Hollywood, SOPA and the AMC Pacer model
In the middle of 2010 I wrote a post titled “ACTA and the Overblown Threat of Piracy” that discussed the proposed Anti-Counterfeiting Trade Agreement. ACTA is basically an attempt by legacy media companies to leverage their hyperbolic rhetoric and wildly inaccurate math into an extralegal framework that would allow them to dictate which web sites are permitted to exist.
It appears to be off the table – at least for the moment – so the existing US framework is largely based on the Digital Millennium Copyright Act (DMCA). The DMCA definitely has its problems, sometimes hilariously so, but contains one important protection: Safe Harbor provisions. Safe harbor means, if you host infringing content unknowingly, and respond in a timely manner to DMCA takedown notices, you cannot be held liable. This makes it possible for a site like YouTube to be a “dumb pipe” and allow users to upload whatever they want. If YouTube had to vet every single clip, the site would be unusable in its current form; few would bother uploading a video and then waiting until it eventually got cleared by the censor (or not).
That, along with the occasional random and specious seizure by the Feds, is the current practice. But when the Stop Online Piracy Act (SOPA) started making its way through Congress I thought I was going to have to write a “SOPA and the Overblown Threat of Piracy” post. In fact, I might just need a “[Insert wrongheaded bill or trade agreement acronym here] and the Overblown Threat of Piracy” template ready to pull out every year and a half or so until the copyright extremists break the Internet or are defeated once and for all.
Happily, though, this time around there were a number of really thoughtful posts covering the deeply problematic technical, legal and commercial problems with SOPA. So instead of just echoing points made better and with more detail elsewhere, I’d like to address something raised somewhat tangentially in several places: The viability of existing legal music and video services, in particular Hulu.
Chris Hayes raised this on his January 15th show. Perhaps channeling just a bit of his inner grumpy old man, he compares today’s file sharers to those of a more innocent time (i.e. when he was in college):
But let me respond to that quickly because people make that argument, and that argument seems dubious to me for this reason: In the era of…when file sharing first exploded with college dorms downloading, I think there was a case to be made that a lot of what was happening was convenience, right? It was, I don’t want to buy CDs and burn them, and I am just sitting here with a high speed connection, and I can get it. But what has happened since then with Netflix and iTunes and all these things is that you can get most of what you want on the Internet, right? That convenience aspect to me seems greatly reduced in a world in which we do have Hulu, so I think there’s been some innovation on the part of big media companies, right? You can watch “Lazy Sunday,” the iconic Saturday Night Live video that was downloaded, that was viewed seven million times on YouTube, which is what I think is what precipitated your [NBCUniversal Executive Vice President and general counsel Richard Cotton] interest in this topic.
Hulu is an incredibly important player in the online piracy discussion, and here is why: Unlike Netflix or iTunes, it is a creation of legacy media companies. So the way Hulu works is very instructive of how these companies approach online content.
They have approached it with roughly the same mindset that the US auto industry approached competition from Japan in the 1970s. Remember that? Low mileage cars with planned obsolescence baked in suddenly had to contend with fuel efficient and reliable compacts in the showrooms, and they looked pretty shoddy in comparison. So executives lit upon the brilliant approach of not offering a competing (or heaven forbid superior) product, but of producing really crappy versions of the vehicles that were eating their lunch. Then when these inferior products inevitably tanked the geniuses in the boardrooms could claim that the public didn’t want fuel efficient, reliable cars, and they doubled down on gas guzzling rust buckets.
Hulu is basically the Ford Pinto of video sites; it isn’t a minor player because it’s the best kept secret on the Internet but because it sucks. (In fairness, unlike the Pinto there are no reports of Hulu bursting into flames, though I believe it also has yet to sustain a rear impact so who can say.) It appears designed to fail so that Hollywood could point to it, say consumers prefer piracy to a legal alternatives, and attempt to shoehorn the online media experience into an unworkable pre-Internet model. This in turn is very convenient for an industry that has so stubbornly resisted coming to terms with new technology.
Hulu has become such a mess that its owners are desperate to unload that turkey attract a buyer, but no one is dumb enough to offer anything for it. So it limps along. Yet when NBC and News Corp. launched it in 2007 it actually had a ton of promise, and a lot of its early users loved it. The joint owners seemed committed to getting lots of content out there, and it looked like what was emerging was a real winner: A place where viewers could watch any of the shows on two of the four major networks, along with a wealth of other clips, older shows, trailers and so on.
More importantly, it offered full runs of content: all episodes of all seasons. This is huge because that is one of the main ways people like to watch shows now. Late to a popular NBC show like “The Office”? Go to Hulu and catch up! Start with the pilot and work your way up over a few weeks. Hulu abandoned that quickly; it seemed like weeks or maybe months to me, but in any event they started screwing with content well before they had any real traction in the marketplace – which, as Netflix can testify, can be hazardous to your bottom line even if you are established. Doing it before is suicide.
So they were randomly yanking content. Then they launched a paid version, which is fine if it allows access on more devices or more throughput – more simultaneous streams, high def options, stuff like that – but will only sow confusion if it offers different content. Guess which route Hulu took.
Moreover, it has different interfaces, most of which are about as appetizing as garlic ice cream. You just never know what you’re going to get when you go there. It all comes across as a half-assed mess.
This is what the studios have come up with; this is their alternative. The wheels were meant to come off, the engine was supposed to fry. It was never intended to be competitive with anything, it was meant to be a scapegoat.
Which is a shame, because there are lots of people who want something like what Hulu initially looked like it might be. If anyone from the MPAA or RIAA is reading this, please take away the following sentence before anything else in this post: It is not in any company’s immediate or long-term interests to presume its customers are criminals. Folks are willing to pay for quality; here’s just one note of despair from a message board: “Alternatively, does anyone know of (legal) alternatives to Hulu? I have no problem with paying for a good service, just can’t find someone to give my money to.”
Yes studios, that’s right – people want to give you money! In exchange for a quality service, sure. Some will game that system, some will stay outside it, but there are enough people out there who want to give money to you to make it profitable. But you have to actually put some effort into it. Quality offerings, along with outreach, education, and well placed reminders – think fences, not walls – can get lots of people into your orbit and happily parting with their hard earned cash.
Will the profit margins be as fat? Probably not. But lots of professions, from programmers to travel agents, have faced that future without trying to make the Internet unusable while fighting it. Even within the industry there are plucky startups like Bandcamp finding ways to make money delivering entertainment to people. Draconian copyright schemes would either shutter or neuter sites like that, because the cost of fighting even a specious liability claim would be prohibitive. While many of them are successful now, they operate on razor thin margins. The prospect of huge legal bills would be enormously chilling to them. (Sarah Lane pointed this out in a Tech News Today podcast last week; that episode’s discussion on SOPA is well worth a listen.)
And incidentally, if you think running these upstarts out of town on a rail might be considered a fringe benefit – at a minimum – of the proposed legislation, well, you may just be on to something. Legacy media companies don’t want the competition, and they certainly don’t want living, breathing counterexamples to their empty claims. But if the major studios spent as half as much time and money trying to deliver a decent product as they did conjuring up monstrosities like ACTA, SOPA and PIPA, maybe the future wouldn’t look so terrifying to them.
Cross posted from Pruning Shears.