Hollywood versus the Internet

The media and Entertainment Industries In a Digital and Networked Economy

By Andrew Currah

Oligopoly

“a market in which control over the supply of a commodity is in the hands of a small number of producers and each one can influence prices and affect competitors”

------Webster online dictionary, 2009

Hollywood Studios

Disney

Fox

Paramount

Sony Pictures

Universal

Warner Bros

Typical characteristics of oligopolistic industry

Collusion

Strategic interdependence

The maximization of revenues

The preservation of industry structure

Outline

Introduction of peer-to-peer file sharing networks

The potential commercial benefits of P2P networks

The reasons why P2P is resisted

P2P

Peer-to-peer (P2P) file sharing is a system of sharing files directly between network users, without the assistance or the interference of a central server (Tech-Faq, 2006).

Three Types of P2P

Pure P2P

Hybrid P2P

Mixed P2P

New Media: an Introduction

By Terry Flaw

P2P Threaten Copyright

Hybrid P2P(e.g.Napster)lost a law suit

Mixed P2P(e.g.Kazza) ruled against by Australian court

Pure P2P(e.g.Bit Torrent) still “at large”

Average number of P2P networks

2003

2005

0 1 2 3 4 5 6 7 8 9 10

4.32

9.28

“the economic relationship between P2P file sharing and industry revenues is still extremely unclear”

---- Condry, 2004; Ganley, 2004;Oberholzer and Strumpf, 2004, cited in Currah, 2006).

Digital Right Management

“encodes computer files into a secure format, with a set of usage rules and a price determined by the copyright owner. The file can then be freely shared over the Internet, or even offline via recordable media, but remains locked until a usage license is purchased”

----Currah, 2006, p447

P2P’s Potential Benefits

More cost-efficient than traditional centralized server-client structure

Cost saving to release any product onto a P2P network, esp. not-so-popular products

If rewarding legal file sharing, revenue increases

DRM technology can release content in multiple formats and versions across regionally segmented markets

Why P2P file sharing networks are not preferred by the

Hollywood Studios?

Home video (DVD) contribute most of the revenue

----Currah, 2006 P451

New generation of high-definition DVD can generate new revenue and more control

Current legal and territorial structure of asset ownership

can prevent legal internet distribution

Clearing distribution rights could be expensive

Territory based distribution structure is in trouble

Present vested interests holders want to

maintain the status quo

Home video divisions

DVD retailers

Summary

Peer-to-peer file sharing networks

The potential commercial benefits of P2P networks

The reasons why P2P is resisted

References:

Currah, A. (2006), ‘Hollywood versus the Internet: the media and entertainment industries in a digital and networked economy’, Journal of Economic Geography, 6(4), 439-68

Flew, Terry (2008) New Media: an Introduction. (3rd edn.). Oxford: Oxford University Press. pp.21-37

Phillips, William (2002) ‘Music and New Technology: making music in the digital age’ in Kelly, Norman (ed) Rhythm and Business: the Political Economy of Black Music, New York: Akashic Books

Pierre-Lou Dominjon (2007) Peer to Peer, retrieved October 20 2008 fromhttp://pilouweb.eu/docs/Epita/anglais/peer_to_peer.pdf

Rietjens, Bob (2005) ‘Give and ye shall receive! The copyright implications of BitTorrent’, Scripted vol. 2, 3 September 2005

Tech-Faq, (2006) ‘What is Peer-to-Peer (P2P) File Sharing’, retrieved on October 19 2008, from http://www.tech-faq.com/p2p-peer-to-peer-file-sharing.shtml

The Register (2006) ‘Judge gives Kazaa deadline to end pirate file-shares’ retrieved on October 18 2008 from http://www.theregister.co.uk/2005/11/25/judge_sets_kazaa_deadline/

Webster online dictionary, (2009). Oligopoly http://www.websters-online-dictionary.org/definition/oligopoly