Tuesday, February 5, 2008

Say Goodbye To Hollywood?

From Borjos Blog:

Say Goodbye To Hollywood?

Marc Andreessen has written the most insightful analysis of the writers' strike that I've seen. It's a must read. He argues that the big studios are in a suicidal battle and that a new Hollywood will likely be reborn, along the lines of Silicon Valley, where writers and actors own the content and distribute it widely and freely over the Internet.

Here is one key passage that neatly summarizes the short-run economic issue that triggered the strike:

Due to amazing historical circumstances around the birth of the VCR in the early 1980's, television and movie writers are currently paid approximately 4 cents for each DVD sold -- bearing in mind that the average sale price for a DVD is over $10, and the cost of manufacturing a DVD is less than 50 cents. The writers want that residual rate doubled to 8 cents per DVD, and the studios are refusing.

Currently, writers are not paid for Internet downloads via online video stores like iTunes and Amazon Unbox. The studios want to extend the current 4-cent DVD residual formula to Internet downloads; the writers are holding out for more.

As always, there is a Law of Unintended Consequences: the strike is keeping writers away from the keyboard and preventing them from writing yet more stuff that's guaranteed to keep moviegoers away from the theaters.

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