MPAA: Cartelization, Not Creativity

From Skip Oliva, on the Mises blog:

The Copyright Cartel — aka the Motion Picture Association of America — was back before Congress yesterday demanding more subsidies for Hollywood’s business model. Michael O’Leary, the MPAA’s head lobbyist, demanded the House Judiciary Committee expand the definition of “felony” copyright infringement to include streaming of content over the Internet (as opposed to mere downloading, which is already classified as a felony). O’Leary repeatedly emphasized the need for more copyright subsidies to protect Hollywood’s essential “creativity”:

In addressing the subject of illegal streaming, it is important to note what this debate is not about. It is not a debate between technology and innovation and the creation of content. That is a false choice raised by too many people. This issue is really about favoring legitimacy over theft – about promoting and preserving creativity and production and punishing people that seek to profit through stealing the hard work of others. Technology and content should agree on that point.

Streaming technology is an emerging way to deliver content and information to consumers the world over, and it is a technology being embraced by our industry – more than 352 legitimate business ventures such as Hulu, Crackle, Netflix and HBO GO use streaming to deliver their products today.

The activity that is the subject of today’s hearing is not innovation, it is theft. Streaming technology is rapidly becoming the most popular mechanism for transmitting stolen content on rogue sites. Users have instant access to illegally distributed movies and television shows without the risk or inconvenience of sometimes lengthy downloads.

O’Leary really does a hatchet-job on the definition of “innovation.” According to him, it’s not innovation when people develop new technologies that provide “instant access” to information, but it is innovation when the federal government threatens to imprison people who copy — not “steal” — information that was previously released to the public. When O’Leary says he favors “legitimacy over theft,” what he really means is that he favors preserving the status quo over innovation. He wants the government to subsidize an obsolete business model — and that is what copyright ultimately is, a business model — while falsely presenting himself as a defender of the new.

Let’s consider the canard that copyright is necessary to protect “creativity.” O’Leary said Congress must criminalize non-MPAA-approved internet streaming as part of “promoting and preserving creativity” and to mitigate the “the negative impact that [copying] has on the lives of our creative community.” This would be the same “creative community” — the major studios that compose the MPAA — that is on pace to produce a record number of sequels in 2011, as noted back in January by Brandon Gray of Box Office Mojo:

Sequels (including prequels and spin-offs) comprise over a fifth of the currently scheduled nationwide releases, tallying 27. Last year, there were 19, and the previous high was 24 in 2003.

[ … ]

The majority of sequels are repeats of the last two years: Eight movies follow 2009 movies, while six follow 2010 movies. Sequels to 2006 movies are the next best represented at five. The longest time between sequels will be The Muppets‘ 12 years, followed by Scream 4‘s 11 years, Rise of the Apes‘s ten years and around eight years each for Spy Kids 4 and Johnny English Reborn. None of those are a match for the waits for last year’s Tron Legacy (over 28 years) and Wall Street: Money Never Sleeps (nearly 23 years).

Just this past weekend, the top three grossing films were sequels — “The Hangover, Part II,” “Kung Fu Panda 2,” and “Pirates of the Caribbean [IV]: On Stranger Tides.” The top ten also included the fifth film in the “Fast & the Furious” series and one film (“Thor”) based on a comic that debuted in 1962.

Now sequels don’t necessarily mean there’s a lack of “creativity,” but this recent sample size certainly suggests that is the case. I’ll note here Roger Ebert’s review of “The Hangover, Part II,” which, again, was the top-grossing film in North America last weekend:

If you saw [“The Hangover”] (which grossed $485 million, so you may have), there’s not much need for me to describe the plot this time. It’s the same story. Director Todd Phillips seems to have taken “The Hangover” screenplay and moved it laterally from Las Vegas to Bangkok while retaining the same sequence of scenes: Call to bewildered bride to be, flashback to wedding plans, ill-advised bachelor party, four friends waking up with terminal hangovers in unfamiliar hotel room, ominous signs of debauchery, desperate quest to discover what happened, etc.

It may be the same story, but it still managed to gross over $200 million worldwide in about a week. This suggests audiences aren’t all that enamored with “creativity.” There are plenty of highly original films that never find a commercial audience. In truth, movies are no different then any other product. Customers often value consistency over originality. In any city you will find high-end restaurants that will serve you a $15 gourmet hamburger; you’ll also find a ton of McDonalds and Burger Kings.

The point is that copyright has nothing to do with creativity or originality. If anything, the original idea has no use for copyright. The original idea often struggles to find a place in the market. Once an idea takes hold, however, there’s a natural desire within the market to emulate — or copy — that idea to adapt it for other uses. This is where copyright comes in; it tries to stop the creative process at the source of the first idea.

This makes the entire process more bureaucratic and expensive. Consider those 27 movie sequels. Sequels are not a cost-saving measure. They are usually far more expensive than the preceding films. Of the 20 most expensive films to produce in US history, 16 were sequels or remakes. This is partially due to copyright. Consider the third “Pirates of the Caribbean” film released by Disney, reportedly the most expensive film ever made at around $300 million. Imagine what would happen if Disney couldn’t legally prevent other studios from copying the film. I don’t mean Internet downloads of Disney’s product. I mean what if another studio could have gone out, hired the same cast, and produced their own film under the same title. If there was actual competition to produce these films, the costs would almost certainly go down, and there’d be a much higher chance someone actually develops an original script. In every non-IP-based market, competition breeds innovation, which breeds lower costs in the long run. Only in IP-dominant markets — i.e., movies and pharmaceuticals — do costs continue to rise despite a lack of innovation.

What the MPAA wants is to bring technology down to the level of the movie industry. It wants government cartels, higher costs, and less consumer choice. Anyone who defends that as “promoting and preserving creativity and production” is simply lying.