YouTube, The Internet and the future of movies


Even though YouTube's original mission was to provide an outlet for amateur filmmaker digital rights management issues immediately emerged. Sales of CDs in retail music stores y y y y have been declining while sales of songs downloaded through the Internet to iPods and other portable music players are skyrocketing. What remained a question was whether the studios could replicate the success of iTunes.Most movie downloads did not come with the extra features that are common with DVD releases. even if customers were willing to pay a little extra. In early 2006. quickly became the most popular video-sharing Web site in the world. Right around the time that the studios were making their foray into Web distribution. which has since been acquired by Blockbuster. they were getting less for their money. However. which started up in February 2005. to sell movies online via download. and leading-edge file sharing services have made downloading of video content faster and easier than ever. major movie studios reached agreements with sites such as Cinema Now and Movielink. powerful PCs with DVD readers and writers. YouTube. a new challenge emerged. . Increased levels of high-speed Internet access.KEY FACTS y The Internet has transformed the music industry. portable video devices.

YouTube developed filtering and digital fingerprinting technology called Video ID to make this possible. The licensing model was already in place between YouTube and several major music In early 2007 YouTube revealed its intention to explore a revenue-sharing model with content creators. It was. When Google purchased YouTube in 2006 for $1. a losing battle. it remains to be se en whether streaming video can actually be profitable The developments in online movie distribution have come at a difficult time for the movie industry. and they could be reposted as quickly as they were removed. Whatever the motion picture studios' relationship to YouTube. however. And watching a two-hour movie in twelve 10-minute pieces proved to be a small price to pay to view the movie for free. the site gained considerable clout in the media world The STUDIOS entered into negotiations with YouTube to establish licensing agreements that would make copyrighted content available legally. Academics and media executives estimate ranges loss of material from 30 to 70 percent.KEY FACTS y y y y y y y y y YouTube measures to discourage its users from posting illegal clips included limiting the length of videos to 10 minutes and removing videos at the request of the copyright owner.65 billion. DVD sales in 2008 were sharply down from previous years The studios continue to seek out more partners for movie downloads . Clips from popular movies and shows were often posted by multiple users.

etc. the industry cannot ensure its receiving just payments and rewards for the work they produce. Amazon. With no controls in place. RapidShare. etc.) Subscription based Rental Services (Netflix.) Video Streaming Services (YouTube. Vimeo.1 y What competitive forces have challenged the movie industry? What y y y y y y y y problems have these forces created? What changes have these problems caused the movie and television studios to make? New market entrants and substitute products are the two main competitive forces challenging the movie industry. cable television. Advancing technologies. and movie rental businesses ± are all challenged by new ways for customers to obtain products. With the advent of downloadable movies. 4Shared) . SUBSTITUTE PRODUCT: The traditional outlets for viewing movies ± theatres. RedBox) BitTorrent Services Hosted File Sharing Services (HotFile. the system is changing to more of a viewer-centric process. interpretation/enforcement of copyright laws and electronic distribution A few of the electronic channels threating traditional business are: Online Media Stores (iTunes. Blockbuster.

slow adoption. It is estimated that 23. Due to this. portable video devices.8% of global internet traffic is infringing on content copyrights . the broadcast and motion picture industry has begun to realize the adverse effects of the internet. specifically high speed connectivity. powerful PCs with DVD readers and writers. free and often illegal video downloads currently outpace paid video downloads four to one. flawed delivery and pricing models have hindered early efforts. and leading-edge file sharing services have made downloading of video content faster and easier than ever´ y While this allows the movie industry to capitalize on new opportunity.y The increased availability of internet access. As Laudon states. ³Increased levels of high-speed Internet access.

These competitive forces have created problems for the movie industry. are the MAJOR ENTRANTS that have challenged the movie industry. In fact. Google is the number one search engine on the internet. Illegal posting of copyrighted movies and television programs. the industry claims that 30 to 70 percent of the YouTube content is comprised of illegally downloaded videos . and its parent company Google. YouTube is the number one video site on the internet with over 100 million video views daily.y YouTube.

1. . dropping to $15.9 billion from $16.problems y DVD sales in 2008 were sharply down from previous years and marked the first time that DVD sales actually decreased from the previous year.5 billion.

and recoup the revenue generated from the ads. y .1. run promotional ads for the movies. YouTube is helping build a revenue-sharing model with content creators and developing a filtering and digital fingerprinting technology that will help it control the unauthorized use of copyright protected material. to sell movies online via download. which has since been acquired by Blockbuster. These problems have caused the movie and television studios to make changes in how they do business. . Furthermore. Several of the major firms entered into negotiations with YouTube in order to create licensing that would enable copyrighted material to be shown legally.Changes in strategy of movie studios y In early 2006. the movie firms have established an agreement to "claim" the copyrighted materials on YouTube. . major movie studios reached agreements with sites such as Cinema Now and Movielink.

People wanted an outlet for the creative video diaries and amateur films that they created using inexpensive digital video equipment. That explains what is causing the changes in how customers want to receive motion pictures y Disruptive technologies continually displace old technologies that. That is. YouTube has become the most popular video-sharing Web site because it gives users what they want when they want it. it¶s a conduit to new processes that are more customer-driven than the old ones. no longer serve a customer base.2 y Describe the impact of disruptive technology on the companies discussed in this case? y YouTube is to the motion picture industry what Napster was to the music industry. . while they are still good products.

The ability to quickly download material. cut into the revenue of the production firms. Viacom sued YouTube for $1. Having the movies readily available on YouTube. the movie studios viewed YouTube as an enemy.6 billion for 150. was extremely disruptive to the movie industry. and ate away at the potential volume and profits that they could have gained. or other "bootleg" resources.000 copyrighted violations that they found on the YouTube site of their material . and have it permeate the web. Gaining free movie access through YouTube bypassed the traditional movie revenue generators. y Initially. Movie firms generate their revenue from movie theaters and movie rentals.2 y The disruptive technology has had a significant impact on this case.

The movie studios elected to utilize YouTube in the same way that the music industry has utilized them.3 y How have the movie studios responded to YouTube? What is the goal of the response? What can the movie studios learn from music industry¶s dealings with online digital music and copyright infringement? y Initially. and enable YouTube and the studios to generate revenue from the illegal downloads by posting ads at those locations . and products.000 copyrighted violations that they found on the YouTube site of their material. the movie studios viewed YouTube as an enemy. The movie studios have learned that utilizing the YouTube site in the music manner will boost their presence. frustrate the use of illegal downloads. Ultimately. videos. the studios have partnered with YouTube in order to hinder the illegal download market on their site. and generate revenue for YouTube and the movie studios. The goal of the response was to curtail the revenue loss caused by the illegal downloads. Viacom sued YouTube for $1. The music industry has utilized the YouTube site to promote artists.6 billion for 150.

The movie industry should continue to work with YouTube to find ways to use the site. the industry can control (to a greater extent) what appears on YouTube¶s site. By putting their own short videos and film clips on the site. publishers are now able to generate ad income from uploads and while there has been limited success. movie studios can thwart some of the illegal use of their films. this additional revenue stream will continue to grow as does the YouTube audience. Currently. .y Should motion picture companies continue to use YouTube to promote their new films? Why or why not? It¶s important to understand that YouTube continues to be the most popular video sharing Web site. The average person would rather see a well-produced video than a second. it will continue to be a force to reckon with. if for nothing else than promotional reasons.or third-rate clip. before others do. By taking proactive measures rather than being reactive. In addition. With Google¶s clout behind it. several movie studios and television networks utilize the YouTube service to promote new releases and shows.

y Advertising is becoming a major source of revenue for many Web sites and YouTube is no different. That¶s especially true since Google. What do you find on the site? Do you see any advertisements attached to the video? Do you feel this way of advertising is effective? Why or why not? y Illegally using copyrighted material is an act of theft. .com and search for videos from your favorite movie or television show. It¶s probably true that YouTube ads help get customers excited about seeing the actual movie. a company very dependent on advertising dollars.5 y Go to YouTube.and audio-sharing Web sites are equally and legally responsible for properly using someone else¶s property. Both users and video. purchased YouTube.


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