Movies, Music and Really, Really Bad Policy

Like most traditional media, the traditional movie industry (films shown in theaters) is losing market share, and has been for decades).  The movie industry's had a long and consistent approach to this problem.  First, claim that other channels for movie distribution would bankrupt the industry, and try to ban the competition (or at least keep movies from being available through these new channels).  Second, when those efforts fail, embrace the new technologies, which often generate more revenues than the old theatrical releases did.  In 2011, the movie industry made $30 billion globally from theatrical box office revenues (a third from the U.S.), and $57 billion from other distribution channels.

Steve Blank has an interesting post on why the movie and music industries can't seem to handle technological progress well, and end up resorting to ever-stricter copyright enforcement efforts.  Here's his list of their "end of the world" predictions

• 1920s - Record and music business complained about radio, because radio was free and "you can't compete with free."  They claimed no one would ever buy music or a ticket to a performance again.
• 1940s - Movie studios had to divest their theater chains (due to antitrust issues), and claimed "it's all over."  And if that didn't do it, TV would kill local theaters because TV was free.There are twice as many local screens today showing movies as there were in the 1940s. 
• 1950s - After succumbing to the temptation to market films to TV, the movie industry lobbied to ban pay channels on cable, arguing that "free couldn't compete with paid"
• 1970s - The movie industry sued to prevent home recording and VCRs, proclaiming the end of both movies and TV.  When the movie industry caved and started marketing movies for the home video market, it quickly became the largest revenue source for the industry
• 1998 - The music and movie industry lobbied Congress and got the DMCA to enforce copy-protection schemes and prohibit consumers from copying content they already owned
• 2000 - The movie and TV industries proclaimed that DVRs would destroy their industries.  Instead, DVRs reignite audience interest in programming
• 2006 - Broadcasters sue to prevent MSOs from offering out-of-home DVR and on-demand content feeds.  (And lose)
• 2011 - Movie studios and TV/cable networks sue to prevent MSOs from offering "TV Everywhere" streaming services, while licensing their own content to other streaming services.
• 2012 - SOPA/PIPA - Movie studios, music labels, and other content producers push for legislation that would make it easier for them to disrupt (delete from DNS servers) Internet sites they suspect may have unlicensed content, or even may link to unlicensed content.(For more on SOPA, check here)

Brand suggests that much of the problem is that the movie industry dealt with a single basic technical standard (35mm film) for its first 75 years, with only ancillary improvements (sound, color) - and sound was only really disruptive for theaters. On the other hand, they have a history of manipulating regulation to their advantage, starting with the industry's roots in the Motion Picutres Trust (legally-enforced monopoly) and copyright.  As Blank opines:

"When lawyers, MBAs and financial managers run your industry and your lobbyists are ex-Senators, understanding technology and innovation is not one of your core capabilities."  With SOPA/PIPA, "(t)he studios don’t even pretend that this legislation benefits consumers. It’s all about protecting short-term profit."
"The SOPA bill (and DNS blocking) is what happens when someone with the title of anti-piracy or copyright lawyer has greater clout than your head of new technology. SOPA gives corporations unprecedented power to censor almost any site on the Internet. It’s as if someone shoplifts in your store, SOPA allows the government to shut down your store."

If you're wondering why Congress and the White House are doing ill-considered favors for the industry, consider - those industries spend more than $100 million annually in lobbying and regularly contribute to re-election efforts (President Obama got more than $1 million, and more than 20 others received between $50K and $250K, in the 2011/2012 election cycle so far), that the Justice Dept. division in charge of IP rights is staffed exclusively with former lawyers from the RIAA (music industry trade group) and MPAA (movie industry trade group), and that the latest head of the MPAA is former Senator Chris Dodd (D), who explained that the lobby was only asking for the same kind of power to censor the Internet as that held by the government of the People's Republic of China (where they arrest, imprison, and shoot people for posting critical comments - but interestingly have a largely hands-off approach to stopping online piracy of Western content).

Sources - Why the Movie Industry Can't Innovate and the Result is SOPA,  Steve Blank
MPAA Head Chris Dodd on Online Censorship Bill: China's the Model,  The Weekly Standard
TV?Movies/Music: Top Recipients,  OpenSecrets.org

edit record - fixed typo and missing link