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July 18 at 8:15am

The Digital Recession, Pt 2: The Problem With Piracy

By Ted Hope

By Jim Cummings

The amount of digital piracy in a country is correlated to the average internet speed. It would be very time consuming to download Avatar on a dial-up modem, so many in El Salvador will have to buy a hard copy, but Americans often watch movies online for free simply by googling the movie’s title followed by the word “streaming”. As if this isn’t already easy enough, advancements in internet speeds will only make watching movies for free easier, or in my opinion, ubiquitous.

In 2010, a filmmaker friend of mine raised 125,000 dollars from family and friends for a feature film. He submitted it to festivals, received glowing reviews from hundreds of media outlets including Indiewire and Variety, and premiered at the South by Southwest Film Festival. A reliable distributor bought the film, promising a small theatrical release and contractually guaranteed revenue from future sales. Again, this sounds a great deal like success and many filmmakers dream of being in this position; a Hollywood deal, signs of interest, and the potential for financial return and future projects. Months later however, the distributor released the film for sale on iTunes and within days the movie was popping up on free streaming websites like putlocker.com. Within 1 month the film had countless views and it still lives illegally online for free. Many filmmakers suffer this fate, unable to recoup their investment because of the nature of the internet. This is not solely a failure in business, this is a failure to understand the value of art in the digital age. If all that it takes to separate a filmmaker from revenue are the odds against one person uploading a copy of their movie to the internet, then the future of film is only growing more unpromising.

Steven Spielberg, George Lucas, and Steven Soderberg have recently spoken at engagements about the terrible state of the film industry, (we can only wonder who guards their piles of money when they climb down from them to speak) and yet none of these successful businessmen enlightened the world to the obvious fact: that it is not the film industry that is collapsing, but the value of video, that overwhelming supply has devalued it as a whole, that cameras in every phone will only further push it off the cliff, that people are becoming less likely to pay for moving images in a rectangle, and that there is no stopping it.

How should we cope with this future?

Tomorrow, we continue this discussion with “The Dreamer’s Disease“.  It concludes the next day with “The Future“. If you are just now catching up on it, we started our conversation on The Digital Recession yesterday.  Check it out here.

Jim Cummings is a producer at ornana.com and the creator of Sanfrancisco3dfilms.com
He is also a screenwriter about the imploding film industry (originalhighquality.com)
and you can reach him here: jimmycthatsme@mac.com


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  1. Dean / Jul 18 at 8:15am

    I am saddened to hear about your friends experience, that just sucks.

    “obvious fact: that it is not the film industry that is collapsing, but the value of video, that overwhelming supply has devalued it as a whole”

    I agree to an extent, I think the perceived value has collapsed, due to easy access to free ( illegal ) versions of the content.

    However the actual value has not diminished, just the perception of value…why pay for that which you can torrent or stream for free, especially in this economy ?

    “How should we cope with this future?”

    As always I could quite possibly be wrong, but I can only see the way to cope is to fight a philosophical battle, to really sell the reason why a person should pay for the film you are selling, it is a horrible thought that some of my favourite creators may no longer make films, imagine not having a new Tarantino, or a new Raimi, or a new Speilberg movie to look forward to, increasingly that is the reality we are moving towards.

    Paranormal Activity was a pretty cheap movie and that made a ton of money, so the potential audience is there, even for cheaply originated content.

    Filmmakers should respond, by answering consumer demand firstly, make the stuff available, in as many forms possible, at the same time, to give the consumer the ultimate choice of medium, make it easy for them to get a legal copy, ( at the right price point ) make it clear that without their support you can not survive.

    But beyond that, until a viable alternative comes along to make “free” pay, we are all going to be fighting an incredibly tough battle, because our “craft” requires upfront funds to produce and to even break even, is becoming, more and more difficult.

  2. chrisdorr / Jul 18 at 8:15am

    If video is not valuable please explain how PSY uploaded a short video entitled Gangnam Style to YouTube and has personally earned several million dollars from it.

    Please also explain how recent research has shown that as more paid and advertiser supported online services deliver movies and music, the more piracy declines.

    Also, explain how it is that the most pirated movies on the web are also the most successful at the box office. (i.e the piracy did not hurt their box office–it may have even helped.)

    People will pay for video, you just have to give it to them when they want it, how they want it and where they want it.

  3. zachgoldberg / Jul 18 at 8:15am

    Bouncing off of chrisdoor’s comment, I’d also like to bring up the success of Louis CK selling one of his shows directly to his fans via his website. For $5 you could download a Hi-Rez QT video of the show twice. That’s it. Nothing prevented a fan from then uploading the content to a bit torrent service.

    I believe Louie did $1M in sales in the first two days, more than covering his small production and distribution cost. On top of that, the show saw much less piracy on bit torrent channels than people initially believed it would.

    Louie has established himself as an authority with the comedy community. People will follow where he goes since he lends real value with his storytelling and they’re not hesitant to lay down $5 to receive his content.

  4. Jim Cummings / Jul 18 at 8:15am

    Hey Zach, Louis makes an appearance in Part III of this article. Stay tuned!

  5. BubbaFilm / Jul 18 at 8:15am

    Jim, you’re right on the money, man! Devalue of video. It’s a race to the bottom. And maybe…just maybe, a shake out will be needed. Too many people have gone into the “film biz” because of the cheap tools, but fail to understand that it is not about the red carpet (which many would love be be on). The proliferation of 500 channels with crap reality TV has also made the industry race to the bottom, by dropping not only the bar of salaries, but the bar on quality. And allowing any 20 year old with a phone, to make a reality TV…but that is because the Network or Google is making tons of cash on that crap. There is money in crap because people watch crap..just as people love watching accidents happen…

  6. Tom Weber / Jul 18 at 8:15am

    I’m sorry for your friend, and I sympathize, but anyone with $125,000 riding on a film needs to develop a sound distribution strategy that takes illegal file-sharing into account. To me, that’s a lot of money to spend without a very solid business plan. It isn’t 1994, you can’t just premiere at a festival, sign an all-rights distribution deal and expect the distributor to be nice. Your friend’s experience sounds to me like a failure on the distributor’s end, as well as a failure of the filmmaker to ensure that the distributor did their job.

    If you’re trying to recoup production costs — that is, if your financial backers want a return on their investment — you have a very small window in which to achieve that, and you must do it with revenue from theatrical and semi-theatrical screenings, sales of hard goods (DVD/Blu-Ray), and possibly streaming/VOD. Once the film is broadcast or released via digital download, the genie is out of the bottle and anyone who feels like it can make a copy and upload to a pirate site.

    I’m no expert, but I made a feature-length documentary for about $30K that has nearly recovered its production costs over about two years. It hasn’t performed as well as I had hoped, but I’m trying to learn from the experience and do better next time. Nobody has this crazy market figured out, and you have to realize that your guess is as good as anybody else’s.

  7. Laura Hammer / Jul 18 at 8:15am

    Can we all stop citing one-hit-wonders and “my friend with this film”?! What phantom film from SXSW?! Our examinations of our industry are farcical. When can we stop whining and spend more time on what DOES work? Who is having stable and continued success with their feature films and why? Where are the new Ted Hopes and Christine Vachons? How can we support these filmmakers? Oh how I look forward to your next article… http://youtu.be/DL7-CKirWZE

    Dean: I agree completely with “give the consumer the ultimate choice of medium, make it easy for them to get a legal copy, ( at the right price point ) make it clear that without their support you can not survive”

    See also: http://www.cracked.com/blog/6-harsh-truths-that-will-make-you-better-person/

  8. Michael Walker / Jul 18 at 8:15am

    I get tired of these complaints about piracy in the internet age. It is a problem, but such a small part of what’s killing US indie film.

    The internet has killed a lot of businesses. The ability to find the cheapest dvd, movie, Car, TV, whatever, has made making a profit on anything nearly impossible.

    Hollywood has a pretty good handle on controlling what’s coming into our houses. They are getting better at selling their movies. And they are shutting us out along the way. They shut us out by outspending us on marketing and taking up all the “shelf space”. They kill competition because that’s their business model.

  9. thedarklight / Jul 18 at 8:15am

    “unable to recoup their investment because of the nature of the internet”

    Hmm. There’s two unanswered questions here:

    – would your friend’s film have recouped its investment before the Internet? (when it wouldn’t have been able to sell on iTunes, and when the majority of indie films still didn’t recoup)

    – if all digital piracy on the Internet somehow magically vanished tomorrow, would the massive rise in competition for attention with user-generated video, all-you-can eat subscription-VoD services, not to mention the rise of social media and gaming, not also have made it harder to recoup?”

    Don’t get me wrong – piracy is damaging and a problem. But it’s often the first thing to blame when there are two other equally important market challenges – indie film financing tends to be a high risk, low return business; and the competition for audience’s attention is getting exponentially harder. Spending on filmed entertainment nevertheless seems to be increasing worldwide – mostly because of the growth in markets like China – which the ‘nature of the Internet’ allows filmmakers to sell directly into.

  10. Peter Gallert / Jul 18 at 8:15am

    yes, the value of the video is collapsing. like the value of audio collapsed years ago. all those, who never saw it coming, are not fit to work in this industry.

    but if you are participating in the whole “indie-game”, then don’t just rely on reviews, small cinematic releases and itunes.

    at the very least, there is vhx and vimeo on demand, that can bring you your own digital distribution line. hell, it’s even very easy to sell your movie over your own movie-website. why is no one doing that? the technical barrier that needs to be overcome is too damn high? come on, it’s 2013 already.

    as far the piracy goes: yeah, you can not stop it (nor will you ever be able to). but you can easily protect your INDIE-releases to recoup your little budgets. there are some great recent examples for that in germany (“oh boy” – to name one).

    and putlocker works in the same way as youtube does – it is so easy to track the pirated copy and remove it: by simply using google.

    if you need more information on that topic, i will be glad to help you (no, i am not selling anything!).

    signed: just some nerdy producer.

  11. Peter Gallert / Jul 18 at 8:15am

    all the explanations you demand are very easy to find, and i do not think they deliver the effect desired by you.

    but i could not agree more with your last statement. piracy is nothing new and existed long before the internet. internet-piracy just raises the bar. and the industry is struggeling with it’s internet distribution, not with piracy.

  12. BubbaFilm / Jul 18 at 8:15am

    very true…very true

  13. BubbaFilm / Jul 18 at 8:15am

    yes, correct. And that is Wall Street’s model overall. Hence why many at the studios never picked up the camera in their lives..

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