Hey! I Got Something For You. Come Over Here … Just a Little Closer …

Here’s where the GOTCHA! usually comes in, right? Boogie man jumps out and grabs you. You’re thrown into the back of a panel truck, never to be seen again. A movie studio sues you into oblivion.

You may still want to stay away from shady characters in trench coats offering candy, but last week the specter of the big bad litigious movie studio got a little bit less scary. Paramount has decided to give away The Tunnel, for free, over the Internet, using BitTorrent file sharing software.

The Business Change here is huge, and comes from multiple angles. Susan, Take a Memo!

Having been involved in the arena and an Intellectual Property Consultant for a couple of decades, I find this to be not only interesting, but a really big deal. Movie studios, like music publishing companies, have been resisting this kind of business change with all their might, and while letting a minor movie that was going straight to DVD also be legitimate on the Internet might not seem like an important move, it’s huge. Here’s why:

Paramount is now essentially in the merchandising business.

While the official position Paramount is taking on their release of The Tunnel to the BitTorrent universe  is that they’re hoping to promote the physical DVD with added features by giving away the movie itself, and while they’ve successfully sold quite a few individual frames from The Tunnel as collector’s items (albeit at a price that’s just too low to matter to a studio of Paramount’s size), Paramount is jumping in as “the artist” in a very smart way; a way that music labels surely wish they could figure out.

Let’s jump a few levels deeper.

In the music business, artists have very little reason to work with major music labels any longer. Music can be recorded in a bedroom using inexpensive equipment and software, and in an era where distribution is mostly done electronically the only place labels still hold in the equation is promotion. Seen much music promotion lately? No, me neither.

Traditionally, music labels would advance artists some money, in exchange for the right to sell albums, tapes, and CDs and keep most of the money they earned doing so. The artists still owned the music, but didn’t make any money from the sale of their music in recorded form. Musicians therefore would make money by selling concert tickets, merchandise such as tee shirts at the concerts, and if they were lucky by selling the right to use their music in commercials, movies, and whereever else people wished to use it.

Movies are different; they can be produced on a shoe string budget, but typically they’re quite expensive—and the “artist” doesn’t exist. There’s a writer, a director, and the actors, plus all the skilled people who help pull those folks’ work together, but at the end of the day it’s the studio that owns the movie, having paid everyone else for their work. So if there’s merchandise, proceeds go to the studio, rather than the artist.

So what if the movie studio takes the position that musicians have always taken? You don’t make money from the original “art”; you make money from extra stuff you sell. Business Change.

Here’s where things get really interesting:

Move the studios from the position of money-grubbing monsters trying to squeeze every dollar possible out of the thing they bought and need to now re-sell to justify their investments to a position more like musicians have always occupied, and they have no choice but embrace the tools they’ve previously fought against.

Most significant in this conversation is the question of the legitimacy of BitTorrent as a way of “sharing” instead of merely a tool used by software, movie, and music pirates. Music and movie studios have argued that BitTorrent has no legitimate place, but by releasing The Tunnel using BitTorrent, Paramount has shut that argument down forever.

By the way: BitTorrent was declared legitimate in Australia over a year ago.

Paramount, thanks for seeing the need to enact genuine business change. Thanks even more for providing the only argument someone being sued for using BitTorrent will ever need in defending its legitimacy.

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