MPAA chief Dan Glickman made it official today: Hollywood will fight Net neutrality regulations being considered by Congress and the FCC. Glickman's comments, which were in his annual "state of the industry" speech at ShoWest, weren't exactly surprising, given that the MPAA had urged the FCC last year not to adopt neutrality rules that would hurt anti-piracy efforts. Today, though, the nuance was gone. Said Glickman:
Government regulation of the Internet would impede our ability to respond to consumers in innovative ways, and it would impair the ability of broadband providers to address the serious and rampant piracy problems occurring over their networks today.
It's a bit strange to see content companies lining up with cable operators and telcos on this issue. Thanks to the paucity of competition today in broadband, DSL and cable-modem services are content bottlenecks online. One of the motives for pro-neutrality forces is the fear that those service providers will favor their own or their partners' offerings over competitors' fare. That fear lies at the heart of the complaint by Vuze -- whose Bit Torrent-powered online video service competes with the cable industry's VOD -- against Comcast's surreptitious interference with Bit Torrent traffic.
Yet Hollywood's vision is focused on the near-term risk of piracy, rather than the long-term risk of its distribution pipelines deciding to collect extra tolls. Glickman argued in his speech that neutrality regulations would bar the use of emerging tools that ISPs can use to prevent piracy. That's what some studio lobbyists have been telling lawmakers, too, in their efforts to derail neutrality legislation. And depending on how the regulations are written, they could be right.
But the bill that's awaiting action in the House Energy and Commerce Committee, by Reps. Ed Markey (D-Mass.) and Chip Pickering (R-Miss.), doesn't fit that description. It would make it U.S. policy to preserve the public's access to "lawful" content, applications and services online, carving out wide latitude for ISPs to interfere with infringing works. For example, ISPs couldn't block all Bit Torrent traffic simply because it might be used for piracy, but they could use video fingerprints to try to stop Bit Torrent from being used to deliver bootlegged movies.
Sure, it would be easier just to do what Comcast has done -- clamp down on Bit Torrent when traffic gets too heavy, regardless of what it was being used for. The studios make so little money online relative to the amount of piracy they endure, it's easy for them to accept approaches that throw out a little bit of good with a lot of bad. But what happens when the revenue from downloads and commercials online becomes significant, as it surely will?
On the bright side, while sales of the music industry's main product continue to plummet, Glickman noted that Hollywood enjoyed its second banner year in a row at the box office. And so far, at least, the Internet and 60-inch plasma screens haven't dented the public's demand for a seat in front of a really big screen:
We found, contrary to conventional wisdom, that the more folks “pimp their living room,” as they might say on MTV, the more they go to the movies. High-tech consumers go to the movies 50% more often than their lower-tech counterparts—an extra four trips each year. And, overwhelmingly consumers say the ultimate movie experience is going to the movies.
Too bad movie production and marketing costs are so high, few films break even on box office alone. That's why Hollywood is so dependent on home video revenue, and why it is more afraid of today's online bootleggers than tomorrow's toll-collectors.