Monday 16 August 2010

Contents versus Distribution: Nothing New Under the Copyright Sun

Why is it that the current issues facing Sony are simply another instance of the basic challenge that has characterized the commercialization of contents since the emergence of the printing press and the rise of the autonomous author over 500 years ago? The reason is simple--then and now, the ultimate questions are (i) whether to be on the creation or distribution side of contents; and (ii) if one wants to be on both sides of the content equation, how to successfully coordinate between them?

Then, the struggle was between the publishing guilds and the interests of creators of independent contents. Now, the struggle is between the creators of contents and the platforms for their distribution and delivery. Despite the distance in time and the advances in technology, the basic issue remains the same--how are contents commercialized and who profits from such commrecialization?

These questions came to mind in reading a report in the June 21st issue of Bloomberg Businessweek entitled "TVMakers Move into Online Content." Generally, the article discussed how hardware manufacturers are about to "introduce a new generation of Web-connected televisions and servicess that will stream movies, TV shows, and music over the Internet and onto those sets." The goal is to enable you and me to bypass cable, and thereby to disintermediate cable as a content delivery vehicle. The ultimate dream is to enable the user to use these new tv-like devices so as to enable one to create his/he own personal set of television channels.

How does Sony fit into this? (The ultimate answer is hardly trivial, given that
the company is reported to have lost $1.4 billion during the last two years.) According to the article, Sony is about to introduce "the prototype of a TV that will deliver video and music over the web in partnership with Google." Earlier this year, Sony unveiled Qriocity, a so-called video-streaming service. Qriocity will link the Sony high-definition Bravia tv sets and Blu-ray players, both of which have internet connectivity. The service will also be available to the reported 35 million owners of a Sony PlayStation3 game console, which also enjoy internet connectivity.

Looked at otherwise, Sony seems to be seeking two different sources of income. First, it wants to increase hardware sales of the so-called Google television, which seems like a pure hardware play. Down the line, but way, way down the line, it hopes to get a chunk of revenues from the contents themselves. In 2010, online video revenues will earn $180 million revenues, compared to the reported $51 billion (!) to be earned this year by cable and braodcast companies for advertising alone. Second, Sony seeks revenues through its Qriocity service, whereby a charge of $2.95 or more will be assessed each time a person clicks to view a movie.

All of the above seem to be versions of providing delivery platforms for copyright contact. Don't forget, however, that Sony is also one of the major Hollywood studios, which puts Sony in an interesting position, at least with the timing of the showing of their movies. That is because movies are first shown at movie theatres and only later displayed via other means and devices. While the time gap between the showing of a movie at a theater and later distribution through other means is decreasing, the basic point remains. Movie theaters want to have the first bite at the apple.

This means that for Sony, the movie studio, it has to walk a tight rope between satisfying the demands of movie theatres and those of other means of content distribution, so as to maximize its revenues from the display of its contents on multiple platforms. For Sony the television manufacturer, however. with aspirations to link televisions with internet delivery, the goal is to make these products as attractive as possible at the expense of other means of content delivery. Obviously, one of the key elements here is the ability to show movies as soon as possible after their initial release, even if this might jeopardize the relationship of Sony studios with the movie theatres.

In other words, Sony has to navigate between being a contract provider and being a distributor of contents. The question is whether, in being challenged to find the golden mean between content provider and content distributor, it is not putting itself ultimately in a competitive disadvantage in comparision with competitors who are focusing one of the two sides of the content equation. Ecclesiastes was so right--there is nothing under the proverbial copyright sun, even for those in the Land of the Rising Sun.

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