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Variety Covers Internet Disintermediation; Producer Says ‘Get Off My Lawn’

While reading Variety’s eye-opening article explaining how successful young performers are reaching a new generation through Internet platforms, you might have come across producer Kurt Sutter’s (potentially NSFW) open letter savaging Google about piracy allegations.  Sutter, who produces the FX drama “Sons of Anarchy,” announces the search company is “in the process of systematically destroying our artistic future.”

The attack is uncomfortably wedged between Variety’s impressive coverage of the rise of the Internet content creators, and stars on Google’s YouTube in particular.  In fact, Variety published a survey this morning which concluded that YouTube stars are more popular than “mainstream” celebrities among teens.  Hollywood, however, has no idea who these new stars are — a disconnect likely to widen as more young Americans cut the cord and trade the remote for the smartphone.  Amidst other coverage, one article concludes, “[Internet video brands] AwesomenessTV and Vice could very well be the next mega-brands; they demand our attention now”.

It’s difficult to square Sutter’s dire predictions that we will look back with regret on “the magical days when creatives flourished” when the several preceding articles highlight creativity flourishing on the Internet.  Situated as it is inside what might be called Variety’s Disintermediation Issue, Sutter’s f-bomb fusillade says nothing so loudly as ‘get off my lawn.’

Sutter’s perspective isn’t just at odds with Variety’s extensive coverage of Internet content creators; it doesn’t square with recent history.  In the two and a half years since the debacle that was the Stop Online Piracy Act, online services have continuously developed new practices and products that direct users away from infringing sites, and toward lawful works and outlets.

Last year, many prominent online advertisers committed to certain practices to reduce ad revenue to site operators engaged in piracy and counterfeiting.  And even though search is not pirates’ primary tool for finding infringing content, Google recently started displaying banners for lawful services like Netflix, Hulu, and Play when users search for media using terms often associated with piracy, such as “DVDrip,” “download,” and “torrent.”  (As opposed to some less sophisticated proposals, such as censoring the word “free”, which — not surprisingly — would lead to false positives.)  In 2012, Google also started accounting for DMCA takedowns in delivering search results, downranking sites that prompted high numbers of infringement notices.

Industry efforts aren’t just focused on stamping out infringement, either.  Internet services are deploying innovations to help users find lawful content more quickly.  For example, both Bing and Google have deployed new features that give prominence to the first playable music video responsive to a search query on lawful services like Dailymotion, MTV, Vevo, Vimeo, and YouTube. [1] [2]  Bing users are shown related artists and albums, which can facilitate music discovery [1] [2], just as on services like iTunes, and Spotify.  These discoveries should drive music sales.

Overall, Internet services are rapidly becoming a substantial new revenue stream.  As Billboard reported in February, YouTube alone had paid out $1 billion to rights-holders and individual artists in recent years.  Yahoo’s push into high-quality, premium video has attracted significant attention, with the service lining up exclusive rights to prominent programs like Saturday Night Live for its video site, Screen.  Screen has shown that online services can spend big to produce original content: when NBC cancelled the “brilliant” cult comedy Community, Yahoo agreed to produce a sixth season.  Yahoo’s move into original content, breaking the cable network paradigm, follows similar successful moves by Amazon and Netflix, which DisCo has noted before.

And evidence shows that legitimate services like Spotify and Netflix help to reduce piracy from unauthorized sites.  Research released last summer found that in Norway, music piracy dropped 80% and video piracy dropped nearly 50% over several years coinciding with the introduction of lawful services Spotify and Netflix.  Spotify’s own research in the Netherlands came to similar conclusions, finding a significant reduction in piracy as the lawful service became available to users.

No amount of enforcement will stop piracy if Internet users cannot access the content they’re looking for in the format they want it.  Licensing practices like windowing, that aim to squeeze long revenue streams out of each work through successive licensing to exclusive outlets, will always drive some users to infringe what they would otherwise acquire lawfully.  We will never convert pirates to purchasers with government-mandated controls over communications infrastructure; the solution is to offer people what they want, when they want it, at a reasonable price, and they’ll buy.

On top of all this, Variety’s coverage shows that a younger generation of content creators is increasingly rejecting the existing content development business model, which is driven by statutorily enforced scarcity.

Of course, none of this enters into Sutter’s letter.  To be fair, all the answers to questions about online content distribution won’t fit into one profanity-laced diatribe.  But given that Variety’s own coverage suggests that the next generation’s stars are likelier to be found on YouTube and Vine, rather than FX, it isn’t clear that Sutter has the answers in any event.

Intellectual Property

The Internet enables the free exchange of ideas and content that, in turn, promote creativity, commerce, and innovation. However, a balanced approach to copyright, trademarks, and patents is critical to this creative and entrepreneurial spirit the Internet has fostered. Consequently, it is our belief that the intellectual property system should encourage innovation, while not impeding new business models and open-source developments.