Paramount
Loew's/MGM
Fox
Warner Bros
RKO and the Minors: Universal, Columbia and United Artists.

The second part goes on to cover ‘The Classic Studio Era 1931-51' when the studios were at their apogee producing hundreds of films every year before the threat of declining audiences (because of urbanisation and competition from TV etc). Although the ranking was virtually the same (except that Gomery couples Disney with its distributor RKO and to the minors, and he adds the B-film factories like Republic and Mongram [noted for churning out westerns and serials etc]), this period also saw the sorry demise of RKO- Radio, destroyed by the mismanagement and regrettable taste of the reclusive Howard Hughes who considered the studio to be his play toy.

The last section covers ‘The Modern Hollywood Studio System' and how the studios were taken over by big business including Rupert Murdoch (Twentieth Century Fox) and huge multi-media conglomerates such as Time Warner AOL (Warner Bros) - these businesses even embracing major TV networks. The ranking now being:

Universal
Paramount
Warners
Twentieth Century Fox
Disney
Columbia and Sony Pictures

There are also sections on the Hays Office and the Academy and unions and agents and a chapter on the rise of Lew Wasserman the Hollywood agent who took Universal into the major league of studios and reinvented the studio system.

The thesis of this article is that for the major recording labels to stay atop the music industry, they will have to embrace both technological and creative risks.

They will need to find ways to reach more users via the internet. Until recently, recording companies have viewed the internet as the enemy rather than an opportunity. They have gone with the strategy of litigating the fans that use peer to peer networks instead of finding a sustainable business model that will put their content online. As a result, sales decreased by a fifth between 1999 and 2003.

More recently, however, the recording industry has made inroads to accepting that the internet and digital technology will shape the music industry’s future. Apple’s iTunes service proved to music executives that the legal download market is viable. With this realization, recording companies are trying to figure out how to change their business model to take advantage of the internet.

Another problem which is just as important as piracy is the recording companies’ inability to develop new artists into strong sustainable brand names. The emphasis on one hit wonders is also to blame for the decline in CD sales. In fact, an internal report at one of the major recording studios found that between 2/3 and ¾ of the decline in CD sales was unrelated to online piracy. By embracing the internet, which bypasses more conservative retailers, the recording companies could gain the confidence to support new, innovative music.

Additionally, when an online business model unfolds, higher quality artists will be more profitable. Currently people buy single tracks much more often than whole albums. However, it is in the recording studios interest for users to spend 12$ on a whole album from one artist than to buy 2 songs from 6 different artists.

Importance to Thesis:

This article is important to my thesis in that it helps highlight the strategic mistakes that recording companies are repeating in response to peer-to-peer networks.  Music companies are exaggerating the threat of P2P networks, just as movie studios exaggerated the threat of the VCR.  In fact, the majority of the recent decline in CD sales is due to factors other than online piracy.  In addition, recording companies ignored the new markets that they could reach through online distribution, just as movie studios neglected to see that the VCR would expand their viewer base.  This article thus helps draw two parallels between the VCR and P2P networks, and allows me to apply historical lessons to the current situation facing recording companies.  

In this case, Universal City Studios lays out its arguments against the commercialization of Sony’s Betamax. The essence of their reasoning is that owners of video tape recorders had been recording copy-righted material, which had been aired on television. This action, they claimed, infringed their copyrights, and thus Sony was liable for facilitating infringement by marketing the Betamax to consumers. Universal Studios sought relief for these damages through money damages and an injunction against the manufacture and marketing of Betamax recorders.

In its ruling, the court explained its reasoning for supporting the legality of the Betamax. It found that the average Betamax owner uses the device to record programs he cannot view as it is aired. This practice, termed "time-shifting," widens the audience for television media consumption. Thus, the majority of copyright owners didn’t even object to this use of the Betamax. However, there were two respondents in this case who did object to “time shifting” but were unable to prove that there was any material economic harm to their copyrights. The court decided that because there were “substantial non-infringing” uses of the Betamax, Sony was not liable and would be allowed to further manufacture and market the Betamax.

The dissenting opinion gives more detail in regards to the arguments made by Universal. The Studios claimed that video recorders would result in a decrease in revenue by reducing the marketability of their works in movie theaters and through diminished demand for prerecorded videotapes. They also feared that video recorders would decrease their viewing audience, and thus the licensing fees they could charge. While these damages could not be proved, the dissenters extolled the Studios view that as long as there exists a “reasonable possibility” of harm, then the use should be considered an infringement.

Importance for thesis:

This case demonstrates the thought process that media companies went through when considering how to react to the VCR.  The emphasis that the Studios placed on protecting their current sources of revenue, despite the fact that they couldn’t prove the VCR even threatened these income streams, exemplifies their short sighted viewpoint.  Additionally, the case demonstrates how media companies fixate on maintaining their current business models without considering the larger changing competitive landscape.  The results of adopting this stance will allow me to demonstrate the negative consequences of trying to fight technological evolutions.