PhD’s finished, defense due in December. To be continued!

Abstract:

With the growth of the Internet, the future of cinema is at stake. ICT ushers in a new era whose main characteristic is the instant transportation of data. The way society, the economy and copyrights work is undergoing dramatic shifts. New uses of technology are swiftly embraced and the volatility of models demands an adjustment of strategies so that technological development does not clash the right of owners’ fair payment. Territoriality is disappearing as a notion and property is being questioned as a concept. The State tries to adjust the different legislations in force and engages in a race against digital technologies. As for the industry itself, it is progressively forsaking its defensive stance and is striving to develop innovative offers and services. But the sequencing and the emergence of numerous new actors who do not participate in the financing of creation, call for modern and supranational solutions. While legal and regulatory frameworks need to evolve in order to sustain and encourage the distribution of on demand films, it is also urgent to collectively conceive a way for the digital natives’ new practices to contribute to a balanced support to production, which represents a fundamental condition to ensure the continued existence of cinema. This multidisciplinary research aims at finding actual solutions that will be able to overcome stereotypes as well as reconcile the motivations and constraints of the various actors: industries, creators, audiences, governments.

Interview of Jonas Dahllöf, CEO, SF Anytime

29/06/11

• Concerning the SF Anytime online film offer
  

- SBD: What are the competitive advantages of the SF Anytime offer?

JD: SF is a house owned brand name and is part of the history. Anyone who has grown up in these countries has some kind of relationship to the SF brand, by far the strongest when it comes to film. So an obvious way to answer the question is: it’s a broad service, we have a very strong brand name, we are very much related to sales so very competent, we have an incredible film supply. But to compete on the long term on a market with non-exclusive rights, I think this is a question not to be taken lightly.

- SBD: What is your business model based on?

JD: The key focus so far has been T-VoD (transaction video on demand). And we have a small subscription service for different TV platforms, a joint product together with our pay-TV district company. SF Anytime distributes its service over the net but also via a large number of telcos and TV plaforms in Scandinavia.
The digital market is still at an early phase. There is growth but on a low level. Our estimate is that both IPTV and Internet represent about 3-5% maximum of home entertainment. So in the early stages of a market, it’s more about setting up basics, getting the distribution online, etc. But on the long term, the question remains on how to win the competitive advantages in a market with a very limited ability to compete (no exclusive rights). Do you compete with better tales, or better encoded films, or with price? You have to use something in your value chain that is hard to copy; Apple is a great example of that.

- SBD: How many downloads have you had in the last years? How did the figures evolve?

JD: I’m sitting in the board of the newly formed digital resellers organization up here and we had discussions with the film industry, about whether we would give them the volume figures in confidence so they we can jointly have an understanding of how big the market is. And we were not able to convince each other that this was a good idea; which I think is a signal that the market is rather immature. But I can say that SF Anytime has seen a good and healthy growth over the last five years and we have been able to grow with the market. I think we left the “techies” and the “nerdies” behind, and we are moving towards more mainstream consumers. But we are still in a very early phase.

- SBD: What is SF Anytime strategy regarding connected TV and multiplatform distribution?

JD: We are active there as well. It’s a new phenomenon. We have launched a service with LG and there are other things yet to come. I think it’s very important to see the connected TV as an extension of the Internet. Since everyone will be there will not be any competitive advantages. It’s still an other way of accessing the net. You might be able to have some exclusive deals but on the long term, it’s still an extension of the Internet.

• Concerning illegal downloading and the legislative answer
  

- SBD: Whereas lots of studies show that illegal downloading causes huge industry losses, some others tend to underline a global positive effect of illegal downloading on digital sales. What is your position on this matter?

JD: Being part of the traditional film industry, I really have a problem seeing this as a driver force for healthy consumption. I think this is just a deception. The fundamental problem is much deeper. We have to be really careful on how we set the prices. And the only thing we know is that on the long term the price will go down.

- SBD: What has been the legislative answer from the governments in Scandinavia, along with the EU directive from 2001? What is your evaluation of the legislative framework to protect copyright at the digital era?

JD: Sweden is not a proud example in this area. It’s been very disappointing since politicians have been fishing in murky water. Sweden has 2 members in the European Parliament who are members of the Piracy party. We should not be bragging in this area. Along with the industry, we are lobbying a lot to get this in line. The pirates have been able to politically organize themselves and debate about privacy, surveillance, espionage, democracy, which they blended together with the idea that everything should be free on the Internet, thus creating confusion. The Piracy party in Sweden is even against the patent laws! I think it’s obvious we need to have a real firm but faire policy. We shouldn’t chase the young criminals but the system today has not been in place. If you are a believer in the market economy, you should also be a believer in strong institutions and law enforcement. And if you can’t have those basics, the future of film industry looks pretty dark.
We have tried to implement the three strikes system but we have not been successful; the telcos have been lobbying against that.

- SBD: What is your evaluation of the situation in Scandinavia regarding the windowing?

JD: There is no legal foundation for windowing in Scandinavia. The system, which has evolved over time, is more based on industry practice. The theater window in Sweden is 4 months, followed by DVD and VoD. For most of the US content, the VoD is 3 months but could be up to 6 months. Then it will be on pay TV, then first pay, then free TV. The TV industry thinks it should get early releases or some kind of forced collapse of the windows. What is happening today is that the VoD market is coming day and date with the physical DVD. The trend is quite clear that everyone is moving towards day and date of movie theater and home entertainment.
Also, for 10 years, the movie industry has been in a digitalization process. The theater owners need to make a huge investment in the digital projection to upgrade their cinemas. On the other side, most of the savings are occurring on the studios side. So there are some negotiations between the industry side and the theater owners about those investments in digital projectors. This is an important phenomenon to take into account when talking about the VoD releases within the theatrical release. Of course the theater owners are very skeptical.

• Concerning the consumers
  

- SBD: From a consumer point of view, what internal studies has SF Anytime made in order to define the needs and expectations of consumers for buying films online?

JD: Doing market research is an important part of the business. But do we know or need to know about the consumer? The answer is no, we don’t.

- SBD: How do you build costumer loyalty? How do you control the user interface?

JD: It’s extremely important to be able to control the user interface. We will be launching a new interface at the end of 2011. In this early stage of the market, our focus has been on being out there, where the consumption is made. The next phase for anyone in this industry lays in better using of the digital possibilities, flexibilities, new opportunities. The market is not mature, so it’s more about being present, being OK on the basic parameters. The game will be much more challenging going forward. I don’t know if subscription can be the key for everyone.

- SBD: What is SF Anytime position regarding the use of social media?

JD: The new site will give us much better functionalities for using social media for example, to create good relationship with the customer base and so on.

• To conclude
  

- SBD: What will be the key factors to success for films online distribution?

JD: It will be a combination of being good at comforting a position (competence and financial strength), understanding and dealing with distribution, being able to build costumer loyalty since there are no exclusive rights. Everyone can create the business but how do you create a business that makes money on the long term?

Box 1824 is a brazilian consulting firm specialized in consumer trend and content. They just produced an amazing video explaining who is this new generation, called the Millennials, this new public born with new technologies and the Internet.

For us (and the brands and industries) to understand those Digital Natives, those teenagers who hack, surf, tchat, lol… the video starts with a description of the previous generations, like Generation X. Some vintage images and musics bring us back to the old days, since the 70’s until today, showing us the progress made. Then, the video shows us a panorama of those new consumers’ consitutive trends.

A very didactic work, a sharp analyze and a great video!

Vu sur le blog de La Quadrature du Net : 

Vu sur le blog de Jean-Baptiste Soufron, une courte vidéo que je vous recommande, dans laquelle le graphiste australien Simon Cottee explique sa démarche artistique autour du pixel.

Vu sur le site Ecrans, ce graphique de Brad Colbow qui a voulu télécharger légalement un livre audio et s’est retrouvé bloqué par des erreurs de cryptage. Le graphique s’intitule “Pourquoi les DRM ne marchent pas” et aurait tout aussi bien pu s’appeler “Pourquoi les consommateurs s’orientent finalement vers le P2P”…

Vu sur Ecrans, ce graphique qui illustre avec humour et simplicité (un peu trop peut-être), le ressenti d’un public qui en a assez d’être la vache (à lait) et le bouc (émissaire) pour une industrie qui peine à adapter ses supports de diffusion (cliquez sur le graphique pour l’agrandir) :

While being a visiting scholar at the New York University, I could broaden my research on the online film distribution in the US. I also had the great opportunity to meet experts, who I usually read and with whom I could talk and exchange points of view.

Recently, I interviewed two professors specialized in copyright. Their opposing visions about the copyright's essence and future is of great interest. First, Jane Ginsburg, professor of literary and artistic property law at the Columbia University School of Law. As a jurist, she is in favor of the authors' right. Then, Siva Vadhyanathan, author of “Copyrights and Copywrongs”, journalist and professor at New York University. As a copyright specialist, however not a jurist, he is in favor of the consumers' right.

About the Viacom lawsuit against YouTube for massive copyright infringement, Jane Ginsburg just reads the copyright act. In legal terms the suit relies on the Digital Millennium Copyright Act of 1998 (DMCA), which made it illegal to deploy technology intended to circumvent legitimate copyrights. But the law included a so-called “safe harbor” provision, which indemnified some kinds of Internet companies if they immediately blocked or removed such content when a copyright holder
informed them it was there.

But the safe harbor does apply only for service providers, defined in Sub-section k, Paragraph 512, of the DMCA, as “an entity offering the transmission, routing, or providing of connections for digital online communications (…)”. Then YouTube would like to attract the attention on the safe harbor and make us forget that it applies only to service providers, which it is not at all. For Siva Vadhyanathan, YouTube can absolutely be considered as a service provider. Thus, he believes YouTube-Google could prevail in the case.

About the hypothetical future of online film distribution without DRM, like what is happening in the music industry, Jane Ginsburg reminds us that there have been two different kind of DRMs: on streaming and on downloading. DRMs on streaming are essential and will remain as such. Concerning the distribution with DRM on downloading (which limits the number of terminals allowed to read the file), Jane Ginsburg underlines the fact that it still exists since one can download a song for $0.99 with DRM or $1.29 without DRM. The selling without DRM will then have to prove its worth.

For Siva Vadhyanathan, DRMs are less a protection against copy but more a protection for a certain control over the market. According to him, it is essential for the industry to distribute films without DRM in order to allow the public to remix. The better satisfied the consumers are about a service, the more likely they are to use it, and the more clients the industry gets. A resolutely consumer-friendly vision!

The weekend of April 27-29, 2007, the international conference MiT5: Creativity, Ownership and Collaboration in the Digital Age was held at the Massachusets Institute of Technology in Cambridge, USA. Various digital technologies and internet specialists were gathered to think about the Web 2.0's social, economical and legal implications. All with the same questions. Are we really in a new era? What is this new culture? How can we make the best of it? What traps should we avoid?

Web 2.0: Not so new

The now very trendy term “Web 2.0″ expresses the promise of a new Internet version. This is maybe not a revolution but there are undeniable evolutions. How do we understand the difference between marketing buzz and real social transformations? What is really new with the Web 2.0?

Communication is the key word. There is nothing new in the desire to meet people and build communities. However, the Internet users can now express their preferences and interact with (virtually) the entire world, with sites like MySpace, by posting a commentary, voting, and sharing a file. The participatory culture reaches a new scale, with P2P systems in particular.

User-generated content is also a great Web 2.0 novelty. It goes along with remix. With sites like YouTube that offer fast and simple tools, the “reuse culture” becomes widespread. It is no longer about reaffirming the authority of the original piece but illustrating the intention of the new one. No more passive contemplation, it is an open call to join in. Thus, the media convergence goes along with a producer-consumer convergence.

As long as there have been humans, individuals have gathered in order to collaborate, think and act. Since the last few years, a new kind of collective intelligence appeared, in a way that would have never before been possible. The free collaborative encyclopedia Wikipedia shows the power of the Internet that makes it possible for experts and non-experts to collaborate and produce a quality content accessible to all (the ones who are connected to the Internet…).

The business world is also part of this new gathering, with sites like eBay or Amazon. From now on, as Chris Anderson explained it with his Long Tail concept, there is room for all products, no more storage problems. All niche[s] markets can make up a market share that rivals or exceeds the few bestsellers and blockbusters. From this abundance came the “culture snack”, as defined by Wired magazine. “Pop culture now comes packaged like cookies or chips, in bite-size bits for high-speed munching. It's instant entertainment - and boy, is it tasty.”

A new social activism appears. New social activists take hold of the Internet to criticize and offer an alternative to the capitalist system. The aim is to connect to the Web for political action and get off the Internet to act in the real world.

While the Web 1.0 challenge was access, the Web 2.0 demands better understanding of the beneficiaries of all those changes and of the growing industry appropriation of the Internet.

Copyright 2.0: Not so fair play

New technologies change the way we see property. In cyberspace, value no longer lies in object but in access, the author is no longer individual but collective, the aim is no longer to safeguard the original but to create an evolving piece of art. How do we make two very different semantics of property coexist? What is the impact on our relationship to new technologies? How can copyright evolve?

Copyright is based on a classical liberal framework with the notion of exclusive right. Digital copyright has threatened all that, through non-commercial users. The DRM tried to limit the bleeding. But the industry realizes its limits. It is now important to think about a way to compensate user-generated content. Collective licensing also appears as an interesting way of expressing a new copyright view.

Aside from the legal repression, the industry has been attempting for a few years to educate the Internet users through anti-piracy campaigns which show users as criminals. Those actions seem to protect only the industry interests and raise the problem of
the presence of corporations in classrooms. They shape how a whole generation sees new technologies. Then, fair use is not presented at all or is discussed as risky.

The US copyright law, faced with technological changes, evolved along with court rulings. In 1984, the Supreme Court decision in the case Sony v. Betamax reaffirms fair use by allowing VHS recording and copying for personal use. In 2005, the case MGM v. Grokster rules on the P2P systems. A victory for the majors. One who distributes a device with the object of promoting its use to infringe copyright is liable for the resulting acts of infringement by third parties. Last March, Viacom filed a lawsuit, accusing Google of copyright infringement. If this goes to trial, the sentence will be decisive for the evolution of copyright and the Web 2.0.

We must keep in mind that capitalist culture is part of the new technologies. Thus, as soon as we buy a computer, we are owned by a big corporation.