Should the Film Industry Embrace Piracy-Related Technologies?

An article in MIT Technology Review this week looks at the history and trends involving content distribution and suggests that Hollywood should consider adopting methods that are similar to those related to media piracy. While efforts to combat piracy continue, some question the perceived impact of file-sharing and other techniques, suggesting the film industry might be better served by adopting new ways to distribute its content and gain potential exposure.

Jack Valenti, the late president of the Motion Picture Association of America, saw videocassette recorders as a danger to the film industry. In 1982, Valenti told Congress, “the VCR is to the American film producer and the American public as the Boston ­Strangler is to the woman home alone.”

The issue ended in 1984 with the U.S. Supreme Court ruling that guaranteed a consumer’s right to record media. Despite doubts, the film industry grew from $2.7 billion to over $5 billion in 1990, and the DVD would later account for about 50 percent of the studios’ revenue.

In the past ten years, the film studios have attempted to shut down online file-sharing services with lawsuits against users by arguing that the entertainment industry would be gravely harmed. File-sharing hasn’t harmed the industry, but has provided a new system for distribution, advertising, and a tool for market expansion.

When Megaupload, a popular file-sharing website, was forced to shut down in 2012, worldwide box office sales for modestly funded movies decreased, according to a study by the Munich School of Management and the Copenhagen Business School. Mainly large blockbuster films may have gained from the site’s closure, suggesting that illegal file-sharing might be the most effective way of advertising and market research.

Julie Bush, a screen and TV writer who wrote for FX’s “Sons of Anarchy,” believes the film industry is starting to acknowledge the value of file-sharing. “I believe torrents are the libraries of the future,” Bush says. “The more people who see and enjoy my work, the more opportunities I will have to be compensated.”

HBO currently offers its HBO Go streaming service to subscribers, allowing three users to sign in at once. HBO could block the users’ IP addresses or have other restrictions, but the company decided that offering wider exposure of its shows is best to prevent any possible profit leaks.

“In 2010, the Government Accountability Office said that such significant damage to the film industry could not be substantiated,” reports Technology Review. “Even a cursory examination of box office figures makes that clear: 2012 was Hollywood’s best year in history, with $10.8 billion in North American ticket sales and a 6 percent increase in attendance over 2011. Additionally, a study published in 2012 by researchers at Wellesley College and the University of Minnesota found no link between the emergence of BitTorrent and declining box office revenues in the U.S.”

Hollywood would release films at different times in different markets, but now the film industry is offering films such as “Arbitrage” and “Margin Call” in both theaters and as video-on-demand, or “day and date.” Beginning in 2016, Netflix will carry first-run films from the Weinstein Company.

“It’s a signal that Hollywood is coping in the same way it handled other perceived threats, from television to games to home video: with innovation and marketing,” notes the article.