Canary in the iTunes

A thought about the media industry’s antipiracy efforts, seen in retrospect back to the beginnings of the digital age. In the NYT today, the question comes up as to whether consumers would pay to watch more movies in digital players if more movies were priced reasonably and the restrictions on viewing were permissive. This is the usual spectrum of debate: between media industry watchdogs who think this is about the culture of theft and those who think it’s about pseudo-monopolies defending lazy, entitled revenue models in which they sold a copy of their product four or five times to the same consumers in different formats and circumstances.

Ruth Vitale, the anti-piracy executive covered in the article, suggested that the falling production of movies is a sign of the damage that piracy (in the “culture of theft” model) is inflicting on the industry.

What if the entire debate is a misfire? What if the 1990s were a final apex decade of a leisure-oriented, consumer-driven society? The last time a middle-class existed and was working to earn more time at home, more time to themselves, more time to consume culture? The last time there was enough money (fueled by debt) to support the mass consumption of leisure? What if piracy is the canary in the coal mine for the growth of income inequity and the collapse of white-collar labor? What if no one has the time to really consume more than a small fraction of even the diminished current output of the media industries, because they’re working longer hours just to keep from getting fired or even just to make ends barely meet? What if no one has the money, because of flat salaries and debt loads?

At that point, debating piracy per se is sort of like getting caught up in managing the ecological future of polar bears without noticing that you’re dealing with a very small part of a very big story. More importantly, it’s not just victims of income inequality that need to defend themselves against the new gilded age: if mass-consumer corporations want to have a future, they had better throw in with a broad “middling class” while there’s still time.

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14 Responses to Canary in the iTunes

  1. Megan McArdle says:

    It’s an interesting theory, but in the depths of the Great Depression, 30-40% of the population went to the movies weekly. The worst of the Depression, when one quarter of the country was unemployed, was not as bad for movie consumption as the invention of television. In fact, radio was the one gadget that managed to radically increase its household penetration despite the Great Depression, and entertainment devices (radio, television) are known to have the fastest dispersion pattern of all consumer goods. So I’m skeptical that this is explainable by economic hard times. “Competition from other sources of entertainment” seems a more likely explanation, and those other sources simply undeniably include piracy.

  2. Timothy Burke says:

    I think you have to look first at the relative price of media consumption to income in the Great Depression to now, and second to the relatively low saturation of media products in the overall marketplace in the Great Depression. Radio (and then early television) got you everything that radio had to offer, and overall radio (and then early television) had relatively concentrated offerings of content. More importantly for my argument, the amount of time that even employed families had for domestic leisure was much greater than at present.

    Right now it’s entirely possible both that middle-class families have extremely saturated content libraries–as much music, television, film etc. as they could imaginably consume and that they have far less time in which to watch it because so many people are having to work longer hours in order to stay at the same income levels. That means a diminished interest in buying more content in an era where there is also diminished income for doing so. Add to that the proliferation of revenue streams that try to get the media consumer to buy content a la carte, and a revenue model for content creators that depends very much on middle-income consumers buying the same content four, five or more times. (A film makes its biggest revenue in theatrical release, but the film industry has been built up since 1985 or so by getting paid off again via DVD/VCR, again via cable/pay TV, again via network/free TV, and then a few more times when formats for home ownership change (VCR to DVD to Blu-Ray to cloud).) That’s dramatically different than the marketplace for early mass media in the Depression. At the very least, even in good times, consumers were clearly starting to feel ripped off (witness the very low levels of interest in Blu-Ray) but in times with less disposable income and less leisure time, that’s a big reason to not buy so much content.

    The point being that at least some of this is about saturation of a market and a glut of revenue streams, but that saturation becomes a much more striking issue when you’re chasing fewer eyeballs (paying or otherwise) due to a dramatic constriction of leisure time and a flattening of income growth.

  3. Tulip says:

    Is there any data on leisure time then and now? Your claim that people had more leisure time in the depression seems off to me but I am willing to be convinced.

  4. Tulip says:

    There is a paper by Aguiar & Hurst (NBER 12082) that shows leisure time increasing between the 1965-2003. But I am not aware of data on the depression era.

  5. Timothy Burke says:

    My thought is that 2003-2014 is the really important era for my tentative argument. Juliet Schor’s work on productivity and leisure time is one of several to claim that in the last twenty years there’s been an accelerating reduction of the amount of time that employed Americans have to spend outside of work. The point I’m trying to make about the last decade pretty much depends upon there having been increased leisure *and* increased disposable income from 1965 to the late 1990s.

    On the Depression, of course the thing that complicates the entire issue is unemployment. Time spent outside of formal employment isn’t leisure if it’s unemployment or underemployment.

  6. Tulip says:

    Well, arguing that 2003-2014 (convenient that since it is outside the range of the paper I found) is the really important time frame is very different from this “More importantly for my argument, the amount of time that even employed families had for domestic leisure was much greater than at present. “

  7. Timothy Burke says:

    It’s a guess. But there is considerable evidence inside of the data about income inequality, productivity increases, and the steady increase in hours worked by Americans for a reduction of leisure time in the last decade.

    You may also have noticed that something happened in 2007 that may have been a sign of major structural shifts in the US and global economies. That’s not me just picking dates to stay outside the frame of a paper you found.

  8. Justin Keefe says:

    Entertainment Industry execs always overestimate lost revenue and jobs as a result of piracy. The “Big Four” are indeed seeing revenues drop, but the industry as a whole has seen an increase in sales (if you count live music, sales from independent firms, musical instrument sales, etc.). There’s been some observation that gaming sales have risen consistently for several years since the decline of the compact disc.

  9. Kate says:

    Also, is the middle really spending less? Today we pay for internet connectivity, cable companies, cellphone carriers…

    Plenty of money is still being spent to enable entertainment, but it’s not getting to the content creators (studios, publishers, or individuals)–it’s going to infrastructure “providers”.

  10. Toph says:

    Very interesting perspective in the post and in some of the comments. But one item that’s missing from the discussion is the advent of streaming as a choice for consumers who want to experience media. Netflix, Pandora, and their ilk have gained a large market segment in a short time, and the use of those sorts of services has got to be changing how people make buying decisions for dvds and cds.

    And to take that back to Timothy’s original point, how many consumers are using these services because they perceive them as being cheaper (or at least a better value than buying physical copies of things they may only experience once or twice)? (perhaps that intersects with Kate’s point) And how many consumers are using these services because they perceive them to work more to their advantage in terms of the kind of time they have available? As in, “I don’t have a block of time for a movie, so I’ll see what TV shows I can find on Netflix or on-demand.” These are options that didn’t exist ten years ago.

    I would argue, regardless of the statistics around “leisure time” vs. “work time”, that the way we define leisure and work time has changed quite a bit since the 1960s. People spend a lot of time online at home and now define that as leisure time. And people spend much more time commuting–how is that defined? Justin brings up gaming, so I’ll interject that here–if I play Threes on my phone for the duration of my ride on the commuter train to work, does that count as leisure time? If I take work calls on weekends, how is that defined?

    I’m not saying the study Tulip found (nice find, btw) is flawed in its results, but perhaps the metric isn’t applicable within current, blurred real-world definitions.

  11. Barry says:

    Kate’s point is important. I’m paying $35/month for internet (no cable TV), plus ~ $30/month for Netflix, Hulu plus and Amazon Prime. I’m not going to be buying that much more stuff directly.

  12. Jackson says:

    Movies in 1930 cost 25 cents. 1 dollar in 1930 is worth 14 dollars today. So adjusting for cost of inflation, movies back then cost about $3.50 in today’s dollars. But our movies today cost 20 dollars. Over 5 times more expensive. That is why people went to movies more back then. Movies were cheap and fun. Today they are expensive and awful and that is why people don’t go these days.

  13. Toph says:

    @Jackson, nice math : ) Also of note, the experience of going to the movies in the 1930s was much different than today. The moving picture shows were still a sort of marvel, and people dressed up for it and behaved politely. The movie houses themselves were often ornately decorated, with unique aspects to each of their designs (as opposed to the generic big box cinemas of today). And people spent hours there–watching the newsreels prior to the shows, then the selected shorts, then the main attraction itself. You got a lot more for your money. They were cheap and fun entertainment indeed.

  14. Barry says:

    Riffing off Megan’s comment – we’ve seen an incredibly fast spread of internet video technology. From my casual memory, in 2000 watching TV/movies on the internet was rare; it’s now far more common.

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