Movie industry sees problem, not opportunity

OPINION: I was lucky enough to make an oral submission at the commerce select committee last week. Lucky because for the first time I got to participate in the law-making process, and I have to say it's an excellent one.

The committee members were informed, the participants well prepared and the questions sharp. The process for the Copyright (Infringing File Sharing) Amendment Bill has been under way for some time now, and the latest version is approaching something all parties can live with.

I spoke after representatives from the movie and music giants, who fronted professionally and presented some good debating points. Yet it seems they have lost in the court of public opinion, and the reason was evident to those present.

The Motion Picture Association and NZFACT (Federation Against Copyright Theft), representing the movie industry giants, spoke of finding on average 158,000 infringements - that's movies being downloaded, each month.

The movie industry looks at these large download numbers and sees a big problem.

It lamented the loss of sales and its inability to enforce penalties against the downloaders.

The barrister ably representing the major recording artist organisations Rianz (Recording Industry Association) and Independent Music NZ lamented the potential removal of a customer disconnection policy while the internet service providers still enjoyed a safe harbour, protecting them from being sued for the actions of their customers.

All of the copyright holders wish to be able to send infringement notices through ISPs to end users, and to have some sort of system where at least temporary disconnection is the result for repeat infringement.

This is indeed what the current draft of the law is proposing.

Those 158,000 movie infringements equate to 7900 infringements each working day.

The copyright owners have automatic programmes that not only detect those infringements, but also automatically generate and send infringement notices to the ISPs for forwarding on to customers.

This is patently a ridiculous number and would have a huge chilling effect on how people use the internet.

The movie industry's upset about illegal downloading but don't we wish that it would look at those numbers and see that people love movies, and that they are willing to go to great lengths to get them? Won't it open its eyes to the enormous opportunity?

Those downloaders are customers in waiting, with an NZFact survey last year even showing that 85 per cent of downloaders would pay something for a legitimate movie. The problem is that they would not pay much, with half unwilling to pay more than $5, and no-one willing to pay over $20.

Those numbers are unfortunately small when compared with new-release DVDs, which sell at up to $40 a piece, and the movie companies no doubt despair at the difference. Meanwhile, the underground demand continues, with those new-release movies uploaded and available for free the instant they are released.

The answer is to ask the customers to pay what they can afford. Airlines do this by varying prices by seat quality and timing of purchase, and the motion picture industry can do it as well. Movie companies can use different video resolutions, renting or buying and timing from launch as the factors to vary price.

Those downloaders that are willing to pay just $5, for example, should be able to do so, but they would see a video in relatively low video quality with stereo sound only - something like YouTube.

Those that can afford more should get HD or HD3D versions of the movie. Everyone would pay a premium for new releases, and back catalogues would be cheap.

The music industry is on to this, with YouTube stashed full of new release music videos, as well as huge back catalogues. These are free to play, and help people explore music. For those willing to pay a little, iTunes offer new- release songs from just $1.79, and those with deeper pockets can download the entire album or buy the CD.

The implications for such an approach are scary - movie companies would worry fans would stop going to movie theatres, or that DVD sales would fall. Movies would be less valuable to television station owners, and stores that rent movie DVDs would appear delightfully antiquated.

On the other hand, launch weekends would add millions of homes to the thousands attending theatres, locking in enormous returns for the biggest movies.

And if movies were cheap enough then, as with music, we would over time buy hundreds of movies for a few dollars each, so that we would all have a digital collection - as we do with our music and iPods.

Movies, songs and books are made with passion, and their creators want people to enjoy them, as well as to make good returns.

Lowering the prices drastically will mean that we can all enjoy their works, while they can enjoy great returns.

Lance Wiggs is a consultant to industrial, media and internet-based businesses. He is a director of several companies and a regular blogger on his website lancewiggs.com

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