Deloitte's Media Predictions: TMT Trends 2008 lays out what their analysts have found to be some of the most important trends and implications for media, specifically with regards to technology, for the year 2008 and beyond. The report contains three sections that are important to the realm of the future of new media.

First, the report tackles the potentially slowing growth of online advertising. It makes two important claims. People tend to find online advertising more intrusive and pay less attention to it than print or television ads. This could be because internet use is typically more active, and advertising can hinder this active process. The second problem is the trend for privacy and against personal tracking. The use of tracking and targeted ads is the single biggest advantage for online advertising. If enough major companies and consumer groups come out against the practice, this could create a major dent in the online advertising industry.

The second area the report explores is the impact of internet television on traditional television. The report makes the claim that internet television will be supplemental to traditional television, however this may be untrue. Although the report states that the major usage of internet video is for short form clips such as YouTube videos, network rebroadcasts have been growing so fast that the advertising revenue from Hulu.com, a studio joint venture to rebroadcast full television shows, will outpace the advertising revenue from YouTube. This shows the trend of people to begin to accept watching television online as a viable alternative to traditional television. The report does make one interesting suggestion that producers could take advantage of differing levels of quality to create a price discrimination scheme that could help add additional revenue.

The last area naturally follows the previous two. It addresses the difficulties in monetizing new media ventures. The traditional form of television media followed the crass simplification of  "Butts in Seats." That is the main goal was to have as many viewers as possible to watch the advertising, and pay rates were based on this number of viewers. Now, many forms of new media are attracting the viewers, but the viewers are not contributing to revenue. These viewers are costly to maintain and it creates a poor business model. The traditional methods will need to be changed to fit the new media world.

 

            In "Who's Afraid of Digital Downloads," an early article about residuals for new media, attorney Brooke A. Wharton argues from the talent perspective about the problems that arise over redefining residual agreements based on new technology. Shee bases his case on the history of the current home video residual agreement. Namely that when the first deal was struck between Magnetic Video, a Betamax producer, and 20^th Century Fox the agreement was that Magnetic Video would pay a 20% royalty fee for the licensing of their library. This deal was followed by many of the studios. In negotiating the talent contracts, 80% of the gross revenue was set aside and the 20% was split up among the studios and guilds. Wharton argues that this was fair when the manufacturing costs of one video were as high as $40. However, now that costs have come down to around $3, it is inappropriate for the studios to set aside such a large margin of the sales figures.

            It is to this argument that Wharton adds the arguments for new media. She states that the production and distribution costs for new media delivery is close to zero and that the higher rates of television should apply rather than home video. She then backs off to say that this is going to be a major debate and refrains from emphatically defending the talent's position. She ends by saying that this fight is not just a fight for digital download residuals, but for the compensation and pay of talent in the new digital age. This question is of utmost importance and could set the landscape for digital media and distribution for years to come.

 

Chapter 5 of Barabar Klinger's Beyond the Multiplex: Cinema, New Technologies, and the Home is titled "To Infinity and Beyond." In this chapter she explores the internet and its future for video content. She decides to focus her attention on made-for online shorts, both originals and parodies. Her argument is that the internet has created both a platform and a renewed market for short form content. She cites the popularity of early 2000's website AtomFilms.com and many popular short parodies such as "George Lucas in Love." Her attention is focused mainly on the artistic and cultural implications, rather than the economic implications. She seems excited about the future and the ability for filmmaking to be available to almost everyone in our society. Very inexpensive tools can be used to create successful short form entertainment, and the internet allows for full and unabated distribution.

One topic that she mentions briefly, but glosses over is of extreme value. The potential market for short form branded entertainment otherwise called advertainment. This powerful tool is simply entertainment content that is developed specifically to showcase or introduce a brand sponsored product. In one sense this goes back to the origins of television with sponsored shows. There have been a few very successful advertising campaigns that have used this new medium. BMW produced a series of films entitled The Hire in which they got famous directors and actors to produce shorts that included driving scenes. The films were pure entertainment, they did not tell anyone where and when to buy a BMW nor was there a distinct product they were selling. They were, however, showcasing the car and entitled BMW films presents. In this vein other shorts such as Dove's Evolution was a powerful two minute short showcasing the illusion of "model" beauty. This film was more educational but still with the purpose that people would choose to watch the short. These successful examples showcase a powerful new market that has yet to be adequately tapped. These shorts can be provided to mobile phones, sites such as YouTube, and any other short form marketplace. This should be the new trend in advertising and can have a large impact on the future of new media.

 

            The Summary of the Tentative 2008 WGA Theatrical and Television Basic Agreement is the end result of major negotiations between the American Motion Pictures and Television Producers (AMPTP) and the Writers Guild of America (WGA) following a WGA. As is evidenced by the focus of the document, the major negotiations occurred surrounding points of new media. There are many other details changed within the Memorandum of Agreement, however, focusing on the official summary it is clear that new media was the most important. The rules for new media fall into two categories: original product developed for new media and the redistribution of media through new media platforms.

            The first part of this agreement deals with original products developed for new media. First, the agreement establishes the guild's jurisdiction over this sphere if the project is developed by an established writer, the project is a derivative of an existing covered film or show, or if the budget is large enough. In this sense the guild has won the jurisdiction argument and has established itself as creating the minimum contract necessary for these projects. The agreement also explains the compensation schedules and exhibition windows before residuals begin.

            The second part of the agreement deals with the reuse of existing media in new media platforms such as the internet or mobile phones. This part of the agreement sets up some interesting implications. First, it differentiates between, electronic rental, sell through, and streaming. This is an important distinction that will largely effect how the future of internet distribution will work. It defines rental as viewer pay for limited access, sell through as viewer pay for unlimited access, and lastly ad-supported streaming in which the viewer does not pay for access to the television show or film. Important terms under the new agreement make rental and download rates higher than the physical media equivalents of home video, but the ad supported streaming, although higher then home video is less than ad supported television.

            The other major implication within the agreement is that it allows for promotional "clips" to be shown without residuals of up to 5 minutes. This is currently being used for programs such as Saturday Night Live where the clip is all that is necessary and may mean that short subject shows will get a lot of attention and reuse online.

 

In their paper, Does Peer-to-Peer Harm Copyright Owners: Protecting and Distributing Digital Products, Anne Duchene and Patrick Waelbroeck create an economic model of peer-to-peer content sharing versus traditional distribution with specific respect to online music sharing. Although the paper was written about music in 2003, it can be thought about with respect to film and television today.

            The model makes a few major assumptions to reach its conclusions. First, the original work provides more utility than the copy. This can easily be supported in today's terms that the original versions are of higher quality and can provide additional features such as DVD extras. The second assumption is that content producers will spend a large amount of money marketing and distributing under the traditional methods, but these costs will be 0 for peer-to-peer distribution. This assumption decidedly focuses on small independent produced content and ignores studio produced content. Along with this assumption is that there is a cost to downloading copies both in the opportunity cost of finding the copy and second in the copyright protection both technically and legally. This assumption does seem to hold true to real world issues.

            The findings of their model is that as copyright protection is increased, not only is consumer surplus decreased through decreased utility for copiers but also for buyers in terms of higher prices passed on to implement the higher protection standards, but also that higher copyright protection favors the large studio productions that have the ability to overcome the capital thresholds for marketing and distributing through traditional media. This could easily apply to film and television new media as well. As the studios block access to files through DRM, they are increasing production costs and favoring themselves over low capital producers who cannot afford to implement these strategies.

This has interesting implications over the future of new media in terms of concentration versus fragmentation of the media industry. It appears that if left unfettered, the online channel allows for a fragmentation of content producers. This is evidenced by YouTube, Funny or Die, and other small yet popular independent online content producers. However, if the studios are able to enforce higher levels of copyright protection, for example winning the Viacom v YouTube case, this could further concentrate power in the studios. In this example, the higher costs of copyright protection would lower YouTube or other smaller sites abilities to operate profitably. If these sites that support user generated content are hampered, it will allow sites such as Hulu.com to dominate and favor studio produced content over user produced content.

 

            In his article, "Watch Now: Netflix, Streaming Movies and Networked Film Publics," Chuck Tryon uses Netflix's new "Watch Now" feature to represent the new methods of Hollywood film delivery to the viewer. "Networked film publics" is the most interesting idea of the article and is presented in the title, but it is only briefly touched upon. The idea that it stimulates, however, is of an online community dedicated to the communal watching and discussing of film and television. Instead of a group of friends gathering in a theatre or a home to watch films and discuss them, the internet would connect random people from anywhere in the world based on like interests and watching these films could be a collective experience.

            Tryon mentions that for the time being the main way of watching these streaming films and shows is on the computer, and that this individual method of consuming content will change the type of content consumed. However, this claim only takes into account the intermediate stages of the new forms of digital delivery. Already Netflix has partnered with Microsoft's Xbox to deliver films on demand to televisions.

            Overall the claim that new methods of watching and interacting with content because of its distribution form is very interesting to the topic at hand. The power of groups to spread and distribute content may give power to the independent producers and new media producers while taking away from the gatekeeping abilities the studios have enjoyed. It is understandable in this context why the studios are concerned about new media distribution as an "experimental" technology that needs to be protected from exorbitant residual payments. However, the studios need to look at this as a new opportunity. They can have the ability to create fan groups and internet showings of films. They can price discriminate by charging different prices for the movie if it has extra features packaged with it. They can run discussion boards in which they can have very targeted advertising. There are many new opportunities to look for in this new delivery method.

 

The media companies have always been reluctant to address new technologies. It has always been there position to let smaller companies experiment in the new space, and wait until ubiquity before entering and taking over the new market. This happened with television, home video, and will now happen with new media. After seeing the music industry collapse by losing control over the distribution of their music, the film and television companies have decided to enter the new media space. They are currently battling with everyone from YouTube to the talent guilds over the future business model of new media. Representative of the whole situation is the negotiations, strike and agreement between the American Motion Pictures and Television Producers and the Writers' Guild of America. This battle over residuals had the studios defending the position that new media is still untested and unprofitable. This is an exciting time. The future is up for grabs and whoever has the best business model will win.