Deloitte's Media Predictions: TMT Trends 2008 lays out what their analysts have found to be some of the most important trends and implications for media, specifically with regards to technology, for the year 2008 and beyond. The report contains three sections that are important to the realm of the future of new media.

First, the report tackles the potentially slowing growth of online advertising. It makes two important claims. People tend to find online advertising more intrusive and pay less attention to it than print or television ads. This could be because internet use is typically more active, and advertising can hinder this active process. The second problem is the trend for privacy and against personal tracking. The use of tracking and targeted ads is the single biggest advantage for online advertising. If enough major companies and consumer groups come out against the practice, this could create a major dent in the online advertising industry.

The second area the report explores is the impact of internet television on traditional television. The report makes the claim that internet television will be supplemental to traditional television, however this may be untrue. Although the report states that the major usage of internet video is for short form clips such as YouTube videos, network rebroadcasts have been growing so fast that the advertising revenue from Hulu.com, a studio joint venture to rebroadcast full television shows, will outpace the advertising revenue from YouTube. This shows the trend of people to begin to accept watching television online as a viable alternative to traditional television. The report does make one interesting suggestion that producers could take advantage of differing levels of quality to create a price discrimination scheme that could help add additional revenue.

The last area naturally follows the previous two. It addresses the difficulties in monetizing new media ventures. The traditional form of television media followed the crass simplification of  "Butts in Seats." That is the main goal was to have as many viewers as possible to watch the advertising, and pay rates were based on this number of viewers. Now, many forms of new media are attracting the viewers, but the viewers are not contributing to revenue. These viewers are costly to maintain and it creates a poor business model. The traditional methods will need to be changed to fit the new media world.

 

            In "Who's Afraid of Digital Downloads," an early article about residuals for new media, attorney Brooke A. Wharton argues from the talent perspective about the problems that arise over redefining residual agreements based on new technology. Shee bases his case on the history of the current home video residual agreement. Namely that when the first deal was struck between Magnetic Video, a Betamax producer, and 20^th Century Fox the agreement was that Magnetic Video would pay a 20% royalty fee for the licensing of their library. This deal was followed by many of the studios. In negotiating the talent contracts, 80% of the gross revenue was set aside and the 20% was split up among the studios and guilds. Wharton argues that this was fair when the manufacturing costs of one video were as high as $40. However, now that costs have come down to around $3, it is inappropriate for the studios to set aside such a large margin of the sales figures.

            It is to this argument that Wharton adds the arguments for new media. She states that the production and distribution costs for new media delivery is close to zero and that the higher rates of television should apply rather than home video. She then backs off to say that this is going to be a major debate and refrains from emphatically defending the talent's position. She ends by saying that this fight is not just a fight for digital download residuals, but for the compensation and pay of talent in the new digital age. This question is of utmost importance and could set the landscape for digital media and distribution for years to come.

 

Chapter 5 of Barabar Klinger's Beyond the Multiplex: Cinema, New Technologies, and the Home is titled "To Infinity and Beyond." In this chapter she explores the internet and its future for video content. She decides to focus her attention on made-for online shorts, both originals and parodies. Her argument is that the internet has created both a platform and a renewed market for short form content. She cites the popularity of early 2000's website AtomFilms.com and many popular short parodies such as "George Lucas in Love." Her attention is focused mainly on the artistic and cultural implications, rather than the economic implications. She seems excited about the future and the ability for filmmaking to be available to almost everyone in our society. Very inexpensive tools can be used to create successful short form entertainment, and the internet allows for full and unabated distribution.

One topic that she mentions briefly, but glosses over is of extreme value. The potential market for short form branded entertainment otherwise called advertainment. This powerful tool is simply entertainment content that is developed specifically to showcase or introduce a brand sponsored product. In one sense this goes back to the origins of television with sponsored shows. There have been a few very successful advertising campaigns that have used this new medium. BMW produced a series of films entitled The Hire in which they got famous directors and actors to produce shorts that included driving scenes. The films were pure entertainment, they did not tell anyone where and when to buy a BMW nor was there a distinct product they were selling. They were, however, showcasing the car and entitled BMW films presents. In this vein other shorts such as Dove's Evolution was a powerful two minute short showcasing the illusion of "model" beauty. This film was more educational but still with the purpose that people would choose to watch the short. These successful examples showcase a powerful new market that has yet to be adequately tapped. These shorts can be provided to mobile phones, sites such as YouTube, and any other short form marketplace. This should be the new trend in advertising and can have a large impact on the future of new media.

 

            The Summary of the Tentative 2008 WGA Theatrical and Television Basic Agreement is the end result of major negotiations between the American Motion Pictures and Television Producers (AMPTP) and the Writers Guild of America (WGA) following a WGA. As is evidenced by the focus of the document, the major negotiations occurred surrounding points of new media. There are many other details changed within the Memorandum of Agreement, however, focusing on the official summary it is clear that new media was the most important. The rules for new media fall into two categories: original product developed for new media and the redistribution of media through new media platforms.

            The first part of this agreement deals with original products developed for new media. First, the agreement establishes the guild's jurisdiction over this sphere if the project is developed by an established writer, the project is a derivative of an existing covered film or show, or if the budget is large enough. In this sense the guild has won the jurisdiction argument and has established itself as creating the minimum contract necessary for these projects. The agreement also explains the compensation schedules and exhibition windows before residuals begin.

            The second part of the agreement deals with the reuse of existing media in new media platforms such as the internet or mobile phones. This part of the agreement sets up some interesting implications. First, it differentiates between, electronic rental, sell through, and streaming. This is an important distinction that will largely effect how the future of internet distribution will work. It defines rental as viewer pay for limited access, sell through as viewer pay for unlimited access, and lastly ad-supported streaming in which the viewer does not pay for access to the television show or film. Important terms under the new agreement make rental and download rates higher than the physical media equivalents of home video, but the ad supported streaming, although higher then home video is less than ad supported television.

            The other major implication within the agreement is that it allows for promotional "clips" to be shown without residuals of up to 5 minutes. This is currently being used for programs such as Saturday Night Live where the clip is all that is necessary and may mean that short subject shows will get a lot of attention and reuse online.

 

In their paper, Does Peer-to-Peer Harm Copyright Owners: Protecting and Distributing Digital Products, Anne Duchene and Patrick Waelbroeck create an economic model of peer-to-peer content sharing versus traditional distribution with specific respect to online music sharing. Although the paper was written about music in 2003, it can be thought about with respect to film and television today.

            The model makes a few major assumptions to reach its conclusions. First, the original work provides more utility than the copy. This can easily be supported in today's terms that the original versions are of higher quality and can provide additional features such as DVD extras. The second assumption is that content producers will spend a large amount of money marketing and distributing under the traditional methods, but these costs will be 0 for peer-to-peer distribution. This assumption decidedly focuses on small independent produced content and ignores studio produced content. Along with this assumption is that there is a cost to downloading copies both in the opportunity cost of finding the copy and second in the copyright protection both technically and legally. This assumption does seem to hold true to real world issues.

            The findings of their model is that as copyright protection is increased, not only is consumer surplus decreased through decreased utility for copiers but also for buyers in terms of higher prices passed on to implement the higher protection standards, but also that higher copyright protection favors the large studio productions that have the ability to overcome the capital thresholds for marketing and distributing through traditional media. This could easily apply to film and television new media as well. As the studios block access to files through DRM, they are increasing production costs and favoring themselves over low capital producers who cannot afford to implement these strategies.

This has interesting implications over the future of new media in terms of concentration versus fragmentation of the media industry. It appears that if left unfettered, the online channel allows for a fragmentation of content producers. This is evidenced by YouTube, Funny or Die, and other small yet popular independent online content producers. However, if the studios are able to enforce higher levels of copyright protection, for example winning the Viacom v YouTube case, this could further concentrate power in the studios. In this example, the higher costs of copyright protection would lower YouTube or other smaller sites abilities to operate profitably. If these sites that support user generated content are hampered, it will allow sites such as Hulu.com to dominate and favor studio produced content over user produced content.

 

            Why We Fight is a video produced by members of the Writers Guild of America during the Writer's Guild Strike of 2007-2008 to state and explain their position on what they were asking for in the negotiations. The video is both an editorial on the disagreement, but also represents a primary source of information that helped move the events of the negotiations. The video was distributed via YouTube, which is fitting with its content about the fight over digitally distributed media.

            The video lays out the background of the writer's demands. Namely that after television proved an important revenue stream for the repeated play of theatrical films and the syndication of television shows, the writers had rightfully convinced the studios to pay them a 2.5% residual for any replaying of a written work after the initial play period. The video states this as a given fair standard. It goes on to say that when the home video market came about, they agreed to reduce their residual by 80% for home video revenue in order to allow the studios to experiment with the new technology. This is due to the calculation formula that sets aside 80% of wholesale receipts before applying profit participation on the remaining 20%. The video continues by making the argument that not only should the current home video residual be raised to .6% as compensation to "give back what we've given up," but also that media that is delivered through downloaded content or streaming should be using the 2.5% residual for free television.

            The video does make one important relevant claim. It suggests that in the future, all television may be delivered digitally through technologies similar to IPTV or other forms of internet television. It claims that the studios will use this change to support paying the lower internet residual instead of the higher television residual. This claim is supported by evidence that studios that resisted new forms of technology in the past, using the threat to gain concessions from the guilds, have later embraced the technologies and earned more revenue as a result. While internet delivery of television and movies is not yet profitable, it may become the most profitable channel in the future.

 

            In their 2007 article, "Hollywood Labor Unrest Looms on the Digital Horizon," Hessinger and Liebenberg argue that not only are the question of residuals for new media going to result in a possible work stoppage (as they did,) but that fundamentally there is a flaw in the residual system. They liken the system to that of a contractor building a house. It is ludicrous to think that anyone would pay the contractor a small fee every year that the house stands for continued enjoyment of the house, but it is exactly this model that the talent guilds operate off of. They argue, however, that because this model is so engrained in the Hollywood system, that reform is preferable to abolishment.

            The article makes an important distinction between copyright law and contract law. In the terms of the talent guilds, especially the WGA, the talent has already signed over the copyright to the producers. In return for signing over the copyright, the producers agree to both a one time payment for services and residual payments based on the reuse of the material. Because this is not a question of copyright infringement, the negotiations occur not in the courts, but in arbitration and negotiation rooms.

            The proposed fix that the article suggests is that instead of taking the residual payments out of the gross revenue numbers, the residuals should be taken out of the profit numbers. They suggest that this would allow studios to recoup a profit before paying out residuals on projects that lose money. It does not seem appropriate that a film that lost a lot of money for a studio should be paying out residuals while the studio is still retaining a loss. However, this solution would not work in practice. It is very easy for studios to change their accounting methods to show no profits from many of their films. This would effectively erase residuals even on seemingly profitable films. These accounting methods may be questionable but are not illegal. Because of this, the new WGA agreement for new media bases the residuals of gross advertising figures instead of net profit figures.

 

 

            Deadlinehollywooddaily.com in spite of its long name is the source for all breaking news and great commentary for the WGA strike and AMPTP and SAG talks. Nikki Finke has created a blog that not only has been providing news and updates about the situations, but she has personally broken many of the stories, especially during the writers' strike. Her posts are decidedly pro-union and very against not only the studios, but the industry trade papers for reporting in slanted ways for the studios.

            Her position on all the union contract negotiations has generally been one of David versus Goliath. She has taken the position that the talent guilds deserve higher residuals, because they are the little guys who are being strong armed by the studios. Although her claims are not readily based on sound economic analysis, she does have a very keen understanding of the actual players in the discussions. She reports how the studio heads deliberately aim to horde profits while keeping the talent as under paid as possible. One of her best posts was supported by a video that juxtaposed the studio heads saying to investors how profitable online distribution was going to be with the statements to the WGA that there was no money in online distribution and that they would not agree to any residuals before they could "experiment" with the medium.

            Nikki Finke's position has nevertheless been backed up mainly by her ability to quote the hypocrisy of the studios. It seems that it has been her intention to keep the studios in line when it comes to presenting an accurate description of the effects of the new media contracts. Currently her posts are centered around both the SAG talks, and the WGA's complaint that the AMPTP is not paying the residuals agreed upon in the Minimum Basic Agreement that was signed to end the writers' strike. Her blog is evidence that new media is such unknown uncharted territory, that often personal emotions tend to outweigh any rational thought. It seems very possible that the future of digital media may be decided in irrational, territorial infighting rather than sound economic business plans.

 

            In his article, "Watch Now: Netflix, Streaming Movies and Networked Film Publics," Chuck Tryon uses Netflix's new "Watch Now" feature to represent the new methods of Hollywood film delivery to the viewer. "Networked film publics" is the most interesting idea of the article and is presented in the title, but it is only briefly touched upon. The idea that it stimulates, however, is of an online community dedicated to the communal watching and discussing of film and television. Instead of a group of friends gathering in a theatre or a home to watch films and discuss them, the internet would connect random people from anywhere in the world based on like interests and watching these films could be a collective experience.

            Tryon mentions that for the time being the main way of watching these streaming films and shows is on the computer, and that this individual method of consuming content will change the type of content consumed. However, this claim only takes into account the intermediate stages of the new forms of digital delivery. Already Netflix has partnered with Microsoft's Xbox to deliver films on demand to televisions.

            Overall the claim that new methods of watching and interacting with content because of its distribution form is very interesting to the topic at hand. The power of groups to spread and distribute content may give power to the independent producers and new media producers while taking away from the gatekeeping abilities the studios have enjoyed. It is understandable in this context why the studios are concerned about new media distribution as an "experimental" technology that needs to be protected from exorbitant residual payments. However, the studios need to look at this as a new opportunity. They can have the ability to create fan groups and internet showings of films. They can price discriminate by charging different prices for the movie if it has extra features packaged with it. They can run discussion boards in which they can have very targeted advertising. There are many new opportunities to look for in this new delivery method.

 

            The complaint filed in the case Viacom et al v. YouTube et al, shows the potential harms from digital distribution of content. In the complaint, Viacom contends that not only does YouTube provide a service in which it is possible for users to post copyrighted material, they encourage it and have infringed copyrights for the purpose of promoting and growing the website. The complaint decides to sidestep the DMCA and make a charge based on previous copyright law. They argue that YouTube is not providing the necessary resources to copyright owners to stop infringing material, and that they are purposefully failing to stop the uploading of copyrighted material. This charge contains two important pieces of information for the topic of new media distribution. One, that there is a market being monetized of copyrighted material, and two, that there is rampant piracy and costs with preventing this piracy.

            The complaint makes a strong yet unsubstantiated claim that the majority of web traffic to YouTube is driven by copyrighted material. Anecdotally and unscientifically this does not seem to be an accurate description. Looking at the "Most Viewed" clips on YouTube, the lists are dominated by user generated content. Most of the viral clips that have become representative of Web 2.0 were user generated. The few notable exceptions being Saturday Night Live's Digital Shorts which were promptly taken down by YouTube before being uploaded to NBC.com and Hulu.com by NBC. In this view that is as scientific as the complaint is, it does not seem to hold true that it is copyrighted material that is driving web hits. In addition, YouTube had in place a 10 minute limit to any video clip (albeit for mainly storage limitation reasons) that would have precluded any longform entertainment to be posted.

            This debate brings up the discussion of now three types of new media content. Copyrighted material created for traditional media that is reused in new media, new media created and produced for digital distribution by professional producers, and user generated content. In this case it seems that YouTube is dedicated to being the market leader in user generated content, while allowing other sites such as Hulu.com to be the standard for redistribution of traditional media.

 

The media companies have always been reluctant to address new technologies. It has always been there position to let smaller companies experiment in the new space, and wait until ubiquity before entering and taking over the new market. This happened with television, home video, and will now happen with new media. After seeing the music industry collapse by losing control over the distribution of their music, the film and television companies have decided to enter the new media space. They are currently battling with everyone from YouTube to the talent guilds over the future business model of new media. Representative of the whole situation is the negotiations, strike and agreement between the American Motion Pictures and Television Producers and the Writers' Guild of America. This battle over residuals had the studios defending the position that new media is still untested and unprofitable. This is an exciting time. The future is up for grabs and whoever has the best business model will win.

    In Chapter 5 of Free Culture, Lawrence Lessig lays out anecdotes and archetypes of all manner of piracy.  The duplication of copyrighted CDs and DVDs in foreign markets is touched upon, but one of the main salient points is his defense of Peer-to-Peer file sharing networks, the groundbreaking networks and servers which made Section 512 absolutely necessary and the rulings on which still protect YouTube from harm.

    One of Lessig’s major talking points is his attribution of the four archetypal uses of P2P networking: stealing music, sampling music before buying, access to abandonware or other copyrighted content that is no longer available by traditional means, and those who search for content that has no copyright or a Creative Commons license and is meant to be shared.

    This is a highly utopian view of both P2P networking and the internet, but at the very least interesting to consider.  Lessig goes on to discuss drops in CD sales and later Jack Valenti’s ridiculous claims about VCRs as “tapeworms,” just waiting to drive the industry down.  If anything, the VCR and file-sharing networks both paved the way for the kind of content generation and also server networks that my final project will use and draw attention to.

    In Chapter 4 of Convergence Culture, MIT Professor Henry Jenkins discusses the grassroots/netroots communities that form around the creation of digital content.  Specifically, the proliferation of DIY digital video creations based on the Star Wars mythos and collaborated on by fans all across the internet.

    20th Century culture, Jenkins argues, built towards a massive uprising of grassroots culture, which began to truly take hold upon the integration of the internet into daily life.

    If there are any flaws in the current fan environment, as he sees it, they are (as he mentions from Lessig) the proliferation of legislation produced to keep the interests of major character-licensing corporations happy, such as mega-giant Disney, which will be quite able to rest upon licenses of its property for decades to come, even if Disney kept producing creations that are barely profitable.

    Convergence culture heralds the digital age, for sure.  Displaying outright giddiness for the subject matter, and extravagant love for the legions of DIY Star Wars buffs and MMORPG fans which proliferate the internet.  These weekend warriors deal with the same kinds of copyright issues that I will, though they re-craft their sacred universes whereas my method is to sample.

The Digital Media Consumers’ Rights Act of 2005 proposes greater care taken by the music industry in letting consumers know the types of digital rights management included on compact discs that they buy.  It mentions increasing consumer dissatisfaction with current DRM practices, as well as general confusion by the mass public about the majority of new innovations in DRM technology, many of which are implemented without consumer’s knowledge.

    It finds most discs to be inadequately labeled with copy-protection warnings, and assures that it is deemed deceptive and unlawful for compact discs to be sold with inaccurate advertising of their digital copyright restrictions.  In this case, certain discs with copy protection must be clearly labeled that they are not, in fact, regular audio compact discs and that they may not be able to be played in some devices capable of playing compact discs.

    This law can only serve as support for the anti-DRM movement, which would find it even easier to warn people about DRM if items such as this were clearly labeled.  This is legislation concerning a number of digital restrictions that already exist in other formats, but are being brought to light more because of a lack of implementation of these technologies at their outset.

    This section of US Copyright law outlines violations of copyright-managed systems, such as bypassing digital rights management and producing a copy of a video in another format.  This makes it illegal for consumers to bypass encryption that restricts content, for instance, to one device for purposes of moving the same content to another.  The law also includes information on the Librarian of Congress’ selection of a class of bypassable works, exemption for educational institutions, and what construes technological violation of copyright encryption.

    Section 1201 also states that no outstanding violations of this section will hinder a defendant’s fair use argument.

    This section of US Copyright law is particularly salient as in order to create my project, I will be bypassing both DVD encryption codes and any DRM embedded into the music used for the piece.

    These are both clear violations of Section 1201.  However, were my project ever to come under copyright scrutiny, I would hope to find protection under this violation being carried out within an academic institution, for purposes of parody, and creating a transformative video which falls neatly under fair use exemption.

    This is also important because for the vast majority of videos on YouTube that contain copyrighted content owned by major corporations, that content has been captured from a source which implemented digital rights management, and thus the uploaders have infringed upon Section 1201.

Thesis: This project explores the increasingly important relation of digital and remix/convergence culture to copyright law and copyright holders, specifically with regards to how video and sound properties are handled in the highly open market of the internet. As a creative submission, I will create a mash-up video parody featuring copyrighted content from Apple Corps., Vivendi Universal, and Buena Vista Pictures. My supporting paper will detail the copyright violations that were necessary for the creation of the work, as well as discussion of whether and why the work should be seen as "fair use" and the ways in which our current cultural paradigm calls for a system within which creations in the same class of works can be made without the violation of the Digital Millennium Copyright Act.

Arguments:(1) If laws are in place which protect works which are transformative in nature or fall under other fair use or parody guidelines, a system should be established by which consumers can legally transform their media without having to violate the DMCA by bypassing digital rights management encryption. (2) Our culture is in a transitional state, as technology is making the process of parody and other fair uses increasingly democratic. (3) The creative project itself will be a parody of Hollywood tropes and practices, which are becoming increasingly less dominant in the new age of user-generated content. Fittingly, the final project will be posted on media and netroots darling YouTube to make the commentary complete.

    This press release from YouTube briefly details their partnership with Universal Music Group (UMG), subsidiary of Vivendi Universal.  In this groundbreaking strategic partnership, UMG agrees to make music videos whose rights they own viewable on YouTube.  It also allows for YouTube users to utilize music from UMG’s extensive catalogs in their videos.  In turn, YouTube agrees to remove from their site any content owned by UMG which they choose not to make available, and UMG and its artists will be compensated by YouTube for their properties being viewed on the site.

    The document makes mention of the nature of the partnership: that is, a way for UMG to tap into the vast resource internet traffic, a way to assure that YouTube remains devoted to protecting their property, and lastly an embrace of contemporary convergence culture and the new consumer/prosumer drive towards user-generated content.

    This is an interesting deal, especially considering the rampant speculation of YouTube running into problems with UMG just a month before this announcement and how, in the midst of the YouTube deal, UMG sued two other video sharing networks.

    I reference this announcement because it, as well as YouTube’s agreement with Warner Music Group (which preceded this partnership) are primary evidence of a growing trend towards adoption of user-generated content models, and the willingness of media giants to begin the slow process of loosing content restrictions without direct payment by the consumer.

    I reference specifically the Universal Music Group rather than the earlier Warner announcement because segments from my project will include property (video) that is owned by Vivendi Universal.  While this announcement does not in any way justify the posting of my project on YouTube as a legal action, the existence of a link between the two companies is of note, and hopefully a sign that should property agreements expand, the video included in my project will one day be YouTube-licensed (keeping in mind that this is not likely, as the project will contain copyrighted material from additional companies.

This is a nice posting about the legal implications of machinima, from a blog totally dedicated to covering the latest news in the world of machinima. The author, Paul Marino, outlines three possible aproaches to the issue of copyright machinima makers might use to clearing their work for commercial use.