Why does tech industry fear Holywood?

[Kreshna Aryaguna Nurzaman]

A very interesting article.

DRM and the tech industry's "girlie men"

By Jon Stokes

If only I could've been there to stand up and clap:

"Why are you such a bunch of big girls?" asked Birch. "Why don't you tell the content owners to just get stuffed?" He continued unabated: "You're too seduced by the content industry, Hollywood is not even a $10 billion industry. Hollywood is small compared to the telecom industry. Why don't you take a stronger line? Consumers don't want DRM at all. You can't sell DRM."

Thus the EET reports the outburst of audience member David Birch, who stood up during the Q&A part of a panel on DRM at the 3GSM conference in Barcelona and let rip at the telecom industry panelists. David Benjamin, who filed the story for the EET, reports that Birch also told the panelists that telecommunications industry is 15 times the size of the content industry.

In a later column at the EET, Spencer Chin approvingly cites the story of Birch's outburst, and manfully (though not entirely successfully) attempts to laud Birch for "stirring the pot" while simultaneously censuring name-calling at professional conferences.

I say bring on the name-calling. In fact, if Mr. Birch happens to read this post, we'd like to formally offer to let him have the mike for a moment so that he can preach, heckle, and harangue a bit more in a guest editorial on content vs. the carriers. Just drop us an email.

For my part, the coverage of Birch's rant definitely got me thinking. The total cost of Peter Jackson's King Kong was somewhere north of US$200 million. That's quite a bit, but such big-budget blockbusters are rare, and you can make and market a Hollywood movie for well under half that figure. Indeed, Brokeback Mountain had a production budget of only US$14 million.

In the tech industry, the price of a new fab is currently around US$5 billion, a price that puts such facilities out of reach for all but the biggest players like Intel and IBM. Still, that's 25 King Kongs, or over 350 Brokeback Mountains, or 1,000 five million dollar episodes of a big-budget HBO series like Rome or The Sopranos. My point is that, for even just half the price of a single 65nm fab, the tech industry could buy a few small studios and just start throwing tons of free content at the world. Or, for the full price of a fab, they could fund almost a decade worth of low- and medium-budget content to give away as an inducement for people to buy hardware.

Intel, IBM, and other tech companies with large investments in Linux know full well that you can sell a lot of hardware by giving away the software. Why not give away the content too? How many dollars worth of media center, home networking, and home network attached storage hardware could you sell if consumers knew that there were terabytes of free, unencumbered, high-definition, processor-intensive, storage-hungry, bandwidth burning, digital content awaiting them on the Internet—content that they could copy, share, and shuffle around among as many newly purchased media devices as they like?

I'll freely admit that 90% of what I know about the cost of Hollywood movies and TV shows I learned from Google over the past two hours. I'll also admit that drawing big-picture conclusions about how the tech industry could crush the movie industry based on a comparison of the cost of a fab to the cost of some movies and TV shows has a certain "late night dorm room bull session" quality to it. Nonetheless, I stand by my general claim that, for the price of what a single tech company invests in a single new fab, the hardware and telecommunications industries as a whole could dump enough free digital content on the world to fuel a very profitable explosion in consumer hardware purchasing.

So c'mon, tech industry. Why let Hollywood push you around and, even worse, hold hostage tens or even hundreds of billions of dollars in potential sales? If investments in open source can pay off in server hardware sales, why couldn't investments in free movies and music pay off in home entertainment, networking, and storage hardware sales?

Think I'm smokin' crack with this idea? Skeptical that low- to moderate-budget, freely available alternatives to Hollywood-produced content would magically translate into increased consumer and infrastructure hardware sales? Find it unlikely that tech companies, who can't even seem to produce advertising that's entertaining and attractive, could ever fund a TV show or movie that you'd actually want to watch? Drop into the discussion thread and tell me why.

Interesting. So Hollywood is pathetically small compared to hardware industry, yet the latter always bows down to the former. The question: why?

[SirNitram]

Talk about getting it backwards. Fear? Of what, being able to tack on a surcharge onto everything to develop some half-assed DRM that will fool the studio execs? Or are we imagining DRM is not being profitable, but instead is being spawned from someone's netherhells?

[Dark Silver]

Mostly because Hollywood has all the knowhow and talent in the content side.

While Tech could buy and sell Hollywood fifty times over, and still not really hurt their pocketbooks (in a perfect world), Hollywood has all the experience, and holds copyright and liscence to all the content and ideas.

Or that's how I see it anyway.

[Destructionator XV]

Fear? Of what, being able to tack on a surcharge onto everything to develop some half-assed DRM that will fool the studio execs?

Exactly. The tech people make money on this in two ways:

1) Like Nitram said, they can make something that doesn't even have to be any good at all and make money.

2) By supporting it, they can charge a wee bit more to the customer, or make a few extra sales, since it now has functionality it wouldn't otherwise have.

It is pretty much win/win for the tech industry as it is now. The only loss they potentially have is people on the Internet spreading FUD about it, which is pretty irrelevant to their bottom line. Producing gobs of giveaway content, while an interesting idea, just wouldn't make them money right now. QUICK EDIT: And would possibly result in them losing sales - how many machines do firms like ILM buy to make movies? Those sales are more profit for the tech guys. If the tech people started doing it themselves, they would lose that profit. /EDIT



What I'd like to know is why the buyers don't get a backbone. If they don't like what Hollywood, et. al., are doing, then stop buying their product. You can live without it, and if no one bought it, or at least a fair portion of the audience boycotted them, they would eventually get the message. That is how the market is supposed to work.

[Hotfoot]

Tell me about it. However, people are stupid as a general rule. I've boycotted HD-DVDs/Blu-Ray for a while now and severely limited purchases of music and movies through most mediums. Rentals I still do, but when possible I've been trying to support digital rentals through my 360 or On Demand, as it's:

A. Cheaper than a normal rental
B. Able to play in HD without need for a new type of format of DVD

A lot of movies I only need to watch once, so spending $20 for that is silly. What's even more silly though? Paying the same price for the soundtrack. Yes, that's right, movie soundtracks and the DVDs STILL COST PRETTY MUCH THE SAME.

Well, unless you go to iTunes, but even then, iTunes has a nasty habit of telling the consumer to go fuck itself. You get limited "copies" of any given file, but if your computer up and dies? Gosh, isn't that too bad. Either see if you can recover the data on your own, or buy it again. That's just plain reprehensible. Support redownloading or remove the DRM completely, I say.

At least Amazon is forcing them to consider DRM-less music.

But back to "people are stupid".

It's been my experience that people will go without food, new clothes, or even doing laundry just so they can afford consumer product X, Y, or Z. Add to that the people with large disposable incomes who just buy, buy, buy, and you've got a veritable stranglehold. This may change eventually, I think we're reaching a tipping point with the entire entertainment industry right now, or at least I'm hoping.