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Why The Entertainment Industry Is Wrong About Everything Pt 3: TV’s Shiny New Things

In previous instalments I’ve dealt with the entertainment industries’ addiction to myths about piracy and how internet pirates are doing a better job of delivering sports over the web than some mainstream broadcasters. This installment is about how the lot of them are missing the boat when it comes to promoting new stuff: new TV shows in particular (although the thinking is similar with music that’s a proper kicking in an installment coming soon – the music industry have done enough wrong to deserve that one all to themselves).

The internet is not a “thing” per se; it doesn’t have a particular identity, it is not evil, it is not kind. It does not care, but it also doesn’t not care. We have a tendency to anthropomorphise things in rather a counter-productive way. This is why when Twitter came along, numerous credible journalists decried it as being mindless, noisy and self-obsessed whilst others were still blaming it for the London riots, terrorism and gayness long after they should have known better. In fact, it’s just lots of peoplelinked together. Alright, technically it’s lots of machines hooked up to each other, but it’s really just people. There is no defining characteristic when billions of people

See?

are grouped together. All kinds of very different people exist alongside each other in that group: from good to evil, blondes to brunettes, psychopaths to philanthropists, genius to music industry executive.

This linking of so many people leads towards the so-called hive mind, a mass of people thinking and combining as if one unit; then there’s the ability to see actual chaos theory at work – tiny ideas can become memes, spreading like the proverbial viruses and becoming so powerful that they can actually change behaviour. Such characteristics are, frankly, the wettest of wet dreams to marketing people. Remember, these are the people who want you to associate any positive emotion you may have with, say, buying a car; for them, somehow promoting the idea that washing powder may actually change your life is a career highlight. When people start to believe that their shaving kit is the “best a man can get” they really do buy more of them. So you would think that if you had a new TV show, then this whole interwebs thing, something which allows friends to share new stuff at the speed of light, would be marketing gold.

A wee tale from history. It is 1996 (I think – my memory is hazy). We are in our offices in Pudsey, Yorkshire, where we have recently installed THE INTERNET*. Our swanky new place has more wires behind the skirting boards than GCHQ and all so we can ALL access the internet. True, my machine has to be logged on for everyone to get a signal, and, yes, I have to redirect people’s emails to their machines (as there isn’t a way of everyone getting their email directly yet) and yes, true we are all sharing a 56K modem, but WE HAVE THE INTERNET. And this is very exciting. Suddenly a world of message boards and forums opens before us. Flash is yet to be ubiquitous, Netscape is the browser of choice, the animated .gif is but a pipe dream. Video? HA! Good luck with that – it takes about 15 minutes to download 1 whole megabyte so video is not on the cards at all. But we somehow manage to enjoy the South Park short Jesus vs. Santa. We are howling with laughter, doubled over the desk.

We are – I kid you not – reading the script. We have never seen more than a picture or two of the characters and don’t know which one is which. But we are sick with the laughing and can’t wait to tell everyone we know.

A friend in the US sent us a link to the script. We had never heard of it before, but you can be sure we sent it to all our friends on email too (probably about eight people we knew had email at the time, admittedly). And by the time it was shown on UK TV for the first time, we had amassed an army of fans-to-be ready to suck it all up. Like it or not, South Park was one of the first things I remember “going viral”** over the web. And none of us had seen a single frame. This is what happens when like-minded people are linked together. They share, they enthuse, they become an audience together, even though they aren’t in the same room.

This is what sharing TV programmes on the internet looked like c.1996. True.

But that was 15 years ago and we have progressed, right? Erm… nope. In fact, we are right back where we were. Keeping with the theme of childish, toilet humour, animation-based chortles, I was recounting an incident in “American Dad” to a fellow Hebe. Roger, an alien, goes on a date with a woman he meets on JDate, a Jewish dating site. It is an astute piece of observation and bitchiness. My friend has been on a JDate not so long ago, but he’s never seen American Dad and I want to send him a link so he can share in the laugh. He is thus primed for a bit of advocacy / evangelism (as marketers oft call such behaviour). But there is no such thing as a link I can send him, because either (a) any clips from said programme on YouTube or Vimeo have been removed for copyright violations, (b) there are no Google or other video search results that have it listed in the rankings or (c) the places where it is featured or ranked tell me that it cannot be shown in my territory.

The thing is, I know my friend better than the broadcaster could ever do. BBC3 may have bought the rights to the series, but their ads for it are restricted to the BBC network (and there aren’t many of them other than “Over on BBC3 right now….” style stuff). I know my friend’s sense of humour, I know this will appeal and I have the technological means to put it right in front of his eyes. But this is where our old friend “le dumb” has come round to play. I cannot do this. I am not allowed.

Here, then, is another example of ignoring audience demand to serve no particular purpose (or, at least, no extra benefit to the content owner).

The perceived benefit to the content owner is that they restrict the exploitation of the content; the original content owner will license the content rights to broadcasters in different territories – each of those broadcasters may also license the rights to some form of “internet broadcasts” too – and they don’t want to lessen the value of those rights by letting any old soul watch the stuff via an unlicensed channel.

This is understandable in one sense but short-sighted in another. If I own the rights to broadcast a show, I most likely make my money from  the advertising that I sell pre- post- and during broadcast. The short term view says “if people can watch it online, they won’t watch it on TV.” And that means they don’t watch adverts and I can’t make money from it. Understandable.

But look a little further ahead: For a series license to be renewed, it needs an audience; for it to gain an audience it needs exposure and / or marketing spend. True, some of the bigger series get a marketing budget to pay for TV trailers, a PR agency to handle the press, a website perhaps, maybe a localised Facebook page and more. But a “gamble” show doesn’t get that kind of spend. It may also get a relatively lousy time slot. Then, without the budget to hire outside agencies, the marketing becomes the responsibility of in-house teams at the broadcaster – and they’re responsible for “everything else” on the schedule; perhaps if it’s a show someone on the team particularly loves it may get a little extra love, but the likelihood is that it gets mostly reactive marketing – if someone emails asking about it they get some spiel, maybe a press pack or whatever, but very little active work will be done on it. The viewing figures are accordingly modest, perhaps it holds its own for ad income just about, but it doesn’t set the world on fire.

In my mind all this looks a bit like planting a sapling. Sapling grows branches, branches grow other branches, branches grow twigs and so forth. The web and its interconnectedness of everything makes it easy for new branches and twigs to grow. When I show someone a clip I know they like I create a new branch. It may yet produce some more twigs. Restricting that behaviour is like building a wall around the sapling’s trunk and saying “nah, we don’t need it to grow anymore.”

Fact is, if you want something to maintain a large audience, you need a depth of engagement. “Yeah I saw it, it was quite good” or “I Tivo’d it… will probably watch it at the weekend…” may not be a strong enough reaction to result in a 2nd week or 3rd week audience worth talking about. What you need then is the people who saw it and loved it to be saying “What?! U Mad? Did you not see the bit where the kid slapped the donkey with the kippers? Watch this NOW [link]”… In the first dozen years since my first internet pipe was installed this was a predominant behaviour. People sending each other stuff they liked, those people sending it to more people.

Which brings me to my next case study of doomy dumbness: MTV (not the villains here) and their parent company Viacom (have a guess). At the end of 2007 we got asked if we wanted to take a look at a brief from MTV that was toilet humourish, childish, rude, offensive. We were there in seconds. No, really, we actually worked across the road from them. And there was this odd combo of Warp Films (godlike coolness) with some damned funny writers on board and MTV who were prepared to risk quite a bit on it. It all revolved around puppets doing un-puppety things. Nods to Avenue Q, Meet The Feebles (and way before Mongrels). Moreover, and with a prescience that did not really exist at the time, they were into social media as a way of building interest in the show. And we had a plan.

This kind of thing is de rigeur now but at the time the idea of creating myspace, Facebook, IM and forum / message board profiles for the puppet characters was pretty out there. We couldn’t believe they (MTV, Warp & the writers) were backing us. We got three guys in the office to method act the three characters, behave just like them, respond to people, create their pages the way we thought they’d really look and do all this for a good couple of months before any content was shown or even any hint of it being a TV show (we figured people would work out that it was something like that, but people just seemed to ignore it and talk to the characters directly).

And then we dropped this little beauty into the mix (NSFW, language)

And off we went. I posted it from my personal YouTube account at the time as did the characters from their own pages. And off it went. Millions of views. Top of the video charts in UK, Poland, Germany, Spain, people translating / subtitling it themselves. It went, as they say, “viral.” [That’s actually viral as in people spinning it out to other people they know, because they know they’ll love it too etc., not pretend viral which is buying enough slots for a piece of content until people can’t ignore it any more.]

The time slot wasn’t brilliant – too late at night – and the marketing budget got cut before we had a chance to refocus. More stupidly still, no other channel in the group was allowed to show it for reasons I couldn’t understand. We could see the buzz from fans was brilliant but then things got really stupid: Viacom sued YouTube and the fallout began to reach the UK. And suddenly, any piece of content that Viacom identified as its own, YouTube had to do some heavy backpedalling, issue takedown notices and so forth – and that meant neither I nor my furry little friends could access our accounts, not without getting into a debate about whether or not we had the right to post the content. If this all sounds complicated then think of it like this: We were working for Viacom, promoting their shows, doing a very good job of it, only to have YouTube tell us to take it down because Viacom had told them to do it. The million-viewed, award winning vids were mostly deleted. Links that featured high in search results led (and still lead) to deleted clips. Branches got walled up and lopped off.

Once again, the people who did very nicely out of the entertainment industry, thank you very much.

OK, let’s leave aside the yays and nays of that little contretemps between the old media and the new and be clear that we understand that a whole company’s future relationship with a major medium (YouTube) shouldn’t revolve around the fortunes of one show. This isn’t about whether or not Viacom should have sued YouTube. But this is about the effect restricting viewing opportunities on the show had then and still has now for new shows. If you let people spread stuff, they advocate for you. The economics of allowing that to happen are simple – more fans means more viewers, more viewers means better advertising income, DVD & merchandise sales and so forth.

This recent article listed a load of shows that I would never have seen without t’internet. I have bought boxsets of several of them. And I have become an advocate for many of them. I have single-handedly converted people to Breaking Bad if it meant stapling them to the sofa with their eyes taped open and projecting it onto their retinae. Moreover, when some of those series finally make it onto some pisspoor Freeview channel late at night, I will watch the odd episode. And by watching it, I increase their audience; should more like me do this, they will increase in audience share and their advertising rates will go up. This addition of numbers to the audience pool seems like it might be a good idea.

The fact is, what passes for piracy in the common lexicon is often of vast benefit to content owners. Nobody is pretending that mass copying & distribution of valuable products doesn’t do some harm, but the entertainment industry needs to buck up its ideas and work out how to turn all this stuff to its advantage. Blindly shouting “piracy is bad” is ensuring they continue to miss valuable opportunities. And that’s just dumb.

Perhaps my friend will watch American Dad on BBC3 late night; perhaps he will, by chance, catch an episode that completely appeals to him. Perhaps, but I cannot help. I do not even have a script to send him.

 

 

*This has to be in capital letters because in 1996 having your own internet pipe was a REALLY BIG DEAL. We’d fax people to tell them all about it.

**Every time a marketing person uses this phrase a LOLcat dies. And a really good LOLcat, too, not one of those shit ones your cousin made with Comic Sans.

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Why The Entertainment Industry Is Wrong About Everything Pt. 2: Sports Broadcasters

OK, I say “sports,” but I’m going to stick to the area I know best which is football (or “soccer,” if you swing that way). I think the issues are pretty much the same for all sports, mind.

Sometimes the Swiss aren't so neutral.

In some ways, I think there are easier issues to deal with here than music or film. Sporting events have the greatest audiences on the day the events are taking place – either live or highlights; only important matches or ones with extraordinary outcomes tend to make much impact in, say, DVD sales. Clubs can monetise the audience over the longer term through season tickets, merchandise and the like, whilst broadcasters tend to rely on subscription fees and the odd one-off payment for special events. And in this episode, I reckon there’s an answer to that whole interweb “problem.”

Now then. 20 years ago I was one of the first people I knew with a Sky box. For about £18 a month I could get The Simpsons, the footy (in every division and country in the world just about), “movies” (or “films,” as they used to be known) piped right into the house.

Everyone remembers that episode, right?

And it was ace. I found friends that would magically appear on a Sunday for the treble bill of football, The Bill omnibus and The Simpsons – popularity guaranteed for under 20 spons a month. Not bad.

Flip forward 20 years and surely things have got even better, right? I mean, that’s what progress does, doesn’t it, make things better? Nope. As a consumer, things are rubbish. Let’s say I want to be able to watch all the games for my chosen team – I only care about club football these days and I don’t have time to watch everything. First, I search for things like “Club X TV fixtures” or “When are Club X on TV?” and a number of related searches. The results are perplexing – smart keyword buyers have managed to associate everything from blogs to football kits and boots to website forums and comment pieces. Finding a list of fixtures and what channel they are on is not something natural search does well. So, we go to the club website and trawl through their own TV channel listings and other sundry items before finally finding a list of matches and TV channels. But wait – something’s missing:

That’s right – listings only go up to a couple of months in advance – TV channels don’t want to have to bet in advance on which teams will be doing well / playing attractive football “for the neutral” so far upfront, so the televised games are selected later in the season.* This is fundamentally troubling – after all, there is a choice between ESPN & Sky for coverage. Maybe I can only afford one – what offers best value for money? Well, I choose my subscription by the year, not month, so I could choose Sky now only to find that ESPN have all the good games later. So, I have the functionality available to bet on a match in January 2012 (which is always highlighted by the fixture), but I can’t tell what channel it’s going to be on? This situation suits the broadcasters, but not the fan. Moreover, I follow my club for the whole season, not just some of the games. I don’t like going to pubs and being forced to endure the commentary by fellow “fans” who parrot what they heard on phone-ins that morning as “opinion.” I want it in my house. And that’s going to cost.

In fact, when it comes to package selection, there is just too much choice, it’s way over-complex, and the price is unbelievable. OK, so the latter might just be me being a miserable old git, pining for the days when I could have all the channels and still have enough change from a £20 note for fish and chips and a can of Coke, but it seems like there is very little change from £100 a month.

"Sky or ESPN.... Sky or ESPN... or how about those nice chaps from Setanta... they still make football, right?"

Bear in mind this is 2011 and we have HD tellies so who wants non-HD? (I’d throw 3D into the mix but – ha- that viewing experience is just rubbish for football, so I’ll leave it out for now), but even with a deal on installation etc as a new customer, Sky plus ESPN plus a basic channel package in HD plus the ability to watch it in more than one room (honestly, the chutzpah!) comes  in at around £80 per month. The club I support has season tickets which cost around £725 a year for an adult and £300 for a child (cheap for a Premier League club). A year’s worth of telly – which is never going to be the same as going to the game – comes in at around the same price. Telly was always regarded as what you did because you couldn’t afford to go to the game – now it is priced on a par with the real thing. And that seems wrong. Sure, I get a whole load of crappy channels thrown in and that has some value, but it’s not what I want. I am a consumer – I have demands and they are not being met. My money stays in my pocket.

And so we turn to where my demands are being met. For about the last five years, I have been able – pretty much wherever I am – to switch on my PC and watch my club. At this point, someone screams “piracy!” whilst the crowd look horrified, policemen prime their truncheons and delicate ladies faint in swoons of shock. Aren’t I taking something for free? Aren’t I stealing? I wouldn’t download a car, would I?

You wouldn't download a car. Unless you were playing, say, Gran Turismo. Then you probably would.

It is a measure of the sheer genius and efficacy of entertainment lawyers, PR peoples and lobbyists that this mindset has come to pass. Sadly, it has nothing to do with reality. Firstly, “free” is not free. Secondly, stealing a car deprives someone of that object – nothing I do deprives anyone of anything physical – I don’t stop the same thing being sold to anyone else. Thirdly, I am sat here with a sum of money that would be spent on football with whichever provider decided to comply with the laws of supply & demand. I have written more about the myths surrounding “piracy” here.

Firstly, then, watching without paying is not mere “freeloading.” Setting aside the nominal licence fee (a tenner or so a month) I have Freeview. All of those 70+ channels are not merely sharing my tenner are they? Mostly it goes on the BBC and, frankly, when compared to the price of satellite / cable, I see the licence fee as a bargain for news, documentaries, Match of The Day and various radio stations alone. But those other “free” channels are surviving somehow, right? Yes. It’s called “a-d-v-e-r-t-i-s-i-n-g.” You may have heard of it. You may also be aware that different channels charge different rates for their advertising – the more viewers they have, the more the ads cost. Amazing! So when I watch, say, a Champions League match on ITV (a free channel) am I thieving my footy? I am not.

And don’t forget sponsorship. The exact amounts involved are hard to discern, but three top sponsors pay in the region of £135m for a 3 year deal.  It’s worth that much because of the numbers that will be watching the games, of course. Those numbers are partially on subscription channels, partly from pubs and, yes, partly from “free” viewers. It is the total number that is important and it is made up of significant chunks of each – no one audience is sufficient by itself. That huge audience is, then, rather valuable – which is why so many broadcasters want it.

ITV, then, who paid c. £160m for three years’ worth of rights, clearly believe they will make that money back because of the value of ad sales. A cheeky enquiry to a colleague in a media-buying agency (the people who buy ad space on behalf of their clients) tells us that the cost of a 30 second slot for a regular Champions League game is c. £45,000 for ITV as opposed to c.£15,000 for Sky. For the final it’s more like £40,000 on Sky and £105,000 on ITV. Do you see that? The audience for “free” viewing is bigger and thus the ads cost more. Oh, and let’s not forget all the ads on players’ shirts and advertising hoardings around the ground. Someone paid money for those in the hope someone is watching. And they’re happy if more people are watching, too.

In other words, when I watch something for free on a channel that sells advertising, I am not a freeloader – I am a crucial part of the channels’ & sponsors’ business plans.

So, why do people host pirated football? Because – guess what? – there are people that will pay them money for hosting adverts whilst they show unlicensed sports. But surely this will be ads for dodgy porn, malware-infested fakes and all manner of under-the-table tomfoolery?

Well here’s the fun part: UK companies are already using these illegal channels for advertising. And not small outfits, either. Big ones. The biggest. Vodafone, Disney, big pharma, the lot. It’s not a few odd cases, it’s everywhere and it’s everyone.

This weekend, I saw UK adverts for washing powders, coffee and mobile phones. And let’s be clear: these weren’t European or Chinese versions of the ads that have somehow found their way onto my machine.

The European Commission, Vodafone, more pharma, Airwick. And there's plenty more where they came from. And I mean *plenty*.

These were the same ads I see on TV, with .co.uk URLs and British accents. And these were not just video trails (which tend to be served whilst streams load) but banner and other display ads, including interactive ones. In other words, the same advertising you would see on official channels. I’ll give them the benefit of the doubt and say that most media buyers probably don’t realise that this is going on as this would be wrapped up in the lower end of the inventory they purchase – probably listed as “miscellaneous websites: reaches 100,000 people, costs £X” – and is a very minor amount in comparison to the total, so it isn’t likely to be something that gets much attention. But for their clients, unless anyone flags it, why complain? You want to advertise to a certain audience, you go where they are – and if they’re watching pirated football, who cares? They’re still consumers.

Oh look: Disney, Bonjela, gambling and more

Next, I feel obliged to point out that downloading something for free is not the same as stealing something physically. ITV & Sky can continue to sell their services to other people, I am not stopping them. It is a complete fallacy to equate downloading something from one source as somehow depriving them of a sale. They simply don’t have what I want in a format I want a price I can afford, so they are “losing” precisely nothing. I was not going to spend that money with them, so how can they have “lost” it? Perhaps, instead of wringing hands about “lost sales,” the better answer would be to examine the pricing, format and availability of the product? Because, in fact, the rights-holders (clubs, leagues, official bodies) – as well as broadcasters – are all losing out on potential revenue by not servicing demand adequately.

Which brings us neatly to the third point – that supply and demand (aka everyone’s first lesson in economics) tells broadcasters exactly what they should be doing. At the moment, my personal demand is supplied by crappy streams. Why?

  • I can see whatever match I want
  • It is a reasonable stream
  • I can choose which broadcaster I want to view it with (including which commentary)
  • I can follow just my team, I don’t need a package of things I don’t want in order to do so
  • The price is right

The downside:

  • I have to search around a bit which is a bit annoying (although I usually find it quicker to track down a stream than, say, track down figures for what sponsors paid for Champions League rights)
  • The quality is occasionally poor
  • I may have to switch streams mid-match
  • I probably miss, on average, 10-15 minutes of the match through any / all of the above.

Various broadcasting friends wanted me to add that I also risk malware, viruses, penury and lupus too, but I like to think that my level of tech expertise avoids this. However, for many people this will be true enough. If you download the necessary software for viewing from official sites, no problem; but many streaming sites have links to software that is filled with malware, frankly. That’s because they are in control of how they get money from you; it’s not regulated or licensed so they do whatever makes cash and adding spyware means someone somewhere is paying them to do so.

Even so, ultimately, when faced with a choice of all the above, it’s streams every time. Had I the simple choice of being able to follow all my team’s matches for, say, £20 a month, nothing else included with them, I’d pay it. And so would hundreds of thousands / millions of other people.

But that requires something we are not used to in commercial models: non-exclusivity. If UK broadcasters pay £400m for TV rights, it’s because they know they become the only show in town. Once other people can show those games, their rights are worth less. If Tommy Streamer can show the game on his blog page then why is anyone going to watch ITV or Sky? Exclusivity guarantees the broadcaster they will have a monopoly on showing a game; that means they are guaranteed a certain minimum audience to watch the game and that means a minimum amount of income.

But the market supports multiple types of demand. At the prices they are charging, broadcasters only service a certain percentage of the potential audience – the rest of us would be happy with less quality for less money, either as paid-for or ad-supported streams. But the only people smart enough to tap this market are the “pirates” and the advertisers who serve ads on their networks. If I was a broadcaster I would offer those networks  a license to show streams at a maximum quality of, say, 50% of the HD streams I can offer and take a percentage of the advertising revenue.

I wrote about this yonks ago when I worked for a company that became EMC (and whose blogs have been similarly assimilated) as an idea for content distribution, the principle being that nobody should care who shows the content as long as they take the ads? Reward people for doing it too – even if it’s a small share of the proceeds it incentivises them for finding an audience and your revenue goes up with the growth in total audience size. I called this “microdistribution.” It has a lot in common with the Long Tail in that it recognises that a myriad of tiny niches may add up to something huge, a la Google Adwords etc.

And there’s another reason why this might improve the delivery of football. At the moment, I am stuck watching, say, Match of The Day on the Beeb or Sky’s full match programmes. MOTD is the last resort of the desperate fan – matches reduced to highlights which are ridiculously short to squeeze in every game. Here’s the build-up play, here’s the shot, here’s the goal. The replay is rarely anything more than the final ball and shot. But what makes a goal amazing is often the quality of the build-up, the passing, the bypassing of the defence through tactical executions. All of this is lost – and the result is the barf-inducing banality of football phone-ins which consist of people making comments about matches based on the few minutes they saw on MOTD and the commentary they heard. In other words, you are listening to opinions about opinions. As a result this promotes a shallowness in the way many people engage with the game. Tactics are reduced to quick soundbites – talk about a pressing game, playing two up front or one in the hole behind the striker – but tactics go much deeper than that.

In the 1990s, before we all agreed he was a bit of a twat, Andy Gray used to do a tactics session in the hour or two before a big game – full on tiddlywink counters and pushing them around, examining why certain managers chose different formations and so forth. It was a big part of my deeper understanding of the game; what had been based solely on a love of playing, mixed with the tribalism of being a fan, developed into something more. The various tactics sections on football shows of all sorts are now lamentable. A favourite piece of utter crap was Andy Townsend’s Tactics Truck on ITV – like so many ex-footballers, a nice chap just repeats the obvious, draws some circles around defenders who have lost their man and that’s it.

But this is because TV is broadcast to such a big audience – it’s not possible to cater to all the different tastes fans might have. I know not everyone’s a tactics nerd, but I’d liketo watch a real tactics nerd doing their thing. Allowing the little guy to broadcast would allow the niche interests to blossom – tactics, Alan Hansen-a-likes who only see the defensive errors, students of the cultured pass, the different chants, partisan commentaries which barely mention a single opposition player’s name except to berate them (which, in fairness, is what it’s like watching any footy on a club’s own channel). All these would be possible.

All of this and more. I get better insights from the cat.

This creates a “long tail” of football consumption. And in the long run, it’s better for the game because everything is catered for.  Again, it’s fair to say that specialist broadcasters do make an effort to vary the programming – there’s the Saturday morning “variety show,” or the highlights reels or the fan-led shenanigans. But consumers are way more varied in type than a broadcaster alone can deal with at times. Niche interests are often what keep subjects interesting to a wider audience; I can’t see anyone likely to broadcast, say, a programme just for referees or coaches. But I bet there’d be some people who’d like it. Search the net for football blogs and you’ll find women tacticians as well as “I love Thierry Henry’s thighs”; Villa fans who only want to discuss the 1970s, others who only ever discuss one player at their club. The “tail” may be lengthening but it’s just not long enough.

Broadcaster and event owners aren’t  going to give in easily – the one thing about selling exclusivity is that you get a big lump of cash if you’re the event owner and the chance to earn a big lump of cash if you’re the broadcaster – it’s a high stakes game with big rewards (unless you’re Setanta and screw up the maths / sales).

And that’s why chasing pirates seems like a better bet – who’s going to say “Yes, this year we shall forgo our £100m income for £25m with the potential to earn an extra £150m”? You’d take the lump sum every time. I get it, but it’s clearly short-sighted.

Free market exponents will consistently tell you that free market means more choice for the consumer. And yet, here we are, us disenfranchised punters, we buy our replica kits, matchday tickets, programmes, consume advertising on hoardings round the pitch, idents and ad-breaks, we’re happy to consume and maybe even pay you some money… but all we are is “thieves.”

Meantime, I’ll just leave this here…

*EDIT : I showed this piece to a number of friends who work in sports broadcasting – amongst the points they wanted to add were that “…the TV fixtures situation is not the great TV carve-up as many people would believe. There are great number of factors why [they] can’t set the fixtures for the entire season in advance: clubs, local authorities, transport providers, and the police influence dates/kick-off times. There is the performance of the clubs in the cup competitions to consider and the sheer logistical weight of organising the fixture list. Hence it is split into 3-4 phases. [Sports broadcasters] attempt to even out each club’s number of appearances on [TV] throughout the season.” Only fair to include that. It can’t all be hyperbole and invective.

 

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Why The Entertainment Industry Is Wrong About Everything Pt. 1

The coming of the digital age should have been a golden era for entertainment and, for some, it was: Amazon, Facebook and others appeared from nothing to conquer the world in a few short years. But for others? A darkness descended on the giants of old… Major music labels, broadcasters, production behemoths, newspapers, games manufacturers – their revenues plummeted whilst demand for their products actually increased.

"It's all about a long-term vision."

And there was one reason, above all, for all their misery; one thing that set them apart from other industries that had reaped the golden benefits of the digital age: these giants were – and often still are – steered by people whose idea of proficiency in ‘digital’  languishes somewhere around the Casio watch on their wrist. These are people who have never really used the things they are meant to be mastering, people who are simply not equipped for the job.

This series of articles will attempt to explain why, as a result, the entertainment industry is wrong about (just about) everything.

The first thing to do is shoot down a few myths that are repeated in every sector – enduring myths that, through their luscious soundbitey-ness, have become conventional wisdom. These mythical narratives are harmful because they are so cognitively appealing that they have become the whole debate:

  • You can’t expect to get anything for free
  • Piracy is theft, like stealing from a shop: aka “You wouldn’t download a car”
  • Piracy does only harm for artists and other content owners
  • Illegal downloads = lost revenue
  • Once people taste ‘free’ they never go back to ‘paid’
  • Telling people about piracy in a ‘zero-tolerance’ fashion is the only way to stop it

1. “You can’t expect to get anything for free”

Proponents of the age-old adage that ‘there’s no such thing as a free lunch’ point towards a truism: everything has a price. They are generally correct. But the mistake is to believe that the ‘price’ is always a directly or solely financial one.

We have many examples of every day consumption that – if not wholly free – are ‘free’ to use on a daily basis. We may pay a yearly licence fee for TV in the UK but (a) it’s only about £14 a month – compared to, say, upwards of £50 a month for Sky – so seems relatively insignificant to most people and includes payments for the whole BBC including radio, but more importantly it’s (b) not something you physically pay for on a daily basis.

Behavioural economists will tell you that because you aren’t paying for it there and then, it doesn’t feel like you’re paying. It doesn’t cost you any more to turn the telly on five times a day than it does to turn it on once.

Commercial terrestrial TV is a good example because it feels free. But it isn’t. In fact, commercial television relies on free viewers as advertising revenues depend on the size of the audience. The more people who watch, the bigger the fees advertisers pay. I can watch premium content on ITV – say Champions League football – and the cost to me has been subsidised by advertisers. If I watch a newly released film on Channel 4, it will have been subsidised (usually) by a sponsor who pays for a whole season of films, plus the advertisers who pay for slots in the middle of the film. The cost to me is that I don’t get to watch the film uninterrupted – I have to wait for the ads. If I want, I can buy the DVD or watch on a premium subscription channel and then I can have an uninterrupted viewing experience.

In other words, I pay a price but it isn’t directly financial.

The business plans of the broadcasters don’t depend on me paying them money, they depend on me watching. For free. It’s basic economics of supply and demand – the cheaper the price, the more people will watch. The more people watch, the more the advertisers have to pay them. This is true of radio, it’s true of websites like YouTube and Google, it’s true of me taking surveys to get free access to eConsultancy market reports. These things seem free to us, but our exposure to advertising is the price we pay.

So, the idea that ‘free’ is wrong is… wrong.

It’s vital.

2. Piracy is theft, like stealing from a shop: aka “You wouldn’t download a car”

Erm, no. If I steal a car, the owner of the car is deprived of it and cannot sell it to someone else to realise its value. If I download a song, the owner of that song can still sell it again. And again and again. It does not disappear from their repertoire. If I watch a film on terrestrial television it is the same: I do not deprive that film owner of the ability to sell it again. Digital products just don’t behave the same way as physical products.

You think people like visiting showrooms and being attacked by sharks with moustaches and cheap suits?

The fact is, for a lot of people the free downloading is similar to the behaviour in listening to something on the radio: a free – and thus slightly crappier – experience than the paid-for version. I don’t really like mp3s because I like hearing things at a certain quality that mp3s don’t deliver. I listen to digital music on the daily commute because even I’m not quite enough of a Luddite to use a CD Discman. But the things I love, I buy on CD because the quality is better. Some things I prefer to buy on vinyl (old punk and  reggae for example) because they were made for the format and digital doesn’t improve the sound. Not only has the entertainment industry missed out on realising the difference between ‘lost revenue’ and ‘lost opportunities’ but they’ve failed to recognise the value of the digital product – and priced it accordingly.

Simply, digital is, for many things, a worse experience with far cheaper distribution overheads – pricing it at the same level as the physical (or not significantly less) just overvalues the inventory. If you could download a car right now, it would be made of paper and need to be powered by wind and pedal-power.

3. Piracy does only harm to artists to and content owners

Ha. Funny thing – the most downloaded stuff is often also the stuff that sells the most. Which comes first, the chicken or the egg?

Back in the very early 90s, before the internet was something people had at home much, I had Sky. I loved the Simpsons. All my friends thought it was for kids and I was loving the subversive humour and telling people they were wrong. Some people came round on a Sunday and would get sucked into the couch with a bag of weed or a beer and it would click. But I was obsessional – I used to record Simpsons VHS tapes on long play, which means eight hours of continuousSpringfield. I did this mainly for myself and my housemates as Sky only broadcast two episodes on a Sunday back then.

But over time, once I had sufficient stock, a trusted friend would be given a tape to enjoy at their leisure – and they would show it to their housemates. Over time, they too would become infected Homerphiles and so forth. As Sky’s broadcasting of episodes increased, so did my taping. People used to beg to be allowed to borrow the tapes. I can confidently state that hundreds of people in the Hyde Park area ofLeedsin 1991-94 were converted to the show through my piracy. And back then, we all spent money on the show too – not only did we watch the show on Sky and thus had a part in improved viewing figures / ad revenues, but we all had t-shirts, pens, stupid bathroom kits, caps, whatever. When my mother found out I liked the Simpsons, that took care of 10 years of Christmas presents: alarm clock, sponge, shower radio (yes, what of it?), bubble bath, greetings cards. Endless revenue. Multiply that by the 100s influenced by those pirated tapes. How’s that working out?

Years of lucrative brand engagement, thanks very much

And it wasn’t just those shows. Over the years, the sharing of pirated material amongst my group of friends that has led to people being converted to fans has included Futurama, The Wire, Treme, Family Guy, South Park, American Dad, Fringe, Medium (only the girls, obv.), Lost… just about every major show that hadn’t yet made it to the UK. And those people talked about those shows, became part of the groundswell of opinion that eventually influenced UK TV stations in their choices of imports (NB a lot of those shows were picked up much later than, say, The Sopranos or Game of Thrones).

Piracy can be pure promotion for some entertainment. We used to license records for release in Russia knowing full well that Russian rip-offs would appear in nanoseconds (official sales used to number in the dozens but they’d be in every shop in every city a week later), but the artists used to make money from touring and we’d share the revenue from tour receipts and merchandise. Good days. If you didn’t have pirated material ordinary Russians couldn’t afford your stuff, nobody knew who you were.

Recently a pirated PDF of a children’s book parody called ‘Go The Fuck To Sleep’ was sent round by every parent I know. What happened to the poor unknown title / author? They went to number one on Amazon.

And whenever there’s a study that shows the beneficial effects of piracy, it’s suppressed by lawyers and lobbyists for trade organisations whose narratives are not served by the idea that, say, people who pirate movies are also those most likely to treat it like an extended preview / tester for things they go on to buy.

I have discovered hundreds of games, movies, TV shows and bands from having a pirated copy that I then go on to buy. I know dozens of people like me. I meet hundreds of people like me online. I can see empirical research that supports this notion. So why are the people who could most profit from this knowledge also the people who are shouting loudest against it?

Because they are just not that bright.

4. Illegal downloads = lost revenue

Now, let’s be clear – there is a difference between making the above point and advocating that piracy has no harmful effects and doesn’t deprive – in some cases – people of rightful income. It does, and especially with smaller independent artists and copyright owners who don’t get to make the revenue up from other sources as much as the big guys.

But this argument is often used to back up the idea that piracy costs an entertainment sector £X billion a year and so forth.

This is a crude fallacy.

Supply and Demand is one of the basic elements of a free market and is lesson #1 in high school economics. If the price of something is too high, there will be lots of people willing to sell it (supply) but fewer people will want to buy it because it’s too expensive (demand); if the price is too low, there will be lots of potential buyers but fewer people will want to sell it at that low price. The smart move is to price your product just right, so that lots of people will want to buy it but it’s also profitable to produce. In other words, moving the price up and down affects demand for a product. See the graph below:

It's the economics, stupid

What the entertainment industry does is look at the demand for illegal downloads and put a price on it on a per-download basis – the price in the marketplace today. But those downloads are actually priced at ‘free’ – which explains why the demand is so high. If, in fact, the cost of getting that download was the market price, there would not be so many downloads. This is so basic that it makes me want to cry that anyone can have the gall to stand there and tell me that the lost revenue calculated this way is a real figure. It isn’t. It’s not even close.

This MPAA pdf is a good example. It twists the data to fit a point of view but has very little basis in reality – you cannot “lose” sales that would never have happened. This is not to say that there wouldn’t have been some losses – of course there are.

If the price had been 10p a movie download, and it was delivered easily, in an agreeable format and quality, you might have seen, say (just for example), 85% of those people choose the legal option. Had they done that, the legal income on the 5 billion or so movies it takes to make up their “illegal download” figures would be around $500 million. And suddenly all their maths-based hyperbole falls to bits.

This whole approach is unfit for purpose. And that’s not all. I don’t agree with him on a lot of his conclusions but Lawrence Lessig put his finger on the discrepancy between perception and reality as long ago as 2004:

“In 2002, the RIAA reported that CD sales had fallen by 8.9 percent, from 882 million to 803 million units; revenues fell 6.7 percent. This confirms a trend over the past few years. The RIAA blames Internet piracy for the trend, though there are many other causes that could account for this drop. SoundScan, for example, reports a more than 20 percent drop in the number of CDs released since 1999.

“That no doubt accounts for some of the decrease in sales… But let’s assume the RIAA is right, and all of the decline in CD sales is because of Internet sharing. Here’s the rub: In the same period that the RIAA estimates that 803 million CDs were sold, the RIAA estimates that 2.1 billion CDs were downloaded for free. Thus, although 2.6 times the total number of CDs sold were downloaded for free, sales revenue fell by just 6.7 percent… [So] there is a huge difference between downloading a song and stealing a CD.”

And that, as they say, is that. Yes, there are losses, but they are way smaller – and have way less effect – than we are being led to believe.

5. But once people have had it for free, they won’t pay for stuff right?

Wrong… so very, very wrong.

I used to hear this a lot in the music industry. In 1999 you should have heard the screaming. For a while the mantra was “once music has been free, people will never pay for it again.” And then, within a couple of years, there was iTunes.

iTunes gave people what they wanted in a format they accepted at a price they deemed reasonable. And if my memory serves me well it did OK, no?

Supply and demand tells you this – the price may be free, but everything from quality to ease of finding something to format is not well-served by ‘free’. iTunes does it better and punters buy it because of it.

The presumption is that people download illegally because they are either fundamentally criminal or simply don’t understand that content has a value. There may be a little truth in either point, but I’m going to let you into a secret : the real truth is that the vast majority of people download stuff because they want it.

And whoever makes it easiest for them will win. People pay a price for ‘easy’ – understanding demand helps you define “easy” and the basics of supply and demand should tell you what the price is.

"OK, but first we need to sue you."

6. The only response is “zero-tolerance” enforcement

Yeah, hard to believe this was a joke sometimes.

The funny thing about that Onion article is that in the 1920s and 1930s record companies got drawn into lawsuits against radio stations as artists feared they were being robbed of both record sales and performance income (they thought if people had radio they wouldn’t pay to see live performances. Here’s a good tale from 1935.

The problem is that the enforcement approach starts from a very bad premise: criminalising your potential customer base. If you want people to buy your stuff (which includes, by the way, your PR) then I’d suggest threatening is not a very effective of communication. Even if wholly justified you are going to become the bad guy when you sue a dead grandmother, a homeless man or a 10 year old girl with a disabled mother.  Most companies seem to hold the idea that they should be good guys with something valuable to offer to a consumer and would shy away from such confrontations – especially when the net benefit is, at best, a pyrrhic victory.

Once again, this is a failure to understand the nature of the market and its consumers. People take stuff because they can – and the legal options just aren’t as appealing in terms of price (yes, obviously), format, ease of search / discovery etc., i.e. ‘demand’. Reducing the demand for illegal content is not just about stopping the illegal stuff – it’s about increasing the demand for legal content. And if Apple can do it, why can’t these other companies? That’s right: because they’re idiots.

In the book Freakonomics, Levitt and Dubner (who seem to enjoy nothing more than poking economists’ bee hives with big pointy sticks and, frankly, good for them) tell the story of Paul, the Bagel man. He spent years selling bagels by dropping off a load at office parks around Washington, relying on the honours system for payment (i.e. you take a bagel, you drop your money in a collection tin). Crazy, right? Actually, no. It worked damned well. And better still, because he did it for so many offices over 20+ years, and kept meticulous records, he performed a huge economic experiment. 20+ years of empirical data about honesty. How cool is that?

In fact, he found that honesty rates never really varied much (there were some small local variations related to things like local unemployment etc) – the overriding statistical conclusion is that between 87% and 89% of people are honest. Eleven per cent of people are always going to screw you over and there’s nothing much that changes that. I can’t recommend reading the article highly enough.

So tell me – why concentrate all those resources on trying to identify and punish the 11%, taking down a significant proportion of sympathetic defendants from the other 89%? Why not use those resources to improve the service and supply to the 89%? For most entertainment sectors, i can’t see how it’s in any way a a controversial suggestion to say that if they serviced demand properly they would make more money from the honest majority.

In the UK, it’s difficult to estimate how much is spent on copyright enforcement every year but there are some expensive-looking offices and lawyers dedicated to it. There’s also talk of ISPs being asked to fund 25% of such costs – and that’s estimated at up to £500m in costs to the consumer (when the ISPs pass on the costs, which they will). That’s a lot of enforcement going on.

Sounds a bit like The War On Drugs to me. And that’s an unqualified success, right?

Enforcement doesn’t stop criminality in copyright any more than it stops criminality in the real world. It competes with demand, which will always be strong – people love music and don’t want to be kept apart from it. Fear of punishment isn’t as strong a method as convincing people of why you should buy legal. You can carp on about supporting artists, but when these messages come from companies with as much of a record of ruination and interference with artists as success, well, it just doesn’t ring true. These captains of industry, when at a different dinner engagement, will tell people that it’s the market which has the greatest effect on consumer behaviour – so why do they maintain the myth that enforcement can work?

That’s right: they’re idiots.

This is only the tip of the iceberg. But the pattern is clear – actions are based on prejudices and presuppositions rather than evidence or simple market economics – in some cases undue influence on market forces is preventing innovation that may yet become profitable. People who are not qualified to do their jobs often use other people’s opinions to guide their decision-making process, but that isn’t working for large swathes of the entertainment industry because the same personnel have now been institutionalised to believe myths about piracy instead of engendering good business practice.

Instead of digital heralding the golden age for the entertainment industry, it’s become a golden age for entertainment industry lawyers.

In other words, there’s too many people that work in the entertainment industry that are wrong about everything.

To be continued.

 

Next in the series: how they’re messing up sport on telly.

 

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