Study Faults Entertainment Companies' Focus on Pir

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mikenyc

Junior Audioholic
<font color='#000000'>From medialinenews.com...

Study Faults Entertainment Companies' Focus on Piracy

(Sept. 26, 2002) Los Angeles -- Media companies have the onus on them to find ingenious business plans for distributing digital music and movies over the Internet rather than trying in vain to hold back the flood waters of free downloads. This sentiment has been heard many times over the past couple of years and was echoed in the findings of a study released yesterday conducted by KPMG.

The tax, assurance and financial consulting firm said the responsibility for finding new digital business models lies with the boards of directors and not just with mid-level managers. With an estimated $8 billion to $10 billion in lost revenues annually, the issue should be a corporate governance matter.

&quot;What we don't see is a real questioning of business models,&quot; said Ashley Steel, a partner in KPMG's Information, Communications and Entertainment practice. &quot;They complain about the Napsters,&quot; she said, referring to the bankrupt music swap site that was found to violate U.S. copyright laws. &quot;But why do the Napsters exist, because the marketplace wants them.&quot;

Ever since the 1990s technology boom fueled the drive to put music, movies, TV shows and books on the Web, the world's major record labels, movie and TV studios and publishers have focused on creating software and hardware that prevents people from illegally copying digital content and re-selling it.

The KPMG study that polled some 40 top executives from major players to smaller independent producers and Web firms found the media executives focus on encryption software and other technologies to thwart pirates, instead of looking for ways to beat the pirates to the consumer pocketbook.

The study found that some 81 percent of the executives relied on encryption to prevent piracy, but Steel argued that the pirates will always exist.

&quot;The next stage of encryption just means it will take a hacker a couple of days longer,&quot; to crack software codes and make digital copies of material.

She pointed to the home video industry that as far back as 20 years ago was battling video pirates, but the media firms found ways to profit from video in spite of the pirates.

Steel said that in order to build new business models, the companies' digital content must first be valued properly. The study found that currently only 43 percent of the companies even make some of their content available in digital form, and fully 57 percent of the executives admitted to failing to have a review process in place to determine types of digital content should be deemed intellectual property.

Major global media companies include AOL Time Warner Inc., The Walt Disney Co., Viacom Inc., Vivendi Universal and News Corp. Ltd. and Bertelsmann AG.

http://www.medialinenews.com/issues/2002/september/news0926_2.shtml</font>
 
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