Friday, November 16, 2007

The Writers' Strike and the future of the entertainment business

I've worked in the DVD industry since before there were such things as DVDs. Back in one frantic week in 1995 or so I created some of the reports and did some of the analysis for my company's rep at one of the earliest high-level meetings of the industry heads to try to resolve the format war that was threatening to have two different and incompatible versions of digital video released to the market - much like what we are now seeing with HD-DVD and Blu-Ray.*

DVD jumped the shark a few years ago. In the early days, people were eager to replace their old videotape movie libraries with the new technology, with its superior picture and sound quality. With CDs this replacement of old technology - records, tapes, 8-tracks - with the new took over ten years; with DVDs it took only about five. After that the question was, what next? New releases were still coming out, but at a rate of a few dozen each year most consumers were likely to find only a handful of new releases they would want to spend hard currency on. And you could only re-sell the same movie, repackaged as a Director's Cut, an Extended Version, a Special Edition, an Ultimate Edition, and a stripped-down no-frills Bargain Bin Edition, so many times to the same consumer.

TV series filled the void. Chapelle's Show wasn't the first TV show to be released on DVD, but it clearly demonstrated the power of consumer desire: from what I have heard, more people bought the Season 1 DVD than had actually watched Season 1 on TV. At first only big-name, high-demand TV shows got the DVD treatment: Sex In the City, The Sopranos, Star Trek, The Simpsons. Now everything from F-Troop to Rat Patrol is getting the DVD treatment. And consumers are gobbling up the discs as fast as they can.

Back in 2000 or so there was a major push to market the next generation in musical quality: DVD-Audio. The music you knew and loved, remastered for maximum quality, re-recorded at a vastly higher bitrate, and pressed onto a new format of disc incompatible with both your old CD player and your basic DVD player. And to fully appreciate the sound quality, you would need to construct a $50,000 sonically isolated acoustically optimized listening studio in your house to go with your new $500 DVD-Audio player, $500 receiver/tuner and $1200 high-end speakers.

In the meantime, millions of mp3s - highly-compressed, low-bitrate, low-quality audio files - were being downloaded for free each day from the Internet. And this was back in the day when both connections and computers were much, much slower than they are today. Given the option of downloading a crappy but listenable version of the latest hit song online for free or making the investment required for the total audiophile experience of DVD-Audio, consumers voted overwhelmingly with their mouse buttons.

The music studios eventually sued Napster. Kazaa was seeded with viruses disguised as downloadable songs. iTunes came along. But the damage was done. The CD industry contracted dramatically, and now consumers are much more likely to get their music from a pay-per-download store than from the local record shop.**

Video is facing the same fate now. For the longest time bandwidth, connection speed, and computer speed were all limiting factors in the ability to watch high-quality video online. But these days many consumers have broadband connections and faster computers, so the elements are in place for computers to replace televisions as the primary means of viewing video.

Studios were slow to recognize and exploit this. For the longest time most of the videos of TV programs available online were illegal postings to YouTube and bittorrent sites that allowed, for example, viewers in Australia to see what had happened in this week's episode of "Prison Break" mere hours after their American counterparts. NBC recognized the consumer demand early on and, jointly with Fox, established a service where consumers could legally watch their favorite shows online.

The DVD industry is on the threshold of a contraction much like the one experienced by the CD industry in the early years of this century. Though DVD sales are still fairly strong, mostly due to the popularity of TV series on DVD, it is clear that the future of video sales to consumers is online.*** The studios know it, and are taking steps to sue the asses off of anyone who is trying to give away for free what they justly feel they have a right to profit from.

Yet these same studios claim that they really have no idea how much money can come from online sales, and therefore do not want to make any commitments to share these allegedly non-existent profits with the writers responsible for their creation.****

Here are two videos that allow the studio heads to make the Writers Union's points for them. The first one is one I first saw on Adam Felber's Fanatical Apathy. He did not participate in its creation - though he wishes he had.

The second video I first saw on Phil Plait's Bad Astronomy. As regular readers of his blog know, "Bad Astronomy" is the name of his blog, but not a limitation on the scope of his blog. He covers topics that range over all his interests, from skepticism to politics and the separation of church and state. Here is the video, written by the writers of the much-missed Daily Show - and featuring a cameo by one of The Daily Show's newest stars.

Unsurprisingly, there is now a blog about the strike, written by several strike captains. This is the website referenced at the end of each of the previous visits. I haven't read through it yet but I will, to see if there's anything I can do to lend more than just moral support to the cause.

*The company's rep, the scion of the family that had founded the company, who spearheaded and drove our company's involvement in the new technology, was eventually squeezed out by a new CEO appointed by the corporation that had purchased the company a few years earlier. I went on from my position as a statistician and analyst to become a DVD Asset Manager, working directly with the studios to determine the content and layout of their DVD projects. I now operate a DVD press. Life is funny sometimes.

**I had to fight the urge to write this as "than to drive downtown in the rain, 9:30 on a Tuesday night, just to check out the late-night record shop."

***In my old job we were the ones who would receive the assets from the studios and rework them into a digital format that could then be authored onto a DVD. I argued back in 2000 that we would be the last department left standing in the company, because after the consumer desire to purchase round shiny things had waned we would still be able to compress assets into digital formats that could be sold directly online. In the final weeks in my position in the beginning of this year I had exhumed this argument and tried to encourage the powers-that-be to let us branch out into authoring the formats of the future. Now I make round shiny things for a living. Life, as I said in an earlier footnote, is funny sometimes.

****Hollywood accounting is perhaps the greatest publically-tolerated criminal activity this side of war profiteering. Virtually any property can be shown to have made any profit you like, or no profit at all, or even a loss, depanding on how the studios choose to look at the numbers. Even the biggest Hollywood blockbuster can be shown to have failed to break even by skillful manipulation of the financial figures. Still, it's slightly more ethical than the accounting practices used in the music industry, where artists are routinely sucked dry and robbed blind - at their own expense. Perhaps when Congress is done delving into baseball it can take a look at these issues.

1 comment:

whimsicalnbrainpan said...

I don't care how long it takes I hope the writer's win.

I also have another hope. I hope that the strike goes on for so long that the networks have nothing to show but "reality TV" and that America finally gets sick of it.

A girl can dream.