theater with a group of people, I just can't afford to pay a minimum of $20 for my wife and I to go to the movies. It's gotten to the point where we only see movies that we think would suffer greatly on a small screen like LOTR.

Here are some points I'd like to make.

• Films should be released worldwide at the same time. Don't release a film until all of the work that needs to be done for foreign markets is finished. Then region coding could go bye-bye.
• Make good quality digital versions available for download legally. Itunes is making a killing. The same could work for movies. Don't talk to me about the crappy services already in place. Those films look like shite.
• Get rid of the dots on the screen. They don't work and they're distracting.
• Get rid of the ads before the films. Trailers are fine but the rest have to go. I'm paying to be entertained, not to watch ads.
• A lot of what I've seen floating around the 'Net is copies of films and shows that are out of print and may never see the light of day for one reason or another. If this is the only way that I can see them, then so be it. If the studios choose to release the programs and films in a legitimate form, I'll be glad to pony up the cash. The studios should look at DVD-on-demand. Smaller distributors like Sinister Cinema are already making it so you can order films that are then burned to DVD-R and sent to you. It cuts their production costs down exponentially. Why can't the studios do that for their niche products?
• At least in the US, piracy isn't hurting the bottom line for the studios. That's a fallacy. The people willing to download crappy cam versions of films are the same ones who wouldn't pay to go to the theater anyway.

Downloading isn't going anywhere. Any copy protection can and will be broken. What the studios have to do is realize that their current distrobution and marketing practices are outdated. They must adapt in order to survive. And the WILL survive. The Movies aren't going anywhere.

 

[Lew Crippen]

You make some good arguments, Brian, though there are some practical (at least today) problems with a few of your points.

Simultaneous releasing of films worldwide does two things: it delays the introduction of films as issues like translations in many, many languages must be done and good subtitles and/or dubbing must performed before any release is possible and it raises the overall cost of production because there will be a delay associated with the post-production costs before any revenue hits the books. This model also does not address the release of smaller films and films that may not necessarily be of global interest. There will also be a raise in print costs, as many countries get copies made for the initial distribution after the demand of the first few weeks has subsided.

Your second (especially) and third points are good, though the copy protection issue needs to be addressed somehow.

I mentioned the ad issue already in this post. This is not an issue that really can be addressed by the film producers—up to the distribution chain somewhere—most likely the local theater owners. But we would all be crazy to believe that the removal of ads is not going to increase ticket prices. And while I have read posts where people said they would be willing to pay more for ad-free movies, I’ve read a lot more posts that feel prices are already too high.

Your fifth bullet is again valid.

Your last point is not supported by any real evidence. We can all speculate, but it is pretty clear that the industry is very concerned. I am not saying that you are wrong—I’m just not sure hat you are right.

 

[ChuckSolo]

As a musician and songwriter, I absolutely deplore the "it's OK to download intellectual property for free" mentality. As for ticket prices being too high at movie theaters, I simply wait until the weekend and go see a matinee. I find where the huge cost of the cinema experience comes in, is in the concessions. My wife and I eat and drink all we want BEFORE we go to the movies and that solves that problem. Remember, concessions are a matter of choice. Once you pay the ticket price, you are under NO obligation to pay $4.00 for a large soda!! I would gladly pay a fee to download a movie, provided that the download picture and sound quality would be equal to a store bought DVD. I have NEVER used free Napster or Kazza, and never plan to. I have however downloaded music from the Wal-Mart website and paid $.88 per track, a bargain in my opinion. I have downloaded almost 90 minutes of music for under 10 bucks. I think the issue of product placement and ads in theaters is a direct result of digital video recording, ala, Tivo. When you can skip over ads in their entirety, advertisers are going to go to different media to display their products. I don't much like commercials before a movie starts at the cinema, but I don't mind product placement in a movie. To me, it makes the movie a little more real; much more so than if you see a character in a movie drinking from a soda can with no label or that has the word "soda" printed on it.

 

[Dome Vongvises]

But do not forget why this happened in the first place. I can't place the exact time and date it happened, but I think it started with Godzilla 98. It's fairly common practice I believe for a studio to receive a majority portion of the ticket sales in the first few weeks, the the remaining weeks of theatrical run going to the theater.

People (whoever they may be) expected Godzilla 98 to make a shitload of money. And so the practice of taking in an even larger percentage of the first weeks ticket sales was implemented by "Hollywood". Or at least that's my guess with Godzilla 98.

Either way, Godzilla 98 proceeds to bomb, and nobody got any money, especially the theater chains. And with the increase in wham, slam, bang films that come to theaters that have no staying power, theaters are finding that they're losing more and more money. Companies always find a way to make money, but theaters have to not only rely on their true seller (the over-priced snacks), but on good films with staying power as well. Something like Titanic or Lord of the Rings rarely comes by and even they're double-edged swords because of their running lengths, although I think they're a special case given how well they do and how long they stay at theaters.

And that's what I think constitutes half of the reason why there are now advertisements in theaters. They got to make money somehow.

 

[Lew Crippen]

I’ve been going to the movies for over 50 years and can say for a certainty that the theaters I attended in small town Illinois and mid-size town Kentucky had commercials back in the day. True they were, for the most part slide shows that advertised local businesses such as jewelry stores or a local restaurant, but they were present.

Dome you are mostly correct as to how most distribution works, although there are two models (at least ones that I know about): a distributor can lease a movie (which may not be done much anymore) or it enters into some type of profit-sharing arrangement with the studio.

In the lease model the distributor takes the risk, paying a fee for showing the movie and if it’s a hit, they make a profit, but lose if it’s a flop. The studio makes a modest profit but does not realize big bucks on a hit (of course there can be contract modifications that modify the arrangements). The profit-sharing model speaks for itself.

The theater owners (now mostly chains) have a couple of options on how to lease a movie from the distributor: they can bid for the rights to show a movie for a fixed period of time (and may get exclusive rights in an area) or they can cut a deal for a percentage of the box-office receipts (note the analogy to the lease and profit-sharing arrangements).

In the model where a theatre (chain) gets the rights to (for instance) Godzilla for six weeks for a fixed price, the theatre owner loses big time.

Which is why most deals involve a percentage of the box-office. In a six week deal (I'm kind of making the numbers up) the theater gets 95% of the take, the second 90%, the third, 85% and so on. This is usually modified so that the theater first takes off his base operating expense (assume $5,000/week). The remainder (or the net) is split 95/5, 90/10 or whatever. The result is that in the first couple of weeks, even if the theater is sold out, they won’t make much of a profit and unless the movie has ‘legs’, the number of people attending in the latter weeks won’t be so great so again the profits will not be large. And they can even lose, if the box-office is not enough to cover their operating costs (the $5,000/wk).

Now assume receipts of $10,000 in the first week (probably 1,300 or so tickets considering student/senior and matinee discounts). $5,000 is retained for operating expenses and $5,000 is split 95/5 giving the theater a grand total of $250 profit for the week. And even if the movie is twice as popular bringing in $20,000, leaving $15,000 to be split the theater makes a massive $750 for the week. Which is one reason for concessions. And advertisements. I don’t have any idea what ad rates a local theater charges, but you don’t have to be a nuclear physicist to quickly realize that selling half a dozen adds at modest rates is going to mean a lot more net revenue to the theater than the straight movie net income.

A longer way of coming to your conclusion. And for me evidence that complaining about Hollywood and fat cats is not going to do away with ads.

 

[Lew Crippen]

Chuck, I could not agree more with this—and with the rest of your post.

With a few exceptions, I find very few people who have actually created something of commercial value, think free (i.e. illegal) downloading is a sound idea.

 

[Brian Kidd]

Lew,

I agree that there have always been ads at the movies, but the difference between unobtrusive slide shows and loud (and sometimes overly long) commercials is striking. I have no problem with slides at all except for the ones that say "Find the bottles of Coke!" and then proceed to show an entirely black and white photo with big red Coke bottles all over the place. I know that Corporate America thinks we're stupid, but COME ON!!! It's like:

*************COKE******************

"Heck! I don't see nothin' nowheres!"

 

[Lew Crippen]

Brian, not to disagree, but too add to your comment, I am beginning to see more ads that are tied in with notices to turn off cell phones (and similar issues), that are reasonable clever and entertaining—and brief.

Those kind of things work just fine for me.

 

[Seth_L]

Well... on the news that movie tickets will be climing to $10.50 this year I think the local theatres can kiss my business goodbye. I won't be downloading, but rather renting and buying.

 

[ChuckSolo]

C'mon guys, to be fair, where would we be today without "Corporate America?" Piracy is a legitimate concern to those folks, and while I think that a lot of the products, CDs, DVDs, etc., are over priced, "Corporate America" only charges what they think we the buying public is willing to shell out. Overpricing is our fault, if we refused to shell out that type of money for legitimate copies, "Corporate America" might price these products more fairly. Pricing though is NO excuse for piracy. I would much rather do without than rob someone of their right to profit from an intellectual work. This is why Wal-Mart and Target are so successful at selling DVDs. You walk into FYE or Sam Goody, or Suncoast and they charge $19.00 to $22.00 for a new release and then WalMart/Target offers it the first week for less than $16.00. But really, how many of you are going to pay the $19.00 to $22.00 at a local video store to avoid the pain in the butt of driving all the way to the local WalMart/Target.....especially if you are a guy and hate shopping centers in general. I think the only time I am going to really get angry with "Corporate America" is if they actually start incorporating commercial breaks into a feature film shown in a theater. I now refuse to watch AMC because of their adding commercials to their features a couple of years ago. If it wasn't for the two or three shows that I like, I wouldn't even have cable, although my wife might insist we do. Although those "Find the bottles of Coke" slides are ludicrous, I rarely even notice the slides as I usually enter the theater and slouch down in my seat and close my eyes until the lights go down and the projector goes on. Methinks some of us are nitpicking at this point since we do get to watch an entire film at the theater without interruptions (intermissions don't count on a very long movie).

 

[DanMarquardt]

dome: I think the shift to front-load the lion's share of the profits to the studios happened before godzilla. jurassic park was pretty high, star wars ep.1, etc...

and don't forget the shortened release window (started with batman). movies don't have "legs" too much anymore since so many people simply wait till a video release!

 

[David Fisher]

John Doran said:

Exactly. Again, look at the high tech industry. Over 25% of the business software used in America is pirated. The proliferation of black market software hasn't driven local businessmen out of business. Yeah, it means that some of us have a harder time to find work, and it means that nearly half of our profits (worldwide piracy rate is over 40%) are stolen every day. And somehow, we're OK.

We don't have to commercials that lay the finger of blame on the customers. We know that the leaks come from within the industry, but we've been forced to run a business that fundamentally trusts the consumer. Sure, we're getting screwed. But we're also making enough money to insure that everybody in the process is paid pretty damn well. It's not perfect, but at least we aren't perceived as alienating the average consumer.

 

[Lew Crippen]

An interesting and emotive post David. In the post I quoted, you used language like ‘Hollywood rapes me at every step of the way’, so you may understand why I assumed that you did not understand the difference between Hollywood and theatre owners. Sorry for the confusion, but I’m sure that you can understand why I would have been confused as to how much you knew.

I do think that you have a valid point as to commercials about piracy that are directed towards those who attend movies in theaters. On the other hand, I was just reading this morning a statement by a defense attorney who had been retained to represent some people being sued by the RIAA. A part of his defense (to the public, not necessarily in court) was the claim that the offenders were ‘soccer moms’ who did not understand the complexities of copyright law. A part, I’m sure of what the industry is trying to do is educate and remove yet one more reason for dubious activities. They may be mistaken in their efforts, but I’m pretty sure that some effort is better than none.

You may rightly think that there is something wrong with the distribution method of movies that causes theatre owners to depend on alternate sources of revenue (concessions and ads) for their profits, but it is factual nonetheless. And is nothing new. Basically the theaters get about 5% of the box-office receipts during the first (well-attended) week of a new movie (after expenses). This does not allow for much profit.

I too work in the IT industry (and have done for over 30 years). I can say with surety that the industry (and companies within the industry) take very aggressive steps with some foreign governments, trying to resolve piracy issues. Microsoft was reported to have had such discussions with Mahatir (head of government of Malaysia) several years ago when they were setting up a ‘high-tech’ corridor, to cite only one example.

I don’t share your optimistic view of the domestic IT industry, as I have many, many friends and colleagues without work. While I would not lay this off to piracy, it would be short-sighted to not consider it a factor.

 

[David Fisher]

Lew,
Thanks for the feedback. I really should apologize for using the word "rape" in my initial post. It's quite insensitive, and I hope that I didn't offend anybody. (I don't think that I did, but it doesn't excuse using that phrase).

I understand that the industry wants to maximize interests. I can't argue with that. I completely understand that theater chains sell local advertising to run between features, I don't have a problem with that. And it does pay the bills of the local managers who run the large chains. (I do care about that local guy, I don't think that the industry does.)

At the end of the day, a good movie experience is still worth the hassle of advertisements and high fees. I'll pay good money to have a good time. I just think that the high price includes my permission to complain every now and then.


I love the industry, and that's the source of my optimism. I guess that I was saying that I still find satisfaction in my job (and industry), even though many of the average users (including "soccer moms") don't see any problem with an illegal installation of Windows XP. Quite a few of my friends are looking for work, too. If you wanna talk about the job market... my pessimism will become apparent. (And you're correct, piracy isn't the reason why IT is in the dumps, and I'm afraid that it won't be getting better soon. :frowning: )

 

[Lew Crippen]

No apology necessary David. I was not offended, just confused. And you have every right to scoff at, or mock futile efforts (I notice that now we are going to just get teens to just say no to sex, which will no doubt be as effective as saying no to drugs).

As an aside, when my son was young, he was quite frustrated (but understanding) that I did not let him copy his friends computer games (nor allow them to copy his, insofar as I could restrict that activity) or to copy music). Now that he works creating things of his own that are protected by copyrights, he has a different view.

 

[Joe Schwartz]

How do you figure that? Sure, it'll be easier to run a digital projector, but most theaters don't have dedicated projectionists these days. In ten years they'll still need people to sell tickets and refreshments, collect tickets, and clean the theaters.

 

[Peter Apruzzese]

Who says there's going to be a lot of digital projectors installed in 10 years?

 

[ChuckSolo]

David, I understand your frustration, but..........how can you be so passionate about software piracy and still say you would download a movie for free? I am the MIS director for an insurance company and I take pains to make sure that we are in compliance with our software licenses. We run Microsoft, Novell, and Oracle, and let me tell you those licenses ain't cheap. I think outsourcing of IT services to foreign companies (read India) is fueling the scarcity of IT jobs here in the US also, not just software piracy. You can't have it both ways. Software and movie/music piracy is the SAME THING. NO intellectual property should ever be shared free of charge unless it is in the public domain. Don't get me wrong, I abhorr Microsoft's pricing/licensing schemes and predatory practices, and that is why I stick with Novell and soon will be installing a Linux Oracle database server, but even Microsoft has a right to make money off its intellectual properties. I am proud to say I have NEVER pirated software, music, or movies in any shape, way or form.

 

[Geoffrey_A]

Here's some of the things that strike me about the piracy issue. Firstly, the ridiculous ly high estimates on how much money is being lost. I'm sorry, but every time someone views a pirated film, that is not a ticket sale lost, because that assumes that if they hadn't had the bootleg, they would have gone to the theater. Doesn't work that way. The assumption also seems to be that these bootlegs are replacing legitimate copies. It's undeniable that there are priated dvd's out there. Honestly, I'm way too lazy to hunt them down, and way too suspicious of their quality to buy them. I dare say there are a lot of people of the same mind. When you take into consideration how cheap dvds are, paying a little less for a product you can't be sure of, most people won't, and the people who would probably wouldn't have bought it at retail otherwise. Piracy is out there, but the effects of it aren't nearly as cripling or wide reaching as the industry would like us to believe. Certainly not in north america at the very least.

Just the way I see it.

 

[Paul_Sjordal]

First of all, I don't entirely agree that entertainment piracy can be directly compared to software piracy. People's attitudes and more importantly what they do with them are too different in each case.

For example, a pirated movie gets watched once or twice, then probably never again, much like legitimate purchases. That pirated movie takes forever to download and when you finally get it, the result is drastically lower in quality than what you'd get purchasing the product legitimately (yes, I understand that there are exceptions).

In the case of software piracy, the download sizes are comparatively smaller, the result is exactly the same as a legitimate copy, and the product will probably be used every day by the pirate, possibly even used to make money (e.g. using a spreadsheet program to manage a business).

Apples and oranges.

Also, people in this discussion aren't making enough of a separation between piracy in places like North America and piracy in places like Hong Kong.

In Canada (for example), pirated movies represent a tiny fraction of total sales, and most of the pirates aren't making money off their piracy. For the most part it's poor college students who risk losing their on-campus internet priviledges for what they're doing.

But in certain countries, you have entire industries dedicated to ripping off Hollywood content. I don't think anyone here who mocks the anti-piracy ads would condone any of this.

So are downloaded movies a problem? Yes and no. For the vast majority of people, the effort just isn't worth the reward. Who's going to spend days downloading a giant file just so you can see a grainy version of The Hulk? Over here no one. It's just not worth it to us. Unfortunately, it's worth a lot to those pirate companies in China, Indonesia, etc. It's well worth their while because they stand to make a lot of money on it.

So that college student might be convinced he's not doing anything all that wrong, but he may be in fact feeding people who are doing something very wrong.

Thus Hollywood has every right to be concerned about piracy in this country and other developed western nations (no matter how harmless it looks to us), but the problem is, making paying customers watch condescending ads is almost precisely the wrong thing to do.

Now the music industry is a completely different animal and I don't know if this is the right place to discuss it. They are starting to head down the right track with services like iTunes, but things could be better. All the arguments by the music industry belie the fact that they wouldn't be where they are today without a certain amount of giving their product away (as anyone with an FM radio and cassette recorder will tell you).

Heck, the metal underground of the 80s (basically a pre-internet pirate network based on cassette tapes) essentially created the careers of bands like Slayer, Anthrax, Pantera, and oh yeah, those Metallica guys.