The Failure of Advertising?

By way of Techcrunch, a great article on how advertising models are failing on the web and that the internet is actually killing advertising (his words, not mine). The author, Eric Clemmons, is a prof at Wharton and the article is a must-read for those in film - especially now as many folks are touting advertising as the savior of film online. I've never believed this - if advertising works for niche content online it would have worked for it on tv. I also find that in my personal experience online, I completely ignore ads (of course, I do this in print as well) - and they are very easy to ignore - Whenever I watch internet video that has ads, I simply watch something in another tab until the forced advertisement is over. I also think it's been made abundantly clear by TiVo that people will pay a premium to avoid advertising, but Clemmons argument is more sound than any I've made. My favorite quote from the article:
"My basic premise is that the internet is not replacing advertising but shattering it, and all the king’s horses, all the king’s men, and all the creative talent of Madison Avenue cannot put it together again."

So if advertising is being shattered, how are people going to make money online? Clemmons thinks from three things: selling real things, selling virtual things and selling access. He explains this further in the article, but what he ends up supporting as possible business models are:

"Selling Virtual Things: People will pay for superior, timely, original content and for superior online experiences.
Selling Access - providing the customer enough info to make the informed choice they want to make"

I agree completely. These aren't that far from the "generatives" described by Kevin Kelly which I described in an earlier post. I'm pretty sure advertising isn't dead yet - people will keep trying it for awhile, and a few will even make money with it - but only in aggregate as a large company, not for any individual film. I think the film business would do well to consider the implications of the possibility that Clemmons is right though - because we definitely need good business models and don't have time to waste on trying to reuse old ones that may ultimately fail.

Thinking unthinkable on the film biz

By way of O'Reilly Radar, I just read Clay Shirky's great piece on "Newspapers and Thinking the Unthinkable" on the future of publishing. I highly recommend this for anyone interested not just in the future of newspapers or the web and publishing/blogging, etc but also for anyone interested in the future of the film business. The parallels are pretty clear. Shirky's best line is:

That is what real revolutions are like. The old stuff gets broken faster than the new stuff is put in its place...

And so it is today. When someone demands to know how we are going to replace newspapers, they are really demanding to be told that we are not living through a revolution. They are demanding to be told that old systems won’t break before new systems are in place. They are demanding to be told that ancient social bargains aren’t in peril, that core institutions will be spared, that new methods of spreading information will improve previous practice rather than upending it. They are demanding to be lied to.

There are fewer and fewer people who can convincingly tell such a lie.

The same thing is going on in film. The old system of making and distributing films is broken and it isn't coming back. Arguing for how we can keep theatres going, or preserve the DVD market or the margins or the profits are asking for the lie.

But if we shift the question away from how do we keep doing the same old thing to what really should be done, we start to get interesting answers. As Shirky continues (and O'Reilly pointed out as well):

When we shift our attention from ’save newspapers’ to ’save society’, the imperative changes from ‘preserve the current institutions’ to ‘do whatever works.’ And what works today isn’t the same as what used to work.

Amen. In film/media, I think this means let's focus on - "what do audiences want" and "what best connects filmmakers to these audiences" who are also producers, participants and even filmmakers by the way....

Open Access Hijinks

Just learned this from Lessig's blog - John Conyers has reintroduced an insanely stupid bill that would outlaw any public agency from requiring that tax payer funded research be made available free. Instead, you'd have to pay a publisher for it. From Lessig:

The Huffington Post is running a piece about H.R. 801, the latest version of John Conyers' awful idea. The law would forbid entities like the NIH from requiring that recipients of government grants make the product of their research openly accessible. (The current practice requires articles be freely accessible after 12 months.) Instead, Conyers' proposal would require that after the American taxpayer has paid for the research, the American taxpayer must pay publishers to get access to the product of the research.

The first important word to emphasize in the last sentence is "publishers." For unlike the ordinary market for creative work, here, the author isn't paid for his work through the copyright system.

This is a ridiculous bill. The simple reality is that the science publishers aren't needed anymore. Of course, no one likes to hear that their jobs aren't needed, and this group is smart enough to run to Congress and try to pre-empt technology from changing their business. This isn't directly related to film, but I'm pretty passionate about the need for open access to educational resources, especially those funded by taxpayers. I'm also pretty sure that what happens here will impact what can happen in the future with access to films. So, for example, the movement to make fully-funded PBS films available to the public for free could be made illegal by a similar act.

Anyway, if you care about this, you can find more info at the Open Access News blog which also tells you how to take action.

Boxee and Future of TV

As many people already know, Hulu (at the behest of some content holders) recently asked Boxee to pull their shows from its service. If you don't know about this, read about it here, but the short version is as follows. Boxee is a great little open source program that helps you get your entertainment from your computer to your TV. Using it, you can watch everything you've downloaded on your tv, but also (until recently) tie in programs from Hulu, Netflix and others. You can also listen to music, look at Flickr photos and a bunch of other stuff.

Of course you can do all of this without Boxee, but it makes it a little easier as you can use your remote. Many people apparently have been using it to watch TV shows from Hulu. Apparently, some lawyer got wind of this and within days got Hulu shows pulled from Boxee. This is beyond stupid - as other bloggers have suggested before me - you can almost imagine what happened. Some idiot lawyer who doesn't understand the internet or where things are going heard that Hulu programs were on Boxee. At first, s/he thought, wow this boxee thing is great - more people watching our programs on Hulu means more eyeballs, means higher CPMs and that's great for us - more money. And they're watching it on their computer, what a crappy experience, so it won't cut into our business. Five days later, someone showed them that they could easily watch the same shows on their TV and the little lawyer's brain melted as it tried to comprehend this scenario - wait, they're now watching our tv programs on a tv and it isn't through our existing deals with affiliates and/or cable companies - yikes. That people can do this anyway, lost on this poor lawyer, so out go the cease and desist letters.

Sounds a lot like the smart business moves the music industry has made online. Already tons of people are saying screw this, I'll just go back to pirate networks. The netowkrs/content-holders could have helped build the future, but is instead fighting it. Hulu apparently understands how stupid this is, but they are stuck in a bad situation. Boxee is stuck in an even worse situation, but they are trying to do something positive about it. This weekend, they launched a wiki where anyone can help them build an argument, or pitch, to broadcasters about why they should work with Boxee. It's a great way to involve your audience in making your case, and I applaud it.

Right now, this argument is just about Boxee and Hulu, but as this debate widens it will likely affect how we access content in the future, or at least be one of the pieces of the puzzle. As cable companies start floating ideas like having their own free portal where you can access this content only if you pay for their broadband and/or cable service, such arguments become much more important. Eventually, this all ties in to net neutrality, as well as to the future of distribution - which at the end of the day effects the small indie player as much, or more than, the broadcasters. So, if you care about how these things pan out - join the action on the wiki!

Curation and Find

I keep telling people that the future of the internet if find. Everyone looks at me like I'm speaking in tongues, but what I mean is that if the last decade has been dominated by search, think Google, then the next will be dominated by find. Meaning we often spend lots of time on the web searching for what we really want, only to be inundated by lots of crap we don't want. Services that help you find what you want are becoming more and more important.

In film, we're all seeing thousands of movies migrate online, and I've been on many panels where the woe of the year seems to be that there's too many movies being made. But I've always felt like this is a ridiculous argument - I never went to the record store and said, damn, there's too many bands and albums out there. And I don't feel that way in the online world.

Instead, I've always relied on trusted sources to help me find the bands/music I really want to hear. Their recommendations, be it friends, magazines, zines, blogs, radio, or whatever - helped me navigate through the crap to find the good stuff. That's exactly what I think will define the best online services moving forward, especially with video - finding trusted source folks to help you find the gems you really want. This will take multiple forms, but over at my day job, we've been building a system to help people use this idea to find the videos they want. It's not perfect yet, heck we're still in beta 2.0 of a soft launch, but it's getting better.

Reframe is build around the idea of curation. We know there's tons of film sites out there, but hopefully Reframe can be a place, probably one of many, where you can go to find quality films that you want to see. We've got lots of great curators helping us - filmmakers, film critics, film professors, average joes, writers, walkers, and out staff, all curating lists of the best films, or their favorite films, on different topics. We selected the first batch, but now it's open to anyone, with the idea being that you can select who to follow and perhaps someone you never knew will become a trusted source.

Check out this post on how it works if you're interested and join us as a curator.

photo from Reframe - "Screening Room With Stan Brakhage" a film from Documentary Educational Resources directed by Robert Gardner

Microfinancing the arts

Got a great email from Galapagos today announcing a new initiative they are launching to micro-finance theater. I'm glad to see more stabs at this in the arts. There's a few in the film world as well, but what I like about this one is that it comes with the trusted "curation" from an arts organization that I, and many people, trust for quality. One that isn't nonprofit by the way.

There's nothing on the Galapagos website about this anywhere, so I post the email in its entirety below. I guess Galapagos is cutting edge everywhere but the web - like many an arts org!

We're creating ~ think social networking meets venture philanthropy ~ a micro-financing funding model based on the Nobel prize winning Grameen bank.

what is the Grameen bank?

_______________________________________________

Help produce theater.

For $100 you'll get:

· Part ownership of a new theater production, produced by Galapagos

Art Space

· Part ownership in a racehorse at Belmont racetrack. We'll go visit

the horse and watch her race.

· Two tickets to the production, and you'll be invited to readings of the

work and to rehearsals. You'll get to meet the director and the actors at

a special cocktail party Galapagos Art Space will organize.

· A special ticket - at cost - to go skydiving with us.

What if we discover the next "Rent", or the next "A Chorus Line"? What if the theater piece we select one day goes to Broadway?

· As an owner of the work you'll own a share of the profits.

Why are we doing this?

· More than 25% of the once two hundred Off-Off-Broadway

theaters have closed in the last five years. And that was during an

unprecedented economic boom.

· We estimate that another 25% will disappear in this economic crisis,

within the next sixteen months.

Why is finding innovative ways to fund theater important for New York City?

· New York doesn't compete to bring the best and brightest to it's most

important industries with a network of fine running paths or wonderful

bike trails. We don't compete for tourists with mountain views.

We compete with culture.

Other cities, cities like Berlin or London, want our best and brightest

- the ones our meritocracy would obviously miss the most - and they'll

get them if our artists can't set their foot on a stage or get their work on

a wall. New York can be expensive but it must include opportunity in it's

narrative or it's only expensive.

_______________________________________________

The next step:

We're looking for the right theater piece to begin this program with.

In the meantime, if you have questions, or thoughts, or you'd like to participate:

If you are an artist, email us at

No experience necessary! If you'd like to produce theater, email

Warm regards,

Robert Elmes

Director, Galapagos Art Space

Future of Social Media Video

My good friend Joe Summerhayes teaches kids how to make media - animations, videos, web - and runs a cool blog on issues around the future of media and education. He posted a video today that I hadn't seen about the history of and future of media on the web - or really about our future as a result. It's a little corny but spot on for most of the video. The video's producer has some other cool videos on the future of cellphones, etc, and even on making caipirinha's in Dublin!
Worth a look:

VOD, Fests and Tom's great post

Tom Hall, always one of the smartest bloggers, programmers, thinkers in the room had a great post at IndieWire that I missed until Agnes Varnum posted about it. I made some quick comments there, but thought I'd post what I think about the recently announced IFC/SXSW partnership here.
Read the other posts first or this won't make much sense:

Tom,
Great, thoughtful post. I am 100% in support of this move by IFC and SXSW and think it can be great for fests as well. Having run a small, regional fest for 5 years, I was always pushing for this exact model and for expanding how we think about what our audiences will come see.
I for one always argued with our programmers that it didn't matter if a film played HBO, or PBS first, we could still get an audience. Tons of people don't watch these. Tons won't even know it's on demand. You, me and many film buffs see things right away and may choose to see a film based on how soon it is available, but I don't think this is true of everyone. it's amazing how many people still haven't seen Citizen Kane - it's been in theatres, on tv, on vhs, disc, youtube and everything else and lots of people haven't seen it. Many would come to your fest for a print screening with a local film expert. Find value in what you offer that other venues (including "venues" like an ipod) don't or can't.

Those that do may be intrigued to see it with others, or to see it again, to bring their mom who can't figure out VOD, or as you mentioned to meet the filmmaker. I'd also argue that you don't necessarily need the filmmaker in attendance. It helps with most, but you could probably fill a screening with related speakers (the local expert doctor on the disease in the doc, or whatever).

More importantly, we need to figure this out because no one should care whether our old (festival, distribution, platforms, whatever) model lasts or is harmed. All we should care about is the filmmaker and the audience. Whatever tools come around that better connect them, all the better. So, for fests (and others) to be relevant they need to continually ask your question (rephrased) - given that this is the new reality, how can we add value to the films, filmmakers and audiences.

I've been so eager for someone to have this conversation, and think of even bolder models, so in that sense I am very glad for IFC/SXSW and your post!

Free the facts

Not really about film, but if you are interested in open content movements, this presentation is great. It's also a masterful powerpoint, which is rare.

Best Outreach Ever

My good friend Luciano Larobina, who I met when he won a Fellowship from my day job and took a workshop with us, is finalizing his new movie HavanaYork. I haven't seen the final cut, but he just linked me to his website where he is doing some excellent work on outreach before his film is even done. Something every filmmaker should do.

There he has great wallpaper downloads like the one shown here, posters, music, etc. You can sign up to pre-order the DVD, enter contests to remix music and clips from the film and my absolute favorite - download graffiti stencils that are incredible. Hands-down the best outreach tactic I've seen lately. The stencils are all in PDF with no direct links, but you can find them easily here.

Python Proves Free Works

This just in from Mashable -
The Monty Python gang has decided to fight piracy by giving away everything for free and letting you link to it to buy it. From the report:

“We’re letting you see absolutely everything for free. So there! But we want something in return. None of your driveling, mindless comments. Instead, we want you to click on the links, buy our movies & TV shows and soften our pain and disgust at being ripped off all these years.”

And you know what? Despite the entertainment industry’s constant cries about how bad they’re doing, it works. As we wrote yesterday, Monty Python’s DVDs climbed to No. 2 on Amazon’s Movies & TV bestsellers list, with increased sales of 23,000 percent.

That's the way the net works folks! Buy some now.

Luddites, Boomers and Media

By way of O'Reilly Radar I found this Columbia Journalism Review interview with Clay Shirky. Shirky is a professor at NYU who I usually don't find interesting (a long story, but essentially feel he's sayig the same things others said 10-20 years ago), but this one is good. It is ostensibly about journalism in the time of new media, but I think it applies to the film world just as well.

So for all of you out in Sundance thinking about the future of the business between screenings, here's a few of the gems. I had to skip the 'Dance for the first time in 10 years, but hope all are having fun.

In debating new technology and it's effects on film, someone often compares the old guard of the film world to Luddites, while the old guard says, "wait, we're not against technology, we just want you to respect our model. So here's Shirky on whether there is a new Luddism:


Luddism is specifically a demand that the people who benefited from the old system be consulted before any technology is allowed to disrupt it. That’s what the Luddites wanted.... But, to say, essentially, that the change should be stopped because it’s disrupting previous value is exactly Luddite. I mean, no one is anti-technology in general times, right? The use of Luddism as a description for anti-technology is ridiculous. What Luddites are is anti-change, and, in particular, they are anti-change in a way that discomforts the beneficiaries of the previous system.

Which I would argue applies to most of the old world film people out there. Another complaint we often here in the film world is that there are too many films. I love what he says about this notion, and how to solve it:

If you took the contents of an average Barnes and Noble, and you dumped it into the streets and said to someone, “You know what’s in there? There’s some works of Auden in there, there’s some Plato in there. Wade on in and you’ll find what you like.” And if you wade on in, you know what you’d get? You’d get Chicken Soup for the Soul. Or, you’d get Love’s Tender Fear. You’d get all this junk. The reason we think that there’s not an information overload problem in a Barnes and Noble or a library is that we’re actually used to the cataloging system. On the Web, we’re just not used to the filters yet, and so it seems like “Oh, there’s so much more information.” But, in fact, from the 1500s on, that’s been the normal case.

So, the real question is, how do we design filters that let us find our way through this particular abundance of information? And, you know, my answer to that question has been: the only group that can catalog everything is everybody. One of the reasons you see this enormous move towards social filters, as with Digg, as with del.icio.us, as with Google Reader, in a way, is simply that the scale of the problem has exceeded what professional catalogers can do. But, you know, you never hear twenty-year-olds talking about information overload because they understand the filters they’re given. You only hear, you know, forty- and fifty-year-olds taking about it, sixty-year-olds talking about because we grew up in the world of card catalogs and TV Guide. And now, all the filters we’re used to are broken and we’d like to blame it on the environment instead of admitting that we’re just, you know, we just don’t understand what’s going on.

That's great, and falls in line with my notion that the future of the internet is find. But the kicker is the end of Part One, when he says he's sick of people wanting us to slow down for those not ready to make the change. This is my quote thus far of the year:

I’m just so impatient with the argument that the world should be slowed down to help people who aren’t smart enough to understand what’s going on. It’s in part because I grew up in a generation that benefited enormously from not doing that. Right? The baby boomers, when we were young, we had zero, zero patience for the idea that people who are in their fifties in the ’70s and ’80s should somehow be shielded from cultural changes because somehow the stuff that we were doing was upsetting them. So, now it’s our turn and we ought to just suck it up.

Amen to that.

bye bye DRM

Wow! It's about time - PaidContent reports that Apple is dropping DRM across the board on itunes. From the report, Apple will:
drop DRM copy protection across 10 million iTunes Store songs from all majors, as per CNET’s earlier report. The move will apply to eight million tracks as of today and will extend to a further two million by the end of the quarter. Bringing to a close what have sometimes been fractious label negotiations, Apple is also introducing three new pricing tiers for iTunes tracks—$0.69 for older tracks, $0.99 for recent tracks and $1.29 for new hits. Marketing VP Phil Schiller, taking Steve Jobs’ traditional keynote spot, also said Apple is extending the ability to buy iTunes songs wirelessly via iPhone from merely WiFi to 3G mobile networks; also from today, tracks will be priced the same and have the same bitrate as desktop iTunes downloads.

This is huge. Not just for music fans, but for us indie filmmaker folks as well. It will take awhile for many filmmakers and distributors to accept it, but DRM is dead for film as well.We're still offering it at Reframe, because that's what distributors and filmmakers still ask us for, but we keep telling everyone - worry about obscurity, not piracy!

Free and Fee

Kevin Kelly, one of the editors of Wired, recently wrote a great article called Better Than Free which should be read by every arts organization, broadcaster, distributor, filmmaker and anyone else interested in figuring out how to build a business model in a world that’s increasingly trending towards free.

With so much free content coming online, whether purposely or through piracy, how do we get people to pay for content? Why would someone pay for your film, or your podcast, or your book, or whatever, when they can likely find something similar or identical for free? This is a question vexing many a business executive, the MPAA and others. I’ve always argued that you can have both, a middle ground of free and fee based content. This is nothing new, many others feel the same way, including Tiffany Shlain and Rick Prelinger in the film world, but not enough people get this yet.

The famous maxim that information wants to be free was only half the quote. There’s another half of the quote that is never mentioned:

“On the one hand information wants to be expensive, because it's so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.”

Stewart Brand at the first Hackers' Conference in 1984

So, we’ve got these competing tensions, and Kevin Kelly’s come up with a neat way of thinking about the problem. He says:

•When copies are super abundant, they become worthless.

•When copies are super abundant, stuff which can't be copied becomes scarce and valuable.

•When copies are free, you need to sell things which can not be copied.

So what things make someone pay for the content? What he calls generatives:

•There are eight things that are better than free. Eight uncopyable values - "generatives."

•A generative value is a quality or attribute that must be generated, grown, cultivated, nurtured.

•A generative thing can not be copied, cloned, faked, replicated, counterfeited, or reproduced. It is generated uniquely, in place, over time.

•In the digital arena, generative qualities add value to free copies, and therefore are something that can be sold.

And what are they?

1. Immediacy – The ability to get it now, or early;
2. Personalized – getting it personalized to your liking, for example to “your” rating or length needs;
3. Interpretation – For example, the idea behind many open source projects – the code is free, the manual costs 10K, or you’ll pay for that service;
4. Authenticity – you pay for a official Dead album because it comes from and is endorsed by the Dead, even though you can get millions of bootlegs;
5. Accessibility – someone else stores it for use anywhere – think of gmail and the move to cloud computing;
6. Embodiment – The book is free, but attending a lecture with the author costs money, or think of the concert;
7. Patronage – support the artist because you want them to keep creating – think of Radiohead’s recent experiment;
8. Findability – helping you find it in the sea of content coming online.

These are my short-hand notes, but the full article isn’t very long and is worth a read. I think arts organizations are very well situated to capitalize on all of these, especially the last. I’ve been saying for years that the internet has been about search (Google) but the future of the internet is about Find – finding what you actually want, and arts organizations are curators at heart – they help you cut through the mass of junk to the one video, or painting, or play, or dance performance that you really want. They just need to transition to doing this online.

These all make sense for filmmakers as well – they point to easy ideas for thinking about how to make money on your film. For just one example, Embodiment is probably the future for most indie, especially doc, films making money . Give away the film, but charge for the lecture with you and the expert on the subject covered, or for getting you to speak to a university about the film. Personalized applies to versioning your film, etc.

Good stuff here, check it out.

Demark - Hanhardt on Cinema at Reframe

John Hanhardt has a new blog over at Reframe, called Demark. Not unlike me, he'll be an infrequent contributor, but one with some in-depth thoughts on the cinema and it's transition to online - how we interact with the moving image and how things can newly be juxtaposed. Here's an excerpt from his latest post -

The history of world cinema is an open archive on the internet. It is a wonderful chance to explore and learn and experience some of the greatest works of the human imagination. In searching through the history of the moving image it is important to break out of the categories that characterize and promote the moving image. Film festivals and museums create categories, theatrical film, installation art, avant-garde film, video art, new media, that separate and do not acknowledge the connections between different moving image practices. The internet and the virtual archive of moving images are an open text of viewing opportunities that make it possible to link and disrupt the categories and conventions for viewing the moving image. It can become a means to engage the global scale and deep history of the moving image.

I love the moving image, whether it's movies, independent narratives and documentaries, avant-garde film, video art, animation, television shows, telenovelas, videogames, favorite YouTube pieces, installation art: all the genres and styles that make up the world of moving images are an open resource to be experienced. It is clear that the history of Twentieth Century art is going to be rewritten through the moving image. As we become a media culture the traditional institutions and practices of history writing, preservation, and museum exhibition are going to try and deny this large scale change. A true politics of reinvention has to begin by revisiting the moving image’s history and current practices to see the ways the whole experience of the text and its construction have challenged traditional categories of analysis. So I want to transcend these categories and begin to explore what we remember from a film, an installation, a television show. I remember films through ways that they push categories, transcend their story, and discover a moment that I never forget. Just like we remember plays for particular characters or scenes, paintings for a particular insight into a character or expressive brush stroke, the impression of the graphic pencil in a drawing, a sculpture seen from a particular point of view, a line in a poem, an uncanny moment in a videogames where the unexpected happens with a logic all its own, etc.

More here. And look in early January for a complete overhaul of the way Reframe works!

Delusions of net neutrality

A mathematics professor at the University of Minnesota, Andrew Odlyzko, has a pretty blistering critique of Internet Service Provider's (ISPs) arguments against net neutrality and about their love of streaming over download. It's worth a read of the abstract if nothing more - his paper, The delusions of net neutrality (caution, links to a pdf) destroys many a myth of the internet and video. Having been to many a conference lately where the best minds in the room can only imagine the internet making a better tv, I appreciate some astute analysis of the reality.

Odlyzko shows that ISPs and others are pushing for a world where the goals of the internet are reduced to streaming movies, in relatively walled envrionments, and that the costs to build a network capable of this demand that net neutrality be curtailed. As he states:

Service providers argue that if net neutrality is not enforced, they will have sufficient incentives to build special high-quality channels that will take the Internet to the next level of its evolution. But what if they do get their wish, net neutrality is consigned to the dustbin, and they do build their new services, but nobody uses them? If the networks that are built are the ones that
are publicly discussed, that is a likely prospect.

What service providers publicly promise to do, if they are given complete control of their networks, is to build special facilities for streaming movies. But there are two fatal defects to that promise. One is that movies are unlikely to offer all that much revenue. The other is that delivering movies in real-time streaming mode is the wrong solution, expensive and unnecessary.

He goes on to show why their argument is wrong and along the way, makes some astute analyses. I'll quote here, because his argument is better than what I could make:

What if you build it and they don’t come? ... that is almost bound to happen if net neutrality is blocked, and service providers do what they have been promising, namely build special facilities into their networks for streaming movies...The public stance of the service providers, a stance that appears to be accepted as valid by the press, research community, and decision makers in government and industry, is based on two delusions. Both delusions are neatly captured in a single sentence by Jim Cicconi, one of AT&T’s senior executives... He said that net neutrality “is about streaming movies.” The first delusion here is that movies are the most important material to be transmitted over the Internet, and will determine the future of data networking. But video, and more generally content (defined as material prepared by professionals for wide distribution, such as movies, music, newscasts, and so on), is not king, and has never been king. (italics added) While content has frequently dominated in terms of volume of traffic, connectivity has almost universally been valued much more highly and brought much higher revenues. Movies cannot be counted on to bring in anywhere near as much in revenues as voice services do today.
...

Even if we allow video the dominant role in shaping the future of the Internet, we have to cope with the second delusion captured in Cicconi’s quote, namely that movies should be streamed. This is an extremely widely shared assumption... However, there is an argument that except for a very small fraction of traffic (primarily phone calls and videoconferencing), multimedia should be delivered as faster-than-real-time progressive downloads (transfer of segments of files, each segment sent faster-than-real-time, with potential pauses between segments). That is what is used by many P2P services, as well as YouTube. This approach leads to far simpler and less expensive networks than real-time streaming.
...
The general conclusion is that the story presented by service providers, that they need to block net neutrality in order to be able to afford to construct special features in their networks for streaming movies, is simply not credible.

Pretty interesting for those of us who think about this. It's also interesting to me because I keep arguing with people about the value of streaming. We now offer it at Reframe, but only because currently an audience exists for it. But long-term, it seems a ridiculous option. I'd far prefer to get progressive downloads and be able to watch it again later on the plane, when not connected, and not have to rely on an internet connection.

I'm also interested because of his idea that video and content as such is not king. He says that people pay for connectivity (phone or twitter) not content. This seems counterintuitive in some ways, but he shows that in aggregate this is definitely true - i.e. more revenue comes from things like VoIP and phone than will ever come from Hollywood. "For all the hoopla about Hollywood, all the movie theater ticket sales and all the DVD sales in the U.S. for a full year do not come amount to even one month of the revenues of the telecom industry. And those telecom revenues are still over 70% based on voice, definitely a connectivity service."

Undoubtedly true, but as I deal in indie arenas, the little dollars matter. That said, what he says is true for me as a consumer - I value email, twitter, and other participatory communications on the web more than finding web content. What I like even more are ways to combine the two - conversations and participation with video content. I don't think it's as separate as he makes it seem.

In his conclusion, he has some interesting thoughts:

The two myths, that movies are a gold mine, and that they should be delivered in streaming mode, are very widely held. But at the same time, it seems clear that service providers are aware this is not even the most promising avenue to explore in search for new revenues and profits. They have been devoting a lot of attention to the potential of DPI (deep packet inspection). Now DPI is not needed if you believe that you cannot have a successful video service without special channels for streaming delivery. If you do believe that, then you just build a network in which you control access to those special features that enable quality streaming. On the other hand, you do need DPI in either of two situations:
– You want to prevent faster-than-real-time progressive downloads that provide low-cost alternative to your expensive service.
– You want to control low-bandwidth lucrative services that do not need the special video streaming features.
Communications service providers do have a problem. But it is not that of a flood of video.

He argues that all of this is a cover-up for what they really want to do, and I think he may be right. Anyway, Odlyzko's article has been discussed many places, but not in the film world, where it seems to really matter so I thought it was worth linking to from here.

Stealing Films to save filmmakers

Just back from Power to the Pixel where I was lucky enough to meet Jamie King of Steal this Film (I and II). This was one of those moments where you feel like the last man on earth to learn about a global phenomenon, as I had only heard of Steal this Movie, and had no idea about this particular film or experiment. Check it out online, but the short of it is that Jamie and friends have put their film about intellectual property online for free, encouraging people to steal it, get it for free on Bittorrent sites, etc. There's nothing new to giving your film away these days, with many people pushing to give away at least part of your film to push sales of DVDs, but Jamie has been steadfastly NOT trying to use this as a PR scheme to also sell his DVD. They are just giving it away.

And guess what - it's made them money. They barely have a website, where they encourage donations, but they've gotten lots of responses thus far. According to Jamie, the film has been seen somewhere between 5 and 10 million times (estimates vary, but there seems to be agreement on this), and they've received at least $30,ooo pounds, which is roughly $50,000 US. This may not seem like a lot with so many people having seen the film, but think about it more. Most documentary filmmakers I know get an average of $10-15,000 US as an advance on their film if they are "lucky" enough to sell it to one of the better known doc distributors. This is a high number, by the way, with many distributors paying less and few more. They also seldom see more money than this. So Jamie and friends have built a better business model for their film by just giving it away and encouraging piracy!

You may think I'm joking, but I'm not - this is a model to explore. Of course, not every film fits this model, but with things increasingly trending towards free, and with the film world continuing to duplicate the mistakes of the music world, it's something worth exploring. Jamie is exploring it further. The first step is VoDo - for voluntary donation - a system to make it easy for people watching films on peer-to-peer sites to donate to the filmmakers. Not a requirement, just a voluntary, and anonymous, donation. From their site:

VODO’s aim is to provide a revenue stream for creators of media content, in a world in which the systems for distributing, copying and viewing that content are cross-territorial, rapidly changing and difficult to predict or control.

If the architecture we are working on proves workable, we will be able to let consumers of media shared through P2P networks make voluntary donations to creators. Our aim is to combine a series of technologies to smoothly connect would-be donors to creators wherever their works are shared.

Good goal, I think and worth further exploration. Jamie is working with several people to develop further business models around free, P2P and piracy, and I think it's worth following his movements. The technology isn't going away, piracy isn't going away (unless we wake up and make it legal and not piracy), P2P isn't going away, the film business isn't getting any better and at least one person is figuring out a new model Kudos to Jamie.

I have to close with a last thought from Jamie. In a conversation we had, he commented that he, and friends of his, often will hear about a film and wonder if it's any good. The first thing they do is search PirateBay - if the film isn't there, they figure it must suck - if no one is pirating it, it can't be worth watching. I don't think Jamie is alone in this, and filmmakers should acknowledge it and build upon it.

Fair Use in Morelia

I can't believe I haven't posted in over a month, but I've been traveling and delinquent on blogging. I am currently in Morelia at the lovely Morelia Film Festival (FICM). I've been visiting here for 4 years now, as we present the Media Arts Fellowships in Mexico annually at this festival (photos of winners at left). Today, after going to the mercado and stocking up on ancho chiles for cooking back home, I spoke on a panel at the Morelia Lab - a sidebar of the festival where 30 documentaty filmmakers from Latin America spend the week learning important things about documentaries, inluding international co-production, pitching and this year - the importance of Fair Use! Filmmaker Gordon Quinn and I led a two hour session on the struggle to re-establish the principles of Fair Use in the US, which has been led by Pat Aufderheide and Peter Jaszi with the creation of the Guide to Best Practices in Fair Use.

While neither of us could speak to specifics of the law in Mexico, Brazil or other Latin American countries, we had a great talk about what has been done in the US and how filmmakers here can use this resource in thinking about their own films, as well as in continuing the fair use movement abroad. Gordon showed some great realworld examples from Kartemquin of how they've used fair use, how for many years their creativity was curtailed by not understanding fair use and how the Statement of Best Practices has influenced how they now approach licensing in their films. It was a great panel, and I'm glad Morelia is forward thinking enough to make sure their lab participants are thinking progressively about their rights.

Morelia is a very special festival, and I am lucky to attend each year. Other highlights were tributes to Todd Haynes, Mexican film star Julio Aleman and to the festival "patron saint" so to speak, Pepe Escriche of the Huesca Film Festival, who recently, tragically died of cancer (he was an inspiration to the festival's founders and all guests). The photo here shows the plaque in his honor. Festival Director Daniela Michel, and President of the Festival's board, Alejandro Ramirez, really make this a special event, a must-stop on the festival circuit and an exemplar of hospitality that all fests should follow. Their film programming is stellar as well - retrospectives, important films from the circuit and many Mexican and Latin American premieres. They do a great job with free outdoor screenings for the public, and fill most screenings, even for obscure foreign work. Kudos to them on a great 6th anniversary.

I came here directly from the Woodstock Film Festival, where I moderated a panel on fundraising (though I somehow fell off the web page, I really did moderate it!). Woodstock is also a great festival with amazing staff and volunteers who really go the extra mile to make you feel at home. The film program was great as well, but I didn't get to see a single film. I was there for less than 24 hrs, much less, as I had a cold and had to get ready to leave for Morelia. Our panel had a great line-up with experienced producers, funders of film and film attorneys explaining new business models for funding your film. People were cautiously optimistic about raising funds in the current economic climate. We also had a lively chat both backstage and on about the importance of keeping your digital rights. Steven Beer pointed out that there's too much change out there to trust anyone with your rights if they want exclusive deals or long terms - a topic that needs more open discussion on the fest circuit IMHO. More on this soon, but I'm off now to Grantmakers in the Arts, Power to the Pixel and Scottish Audience Development Forum.

Chinatown Film Project

Kudos to my friend Karin Chien on the press she just received about her Chinatown Film Project. Karin's been working on this for awhile for the soon-to-be-opened Museum of Chinese in America on Centre Street. I walk past this building on my way to work every day, and am anxious to visit and see the architect, Maya Lin's work.

Karin first spoke to me about this project at Sundance a few years ago, and it's a great idea. She designed a 3 part series. In the first, several famous directors shoot projects about New York's Chinatown. She chose to work with (grantee) Jem Cohen, (board member) Sam Pollard, Jonas Mekas, Wayne Wang and several other notable directors. Their short films will be featured in an inaugural exhibition at the Museum before touring film fests and other museums. For part two, she asked that other international filmmakers make films about Chinatowns in other parts of the world. For part three, she is having anyone, from anywhere upload their own stories about Chinatown. This is the great part, and you can already check them out online now. I love the way she's mixed the top down masters with the "bottom up" UGC, making it a much more interesting participatory project. Can't wait to see more.

Joe's Ode to Mobile Me

My new good friend Joe Summerhays, who I just met on a trip to Rwanda and who has some pretty cool thoughts about the future of media has posted a hilarious video on his experiences with MobileMe. Worth a quick watch:

Long tail not so debunked after-all

There’s been much ado about Anita Elberse’s article in the Harvard Business Review lately – where she seriously questions the validity of the long-tail theory. The press (and that includes bloggers, and me) love anything that runs contrary to a popular opinion in business and culture, and Chris Anderson’s The Long Tail, has certainly been influential. Within days of the issue hitting the stands, I started receiving emails from people making sure I had read it – mainly because they know my organization has launched a project working somewhat off the long-tail theory. I nuance this with the “somewhat;” however, as I’ve never agreed with most of what the adherents of the long-tail seem to believe. Pretty much everyone in the film world who has read it, and I meet someone everyday who hasn’t, seems to think that it says that obscure, niche content can now make more sales. These people believe that by building a better web system, doing more niche marketing or whatever, that their small movies can now become much bigger. This is false, of course, but became a popular belief because, hell, every filmmaker is in need of some golden business rule that can help them sway investors that their little movie can someday be big. A few people have even accused me of thinking this in relation to Reframe. (Which has never been true.)

But what they all miss, and what Elberse’s article doesn’t really address, is that the real truth of the long-tail is simply that in a business environment that allows for more long-tail content and transactions, more value will accrue to those companies that exploit an aggregate of long-tail content. Not more than hit-makers, but more than they made before the web. No single niche title (yes, there are a few exceptions) will become much more popular, but if you aggregate many of them, you can add up those small sales to something approaching profitability. This isn’t refuted by Elberse, and I’m still pretty bullish on the aggregate model; in fact, even more so in relation to this new study.

Elberse points out some very fascinating things about the nature of long-tail business, and while seemingly intuitive in retrospect, it’s great to have some data to back this up. First, she proves that yes, a hit is still a hit and that hits sell a lot more than niche titles. She also shows that this trend is growing. Importantly, however, she identifies two other trends – from 2000 to 2005 sales of the most obscure titles doubled their sales, but the number of titles that didn’t sell a single copy quadrupled. In short, more content is entering the marketplace (thanks, digital, thanks a lot) but not all of it is going to get purchased just because it is available. So, your small title won’t necessarily gain a huge audience just because it’s on every platform available, but you can expect a better marketplace than not to long ago. Those things with some value, however, are seeing an increase in sales due to digital availability. This is especially true on the thinner part of the tail. As Elberse says, “When I differentiate between artists on smaller, independent labels and those on major labels, I find that the former gain some market share at the tail end of the curve.” Clearly, more research is needed on the long end of the tail, but there is a marked increase in activity that you don’t see at the middle end – this is potentially good news for the smaller indies.

When Elberse investigates what does drive sales to the long tail, she finds some fascinating stuff. She analyzes the buying habits of people on Quickflix and finds that people who tend to buy long-tail, niche items buy a lot more of them than anyone else, and that they also buy a lot of popular product. She found that people who rent obscure titles tended to rent more than twice as many titles as those who didn’t (50 per 6 months vs. 20). I’ve always had this hunch, and we built it into Reframe’s design, but she has the data to prove it.

She goes further and shows data that debunks the idea that there is an audience that simply prefers obscure, niche titles – it turns out that even those who buy the most obscure films/music tend to give it much lower ratings than they give to more popular product. This is pretty profound – her data seems to debunk the idea of an “iconoclast” consumer who purchases/rents a lot of obscure media because they like it more. On the contrary, she found strong indications that they like such media less than popular media – they just like to consume a lot of media and therefore go further down the tail. She found this particularly true of consumers who tend to focus on a broad category or niche – perhaps a genre like horror or comedy. Consumers who really like a genre – and importantly, any genre – tend to seek out more obscure titles in this genre. Those who consume more media look for more titles than those who passively consume, but they feed off both popular and niche content. Yep, they read Lapham’s Quarterly and People, watch both Batman and Reminiscenses of a Journey to Lithuania and if they like Wanted a lot, they are more likely to hunt out more obscure titles from the same director, like Day Watch and Night Watch, and the most obsessive will seek out other films from the same region. But don’t think you can capitalize on this too easily, as Elberse cautions that “given that obscure products tend to be appreciated less than hits, it will be very difficult to earn any kind of price premium for them.” That’s an interesting thought in relation to the current model for educational sales!

She gives many scenarios of advice for both producers and distributors of content to consider, but the implications are pretty clear – the long-tail does exist, but the business models to best exploit it may not be what many in indie film have thought. It’s very clear that aggregators, online stores, etc. need to have a mix of both popular and niche content – there isn’t some mythical consumer that only values niche content, and your little film is much more likely to be found if someone can get there while investigating something much better known. This is nothing new of course. Film festival programmers have always used the strategy of mixing an experimental short, say, in front of a more popular feature to build audience for the more obscure title. It works this way online as well. Anyone thinking about how the long-tail impacts the indie film business -festivals, distribution, producing - should study these findings closely because it’s very possible that the idea of separating indie/niche content from popular content (i.e. current practice) is not a good idea in an online, interconnected world.

BTW - That her article is brilliant is not surprising – she is colleagues with and did part of this study with Felix Oberholzer-Gee, and his research has helped debunk the myth that piracy has been hurting sales of music. A couple of debunkers of popular internet myths like these are surely business-minded folks the film world would do well to listen to more clearly.

Gill, Gibney and the Numbers

There’s been much ado lately about Mark Gill’s “Sky is Falling” speech. I read the speech, and the millions of other bloggers responding, but still have to ask – where’s the news here? And how does this apply to 99% of IndieWire readers?

In my job, I speak to filmmakers almost daily – young, old, established, emerging, successful, under-appreciated, good, spectacularly good, mediocre and incredibly bad. I’ve been doing this for more than 10 years now, and I have yet to meet the filmmaker that has had good things to say about the state of the industry – particularly as it relates to their film. Whether it’s the difficulty of raising funds, or the inability to make money back – even on films that are seen as successful – they all bemoan something. Even the Hollywood types have horror stories about either troubles getting their film made, or not getting paid what they feel is fair. No news here.

Mark Gill’s analysis, even the parts I would debate, is fairly accurate, but pretty much meaningless to 99% of the indies I (and you) know. For most of us – those making truly indie films, and those watching them – not one of Gill’s thirteen disaster points mean anything to us.

Nothing.

Picturehouse, Warner Independent, etc and all – wouldn’t distribute most of the films that I've seen and/or supported this year, have nothing to do with what we call Indie, and are for all intents and purposes meaningless to us. I’m not saying I haven’t liked any of their films, or that they haven’t been important to the movie business. I am saying that few of these companies would ever pick up 99% of the films accepted to Sundance (or any other fest) anyways, and that whether or not they tank has no real impact on the majority of indies I know. For them, they haven’t truly had a distributor for their films since perhaps the early 90s, if ever. And they’ll keep making their films, their audiences will keep finding ways to see them – be it at festivals or online or through a hand-me-down VHS tape. So, for the rest of us, points 1-13 add up to possibly one thing- less parties to try to get into at Sundance, but not much more in terms of indie film.

Everyone in the film business seems to be completely aware that the entire marketplace is changing as a result of digital and its attendant changes, and that we better do something or end up just like the music business, but no one seems to be offering any good answers yet. Gill essentially offers two bits of advice – “Make fewer better” (from Goldwyn) and make sure there’s an audience for the films. Well, we all know this, but newsflash – that’s not going to stop the wave of digital crap that Gill thinks has come from the digital revolution. Go ahead and hold your finger in that hole Mark, but the deluge is going to break through. There’s a good chance you’ll make fewer films, but not much that the world will. (Don’t take that as a slight against Gill, it can apply to anyone). And while I have no bad feelings against Gill (we’ve never met, and I’m glad this speech was published), I do have to take exception to the idea that the digital revolution sucks. While none of these are "films" in the strict sense, I’m very glad that my 8 year old nephew turned me on to lego Star Wars, Kill Vader and that so many amateurs could inspire and star in Weezer’s Pork & Beans. I’m sorry, but once you see this stuff you can’t put down the revolution, even if none of those hundreds of thousands of viewers add up to quarters for your Vegas trip. It all adds up to something pretty cool for our culture, and I can't imagine that more people having access and making more media won't be a good thing in the long run, even if it means we have to work harder to break through the clutter.

As suggested in this piece, we should look to the music industry - Well, we’re not seeing less music being made, and frankly, I’m glad to have so much stuff to wade through – my musical selections aren’t making anyone a lot of money, but neither I nor the people making the music I like are in this game to make a lot of money. (Trust me, Ken Vandermark knows he’ll never be famous.) Same with most of the filmmakers I know – they are passionate about making films, want an audience and would like to just make enough to live on. The suits are in it for the major profit, and for them the sky is falling – it actually fell a long time ago, but all that dumb money kept the eyes glazed enough not to notice it. So, from the rest of us to all of you just joining us – welcome to our party, it’s not making us any money, but some of us are still finding what we want and having fun. What we need now is gatekeepers, but not the old types that spent a lot of money to get us to see that which we could do without, or that think that unless a film can gross millions, it wasn’t worth being made. The new “gatekeepers” needed are those that can help us wade through the junk to find the gems, and these gatekeepers will probably be my friends (or maybe just my nephew) as often as some studio division head.

A more important article in IndieWire was their excellent piece on Alex Gibney’s suit against ThinkFilm. The most relevant part to this discussion was the money – Gibney received $150,000 for selling the film to Think for 20 years – that’s a long time in this age, btw – and a $50,000 bonus for winning the Oscar. This in itself should be a wake-up call to all the indies trying to make their films. I assure you that Gibney spent more than this making the film – while many indies can get by for less than 100K, ITVS still finds an average cost per hour of $500K for indie docs aimed for public television.

Note further that Think has made just $275,000 on the theatrical release of Taxi to the Dark Side. Don’t make the mistake of doing simple math and think they are $75K ahead of the game here – they probably spent more marketing this film and releasing it theatrically than they made back. That’s even if they did they poor job of releasing it that Gibney claims. Now, this is a tough film – a film about a war that most of America wants to ignore. None of these films are doing well, but this is a filmmaker with a track record, a well-known distributor and a lot of press. It is safe to say that 99% of indie docs made won’t do even this well. A quick perusal of IndieWire’s box office charts (from Rentrak) any given week will show you that few “truly” indies are doing any better at the box office. Even more interesting is to peruse the total theatrical numbers at The Numbers from 1995-2008. There are well-known Indie Distributors that in that entire time have made less than a million dollars on theatrical releases.

Now, we all know by now that theatrical only exists anymore to market the film. (I know, I know, and I love films in theaters as well). Most revenues will be made in ancillary, mainly DVD, markets. No one tracks those very well, but you can find some sense of these at The Numbers and in talking to filmmakers who have been distributed. Guess what? These numbers don’t add up much either.

Bottom line- very few people are doing well in the film business. Kinda like in America in general, but that’s another blog post. It’s about time that filmmakers wake up to this fact collectively, and come up with their own models. No one can afford to keep making films per the usual model. People are spending a lot more making their films than what they are earning back. I hope IndieWire can use this pair of articles to re-imagine what they can offer to us, their readers. I know them well, and don’t mean this as a strong critique, because they can only do so much, but I do think that more articles adding up the numbers and exposing what is and isn’t taking place in the market will have a much bigger impact on the indie film world than any iPop photo of the latest festival party (not that those aren’t fun).

I don’t have the answers here, but these articles did get me thinking – as well as many others who emailed me about them this week – that we need to really get some good heads together and think this stuff through, re-imagine what we are doing and come up with some new models. I’ve been speaking with many people about putting together some kind of forum for this soon, and if you want to be part of it, let me know.

Photo: http://flowtv.org/wp-content/uploads/2007/06/stacks1.jpg

Social Media - like ice cream

Thanks to Mark Wynns for the tip. This guy's videos are always great, and this one sums up what's going on in the media world pretty well:

Orphan Works Myths

For the past two years, several media organizations have been working on potential orphan works reform, and Congress is finally poised to take some action. What the heck is that, you ask? Filmmakers often encounter orphan works when they are making a documentary and need to use a clip for which they can't find the right's holder. Often, this person doesn't exist - maybe they died and the estate doesn't care about the work, or maybe they didn't register the work -there could be many reasons. As a filmmaker, you have no way to use this clip, no matter how important it is, because since you can't find the owner, you can't get permission and no one will insure the film or distribute it because the owner might surface and say - "hey bud, your film is famous now and you owe me a million bucks." Odds are likely that if you are a reasonable filmmaker and have done your research this won't happen, because you being a rights-holder yourself, you've looked far and wide and the person just doesn't exist.

Several groups have worked with the Copyright Office and proposed that if you do a reasonably diligent search, you should be able to use the clip - or any other orphan for that matter (writing, etc) - and if someone does show up and claim rightful ownership, the damages due to them should be limited - because you essentially exhausted all efforts. Congress seems to agree, and there is now legislation being considered which could remedy this situation. It would keep a balance of allowing use while protecting the rights of the creator. You can read all about it on Public Knowledge's excellent Orphan Works site.

Unfortunately, there's some folks out there who seem to be misunderstanding this whole legislation, and there's a lot of confusion about the effect of orphan works reform. Luckily, Alex Curtis of Public Knowledge (getting the sense this group is smart? You're correct) has posted a response to the myths out there. Read it on their blog or pasted below. Soon, several groups will be sending out info on how you can get involved, and when they do, I'll post the info here.

MYTHS AND FACTS ABOUT ORPHAN WORKS LEGISLATION – H.R. 5889 AND S. 2913

MYTH: The bills would take away copyright protection from every work a visual artist ever created!

FACT: The bills do not take away artists’ rights. The bills set a limit on damages for users of a copyrighted work where the copyright owner could not be found, despite a search conducted in accordance with detailed guidelines that the bills lays out. Under these guidelines, lack of identifying information on a work would not be an excuse to use a work. After such a diligent search, in the unlikely event that an owner came forward after the use had started, the user would have to pay him a “reasonable compensation” for the use. The owner would also be entitled to an injunction in situations where the work was not incorporated into a new work. The bottom line is that good faith users are shielded from liability, and owners are paid if they surface.

MYTH: The bills would mandate registration of all visual arts in expensive, private registries.

FACT: Neither bill contains such a mandate. Owners’ failure to register would not absolve users of their search obligations. The purpose behind the “visual registries” provisions is to help artists keep ownership information associated with their works and to help users find owners. In order to achieve this purpose, the bills contemplate the development of electronic databases of visual works in the market place. The bills do not require artists to use these services, nor do they require the services to charge a registration fee. Services that operate in the current marketplace, and provide services free of cost, could easily evolve into the visual registries contemplated by the bills. The bottom line is that the bills aim to encourage the market to solve a problem to help owners be found, but the bills do not require owners to register with these services.

MYTH: Unavailability of statutory damages means that owners cannot get compensated.

FACT: Both bills would require a user to pay a reasonable compensation to an emerging owner. This compensation is defined as the amount the parties would have agreed upon had they negotiated a license before the use began. If a user refuses to negotiate with the emerging owner in good faith or pay the compensation within a reasonable time, both bills currently provide that the user would be liable for all the remedies currently available under copyright law including statutory damages, which could be as high as $150,000 per work. Statutory damages of this sort are really punitive damages, and since owners will be reasonably compensated to be “made whole,” user communities have proposed limiting damages to at most paying the owner's attorneys fees. A user’s desire to avoid having to go to court and pay double attorneys fees (his own and the owner’s) would provide a good incentive to any user to negotiate an appropriate license. Thus, the bills would provide a fail-safe means of ensuring that owners get compensated.

MYTH: The bills would institute registration formalities in contravention to international treaty obligations.

The bills impose no new registration requirements on owners.. While existing law does not require owners to register their works to claim copyright, it does obligate owners to register their works prior to infringement in order to receive statutory damages. The orphan works bills do not mandate any additional registrations beyond current law, neither to the Copyright Office nor to registries certified by the Copyright Office. To qualify for protection under the bills, a user may have to search both of these sources for the information about the owner. However, a user's obligation to search these resources does not create any requirement on owners to register their work.

MYTH: Any user could fake a “diligent search” and use the orphan works limitation to infringe. Couldn’t a bad actor falsify the records of their search?

FACT: Orphan works legislation does not make an owner more vulnerable to bad actors, nor will it make infringement any easier for bad actors. A user must undertake a diligent effort to find an owner, and that effort must be documented. A user that fakes a diligent effort would be considered a bad faith user, and would be on the hook for the full panoply of remedies under copyright law. If a user is going to claim this orphan works limitation, he’s going to have to plead it up front in court, and again up front in the discovery process, and he must produce the documentation of the search. This prevents him from hiding information or prolonging discovery. Also, the “pleading with particularity” requirement means that the infringer’s lawyer must sign his name to the fraudulent conduct. Even in worst case scenario, where a court does not find fraud, the owner still recovers reasonable compensation. The fact that the infringer must pay reasonable compensation makes fraud extremely unlikely. Why perjure yourself in federal court about conducting a search, when you’ll still be required to pay compensation. If you’re going to lie, you’re best off claiming that you never copied the owner’s work in the first place, and any similarities between your work and his are coincidental.