Miramax CEO: our biggest threat is online distribution monopolies, not piracy

Netflix CEO Mike Lang, speaking a the MIPCOM conference, discussed the problems facing his industry and suggested that while piracy isn't a big deal, chokepoints in the distribution chain were, because when there isn't enough diversity in distribution, you get intermediaries that end up totally controlling your business:

Another problem, related to the pricing issue, is the emergence of digital monopolies such as the one Apple has in the digital music business. This threatens the music industry more than piracy, Miramax’s CEO suggested.

“Apple is the strongest company in the music industry because there was not enough competition, and still to this day there is not enough competition. As an industry it can’t then influence, packaging, merchandising – all the things that are vital,” Lang said.

“As an industry – the movie industry – we have to be very cognisant of that. That’s why we did our deal with Netflix, and why we also did our deal with Hulu. We want multiple players to be successful.”

Sarandos also learned his lesson from watching the music industry struggle with their digital strategy. “When consumers tell you what they want, give it to them. Figure out a way to give it to them, because they will figure out a way to get it.”

Or in other words. Don’t blame piracy for everything, but innovate – or die.

• [atimoshenko]

  The biggest threat to music, film, and TV (and other digital media) are not monopolistic distribution channels, but oligopolistic media conglomerates. The smaller the number of intermediaries between the artist and the audience the saner and the more creative the industry would be.

  • [Dan Woods]

    I think he means that Monopolistic distribution channels are a threat to Oligopolistic media conglomerates. If the OMC’s can’t charge exorbitant rates to the consumer, how are they going to fund the latest, greatest 3D monstrosity?

• [Guest]

  I hope the book publishing industry is paying attention to this.

• [bingowings85]

  aaand the crowning achievement of Capitalism is…… a Monopoly!
  Don’t act so surprised when it happens.

  • [Mister44]

    I don’t know if I would call it a crowning achievement. It is when the system is out of balance.

• [MrRocking]

  Or…

  “We’re mad because we thought this internet thing would go away.”

• [That_Anonymous_Coward]

  “That’s why we did our deal with Netflix, and why we also did our deal with Hulu. We want multiple players to be successful.”

  And that is why you priced Netflix out of their business model, used your market domination to force them to buy discs from you that you gutted all of the special features out of.

  That is why people who actually pay to use Hulu get MORE advertising that the people watching for free, and Hulu is on the market because you refused to reup their contract.  Oh and you expect bids of over 2 billion for a company that has no contracts for content, so you can then jump the new owner with your demands for high fees.

  I think the real reason you fear Apple is because they figured out how to get a cut of your revenue stream because none of the major media players has any concept of how the internet works.  Your more intent on the next magic bullet DRM than making sure your customer is happy. 

• [CH]

  “When consumers tell you what they want, give it to them. Figure out a way to give it to them, because they will figure out a way to get it.”
  Very much this!!!! I still don’t get it why the music industry is trying to patch up an antiqued leaking bucket, when the market is clearly showing what it wants. Figure out the “why” and you will find out what market you are currently underperforming in.

• [Ben Carlsen]

  “When consumers tell you what they want, give it to them.”
  Yes, instead of figuring out what you want consumers to want, telling them what they want, giving them that, and then getting mad at them when they don’t buy it.

  • [yahoo-A3UAIBSSVQJCAAST32YLNUCO7A]

    So true.  Video games have fallen down this path (talking to you Eats Ass Sports).  Still some great developers out there like Bethesda who care about storytelling and overall enjoyment.

• [Daniel]

  It seems somewhat absurd to call Apple a digital music monopoly anyway. I probably listen to ten times more digital music than the average consumer and won’t touch iTunes. Being the most successful at something doesn’t make a monopoly, and there are plenty of viable commercial alternatives to listening to digital music.

  That said, I think one of the biggest dangers coming in the future is major labels and studios not making workable contracts with distributors like Netflix and Hulu. The lack of width in content availability is one of the most off-putting factors when deciding to pay for a subscription. This is interestingly why Spotify is a nice music distibutor, because they manage to have a really massive catalog with few (but some notable) holes. Netflix, it seems most of the time when I think of a movie I want to watch, they simply don’t have it.

• [Scott Frazer]

  The blurb has some errors which make it really hard to figure out who said what.  This should help:

  “Miramax CEO Mike Lang and Netflix chief content officer Ted Sarandos gave a keynote talk at the MIPCOM conference.”

• [Edward Bear]

  Short form of the speech: “Apple hasn’t made most of their customers hate their guts the way we have.”

• [mcgski]

  Isn’t this a classic marketing strategy issue of “four P’s” – Product, Price, Promotion, Place?

  In the old days, the music/movie/book/newspaper companies could control Place (distribution) and the Product and therefore influenced Promotion and set the Price.  Apple broke that mold and developed a distribution model and pricing model that put more $$’s in the hands of those that owned content.   Sounds like sour grapes to me.

• [mcgski]

  Sorry, that last comment about putting more $$’s in the hands of content owners implies those that create the content, not the mega studios that contract with the artists.  They may own rights and that’s why the music industry in general doesn’t like what Apple has done.  It’s taken away control from the studios for the distribution channels and pricing models on the product they own.  They don’t own all Four-P’s anymore and it’s impacting their bottom line. 

  The internet was disruptive in that regard and will be for movie studios in the end.

• [Chris Lites]

  And I thought their biggest threat was dumping the Weinsteins from their own company.

• [Athelind Long]

  “… when there isn’t enough diversity in distribution, you get intermediaries that end up totally controlling your business … ”

  As the last two decades in the comic book industry have demonstrated.