What the music and film industry have to decide

A few years ago the music industry decided to cave into technology and discovered that their music had almost no value in the process. Fast forward to 2014 and the film industry is about to do exactly the same thing.

In a race to the bottom, record labels partnered with streaming services that offered music to subscribers for fractions of a penny in order to retain what little value music had left. People who bought albums then switched to streaming and gave up largely on the whole idea of a CD. For filmmakers and the film industry as a whole, we're about to do the same thing and no one is really looking at the numbers or trying to figure out how to fix the problem.

The situation right now with streaming

There are some superb services out there that stream content to millions of people and we all know that buying physical copies is a thing of the past. Streaming gives people content instantly, easily and anywhere they like. There are huge advantages for consumers to opt in to streaming services and it's definitely going to be around for the foreseeable future.

The problem of content values

Right now the value of streaming is hard to quantify. Depending on what service you use there are different streaming rates. Advertisers have deals with platforms while subscribers pay monthly fees, which all have an impact on the value of the content which is not decided by the creator. However, if those rates are too low per stream, then producers and artists are actually losing audiences who would have paid the full price of an album or DVD. What then? What is the point of making an album, or a film for that matter if all we're doing is trying to get the most amount of people to download or stream it without making money?

If the entire audience for film suddenly feels like a $10 DVD is now only worth $0.006 (Spotify numbers) then the VOD values will disrupt the entire business model, and here lies the problem. The music industry has felt this pain for years and wasn't able to do anything about it. Only recently has a major artist like Taylor Swift actually drawn the line while Hollywood heavyweights like Spielberg and George Lucas have predicted a film industry implosion.

The quality has to remain high

Filmmakers, film studios, music producers, artists and film production companies all have the expertise to create unique content that audiences will buy, but they shouldn't be bending over backwards to get their content out on all available online channels just to make sure people will be able to access it.

There are also problems in the film industry that have to be solved around the production of content itself as audiences get more selective. Recent summer releases at the box office have been poor and given audiences less incentive to go to the cinema.

Quality has to remain high in both industries, and pricing should also be affordable for people but profitable for those that devote themselves to making creative products. Art has to make the creator a living otherwise it can't exist.

How to get it right

At the end of the day, audiences won't disappear, but the way they consume content will be different. This is obvious, and the way to preserve the pricing of a film or an album is to set a minimum 'stream rate' depending on the length of content. That has to be set up at a government level to pass legislation ensuring digital products in these two industries remain viable without anti-competitive practices like price-fixing behind closed doors, otherwise rates for content will continue to collapse as long as VOD or music streaming services can create a profit.

Until now, no government has decided what the value of a streamed digital product is. It has very little tangible value because we can't see it physically. It's data that represents a product, but doesn't sit on our shelf. We see it displayed on a screen and click a button to see or hear it, but that creates a huge problem for entertainment itself. Where does one draw the line on how much a streamed song or film is worth? That's what filmmakers and music artists have to decide and fix. Let's start the debate.

Iain Alexander

Founder - Film Industry Network

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