A Year Of New And Changing Audiences

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One of my favourite moving images is the slow motion footage of a fridge exploding in Michelangelo Antonioni's Zabriskie Point. It's an apt metaphor for a post-Napster entertainment industry.

What does it for me is the frozen chicken, careering like an oversized Higgs Boson God particle towards the lobster, itself in an after-shelf orbit. Nothing is in the one place anymore or will be again. It is all up for grabs. The sanctity of the marketplace as fridge has been destroyed. I like to think of this image as where we are at now. In the history of the entertainment industry the outstretched claw of the media mogul lobster is stroking the cryogenically chilly wing of the tech chicken, while both fly through space.

Like it or not, the illegal downloading of digital media content is a definitive aspect of life and business online. The illegal downloading of film, music and games is still widespread, despite the best efforts of the likes of the Record Industry Association of America (RIAA), the Australian Federation Against Copyright Theft (AFACT), Music Industry Piracy Investigations (MIPI), the Motion Picture Association of America (MPAA), the looming Trans-Pacific Partnership (TPP), legal proceedings by US and Australian film studios and television networks, and by a host of other copyright enforcement acronyms worldwide.

The scale of the economic cost of that illegal downloading has been the subject of many reports and a great deal of controversy. While rights holders and enforcement agencies advised in 2012 that the US loses between $200 and $250 billion and 750,000 jobs per year from copyright infringement, the blog freakonomics.com pointed out that the US Government Accountability Office concluded the figures “cannot be substantiated or traced back to an underlying data source or methodology".

In April the Wall Street Journal reported on the difficulties of getting accurate or reliable figures on the impact of piracy. One academic said, '"the jury is still out on this. The aggregate data is conflicting”. Moreover, "box-office and digital revenues are rising while DVD sales have been falling," the article continued.

The Sydney Morning Herald reported in August this year that a study, File-Sharing and Film Revenues: An Empirical Analysis, looked at 166 films released in Australia between January 2010 and August 2011. The Australian film industry estimates losses of $1 billion a year from illegal downloads, but according to one of the report's co-authors, Dr Jordi McKenzie, that was "on the assumption that one download equals one lost sale … This approach is fundamentally flawed. Obviously not everyone who downloads an album, TV show or film would have actually been willing to pay the full price of the legal alternative''.

The approach of industry now seems less focussed on litigation and more on using the data to gather information. The WSJ quotes MPAA spokesman Howard Gantman, who admits that, “At the current time we do not actively cite the figures directly relating to movie piracy, as the landscape has changed significantly since these studies were conducted both regarding the growth of broadband and the development of streaming technology, as well as the introduction of hundreds of new sites world-wide for viewing legal online content.”

Neil Peplow, director of screen at the Australian Film Television and Radio School, was a producer of the 2009 film, Frequently Asked Questions About Time Travel. On IMDB at the time of writing its rating was 7.0/10.

In an interview with Colin Delaney on Mumbrella, Peplow explained, “We [noticed]that Torrent Freak (a torrent news blog) had a chart and we appeared three weeks in a row. That piqued my interest … So I wrote to the Torrent Freak blogger, and I said ‘I’m an independent producer. I’d like to know how many times my film was downloaded and if there were any legs in a sequel.’ He said, ‘It has been downloaded 1.2 million times. If you want more information you have to pay for it!’.”

"There wasn’t any DVD interest by HBO, so the pirates suggested I go to Amazon for a bespoke DVD service," Peplow said. "It was the first time I had the audience suggesting a way to distribute it and it opened my eyes on how to engage with the audience. If I managed to persuade half of the illegal downloaders to buy a $2 DVD that was well synced, I’d have made $1.2m … As a producer though, that is your business. You’re wanting to get the money back any way you can.”

Diana Nyad was all over the news in September this year when, at the age of 64, she swam onto the shores of Cuba, having left Florida 53 hours and 110 kilometres earlier with no shark net. Swollen with jelly fish stings, suffering hypothermia and exhausted, she staggered to the beach.

The film of her story is entitled The Other Shore and was produced by Ketchum Labs. It was released direct by Video On Demand, using the distribution technology delivery and payment services of a company named Yekra. Leveraging social media, The Other Shore was marketed direct, driving friends and followers, friends of friends and followers of followers to the Yekra point of purchase. With that closeness of involvement in her story, Nyad could avoid the problem that Neil Peplow faced — to persuade even half of illegal downloaders to buy a cheap DVD.

Suppose you don't want to swim to Cuba to make friends? A little closer to home one of my clients (New Holland Pictures' Cathy Rodda (Overett) and Mark Overett) raised contributing official co-production finance in Australia from Screen Queensland, in the sum of $350,000. German and Finnish producers also contributed to their film, Ironsky, which started life as a cult crowdfund in Finland.

The budget of €7.5 million and Box Office US $8,135,031 for Ironsky created over 130 jobs for Queensland cast and crew, according to Screen Queensland. $3.6 million was spent in Queensland on production expenditure. Of the entire budget, just under a million euros came from fans and followers who also collaborated on the story with their feedback on the trailer and various cuts of the film.

Once a film is available, it will be pirated — but clearly friends and followers are far more likely to fork out and support the film.

In Australia we almost had Optus TV Now. In the USA they do have Aereo, at least in New York.

The Optus TV Now service was shut down on appeal in the full Federal Court of Australia in 2012. In its brief life, Optus TV Now enabled subscribers to record any television program, including live broadcasts of sports events such as NRL matches, and play them back on their phones. Telstra, who had paid $153 million for the exclusive rights to the NRL, was less than pleased.

Aereo, for US$8 a month, gave subscribers access to massive data centres busily recording and encoding standard free-to-air TV signals. They would then be streamed, via a purpose-built web interface, to a subscriber's computer, smartphone or tablet. A separate signal receiver aerial for each subscriber meant when Aereo went to court, they survived. I doubt such an argument would work here.

The CEO of News Corp, Chase Carey, said at the time, “We can’t sit idly by and let [Aereo] steal our signal. We will move [Fox] to a subscription model if that’s our only recourse.”

Threatening to dump free-to-air and move to cable is not a small matter, nor an idle threat. It's also nothing new. In response to home video taping, amendments to copyright law here and in the US legalised time shifting of TV programs. But we no longer tape using a VCR, we use Foxtel and FetchTV, PVRs, or the Slingshot cloud service. Digitising media in this way then makes it available online and accessible to any device. The VCR and the tape-deck have been converged by digitisation; the internet and mobile devices are fragmenting time and playing havoc with traditional television programming.

The TV networks are adopting services like ABC iView to respond to audiences' new habits. They're playing catch up with catch up. Very popular, in-demand TV series are often going straight to the audience via VOD. Even the cable networks are resorting to a strategy of "Express from the US", to supply the latest series in a matter of hours. Often this is not fast enough, with pirates on high-speed connections setting the pace.

In 2011, Lionsgate Television entered into an output deal with Netflix for the prison drama based on the memoirs of Piper Kerman, Orange Is the New Black, for its release straight to VOD. To watch the show, Australians are circumventing Netflix's geo-block, and happily paying to watch. The local free-to-air and cable networks don't even get a look in; previously they would have fought it out for rights to the best content. The good news from this is that it may drive them to produce local content, but that's an expensive way to do business.

It's unsurprising that, according to reports, Foxtel's chief executive officer Richard Freudenstein "has approached executives at Seven West Media and Nine Entertainment Co about establishing a business modelled on US streaming giants Netflix and Hulu".

If you think about it purely from a network engineering perspective, the free-to-air and cable broadcasters are sitting on a wireless and cable system with enviable bandwidth, able to deliver crystal clear streaming in HD. The digital revolution has brought about convergence of content and devices. The next convergence may be of infrastructure, when the device that connects the audience to the TV moves onto the Internet, and the Internet becomes indistinguishable from the cable and terrestrial television infrastructure.

New Matilda

New Matilda is independent journalism at its finest. The site has been publishing intelligent coverage of Australian and international politics, media and culture since 2004.

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