To Save the MPAA.

From the perspective of the Motion Picture Association of America, their business model is broken. Is it their fault? Have studios been producing increasing amounts of celluloid trash that does not interest the public? Has the advertising model by which major studios rely on ceased to be able to force feed consumers their concept of good cinema? The MPAA will tell you that the loss in revenue relies solely on piracy; internet piracy and bootlegs selling on the streets and subway stations.

"The worldwide motion picture industry, including foreign and domestic producers, distributors, theaters, video stores and pay-per-view operators lost $18.2 billion in 2005 as a result of piracy."

Like most industries, the film industry suffers its ups and downs. If you look at the US stock market, across the board stocks took a plunge in 2001 following September 11th and idled in recession until picking up steam through 2006 and 2007. The movie industry on the other hand had no such recession, since 1995 the growth of the movie industry has risen from $5 billion to $9 billion in 2006 (this is box office revenue alone! not counting DVD sales!). I don't know of any other industry that has been able to grow at that rate. At one point, the MPAA even said that they were losing $250 billion a year to piracy worldwide, with recent estimates being toned down to tens and twenties of billions of dollars.

In any case, the movie industry attributes revenue fluctuation to piracy. There is no doubt that piracy causes a loss of revenue for the MPAA member studios; the illegal market for films is high and widespread. It would be interesting to see how much of an effect that the illegal industry has on strengthening the legal market on account of free marketing and promotion. There is however no way to change the mind of the MPAA. Piracy is a crime and it must be dealt with. I am proposing a way for the MPAA to deal with it.

Movie studios keep their current strategy of releasing films to theaters across the nation. They charge high prices for theater chains to buy films and they take a percentage of ticket sales.

To combat piracy, I propose that the MPAA member studios make available their new films for free online after the film has been in the theater for a set number of weeks and has been available for sale on DVD for a week or two. This assures that retailers like Best Buy and Amazon.com will still retain a significant amount of income from the sale of new DVDs. The online release date can be dynamically adjusted for films, like Titanic, which continued to generate massive box office numbers MONTHS after the premier. Like ABC and NBC have pioneered, movies can be hosted on individual studios' websites, available for streaming over the internet. Advertisements can be run on the page adjacent to the film. Like television, ad revenue can be generated at a high rate due to the significant traffic to the site that online availability would provide. The mentality is that film is best watched in a movie theater and not the home computer. People will pay for the theater experience, but the honest truth is that not all movies released are very good, and there are a significant amount of people that are willing to sacrifice the theater experience for a cheaper price. Blockbuster has proven this.

Providing new films online for free in my opinion would deter a significant amount of people from illegally downloading a movie. The recent lawsuits from the RIAA have been burned into the public consciousness; the MPAA is making similar moves. I would bet that people would wait for the availability of a MPAA sponsored free version, rather than risk a lawsuit while downloading an illegal free version via p2p.

Studios may retain new movies online for a period that may be arbitrarily set, say a month after first posted online. Movies will not be retained online any longer than the fixed amount of time. New movies and old movies will both still be available through Blockbuster, Netflix, Best Buy, Amazon.com, etc.

The current practice of filing lawsuits against the customer is detrimental to the overall health of the industry, and it is destined to fail. We saw it once already with BetaMax. The solution is providing a distribution avenue that delivers what piracy does, but does it within the confines of the law; if paired with an ad delivery system, the free distribution method becomes a new revenue generator. With a legal alternative, customers will be dissuaded from the illegal method of instant gratification and turn towards a legal method that requires some patience.

If the MPAA hopes to increase profits, assuming that revenue loss is directly due to piracy, they need to adapt to the networked digital world where anything can be attained for free. This is the way, lawsuits and scare tactics are not.