FREE IS NOT WORTH THE PRICE, PART 2


Continued from FREE IS NOT WORTH THE PRICE, PART 1

We are now feeling the impact of that un-analyzed, self-serving desire, “I want it FREE.” The impressionable college generation coming of age at that time threw away moral discernment in the face of the “free on the Internet” mantra and nearly destroyed the music industry.

Yes, the Internet itself must be free. The recent announcement by the FCC that it is switching its official support from the old era of broadcasting to the current era of Internet access is welcome and profound news. The Internet needs to be freely available for the exercise of democracy.

But content is a challenge. We want it free, but it cannot be sustained when free.

The Internet has become the dominant distribution system in the world and obliterates the profit streams generated by old-school “analog” distribution systems and old-school “gate-keeper” systems. Those are crumbling quickly, faster than old-world companies can grasp, much less react to.

The Internet has become the most blatant definition of “disruptive technology!”

The mind-set of the consumer must evolve, too.

Of course, we all want everything for free. Of course!

But we must grasp, and are slowly grasping, the old truism, “You get what you pay for.”

If we do not step up and recognize the true value of quality- -again, a value that had been set by the news publishers themselves as “free”- -then we will eventually, and sadly, recognize that FREE IS WORTHLESS.

I used to read Daily Variety online religiously. Now I don’t. When I click on my fifth article (or whatever the tipping point is) and am denied access, I resent it. Yet, I know that if Daily Variety does not succeed somehow, I am either going to have to become my own journalist (“JOURNALIST”, not merely an observer or repeater) or I am going to have to rely on agenda-laden, word-of-mouth bloggers who rarely investigate and uncover; they mainly regurgitate without accountability.

This situation is also affecting indie filmmakers. Indie filmmakers have to deal with the worst form of free: theft by piracy. They also have to deal with distribution outlets that want their films for free.

Even REDBOX, with their $1 DVD rental kiosks, a pet peeve of mine, is an enemy of the indie filmmaker.

The success of REDBOX comes from ripping off filmmakers. In fact, you have to admire REDBOX for achieving something few ever have: they have even ripped off the studios! By circumventing the sales requirements for rental DVDs (REDBOX had originally bought their DVDs from big box stores like Wal-Mart at discounts rather than at “rental” pricing from wholesalers, they stripped the potential profit from rental fees and kept all the income for themselves. (see the Bloomberg Businessweek article “Wal-Mart, Target Put Squeeze on Redbox” at http://www.businessweek.com/technology/content/feb2010/tc2010022_125668.htm _ ) and the Mashable article “Why Redbox New Release DVDs May Vanish from Kiosks” at http://mashable.com/2010/02/03/redbox-rentals/ and the Gizmodo article “Walmart and Target Afraid of a Little Redbox” at http://gizmodo.com/5463416/walmart-and-target-afraid-of-a-little-redbox ) They single-handedly killed the perceived value of DVDs by pricing them at only $1. Yes, they are successful, but because, of course, EVERYONE WANTS FREE. $1 is “free” as far as the film business is concerned, since there was no return of any of that income to the filmmakers. (The studios have since coerced REDBOX to start playing on a more level playing field.)

Bear in mind: McDonald’s will offer you a $1 burger. Why? They know that’s as good as free to you. But the difference between REDBOX $1 DVD rentals and McDonald’s occasional $1 burger is that McDonald’s still has its full-value menu for you, and will up-sell you with sodas and French fries. They sell $1 burgers with the full intention of making a profit and without killing the perceived value of a standard McDonald’s meal. (see the Daily Finance article “Will McDonald’s sell Coke for $1 this summer? Still a rip-off” at http://www.dailyfinance.com/blog/2010/03/22/will-mcdonalds-sell-coke-for-1-this-summer-still-a-rip-off/)

When REDBOX rents you a DVD for $1, that’s it. End of story. There’s no more income stream possible, there’s no up-sell, there’s no method to establish the realistic value of the product.

The current thinking in indie filmmaking circles in response to the issue of “free” is to find ways to monetize the movie in some other way, such as creating unique and hard-to-duplicate elements of a film project, or creating merchandise that would be desired by fans of the films.

The most hostile effect of the surge in kiosk DVD rentals for indie filmmakers: the kiosk only displays a couple dozen titles, so indie filmmakers can no longer compete for viewers’ attention as they used to when people wandered the aisles of their local Blockbuster (RIP!). The “Blockbuster Crawl” was a major source of income for the indie film biz.

$1 DVDs from a REDBOX kiosk are the same as “free” and the impact is just as profound on filmmakers as the free online content has been on the news publishers.

Here’s a thought: ‘Hey REDBOX! Want to do something positive for the indie film biz? Start funding movies from the profits you make from successfully handing out “free” DVDs!’ (see the CNN.COM article “Coinstar’s stock up 16% on soaring Redbox movie rentals” at http://money.cnn.com/2010/04/30/news/companies/coinstar_redbox/index.htm?postversion=2010043016)

The impact of “free” is beginning to cripple journalism and filmmaking, as it is many other traditional distribution functions in our economy.

At some point soon, it will sink in to me, and others, that FREE IS NOT WORTH THE PRICE.

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