What's New at End-of-Quarter?

With mid-year upon us, here are updates on a couple of ongoing stories:

• Hulu finally announced its long-rumored pay service, Hulu Plus. For $9.99 a month, you can get rolling access to full seasons of many new shows, as they air. And you also get access to more complete seasons of older (sometimes "classic") programs. How many people will pay for this in addition to their cable bills, which often include DVR service, which can duplicate the current-season offering on Hulu Plus? And how will the "classic" series offering compete with Netflix? Time will tell.

• Brad Stone reports in today's New York Times that Google will be helping independent bookstores when it launches Google Editions, its foray into the e-book market. A deal is apparently near between Google and the American Booksellers Association, which would make e-books available on the websites of independent bookstores via Google Editions. One staffer at Powell's Books in Portland is quoted as saying he thinks this will be a positive thing for bookstores, and that Google won't actually compete with them; though he adds, "I wonder how naive that is at this point. We'll have to see." Indeed. That Google embrace could become stifling.

• And, with that stifling Google embrace in mind, I'll note that we are still awaiting Judge Chin's decision on the amended Google Books settlement. I continue to hope he'll force more changes, in order to eliminate Google's unfair monopoly. Again, time will tell.
  

Windows Proliferate for DVDs

Following on their recent agreement with Warner Bros, Redbox has now settled with both Fox and Universal.

Under the agreements, Redbox will not rent Fox or Universal DVDs from its $1 rental kiosks until 28 days after the films are released on DVD. Redbox also agrees to destroy the DVDs at the end of their rental life, rather than sell them on the used market.

In return, Redbox gets better financial terms from the studios, and guaranteed access to greater quantities of DVDs.

This makes a higher-price rental "window" (for the likes of Blockbuster) common now across the majority of major releases, followed by the lower-price Redbox rental window. The studios also, of course, hope for increased sales of DVDs during this window, since they profit more from sales than from rentals.

Thus, the home video rental window has now been sliced in two. How many more windows will we see as movies make their way online?

End-of-Quarter Updates

With the end of the quarter upon us, here's a review of where we stand with some ongoing stories:

• Just days before Apple launches its iPad and associated iBook store, Amazon agreed to stop discounting the prices of e-books from two more major publishers. As The Wall Street Journal reports, both Simon & Schuster and HarperCollins will set their own prices under the "agency" model. This mirrors the deals at the iBook store, as well as those that Amazon had previously set with other publishers. Now we need to wait and see what the iPad does for/to e-books.

• While we're waiting on the iPad, we continue to wait on the Google book settlement. Judge Chin is presumably still pondering the possibilities, and we can but hope he will continue to be harsh on Google, demanding further improvements in the now-revised proposed settlement.

• And in good news for theater owners, audiences (so far) are willingly paying much higher ticket prices for 3D movies. As Variety reports, the upcharge for 3D tickets at many theaters is now as much as 50% of a regular 2D ticket price. Will audiences tire of a 3D "fad", and decide that movies are no longer the most-economic family entertainment option (as the industry has promoted itself); or will 3D become the new standard, as sound once replaced silent pictures, and color offed black-and-white? Only time will tell.

Reading Into The Vudu That Wal-Mart Do

It’s a lot more fun to Wal-Mart watch than it is to Wal-Mart shop. When you shop there, you have to worry about supporting a venture that is dicey at best for the greater economic good. When you Wal-Mart watch, you get to hypothesize about its complete lack of fear when it comes to using its size to squeeze impossible deals out of suppliers.

My latest Wal-Mart watching has to do with that hammerlock leverage. Wal-Mart just announced it’s buying Vudu, a startup which supplies movie rentals and purchases over the internet. Vudu has deals with all the major studios, including a large library of high-definition movies.

[read the rest of my column at digiday:DAILY]

Redbox accepts delayed access to Warner DVDs

As I wrote in an earlier post, the movie studios have been battling Redbox and its $1 DVD rental machines. Lawsuits ensued.

Warner and Redbox have just announced the settlement of their legal battle. The agreement delays Redbox's access to Warner DVDs until 28 days after initial release, creating a "window" for higher-priced consumer DVD rentals. In exchange, Warner reduces the price Redbox pays for DVDs, and also guarantees the larger quantity of discs Redbox sought.

Thus, just as consumers can buy a hardcover book early or wait for a cheaper paperback, consumers now have the choice of renting from higher-priced outlets like Blockbuster on the day of release or waiting 28 days for a cheap rental. Of course, Warner hopes that some consumers will choose to purchase the DVD instead, which would give Warner a greater profit.

That 28-day window also gives Warner an opportunity to try to build up the market for video-on-demand, online streaming, and digital downloads -- all of which have the potential to provide larger profit margins than DVD rentals.

Although not mentioned in the press release, PaidContent and the New York Times (via AP) are reporting that Redbox has also agreed to destroy all Warner DVDs when demand drops for rentals from their kiosks. Until now, Redbox had been selling off used inventory at low prices, further diminishing demand for new DVDs.

Will Justice Be Done In the Google Books Case?

So which is it? Either (a) the geniuses at Google really don’t get it, or (b) they’re just playing dumb and hoping we don’t notice. Which do you think is more frightening?

The first version of the proposed Google book settlement received a scathing critique by the US Department of Justice, in which the DOJ told the Court to reject the settlement. So Google, the authors, and publishers crafted version 2, an amended settlement agreement ("ASA"). Last Thursday, the DOJ issued its critique of the ASA, asking the Court to push for additional changes, for many of the same reasons. [read the rest of my column, including some pithy quotes from the DOJ, at digiday:DAILY]

"Avatar" gross surpasses "Titanic". So what.

As dutifully reported by Michael Ceiply in the New York Times (and many other media outlets), the global box office gross on Avatar has now surpassed that of Titanic. Aside from giving Fox and James Cameron bragging rights, does this matter? And what do they really have to brag about anyway?

Ignoring for a moment the 3-D surcharge on Avatar tickets, let's look at how things have changed from December 1997 to December 2009:

• The average US movie ticket has gone from $4.69 (per the National Assoc of Theater Owners) to $7.46 (per the referenced NYT story). That's a 59% increase.

• For comparison, the cost of first-class postage went from $0.32 to $0.44, a 38% increase.
  

• The value of the Japanese Yen has gone from $0.00784 to $0.0111 (historical exchange rates per OANDA), an increase of 42%. And the value of the French Franc (since subsumed into the Euro, but you can do the math) has gone from $0.168 to $0.219, a 30% increase. Note that any increase in the price of tickets in Yen, Frans, or Euros would be in addition to the noted exchange rate fluctuations.

So we have the usual problem: even if a movie sold only the same number of tickets in 2009 as an older movie sold in 1997, the total box office gross would likely be up 40-60% (factors such as matinee pricing, child/senior pricing, and so on aside). Given that Avatar is up only1% from the Titanic box office, it has certainly sold far fewer tickets...not much to crow about, is it?

The NYT story says that Fox stated that 72% of worldwide sales came from 3-D screens, which tack a surcharge onto each movie ticket. This further decreases the number of tickets sold, putting Avatar far behind Titanic.

Why do I care about this? I don't. Except that I'm tired of the constant drumbeat every year, as mega-budget movies open and "set new records". The records are in inflated dollars, inflated exchange rates, and (in this case) 3-D surcharges. If the movie studios would report the number of tickets sold, we could track some version of "popularity". The dollar comparisons are nearly meaningless.

Ursula K. Le Guin on the Google book settlement

Ursula K. Le Guin recently resigned from the Authors Guild over the Google book settlement -- she says of the Guild, "you have sold us down the river." Her complete letter appears below:

18 December 2009

To Whom it may concern at the Authors Guild:

I have been a member of the Authors Guild since 1972.

At no time during those thirty-seven years was I able to attend the functions, parties, and so forth offered by the Guild to members who happen to live on the other side of the continent. I have naturally resented this geographical discrimination, reflected also in the officership of the Guild, always almost all Easterners. But it was a petty gripe when I compared it to my gratitude to the Guild for the work you were doing in defending writers’ rights. I went on paying top dues and thought it worth it.

And now you have sold us down the river.

I am not going to rehearse any arguments pro and anti the “Google settlement.” You decided to deal with the devil, as it were, and have presented your arguments for doing so. I wish I could accept them. I can’t. There are principles involved, above all the whole concept of copyright; and these you have seen fit to abandon to a corporation, on their terms, without a struggle.

So, after being a loyal if invisible member for so long, I am resigning from the Guild. I am, however, retaining membership in the National Writers Union and the Science Fiction and Fantasy Writers of America, both of which opposed the “Google settlement.” They don’t have your clout, but their judgment, I think, is sounder, and their courage greater.

Yours truly,

Ursula K. Le Guin

If I Ran the Google

(with apologies to Dr Seuss)

It's a pretty cool place, said young Kenny McDougal¹,
This place that they've given the wacky name Google.

They search and they scan, pulling info together,
You find what you wanted, no matter the weather.

They copied some books, then they copied some more,
But permission is first what they should have asked for.

They didn't, you know, ask permission from writers,
Who made so much noise that they sounded like fighters.

Then lawsuits went flying, from publishers too,
Shocked, Shocked were the Googlers, "oh what did we do?"

First, Settlement One², it raised quite a ruckus,
Alarming the judge and Department of Justice.

Then, Settlement Two³, even longer, appeared,
But it didn't do much, as we certainly feared.

Can Settlement Three⁴ be much further behind?
We'll see what the Copyright Register finds.

If McDougal ran Google, now what would he do?
Well first he'd admit that we made a boo-boo.

Not asking permission, now that wasn't right.
Lest doing real evil⁵ be the Googler's plight.

A selfish monopoly isn't for me,
We need competition, which we can all see.

With Google Books fixed, I could say, "This is groovy,"
Then move on the way to start scanning a movie?

The studios would squawk, as all Googlers should know,
This time ask permission ere you enter the show.

But lots of films out there are orphans you know,
Abandoned by owners whom nobody knows.

They're sitting in archives, these stories on reels,
Preserved for the future, but making no deals.

Jon Stewart made fun, on his show, of the archives⁶,
Dissing good folks making sure film survives.

Then work with the Congress to pass legislation,
To make films like these, maybe, wards of the nation.

The Google McDougal would thus make amends,
By being more open and acting like friends.

---------
¹ The Dr. Seuss book "If I Ran the Circus" features young Morris McGurk who starts the Circus McGurkus, and "If I Ran the Zoo" features young Gerald McGrew who starts the McGrew Zoo. So I needed a last name to rhyme with Google and a first name...a variation on mine

² The initial Settlement was tabled by the judge, after complaints from many parties including the Department of Justice, the Register of Copyrights, and yours truly.

³ The Amended Settlement, which made its midnight appearance this past Friday the 13th, made some adjustments; but still leaves Google with an insurmountable monopoly in orphan books.

⁴ Don't be surprised to see a Revised Amended Settlement in the future.

⁵ Google's motto (as you probably know) is "Don't be evil."

⁶ On the November 11, 2009 edition of "The Daily Show," Jon Stewart did an extended riff belittling professional archivists. If he hopes for any sort of legacy, he’d best be sure some professionals are taking care of his footage.

[first published in slightly different form at digiday:DAILY]

Google's Failed Midnight Confession

Minutes before the Friday midnight deadline, an amended Google settlement was offered in New York City, and on further review...it's not enough. Anyone involved in copyright, digital publishing rights, and the apparently unchecked run of Google toward owning what it wants without compromise in this plan had to be disappointed, if not surprised, by Google’s minimalist revision in its new filing, especially given its somewhat dramatic timing. Basically, the key point of contention was not changed. Google still wants to maintain a monopoly on the right to "orphan" books, the digital scans it makes of all books, and the right to sell subscription licenses to its library of digital books. These monopoly rights remain a huge problem, and they still appear to be an end-run around copyright law. [read the rest of my column, including a few good changes by Google, at digiday:DAILY]