Phrenzie.com

RealNetworks created software, RealDVD, that allows you to copy a DVD, on up to 5 computers for $30 (can get additional coverage for $20 each).

Studios (Paramount, Warner Brothers, 20^th Century Fox, Sony and Universal) are like, “Screw that!  We’re building a download biz and we’ll be damned if we lose any revenues from DVD sales.”  So studios are trying to establish a moat around this business to protect it…by suing the hell out of RNWK.

RNWK is saying that copying one’s personal collection of DVDs is cool and covered under fair use.

But given the limits software makers place on the number of copies of software licenses, isn’t RealNetworks being hypocritical?

What if I wanted to buy a copy of RNWKs software (any software) and put it on four computers instead of the three limit (mine, my wife’s laptop, her kid sister – who can’t afford it on her own, and my brother’s laptop).

RNWK would probably have a conniption!

Am I missing something???

As a consumer, I’d like RNWK software, since I’m not trying to make money off of this stuff.

I may want to mix some footage of home video of my 10 month old, with scenes from Star Wars and my mom’s amazing piano and vocal performance in 1989 J.  Again, this is for personal usage, so I’d hate to be limited on usage.

Yet, part of me wonders if the studios are going down the wrong path.  These are the same people who said the home entertainment market (i.e., video rentals) would kill its business.  Now the home entertainment market is massive and actually saves the bottom line for movies that either didn’t or couldn’t make it in theatres.  Adams Media Research estimates lost revenues from DVDs will be about $15B if consumers stop buying DVDs and instead copy DVDs from friends or rental outlets like Netflix or Blockbusters.

The other part wonders if the studios are borrowing a page from the old “failed” record label playbook, “sue anything that moves” philosophy.  In that case, when people virally spread music around the net, it actually created buzz for the artist, which reflected in concert ticket and merchandising sales, paid appearances in movies, etc.  The labels didn’t push to get any of that alternative revenue though.  This could drive merchandising, etc.  George Lucas realized this and built a massive empire (no pun intended) out of it.

But I have to admit, about this last point…it generally doesn’t cost as much to produce good music as it does a good movie.  So in theory, you have to recoup more of the cost from DVD than, say music CD sales.

Before we get into piracy, a word from McLovin (of SuperBad) on the topic.

Matt Mason, in his book “Pirate’s Dilemma: How Youth Culture is Reinventing Capitalism” discusses a fascinating look into what is very possible a mega trend…piracy in other forms – not just music but everything, how technology is making piracy easier and how, on some level, it should be embraced.

As far as the first two points, sure, there have been bootleg BMWs, watches, software, but Matt’s talking about a world where it’s becoming much easier.

An example, is the 3D printer, which has been talked about for a while (heard about this at about the same time I heard that someone built a PC accessory that could replicate smells over the internet).

As far as it being embraced, I remember an old professor of mine, Pete Fader, a marketing professor at Wharton who’s known for his patented rants, arguing that file sharing was actually good for copyright holders (primarily record labels and their artists). It created buzz. Matt also talks about this in that the demographic who would get pirated material is not the demographic who would actually buy the material. Fader argued that the labels were wrong when saying that they lost $X amount in revenues due to pirated materials. “That’s ridiculous!” Fader said. Just because you can’t get something for free, doesn’t mean you’ll buy it otherwise.

While thinking that copyright laws should be updated, Matt likes the idea of piracy (mentioning that he can’t wait for his book to be pirated).

I actually agree, in concept. I like the idea that new business models need to emerge. That’s why I like open markets. It forces companies, and thus, products, to evolve.

But if I spend a lot of money to make intellectual property, I deserve the right to protect it, regardless of borders.

That notwithstanding, I also think some forms of IP can be seen as marketing materials for a greater thing. Classic example is music. Because of the amount of music put out yearly and the lack of distinguishing characteristics of some tracks to others, music seems more like a commodity. As such, it could be effectively used to market the artist. Artists can let viral marketing take over, bootlegged or not. In fact, in this scenario, you want people to pirate it because it costs you nothing…free marketing to create demand.

The model that I favor is a controlled “open” IP.

Software companies have been doing things like this for a LONG time. Adobe let people get Reader (reads pdf documents) for free to help create demand for Acrobat (to make pdf), for which it charges.

This model might be able to be used consistently for all IP and is a direct link to revenue– that’s why I like it.

Here’s Matt’s video. Enjoy!

Thanks to ProHipHop.com for the video.

On an industry panel, I made the comment that copyright holders, particularly young, independent artists, should focus more on distributing their content on all available platforms, rather than on DRM (digital rights management).  Not that DRM isn’t important…but at this stage, it’s not as important.

Consider a DRM free model.  For an independent artist this is invaluable.  People can freely distribute that content on any and all platforms.  But get this…it doesn’t cost anything.  It’s free promotion without the artist having to do a darn thing.  If you consider the potential for lack of royalties because of the DRM infringement (as an opportunity cost), then consider this cost as a cost of marketing.  How much would it cost the artist to get that content in front of people who can’t hear the music because of DRM?  I don’t know, but do you want to take that chance of the content not proliferating to the full extent possible?

This is at a very critical stage now.  The internet has been THE go-to platform to distribute, play and search for content by all stakeholders (artists, fans, labels).  Being a copyright holder who makes it easy for anyone to hear/see that content will continue to win…because it gets it in front of the maximum amount of people possible. 

Sure, no one wants to get hosed on losing control of the content, but it’s that very control that can limit exposure.  The focus shifts into brand building and creating demand…