BitTorrent's legal download deal, says Mathew Ingram, is "built to fail" because it is yet another DRM-ridden solution that solves a problem that the studios think they have but none of the problems really faced by consumers. TV shows will be sold: films will only be rented, time-expiring after 30 days or within 24 hours of being watched.
"BitTorrent co-founder and chief operating officer Ashwin Navin effectively admits that this is a dumb idea, and says that (NYT) the company actually had agreement from the studios to sell movies outright for download, but the prices that the studios wanted to charge didn’t make any sense."
I'm not convinced that the prices the studios wanted to
charge for DRM-free digital films didn't make any sense. It sounds like
the fee they wanted was high. But in one way a high fee for owning a digital copy of a film as soon as it comes out makes perfect sense. At the moment, release windows maximise returns for rights-holders - some consumers buy more expensive formats simply because they are available earlier, and many will consume the same film many times. I might watch Hot Fuzz a couple of times at the cinema with different groups of friends, then later buy it on DVD as soon as it comes out, and even watch it (ad-supported) on TV a few years later when it finally makes its way onto the network schedule. If instead I could buy it just once on digital, the studio would need to charge me enough to cover all those lost opportunities to charge me to see it at different times in different ways.
If I had to guess what the studios needed to charge for films over digital to offset that lost revenue, I'd stab at thirty pounds a film. The calculation for each film must include the propensity of each possible consumer to watch it at the cinema, then buy it in one or more formats, then view it on TV one or more times. Or to put it another way - the studios will want to charge more (perhaps a lot more) for a digital copy of a film that it costs them almost nothing to distribute than they do for a DVD that has to be made and shipped. To the consumer, this looks like naked profiteering.
And there's the problem. Consumers can currently get DRM-free films via P2P for nothing. The studios are competing on the one hand with free, and on the other hand with their own complex legacy model of release windows and formats. And as Grant McCraken reminds us,
"Consumers have still not forgiven the industry the digital transition. CDs cost less to make but the industry didn't charge the consumer less or pay the artist more. It kept the difference."
The right price to compete with free is very low. The right price to compensate for lost cinema/DVD/TV receipts is very high. Many consumers remember being screwed over the digital changeover in music and don't trust the rights holders this time around. Which is why, I think, for no-one who looks at this market from either side thinks the prices make any sense.
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