Yea, many of this I am well aware of already. In fact, I have a series on artificial scarcity and it's problems. The problem is how to get the media companies to finally change and fix the problem completely. Doing the debugging to find out exactly what is happening internally would be a good idea.
I, for one, would love to know where those hundreds of millions to produce Avatar went, for instance. I wonder what slice of that pie was attributed to "Marketing Expense." Turns out it's free to upload a video (like, a trailer, let's say) to YouTube and link to it elsewhere. Go figure.
But insofar as media conglomerates addressing this matter internally, why would they? It's not a problem for them.
Their revenues have been on a steady climb since ever. They know god damn well how little overlap exists in the groups "definitely going to pay for it" and "would consider downloading it for free." But they would have you believe that every "illegal" download represents a lost conversion.
Now there's blood in the water, because "Hollywood" is one of the few industries left in America which still makes any money, and as belts continue to tighten, highly compensated lobbyists (including the most highly compensated, Cary Sherman [1]) will be more and more successful in convincing conservative politicians that they need to vote to protect entrepreneurship and (not really) free market capitalism, and liberal politicians that they need to lend their support to secure the livelihoods of our poor struggling artists. The more sinister elements in all of our governing bodies will jump at any opportunity to introduce legislation which further erodes liberty but allows them to monitor/control that damn Internet thing. All the while, most artists still get fucked by the system, ClearChannel/LiveNation/GoldenVoice are still shitty, evil monopolies, and the executives of major media firms laugh uproariously all the way to the bank.
I sincerely doubt that the change will come from within. Not that there aren't people who work for those organizations who care passionately about the arts, who understand technology and its implications in significant and meaningful ways, who generally have their hearts in the right places. There will be a place for them in the arts economy of the future, but somebody new will be signing their cheques (or bitcoins).
The decision-makers at the top are the ones who give off the impression that they'd prefer to hide in their opulent executive chambers, doing their damndest to legislate their competitors out of existence, and ultimately bleed to death, gripping stacks of money, gold bullion spilling from their pockets, then actually compete on the free market, and perhaps die an honorable death.
The Guardian conducted an interview with electronic music pioneer, brilliant composer, omni-talented artist and all-around genius Brian Eno last year, wherein he stated the following:
"I think records were just a little bubble through time and those who made a living from them for a while were lucky. There is no reason why anyone should have made so much money from selling records except that everything was right for this period of time. I always knew it would run out sooner or later. It couldn't last, and now it's running out. I don't particularly care that it is and like the way things are going. The record age was just a blip. It was a bit like if you had a source of whale blubber in the 1840s and it could be used as fuel. Before gas came along, if you traded in whale blubber, you were the richest man on Earth. Then gas came along and you'd be stuck with your whale blubber. Sorry mate – history's moving along."
Two important points here:
1. This was going to happen no matter what. These firms rose to prominence during an odd period in the ongoing history of our world civilization when ideas, emotions, and artistic expressions could be recorded, duplicated, and feasibly distributed to consumers around the world. They happened to exist at an exact moment on the timeline when it was just cheap enough that it could be accomplished, but just expensive enough that a large firm was required to organize workers, consolidate (what was, at the time, very expensive) equipment, and coordinate distribution to drive marginal costs down. That moment in time is passing. Marginal costs to produce and distribute media are rapidly approaching zero.
2. The inevitability of these changes in market conditions is no reason to vilify media conglomerates. They did just spend about 60 years betting on all the wrong horses, but no one could know that the Internet (and all it entails) was coming. The reason to vilify these organizations lies in their reactions to these changes. I'm not going to go down the list, suffice it to say that much resentment towards labels/studios/production groups/etc. has built up, not just on behalf of artists and others with a dog in the fight, but in average consumers. That resentment just didn't exist a decade or two ago. The "rights-holders" fought the inevitable, and now not only are they going to lose, but they've so antagonized their customers—the only people who may have been able to prop them up long-term if only due to sympathy—that people who previously wouldn't have given a shit are now positively giddy at the idea of someone like Jim Gianopulos standing, defeated and alone, with nothing but a stupid look on his face and all his fucking whale blubber.
I assert that in no way is the continued existence of these lumbering, bumbling, crumbling dinosaurs a requisite condition for humans to have the opportunity to create, distribute, access or enjoy art, in any of its forms, anywhere.
I'll be happy to watch them suffer, and eventually die. And that's on them. 100%.
If I've assumed at least one thing correctly and by "it" you mean producers and studio heads artificially inflating budgets in order to ultimately line their own pockets and the pockets of their friends, I would find it hard to believe that there has been any point in the entertainment industry's history when that hasn't been prevalent.
As to the "why," what, you don't like money? Here, have some more money, now now do you like it? Rinse, repeat.
I'll venture that we're doing the debugging right now, as we discuss this matter. The debugging occurs every time a 14 year old reads about these issues and wonders how the hell it could be possible, let alone legal, for these entities to behave so miserably.
I'll indicate once more that I believe the root cause of this excess lies in these unsustainable institutions and the selfish people who lead them. Leave art to the artists, we'll/they'll figure out how to make money doing it, I'm sure. If you're a failed lawyer or a failed artist or just a plain-vanilla opportunist and you want to run a commodity business, sell canned peaches. Or literally anything else in the world where there's an economic incentive tied to an actual physical object, anywhere but your own mind.
"and the selfish people who lead them. "
I believe "legacy MBA" are the key words. The old MBA courses taught a lot of horrible stuff, including self-interest and control which are probably big factors.
