Before you all form a lynch mob: I’ll not be advocating for the acquisition of content without benefit to the creators. My opinion is that in a currency-based economy, all creators everywhere should be compensated for their creations. I also believe that art, once created, belongs to all of humanity and should be available without restriction. How then do I balance two opinions that don’t seem to work together? I hope that by the end of this article you’ll understand fully. Understand how these opinions are not contradictory, and how they must be held together for the future.
As a base of understanding from which to build my point, we need to be on the same page about what torrenting is. Torrenting relies on a system of seeds and leeches. Functionally ‘seeds’ are a linkage of computers, all of which are making available a specific file. A ‘leech’ is a computer which requests that file from the seeds. The leech will receive the file in small pieces from at least one, more likely many, seeds. As a system, the torrenting network is entirely non-centralized, and any computer with the requested file can contribute to the network. There are other minutia to consider, but for the purpose of this article they are not so important.
The business of media production is fundamentally flawed for many reasons. Primarily the impetus of profit. Making video media especially, has become so expensive at the professional level, that even a casual comedy show is a huge investment. Producers aren’t willing to risk investing in something that may not turn a profit. In the west, this is why sequels and remakes dominate the mainstream. This despite the fact that truly great original content actually generates more audience satisfaction.
The anime industry may not be mired in sequel hell, but the phenomenon does manifest in the form of ’12 episode book commercials’. The vast majority of anime produced in the last 10 years are adaptations of manga or light novels. They are largely successful because they have a built-in audience. But despite their success in the anime realm, many of them are never continued beyond the initial run, because anime success wasn’t the point. They’ve produced 264 minutes of animated commercial for a book series, because they want to sell more books.
Selling more books may be a noble goal, but this circuitous method of using full-season anime to do it is wasteful and actually contributes to lost revenue overall. One article stated that the anime/manga industry is losing $12 billion a year to piracy. They make a big expensive 264 minute commercial for a book series, and then some people buy the books, and others acquire them illegally. I posit that they’re not losing $12b to piracy. I posit that they’re losing $12b to their own business model.
The business end of the video media industry has been crowing on about piracy losing them money for almost 20 years now. This instead of actually solving the core problem. The entire business model is based on the convenience of going to a movie theater, or of watching a T.V. in your own home. This was true for the majority of the media form’s history, and it worked. Except for the ever-increasing amount and ever dropping quality of advertising.
That changed dramatically between the years 2000 and 2003. We can call 2002 the halfway point, for this explanation. In 2002, two significant technologies both advanced to the point of making traditional T.V. obsolete.
One was the internet. Prior to 2000 almost nobody could afford or even had access to an internet connection capable of downloading a large video file. But the increasing availability of DSL and Cable internet made that a viable option. The other was consumer level P.C. hardware. In 2002 it became possible for someone in the upper-middle class to own and operate a computer capable of capturing and editing video. And it was within the reach of even the lower-middle class to own and run a computer at least capable of storing and playing those videos.
With this convergence of technology, many people suddenly found it much more convenient to download their favorite T.V. shows and movies to watch whenever they wanted. As there was no official or legal system to do so, they simply did it illegally. Convenience wins out in the hearts and minds of the general public.
By 2006 the industry had realized what a drain this phenomenon was on their revenues. I should say, the advertising division realized it. And I should say, they realized their viewership had gone up, but their revenue hadn’t. People who were ripping T.V. shows edited out the commercials, because of course they would. Nobody wanted the commercials, and even if they’d left them in, the views weren’t going to be counted anyway.
So the industry panicked. They tried everything they could to make it as illegal as possible. They themselves engaged in questionable activity, lobbying and influencing their way into making laws that suited them. They levied taxes on CDs to curb music downloads. They shut down sharing sites. They went so far as to have people arrested and tried for sharing movies.
None of that actually stopped piracy of course. Just like the war on drugs, making something illegal doesn’t make it go away. The technology just got better. Encryption, VPN services, torrenting, anonymizer services… Not just the sharing technology improved, even the basic hardware and software involved has improved as a direct result of illegal media sharing. One side effect of this whole thing has been a measurable improvement in everyone’s selection of technology.
The industry has by this point made their own problem worse. Every time they make something more illegal, someone else comes up with a way to defeat it. The one thing they never did was try to adapt to the new technology. Even the rise of streaming service, as revolutionary and convenient as it is compared to T.V., is based on the same business model, and thus has the same flaws. The licensing agreements, and the legalese within, have devolved into a level of specificity that is actually hurting the business.
There are three big video streaming services whose selection is nearly universal. Netflix, Amazon Prime Video, and Hulu. Thanks to licensing nonsense, there is almost zero crossover of either movies or T.V. shows across them.
Netflix can’t seem to get licenses to some content in perpetuity, so beloved shows are occasionally deleted and made non-available. Prime Video has a bizarre habit of licensing parts of a show. For example, they have the first 5 seasons of Stargate SG1 listed, and only the first 3 available to watch as of the writing of this article. There are 10 seasons of SG1, but if you’ve only ever seen it on Prime Video, you’d never know there were more than 5, and you could only watch 3 of them. I’ve not personally used Hulu, but I imagine they have similar problems for the same reasons. This doesn’t even account for individual networks making their own streaming services for their original content.
The problem of licensing began with the rise of cable television in the United States. Before that every studio had a channel, some banded together in networks for wider coverage, and the affiliate stations all aired their network’s content. It was the most convenient way to reach the widest possible audience at the time. Nobody had to worry about licensing for T.V. shows because the system didn’t even require going out of network.
With the rise of Cable, these networks had the opportunity to reach further, and made arrangements with the cable companies to do so. For a while thereafter this was the most convenient way to watch T.V. As the system got more complicated and more digital, this became more of a problem. The sectioning of cable selection into basic and premium channels was the result of some companies and cable channels wanting to make more money by way of branding and competition.
The irony is that this process ended up reducing competition. The cable companies merged and marked out territory like a feudal dukedom, until eventually several area monopolies replaced every regional cable network. Now the channels would license out to these few, demanding more money from each, and inflating the customer price as a result.
With the rise of the internet, this was no longer the most convenient way to watch T.V. shows. It became much more convenient to download the episodes as whole files, and watch them at your leisure. No fussing with Premium channels, or schedules, or of course licensing malarkey. The cable companies and production networks had many opportunities to capitalize on the new technology, but they didn’t.
They chose to stick to their existing model for a few reasons. For one, they expected that most people would still prefer things the way they had been. If nothing else this is definitive proof that they were, and still are, completely out of touch with reality. Another, more significant reason was that the income from any sort of file availability system was unpredictable. The existing business model had no capacity to calculate that. That scared them. The fact that there was a system with which people could watch their content, but couldn’t be accurately tracked with? Terrifying, to a system which had built a business model that relied on predicting watching patterns and schedules. The idea of Primetime Television is meaningless when people can watch it whenever they want.
The manga industry side of this issue is not as ‘high stakes’ as the video media side, but no less convoluted. In a recent article I mentioned a particular example, Project X: Cup Noodle, which exists in a sort of legal limbo. The one, singular site I’ve found that hosts it is a grey-zone site.
Specifically with Cup Noodle, making it available to be read, without a license, is technically illegal, and this site doesn’t have a license. However, neither does anyone else. This site is, as stated, the only place it’s hosted at all. Print copies are hard to find and can go for $150. The site hosting it doesn’t sell it, simply making it available to be read on-site. All of this is why it falls into the grey-zone instead of being fully illegal.
There are thousands of such examples, collectively known as orphaned works. An orphaned work is something which hasn’t yet entered the public domain, but which cannot be licensed through any available means. This can happen for any number of reasons. Either the owner can’t be contacted, is dead, or the ownership is in dispute. It can also be that the owner has abandoned it, but hasn’t declared it to be released to the public domain.
There are also cases where a copyright has been legally extended to avoid entering the public domain. You can thank Disney for extending copyright duration worldwide BTW. Every time Mickey Mouse gets close to entering public domain, they either lobby to extend it, or set case precedent by re-copyrighting the character. They do this for other content as well, but Mickey was the first.
Because of this, there are now thousands of orphaned works which should be in the public domain, but aren’t. This legal quagmire was created in U.S. law, but it extends around the world, and makes anything which was created by an American, or is owned by any company with an American branch, fair game to sue over.
The extension of this has created a level of granular specificity which threatens to eliminate the concept of fair use, as well as calling into question just how small an element of media can be owned by an individual person or corporation. Recently a popular Youtube content creator by the name of MumboJumbo was hassled over the intro music in his videos. As it turns out, a company claimed ownership not of the song, nor the clip, but a sample of a sample within the song from which the intro was clipped. I can’t be sure what percentage of the clip was in question, but my guess would be low. They copyright claimed his entire channel over this, and Youtube let them. He’s since removed the intro and outro music from all of his videos, to avoid the claim.
With this as precedent, it’s not inconceivable that someone could begin to copyright individual frequencies. If I were to copyright the use of the G key on piano, anyone who wrote or performed a song using that key on piano would owe me money. Too far? I agree. I’m being melodramatic? Perhaps. But give it a few years and see. There are already certain color pallets that can’t be used without permission from the company that owns them. How long until there are 4×4 squares of pixels that can’t be contained within a larger image for fear of lawsuit? A mangaka could, by complete accident, use a copyrighted set of pixels in the back panel of a story and be sued for it.
As has been established, and as I’m sure anyone old enough or educated enough to read this article knows, advertising pays for the vast majority of media. Be it digital, print, audio, or video, you pay for it with time exposed to ads, instead of directly, with currency. But post-2002, I have to wonder just how efficient that advertising system still is.
A company will pay an advertising firm to make advertisements for either the company itself, or a specific product. The work they produce at this request is then put out into the world. The firm will purchase time or visible space in whatever medium is applicable, and the medium will then publish the ads alongside their core content. A great deal of money is exchanged in this process, supporting both content creators and content providers.
That said, this core business model isn’t nearly as effective as it once was. I personally see a dozen commercials a day on Youtube for things I don’t want, and can’t afford. Even the best ads, what few are still made, can’t motivate someone to buy something they don’t want or can’t afford. Gone are the days of convincing housewives they need fabric softener. Gone are the days of convincing 20-somethings they want a brand new car. They can’t even convince most millennials that they need a new car anymore, because we know better.
This hasn’t gone unnoticed by companies or their ad agencies, who now wonder why they should invest so much money in things that create no sales. They buy the ad-space for less money, but buy more of it to saturate the customer’s experience. This strategy worked for a while, but now they’re just shooting themselves in the foot. When was the last time you genuinely paid attention to an advertisement? They have to get really clever to get your attention these days, and they know it.
Still, they can’t stop. There is an entire worldwide industry, with its’ fingers in every other industry in the world, that would go belly-up and drag half the world down with it when it did. That may be inevitable at this point, and we the consumer class must consider how to prepare for it. On the topic of media, the tools to create it will still exist, but how would it be paid for? Nobody I’ve met in the media production field has delusions of grandeur, thinking they will get filthy rich from their work. But everybody has bills to pay, especially us creative types.
Money and Shopping
Well established is the cost involved with production of new media. There are so many people to pay in the process of making something that investment is tough to come by. Still, the largest drain on the industry has nothing to do with production at all. As explained, the advertising industry is massive and expensive. The promotion of new content, and the legal process of licensing can in some cases cost more than the production. This self-feeding loop tends toward eating a lot of money in self-maintenance.
On the topic of existing content, Netflix paid $100 Million to keep Friends available through 2019. Friends ended in 2004 and Warner Media is still making bank from it. It currently costs them nothing to produce because production is long since over. The deal ends with the close of 2019, with the possibility to renew it again. Warner Media intends to launch its’ own streaming service in 2020, which calls into question whether it will allow Netflix another license.
It also calls into question the future of streaming itself. There’s no way to know how much Warner expects to make from their service, nor from Friends as an individual show, on their service. CBS Access costs $5.99 per month. HBO Now runs for $14.99. Averaged out, if each major network creates a streaming service and charges between $6 and $15 per month, a person who wants access to all of them would probably be better off sticking to cable. The best thing about Netflix is their wide selection, licensed from many sources. If the networks and production circles atomize their selection they will end up shrinking their own viewership as the audience is forced to choose.
Imagine a grocery store where you had to buy access to ‘brand zones’. Every brand has a zone where they sell their products, and nobody else is allowed to sell the same product. You need a Dempsters Pass to buy anything bread. You need a Lactantia Pass to buy dairy. In terms of variety, the best pass would be Kraft. But then you have no eggs, no bread, and you’re stuck with “fake” (delicious, mouth watering) cheese. It’s ludicrous. Nobody would run a business like that. Nobody, except of course, the media industry.
This of course is just another indication of how far out of touch the industry is with their customers. The audience does not want to have to sign up for a dozen services to watch maybe 18 shows a year. The audience does not have the time, patience, or money to spend on such a convoluted way to watch T.V. shows. This situation will only be frustrated by the fact that with few exceptions, the overall quality of television programming has been dropping for several decades with no end in sight. Securing the funds for new production gets harder every year, because the people who throw money at it know this. It’s a downward spiral.
Most of my research is directly linked to the western media, but the anime industry shares many of the same issues. This has resulted in the overuse of CG for the sake of time, dropping quality of 2d animation due to iffy outsourcing, and of course the over-investment in adaptations of existing content. Nobody’s willing to invest heavily in something that may not be popular enough to make a return on the investment.
The investment issue could be ameliorated or even solved by a comprehensive shared investment platform. Eve no Jikan proved that crowdfunding can be used to fund anime production, but also proved that the process needs work. Back then crowdfunding was in its’ infancy. Much work has been done, but it’s still too fractional to make a reliable source of funding for a large industry. Everybody in the game is forming a conclave of their own instead of banding together. What we ideally need is a unified crowdfunding platform open to any studio that wants to pitch a project. On that platform the audience would be the investors, and the return would be the end product.
The challenge for a platform like this would be to gather momentum. For this project to work it has be able to become an industry standard. Convincing the studios to get on board with such a service will take some doing, but I believe it will be necessary to prevent a total collapse of the art form. Either that or the platform will have to form several new studios to get the ball rolling.
End of an Era
It’s possible that The Industry will never recover from this problem. They’ve had nearly 20 years of opportunities to adapt to the desires of their customers, and have made no real efforts to do so. The era of scheduled T.V. and Movie Theaters was great while it lasted, but even Rome eventually fell to its’ own failures.
We now live in a time when a Swedish comedian’s humorous news website gets more regular views than every American news outlet combined. Youtube gets over 5 Billion videos viewed per day, but loses money every year, and it’s still the most valuable user-content video platform in the world. In a time where high quality video content can be made by a single person in a basement and distributed to the world the next day, do we really need an industry to make things for us?
When the industry is eventually crushed under its’ own weight, it’ll be the individual creators making new videos anyway. It may be a rough few seasons, but they’ll band together and form their own new studios. They’ll put their products on whatever platform is available.
Beginning of a New Era
I’ve tried much too hard to come up with a genuinely positive, reassuring “Everything’s gonna be alright” end to this article. And I have failed. In the coming years we will lose studios, channels, services and websites. The right to fair use of materials and ideas will be stripped away in the name of corporate stagnation. The audience will split into those who can afford a dozen streaming services, and those who use the dark web just to watch T.V. It will be rough, especially to those who have neither option.
But where there is demand, there will be supply. It will not be like the old days, so don’t let anyone tell you they can bring them back. But there will be new media, new content, new anime. The customer base will be more than happy to support a new industry that understands the way they prefer to watch video media. This will come. Not soon, but it will.
I’ve beaten the media industry to death in this article, figuratively, but they’re not the only problem. The above chart indicates that most of our readership understands the standard business model. This is pretty good, but it’s also going to be obsolete information soon. For the future, we are all going to have to start thinking of art not as a business, but as a public service.
As stated before, nobody makes art to get rich. People sell art to get rich. And most of the people getting rich from selling art are not the artists. And as I stated in the preamble, art belongs to the world. When we creative types write, draw, paint, or animate something, it’s not for us. If we want to tell ourselves a story we just do it in our heads, we don’t bother putting it to paper. We certainly don’t do it because it’s an easy, high-paying job. All told I’m going to make about $0.01 an hour from this article. I haven’t written it for the money, I’ve written it because it needed to be written.
When the industry tells you to support artists and actors and animators by keeping your cable, paying for streaming, buying merch, books and Blu-Rays, they don’t care about the artists. The grunt doing tween frames isn’t going to see a single yen more just because you and a thousand of your friends bought the DVD box set. An industry that underpays and overworks its’ employees, and then blames that on the customers, will always fall. It must change, or we must change it.
It may sound like an ultimatum, but it’s simple logic. Good luck, Otaku.
Everything written herein is the opinion of the author, and not necessarily shared by the Ultramunch staff, advertisers, or sponsors. Readers are encouraged to do their own research and form their own opinions from multiple sources of information. This article is the opinionated analysis of many hours of research, and time may prove the conclusions incorrect.
No recommendation is made for or against any studio, company, or streaming service in particular, use them at your own discretion. No recommendation is made for or against torrenting or other methods of sharing media, one does so at one’s own discretion.
Long time nerd of many types and tastes, considered and often controversial opinions, and lover of debate.