Hollywood has the ability to do price discrimination. They can charge users different prices based on how and when a person would like to view a movie.

They can get $10/person in theaters. In return, the users get a huge screen, big sound system, maybe 3d, and the ability to see a movie as soon as possible.

After a view weeks, they knock the price in half and throw it at the second-run screens.

After a few more weeks or months, for a couple bucks per household, they can deliver the movie via DVD/Bluray sales, digital sales, rentals, Netflix mail service, VOD, and whatever else.

After a few more months, it gets shipped off to whatever premium cable network for whatever price. I’m not sure how these arrangements are actually structured, but again, thinking economically as you stated, it’s reasonable to assume the studios are making more money from the premium outlets than they are licensing to other non-premium cable.

At this point, I think some of these movies end up on Netflix.

After the premium cable exclusivity runs out, they can start licensing to other TV network. By now, the VOD prices half probably been slashed in half and sent to the “archives” and DVD/Bluray discounts are likely happening as well.

I just don’t see how giving up all this price control to Netflix makes any financial sense whatsoever. Even if Netflix doubled their prices and gave all the additional revenue to Hollywood, I’d still doubt that it would create equal revenues to their current model.

I’m sure movie studios could easily whip up a chart that shows what percentage of a movie’s lifetime audience sees the movie through any particular medium. Given those numbers, I’m sure you see a substantial revenue skew towards the early-stage delivery mechanisms. What the tech-industry wants Hollywood to do is completely disrupt the skewed portion of their current time/revenue graph, in favor of a model that cannot reasonably predict equal earnings.

I’d consider myself a rather casual movie consumer. My wife and I see about 6 movies a year in theaters. We probably watch another 12 on VOD. We’ll maybe buy 3 movies on digital media. Those revenues would be (6 * 20) + (12 * 5) + (3 * 15) = $225. Netflix costs what, $7.99 / month? That’s not even close.

And none of this touches the strategic shift that Hollywood would have to take if they just gave everything to Netflix. A lot of expensive movies are funded with the expectations of a big box-office gross. Take away the ability for blockbusters to make huge money in theaters, and you eliminate the incentive for movie studios to make expensive movies. There’s clearly demand for expensive movies, so you’re looking at substantial dead-weight loss.

The tech industry is blatantly ignoring economics in favor of pushing the quixotic fantasy of an uber-Netflix.

[...]Tech Lobbying « MattMaroon.com[...]…

While entertainment and drug companies are certainly pushing hard for this bill to go through, you can bet anything that tech giants like Google and Facebook are lobbying right back at them from the other end, for the obvious monetary reasons. You think those companies are any less seedy and willing to pay off a politician or two?

The fact is that SOPA was introduced to prevent crime. The only legitimate argument against it (which is why I don’t support the bill) is that it will fail spectacularly in preventing what it is intended to do. But I think the intentions of the bill are good and if there was some way to alter it to make it more effective I would support it.

ezrss.it is similarly awesome for television, though it isn’t too reliable these days.

I don’t think it’s fair to say movie companies in particular are clinging to past distribution models. They’ve experimented quite a bit. They just are trying to maximize revenues and avoid being at the mercy of an iTunes-like gatekeeper, and whatever chunk they get of Netflix’s $10/mo is really too small to take that risk for.

I don’t think iTunes, Pandora, or Spotify are good examples as the music industry loathes all of them. They fear another iTunes like gatekeeper to their content, and the other two pay them peanuts.

O’Reilly’s arguments aren’t wrong because of propaganda, they’re wrong because they are logical fallacies. I really don’t know the economic impact of piracy on the music industry but I’d be willing to bet you could find studies showing it to be anywhere from enormous to non-existent.

There’s plenty of propaganda on both sides at the moment. I still think SOPA and PIPA are idiotic, but I also find the “media companies just can’t innovate” argument disingenuous.

If as you suggest to the readers, ‘you actually read the bills’, you would know that they do not clearly target foreign countries. The Bills use very vague terminology that almost certainly can and will be used to target companies any where in the world including the U.S. Very specifically SOPA allows private parties to require payment providers and search engines to suspend services with out any oversight. This single feature creates an incredibly hostile environment for all Internet companies and would almost certainly be fatal to many early phase startups.

Contrary to what you imply in this post there is no evidence that any action is necessary by anyone. In fact there is beginning to be strong evidence that no action is the best course. The movie industry is trying to fight inevitable change it should be embracing it and providing it’s customers with the services they want.

To see actual evidence that no action is necessary look at the 2010 GOA study, the recent Swiss Study or even the study that Envisonal did for NBC Universal. No credible study has been able to support the economic impact numbers the content industry throws around.

The fact that you believe Tim O’Reilly’s arguments are the wrong way to combat SOPA is just evidence that to many people have been brain washed by decades of propaganda.