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Turfscape (42.95)

Oh, Bono...not you too!

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January 04, 2010 – Comments (2) | RELATED TICKERS: NFLX , AAPL , BLOKA.DL

U2 frontman Bono penned an opinion piece in the New York Times on the fate of the film industry if it fails to heed the mistakes of the music industry in combating online piracy, otherwise known as "file-sharing" (BBC summary article here). Bono suggests that the film industry (and others) should increase internet monitoring and prosecutions of those found to download a low-grade MPEG of "Happy Gilmore" or "The Hangover". Bono seems to believe that the music industry's big failing was not being vigilant enough in catching and suing 13-year olds who wanted to listen to Britney Spears on their PC.

Now, I'm no music company CEO...but, it seems to me that the biggest factor in reducing illegal file-sharing for music was increasing legal channels for content! The mistake of the music industry lay not in laxidasical enforcement, but in clinging to a dying business model built on physical deliverables and brick & mortar retail outlets. By refusing to recognize that Compact Discs and cassettes would not be able to compete with playlists and streaming "radio", the music industry opened the door for illegal channels to fill the void.

The film industry has remained slightly ahead of the game, mostly by having a less portable product which allowed them to watch this happen to music first. "Big Film" (as it were) had the fortune of not being the first target of piracy. They've done fairly well in working with companies like Netflix to provide movie downloads and instant gratification to consumers. But, they'll need to step up that kind of thinking and realize that the business model is changing faster than they are. Already DVDs are on the dying side of technology. There are fewer reasons every week to require a physical deliverable for movie content. With products like Apple TV, Tivo, XBox and other connected devices, direct electronic delivery will supplant discs same as it did with music...only faster.

This bury-your-head-in-the-sand approach is really what's killing broadcast television. The business model has not kept up with technology and consumer habits. First was the "keep our shows off the internet or we'll sue" approach. Then the battles between making it available on the network's own website or as a paid download on iTunes. Then Hulu, TV.com...and who knows what's next....But the fact remains that the consumer has made it clear that appointment viewing is no more. On-Demand is what's being demanded. You want large numbers of viewers to tune in at the same time? You need an event, not a partially funded, poorly-written half-wit "comedy". You want people to sit through commercials? If I have a choice at all, it simply isn't going to happen. Change the model...be it subscriptions, premium content, embedded sponsorships, micro-targeted programming, anything else. But it should be so painfully clear to all networks by now that the advertising driven model of scheduled programming is resting firmly in the backyard of 8-tracks and VHS.

Film has been mostly forward thinking, and if a major iTunes-style deal is on the horizon, they're likely to be in decent shape. Network television is not dead yet, but unless they take a comprehensive approach to changing the medium, you might as well call them "Blockbuster".

(Disclosure: Long AAPL. No positions in any other entertainment-based industry)
(Secondary Disclosure: Half the reason I wrote this was for the pun in the headline...)

2 Comments – Post Your Own

#1) On January 05, 2010 at 2:46 PM, lemoneater (82.88) wrote:

Liked the pun :)

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#2) On January 05, 2010 at 4:19 PM, Turfscape (42.95) wrote:

lemoneater wrote:
"Liked the pun :)"

Thanks. It's what I live for...

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