Distance Learning

In 1604 and into 1605, London was ravaged by Plague, forcing much of the city into what today we would call lockdown: Many types of public gatherings were banned, theaters were shuttered, and houses that had been touched by the disease were marked with red crosses and the occupants told to stay indoors.

William Shakespeare used his forced downtime to write “King Lear” and “Macbeth.”

Some 60-odd years later, during another outbreak of Plague, Isaac Newton worked out the laws of motion and invented the calculus while self-isolating away from London.

Hoping for another Newton or Shakespeare to emerge from the current Covid-19 pandemic might be setting expectations a bit high. But with virtually the entire media and entertainment industry mothballed until further notice, it’s not out of the question that the extended downtime and forced isolation could become an important, if unwanted, engine of innovation, leaving a changed business in its wake.

The most immediate impact of the current calamity is being felt by the live and location-based entertainment sectors: Concerts and music festivals have been cancelled or postponed; movie houses and Broadway theaters have gone dark; theme parks have been shuttered.

Billions of dollars are likely to be lost before it’s all done and much of that lost business is not likely to be recovered.

The longer term impact, however, could be felt in less visible ways.

The entertainment industries rely heavily on a nearly year-round circuit of industry fairs, festivals and markets to transact crucial licensing and content-acquisition business to keep distribution pipelines full. They also provide important showcases for creators hoping to get their works picked up for distribution.

For all the dramatic transformations wrought to the media industries by digital technology, in other words, a lot of important business still gets conducted face-to-face, in large industry gatherings. With many of those fairs and festivals now being cancelled or postponed due to fears of spreading Covid-19, that part of the business is also undergoing significant disruption.

The London Book Fair that isn’t happening this month, for instance, is normally an important marketplace for translation and other subsidiary publishing rights. Without it, many fall catalogs will will have holes.

The now cancelled MipTV conference would have been a premiere international marketplace for TV and streaming rights.

The SXSW festival that was supposed to happen this week but won’t is an important showcase for many independent filmmakers who are now scrambling to find other platforms and venues to screen their work before influential audiences.

There isn’t much that can be done about the loss of business in the live entertainment sector. Activities that depend on or encourage large social gatherings cannot easily be re-engineered to comply with social distancing practices or mandates.

Other aspects of the business, however, such as business-to-business interactions and transactions, are more susceptive to innovation, and a prolonged disruption to that activity could prove a catalyst.

Crisis management

The idea that disruption wrought by crisis could spur business-process innovation, in fact, has recent precedent. Economists have noted that the financial crisis of 2008-9, and the Great Recession that followed, served to accelerate the existing trend toward process-automation in many businesses.

As companies shed key employees, they were forced to find or develop other ways of maintaining critical processes and systems, and automation proved to be one of those methods. As the economy recovered, and businesses returned to growth, many found they could do what they had done before more efficiently and at lower cost via automation.

At a conference earlier this month (ironically enough), founder and CEO of BCMstrategy, Barbara Matthews, suggested something similar could be in store in the wake of Covid-19.

“The virus crisisis likely to accelerate the decades-old shift towards process automation,” she said. “Key vulnerabilities associated with the loss of significant staff will likely create incentives for business leaders to shift rapidly towards remote-working platforms and process automation initiatives.”

One reason Concurrent Media and our colleagues at Digital Media Wire started the RightsTech Project four years ago was to bring attention to the need for process innovation in the management and licensing of media rights.

We saw that need as born not of crisis but of historical under-investment in the business-to-business layer of the media value chain relative to the huge technological and financial investment in the consumer-facing consumption and creator-facing production ends of the pipeline.

Many long-standing media industry practices and organizational structures for the management and licensing of rights have remained largely untouched by the digital revolution that has transformed the rest of the business.

Many of those practices are slow, expensive, and worst of all do not scale to a degree commensurate with how the distribution of content scales today. That disconnect, in fact — the difficulty or inability to license content usage rights quickly and at scale — is the source of many of the conflicts that arisen over the years between rights owners and technology developers and users.

The current disruption of many of those long-standing industry practices at the hands of the novel coronavirus could force media companies to think seriously about new and ultimately more efficient ways to conduct business, not only to get through the current crisis but to finally bridge the “analog gap” in the middle of the media value chain.

Box Office Blues

Total movie admissions in the U.S. fell 4.6% in 2019, to 1.24 billion, making last year the second worst through the turnstiles since 1995, according to the National Association of Theatre Owners.

The worst year was 2017, when only 1.23 billion tickets were sold.

The decline comes as theaters face growing competition from streaming services, not only for consumers’ time and entertainment dollars, but for their first-in-line position in the movie distribution system.

Two of 2019’s most high-profile releases, for instance, Netflix’s “The Irishman” and “Marriage Story,” which together helped the streaming service rack up an industry-leading 24 Oscar nominations, received very limited exclusive theatrical runs.

One reason for those limited runs, of course, was the reluctance by many theater owners themselves to book the films at all because they did not like Netflix’s proposed terms — a policy that increasingly looks self-defeating.

A recent survey by The Hollywood Reporter and Morning Consult found that a plurality of U.S. adults — 48% — prefer to watch new release movies via streaming service, compared to only 37% who would prefer to see them on the big screen.

Preventing movies from being more widely available on the big screen seems likely only to fuel consumers’ preference for in-home viewing.

It is a policy that also seems likely to grow increasingly untenable. As the major studios aggressively pursue their own direct-to-consumer initiatives, launching streaming services of their own and adopting increasingly proprietary distribution strategies for their content, pressure on the exclusive theatrical window will only increase.

If theater operators cannot find a way to accommodate themselves to the new strategic landscape, missing out on a few Oscar nominees will be the least of their problems.

A.I.: The New Hitmaker

Artificial intelligence has been a presence in Hollywood for many years, first as a subject of dystopian science fiction plots (“2001: A Space Odyssey,” “The Terminator”) and later as a CGI tool used in making many of the same type of films. Now, it’s moving behind the scenes entirely.

The Hollywood Reporter reported this week that Warner Bros. has signed a deal with L.A.-based Cinelytic to use its A.I.-powered project management system to provide predictive analytics on proposed film projects at the greenlight stage.

Cinelytic’s system can assess the value of star in any territory using data from multiple sources, and make projections of a movie’s likely earnings from theaters and ancillary distribution channels.

With the deal, Warner becomes the first major studio to sign up Cinelytic, following its earlier deals with Ingenious Media and Productivity Media.

Cinelytic is not the only developer shopping A.I.-powered predictive analytics to the studios, however. Belgium-based ScriptBook has trained an A.I. algorithm to be able to analyze a script alone –without stars, director or other creatives attached, — to generate box-office projections based on a range of story and character elements.

Although no studio has publicly signed on to use ScriptBook’s system, three of seven it has been presented to have expressed interest and are currently in discussions with the company, ScriptBook founder Nadira Azermai tells me.

Nor is Hollywood the only corner of the entertainment business where predictive analytics is finding traction. The music industry is also showing growing interest in the predictive powers of A.I.

Silicon Valley-based Chartmetric , for example, says its A.I.-powered A&R tool can shortlist which of the nearly 2 million artists it tracks will have a big career breakthrough within the next week. Pandora-owned Next Big Sound says it can predict which of nearly 1 million emerging artists it tracks will hit the Billboard 200 for the first time within the next year. Secret Chord Laboratories‘ dopr tool combines data from 33 years of Billboard charts with insights from neuroscience research to predict how a particular audience will respond to a song.

Big data

The use of analytics is not new, of course, particularly in Hollywood. The studios have long had green eye-shade types poring over past box-office, home video and ratings data to try to assess the likelihood of success for a new project. Even the determinedly non-empirical record industry will consult chart position and airplay to decide how much promotion to put behind an act.

The difference today is the immense amount of data, generated by streaming, that is available to analyze, and the computing power to sift through it all.

“The system can calculate in seconds what used to take days to assess by a human.”

Cinelytic founder Tobias Queisser

Neural networks and machine-learning algorithms make it possible for A.I. systems to analyze petabytes of data and discern patterns within it that elude humans.

Moreover, unlike humans, machine-learning algorithms get better at their job as they are fed more data to process. ScriptBook began training its algorithm with a library of about 30,000 produced scripts. But just as the natural language processing algorithms that power Siri and Alexa get better at recognizing human speech the more of it they hear, ScriptBook’s algorithm will be able to produce more refined and precise projections over time as it analyzes more scripts.

The limits of human processing historically left plenty of room for critical creative decisions still to be made by “ear,” or “gut” or “feel.” Data could inform but not supersede human intuition.

But with A.I.’s vastly superior processing power, and the mathematical improvement in its powers of discernment over time, that gap is starting to close, raising difficult questions about how and where to draw the line between man and machine.

A.I. developers, their eye on human purchasing managers, are careful not to put to fine a point on the question.

“Artificial intelligence sounds scary. But right now, an AI cannot make any creative decisions,” Cinelytic founder Tobias Queisser told The Reporter. “What it is good at is crunching numbers and breaking down huge data sets and showing patterns that would not be visible to humans. But for creative decision-making, you still need experience and gut instinct.”

Still, with potentially millions of dollars at stake, some mission creep is inevitable. ScriptBook, for instance, a tool it calls Deep Story, which Azermai describes as “the next generation writers room.”

By entering a few parameters (genre, character names, source material, etc.) Deep Story’s algorithm can generate an initial script, which human writers can then use as a starting point to produce a shooting script.

Similar technology is already in use in newsrooms, where A.I. systems sift through documents and real-time data feeds to suggest story ledes and angles to editors and reporters.

Even creative writers have begun experimenting with A.I.-powered story generation.

All of which is adding greater urgency to the questions being asked by the U.S. Patent & Trademark Office, the World Intellectual Property Organization, and other intellectual property agencies about how, whether and to whom copyright protection should be assigned or apportioned for works produced, initiated or assisted by algorithms.

I am currently preparing a larger report on the evolving role and implications of A.I. technology in the media and creative industries that will be published later this year by Penske Business Media’s Variety Intelligence Platform. Stay tuned.

Droit d’A.I.?

The World Intellectual Property Organization this week issued a request for comments on whether copyright, patents or other intellectual property rights could or should be extended to works produced by artificial intelligence. The notice comes as part of a public consultation the United Nations agency launched back in September, and the comments will be used to refine its working draft (pdf) of the topics and questions to be addressed in the next, formal policy-development phase of the consultation beginning in May 2020.

The WIPO consultation parallels a similar process underway at the U.S. Patent & Trademark Office, which issued its own request for comments on the same topics in October. Other countries have also begun wrestling with questions of authorship and ownership in the emerging era of machine creativity.

The formal inquiries are at a very preliminary stage. Both WIPO and the USPTO acknowledge in their requests for comment that they are still trying to figure out what question they should even be asking and how they should be framed.

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USMCA: Safe Harbors Still Safe…For Now

The agreement reached this week on a new — and apparently final — version of the U.S.-Mexico-Canada trade agreement (USMCA, née NAFTA 2), is likely to be viewed as a setback by those looking to rein in the influence and market power of Google, Facebook and other U.S. technology giants.

The new agreement retains language mirroring Section 230 of the Communications Decency Act, despite a last-minute push by members of Congress from both sides of the aisle to get it removed.

The provision, which provides digital platforms with immunity from legal liability for content posted by their users, was originally intended to create a safe harbor where online platforms could find their sea legs in the early days of the internet. But it has come to be viewed by many in Congress and elsewhere today as a sop to the now behemoth tech companies, allowing them to profit from the spread of fake news, harassment and other dubious content unconstrained by regulation.

Retaining the language in international trade agreements could make it more difficult for Congress to repeal of modify Section 230 in the U.S. — as many on Capitol Hill would like to do — by obligating the U.S. by treaty to maintain the current, laissez-faire standard.

“I had one disappointment… [Section] 230, but I was too late coming in on it,” House Speaker Nancy Pelosi (D-Calif.) said at a press conference Tuesday to announce the agreement. “I lost – they had 230 in the agreement, there are some members that wanted that… it’s a real gift to big tech.”

In another win for tech companies, the agreement also includes language barring Canada and Mexico from enacting data localization laws that could force U.S. companies from processing and storing data collected from Canadian and Mexican citizens in those countries. A similar localization requirement in the European Union’s General Data Protection Regulation (GDPR) forced many U.S. technology companies to significantly retool their operations, at considerable expense.

Many outside the U.S. view such “data sovereignty” laws as a way to push back against the implicitly American-ized cultural and economic influence of the internet’s dominant platforms, and see the E.U. standard as a model for other territories. The provision barring them in the USMCA could raise at least a speed bump against their further spread.

Technology companies dodged another bullet could have poked a hole in their copyright safe harbor as well. The agreement retains language modeled on Section 512 of the Digital Millennium Copyright Act that shields user-generated content platforms from copyright liability for content posted by users, so long as the platforms follow a prescribed notice-and-takedown process.

Though once championed by rights owners looking to export U.S. copyright standards, many have since soured on the idea of including DMCA-like language in trade agreements, and the music industry in particular pushed hard for its removal from the USMCA.

With technology companies increasingly viewed as on the run politically — from GDPR and the E.U.’s recent adoption of a new Copyright Directive to rising concerns in the U.S. over their market power and porous content moderation — many in the copyright industries see their best chance since since the DMCA was enacted to roll back the scope of the safe harbor, which they blame for diverting billions of dollars of value from rights owners to technology providers.

The U.S. Copyright Office in coming weeks is expected to release the long-awaited findings from its nearly five-year review of Section 512, which are widely anticipated to include recommendations for modifications of the law.

The head of the Copyright Office, Karyn Temple, this week stepped down from her post to join the Motion Picture Association as general counsel, a move widely viewed in Washington as indication that the report’s findings will be favorable to copyright owners.

As with Section 230, however, retaining the 512 safe harbor in trade agreements could throw a wrench into legislative efforts to amend the DMCA by limiting Congress’ room to maneuver.

In a statement following announcement of the agreement, National Music Publishers Association president and CEO David Israelite lamented the result, saying publishers “remain concerned that the DMCA safe harbors in the agreement continue to devalue creators’ work and protect Internet service providers who should be doing more to prevent piracy and infringement.”

If there is hope for Sections 230 and 512 reformers at this point, it lies with the Senate, where Majority Leader Mitch McConnell, once a vocal supporter of USMCA, seems to have gotten cold feet on putting it to a vote now that a deal has been reached. In a statement Tuesday, McConnell said the Senate will not take up the USMCA until sometime next year, angering Democrats in the House, who want it see it done before Christmas.

McConnell is likely reacting to concerns raised by some Republicans that, in his zeal to claim a legislative victory, President Donald Trump made too many concessions to the Democrats, and Democrat-aligned groups on the terms of the agreement, particularly those relating to worker and environmental protections.

With an impeachment trial of Trump looming, where McConnell will need to hold his caucus together, he likely wants to avoid forcing his members into an awkward position of possibly opposing the president on a key priority until after the impeachment furor dies down — one way or another.

Delays can be deadly in Congress, and McConnell has now set the USMCA on a highly unpredictable path. Even in normal times, the appetite for taking potentially high-profile votes tends to dry up in election years. And these are anything but normal times.

A lot of mischief could still be made between this week’s hand shakes and whenever the USMCA ultimately comes to the Senate floor for a vote.