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Opinion: Tech group tells Hollywood the sky isn’t falling

An infographic accompanying a report by the Computer and Communications Industry Assn., dubbed "The Sky Is Rising," on the effect technology is having on the entertainment industry.
(Computer and Communications Industry Assn.)

Every few months, the entertainment industry and its allies put out another report for policymakers on the toll that the Internet and changing technology are taking on filmmakers, musicians, authors and the companies that finance many of their works. For example, it may be an estimate of the revenue lost to online piracy, or a list of the foreign sites that help Internet users obtain free (and illegal) copies of movies and albums.

On Thursday, a Washington-based tech trade group offered lawmakers and the administration a more optimistic perspective. The report by the Computer and Communications Industry Assn., dubbed “The Sky Is Rising,” focuses on the opportunities that technology is creating for artists to make, promote, distribute and build an audience for their work, and to develop new sources of revenue.

The point, said lead author Mike Masnick of Floor64 (and the TechDirt.com blog), is to show that the technology and creative industries are intertwined in a good way, not locked in a death match.

“I think it’s pretty clear in all of the reports that this is in no way an apology for piracy,” Masnick said in an interview. But while the data show the market changing, he said, it doesn’t show that “everybody is just taking things” or that “there’s no money in the market.”

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“Consumers are still spending,” Masnick said. “It’s just that some of that money is going into different places.” That’s not necessarily a good thing for established distributors and creators, Masnick said, but added, “Today there are many more ways for content creators to find an audience that appreciates them, if there is an audience that appreciates them, and to do something with it.”

As the report puts it, “Amazing new works are being created in every different form of media — with the boundaries and lines between them starting to blur. Much of what is happening is directly related to technological progress and innovation, as new platforms, tools and services are enabling cheaper, easier and better ways to create, to distribute, to promote, to connect and to make money.”

The CCIA has now issued three editions of the “Sky Is Rising” report. This year’s version focuses on the U.S. market for music, movies, books and video games, and a theme that runs throughout is growth. That tone contrasts sharply (and deliberately) with the gloomy notes sounded by the reports on rampant online piracy, miniscule royalty payments, and other tech-fueled miseries put out by the industry and its backers.

For example, while the music industry often points to the rapid decline in CD sales since online file-sharing became commonplace, the CCIA’s report notes the growth in the creation and consumption of music, concert ticket sales, legal music streams and downloads, and royalties from online music services.

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Similarly, while DVD sales decline, the report says that revenue from all forms of filmed entertainment -- including box office receipts, Netflix subscriptions and video on demand streams -- is projected to keep growing steadily in the United States. Citing projections by PricewaterhouseCoopers, the report predicts that revenue from online video services will surpass the amount from DVDs, Blu-Ray discs and other physical media.

One surprising statistic in the report is the amount of money generated by the most successful artists on YouTube, the Internet’s most popular video outlet. “YouTube states that thousands of channels are making six figures a year,” the report notes. “Estimates based on known advertising rates and view counts suggest that top partners like gamers PewDiePie and BlueXephos are currently earning between $6 [million] and $7 million a year from their popular channels. In 2010, similar estimates placed the top earner’s revenues at only $315,000.”

Another unexpected insight: An analysis of the 50,000 best-selling book titles on Amazon found that self-published authors earned more in royalties in July than authors backed by the five major publishing houses.

Yet as the report concedes, there are losers as well as winners. Success has always been elusive for creators, but at least in the years before broadband there were some well-established paths. Now, those paths have been obscured or even obliterated. There’s plenty of experimentation and innovation, but the growing number of creators at the grass roots has only made it harder to stand out in the crowd.

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Then again, it’s never been easy to make a living as an artist, even when the business models are clear. What the data reveal, Masnick said, is that big technological shifts inevitably work in creators’ favor.

“Where there’s demand for this kind of content, the business models really show up,” he said. “We keep seeing ... every time people fear that these things are going away, something else pops up.”

The report concludes with a warning to policymakers: don’t kill off innovation in an effort to protect creators against disruptive change.

“It is simply undeniable that we are in a cultural renaissance,” the report states. “If the goal of public policy is to continue this trend, we should be generally cautious about making policy that feeds off the false narrative that our culture is at risk — or that the very same innovations that have made this renaissance possible are somehow to blame for a perceived decline in these markets.”

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Follow Healey’s intermittent Twitter feed: @jcahealey


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