We've Got Hollywood Covered
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YouTube + Film Studios = Disaster Movie

It must be ironic, rather than conspiratorial, that just as a Stockholm court jails two individuals responsible for the Pirate Bay and SAG reaches a tentative and contentious deal that YouTube has successfully seduced some big content providers. Obviously Google is not desperate for cash, but it certainly is desperate do something with YouTube, a […]

It must be ironic, rather than conspiratorial, that just as a Stockholm court jails two individuals responsible for the Pirate Bay and SAG reaches a tentative and contentious deal that YouTube has successfully seduced some big content providers.

Obviously Google is not desperate for cash, but it certainly is desperate do something with YouTube, a money pit. YouTube is neither technically (it uses Flash player) nor artistically innovative.

It says a lot about Google that it won’t become a content producer yet paid $1.65B for a site for which it expects everyone else to do the donkey work.

YouTube has colossal costs — Credit Suisse’s recent estimate is $1M a day on bandwidth. To solve its predicament, Google needs the studios more than they need Google.

For the film industry, partnering with Google carries many risks. The main one is that for them, too, YouTube will be a money pit. Considering all the vast material in archives, it’s fairly logical to assume that if the programming finds an audience, then the duration of content will lead to them being lumbered with the exorbitant bandwidths costs which have plagued Google — and it’s highly unlikely any subscription model will cover the costs.

The arrangement can only “succeed” by poaching audiences from TV. Worse still, advertisers who suspect they are overpaying in the traditional currency of viewing and circulation figures will likely migrate too. However, any YouTube partnership upholds it will be detrimental to old media. If this were a winner, Google would be throwing its money in Hollywood’s direction.

There are still more perils. The risk of a brand being subordinate to YouTube is high, particularly for the networks. Collaborating with Google will morally acquit the company of assisting in copyright theft.

But possibly most dangerous of all, the content providers are playing in an arena not of their own making. Home entertainment from VHS to disc has come to market in what was the traditional way. When CD rewriters became commonplace on computers, the moat was jumped. As the moguls dithered, an entire digital distribution network has been assembled with industrial efficiency that is possibly unprecedented — even fake goods need production facilities and materials.

The genius of piracy is that since it is peer to peer — once a film or music has been illegally downloaded the recipient then becomes a host, too — it implicates everyone. There is no taboo.

The psychology, and the extent, of internet piracy are being ignored. File sharers find it hilarious that they’re being portrayed as the foundation of international terrorism. Though it’s easy to download a film and sell copies, most of the people pirating think it’s not much different from borrowing a DVD or CD. The software has made it so easy that now users just search for a movie before they go to bed or leave for work and have a 4GB film waiting for them later.

Anecdotally, parents are turning a blind eye as their teens quietly acquire what they cannot afford to buy them — or in more affluent cases where they plan to spend their money on something else. A generation that will almost certainly be poorer will be unwilling to start paying for what they take for granted.

Once, analysts wondered how much households would be willing to pay for broadband; the answer is quite a lot because it pays for itself. There is a very grave danger that Hollywood’s participation in a net model will signal a free-for-all.

The disrespect for the industry cannot be underestimated, either. Stars can no longer open movies, but their antics and attitudes can remove guilt from piracy. Concentrating on event movies for younger audiences — the segment most likely to download illegally — at the expense of others has helped erode cinema’s place in the entertainment pecking order.

Here in London there have been a few reports on the squabble over YouTube revenue from the Susan Boyle clip. Both the Times and The Observer ran informed calculations. The figures suggest that even a snippet with so much momentum is hardly a goldmine.

A clip that gets say 1 to 2 million views will only bring in $20K. Can an episode with four ad breaks per hour count on much more?

And remember with clicks, the advertiser only needs one to know a message has got through. From the advertiser’s point of view, its efforts in the platforms of old media are needlessly excessive and expensive. With clicks, the performance of the advertised goods can be audited more succinctly and market effectiveness determined more easily.

If the advertiser has an interesting site which persuades the viewer to register, then the customer is captured. Unlike TV or print advertising, persistence is not needed. I suspect this is an overlooked factor in the continuing disappointment over internet revenues for newspapers on the web.

To my mind, any alliance with YouTube or Hulu is commercial suicide.

The music industry has allowed a huge number of music videos to be streamed on YouTube — has it helped stem the collapse? Absolutely not. Touring is now considered to be the only way popular music can pay. Actors and the associated trades of film and TV production don’t have the luxury of something like that to fall back on. They don’t have a plan B.

So what is to be done? 

The government has to take serious and profound steps to protect intellectual property. Despite the hostility Democratic Hollywood often arouses in the U.S., as foreigner I can safely say it is probably your most patriotic industry. In Europe, social division is less pronounced, we have the luxury of free or subsidised health care but our ungrateful films tend to be grittier; social norms are questioned more thoroughly.

Young Iranians, for example, love American pop culture not because it is radical but it projects an American dream that transfixes them. Hollywood rarely embarrasses America. The images of America that damage its standing abroad are largely Republican — televangelists in sex and money scandals, and Enron widows pleading poverty.

Yes, some of the films stink, but my sentimentality wants the town to be saved.
 

Mark Lynch lives and works in London, where he writes an online novel, The Republic of Truth, about teen survivors of a climate disaster.