In Occasional Defense of Piracy: Streaming services getting it wrong.

When piracy of entertainment properties is the only way to improve its own domestic market.  But in no way does this apply to international licenses.  That is a very different set of metrics.

Yar har har!  Hardee harrr har har har harrrr!

Those who fail to learn from the past are... baby boomers.   Only from the boomer mind that thinks it's just too cool to keep up with new developments would a notion of a TV studio acting like a record label make sense. In 1995 having a Blackberry made sense too.  Since these people have insulated themselves in positions of power which no one would dare offer up an incongruous or critical counterpoint, their clunky outdated ideas will drop on top of the existing market only to smash into it like a rusted 1970 Mercury Zephyr into an electric car show. Theirs is the idea of owning a show from top to bottom and forcing an environment where an interested consumer would have to join a paid service just to watch the one good show that's on it.  The days of consumers buying an "album" to get one or two hit songs from it are gone, and it seems as if TV executives don't think that is going to mean anything to them as they try the exact same failed strategy with streaming services.

Nobody... just no one wants this.  Seriously.

If anyone who sees this has seen other stuff written here previously, it would be apparent that I usually take a very negative view of piracy, as it de-values any property and makes it less likely that more of that property will be made.  But in this context, "be made" does not only mean produced, but also be made available to potential consumers/audiences/whateveryouwannacallit.  By not doing so, a vacuum is created which will collapse in on itself, and never is that seen as a profitable venture. Even though these properties lack tangibility in the literal sense, the rules of logistics are going to apply just as they would to any commodity.  Ignore those rules at your own peril, guys.

There is a reason that Nike.com was never the #1 seller of Nike shoes online.  It's because no one goes to a store that sells only one brand of one item.  No one wants to register or any nonsense at a different website for every different product they want to buy.  Amazon made it possible to look "across the shopping isle" to other brands, other items, and alternative products while never abandoning a shopping cart.  Similar thinking in the strategies of TV streaming, forcing potential customers to sign up for an entire service just to get the one thing they want, will similarly kill these studio attempts.  We had Hulu, Netflix, or even (shudder) cable providers, which offered all the programming with little barriers of going in between them as a consumer, push a few buttons, and bam you're watching the other thing you want to watch.  Throw properties behind a paywall of a completely exclusive service with its own user registration and billing cycle?  Yeah, the RVR (reverse value ratio) there is far too big to make it worth it to the point of continuing.

RVR is this but with way more math and specified variables based on regression analysis.  I'd mansplain it to you but your brain would melt.

So why is this even happening if it's so crazy universe ass-plodingly obvious doing so is a terrible idea?  Because baby boomers.  I am serious, baby boomers are desperate to keep other baby boomers running the show rather than allow opportunities to become available to other generations, will literally do anything to stop younger people from ascending to any type of positions where they would have executive authority.  Baby boomers will invent new positions which sound great but don't do anything and put younger people in them, they will abandon entire projects/divisions to get rid of them there youngins, or they will just keep hiring their own generation even if they are way past their expiration date.  The generation that says "there's no such thing as a free lunch" but wants to pay you in "experiences" is gonna keep on truckin' and just say "what the fuck are you gonna do about it?"

The boomer-block.  Why you haven't gotten promoted in over a decade.

They may end up changing the strategy, but boomers won't "learn" anything, they never do.  The reason is actually because the boomer mentality is so conceited that despite having ample opportunity to learn new things when they were new (the internet, corp. strategy, environmental responsibility, logging on to wifi, how to rotate a fucking .pdf), they feel they shouldn't have to learn such things.  They are just too cool for that stuff.  The generation that has such ignorance that finds not until it feels, is not going to avoid a problem in advance.  So like many things boomer, this is another one where the solution is going to have to wait until they run out of other reasons to blame it on until they finally end up having to look into a mirror. 

The show Picard itself isn't actually very good.  This is going to cause a lot of buyer's remorse and trigger a kind of resentment that people on the receiving end of a bait and switch inevitably feel.  It promised so much and delivered a pile of nonsense antithetical to the entire identity of the entertainment entity that is the character Picard and the brand of Star Trek.  This should be no surprise as it's coming from Alex Kurtzman.  They guy who ran the SpiderMan franchise into the ground, who screwed up Universal Monsters so bad it couldn't even get off the ground at all, the mind behind the box-office juggernaut that was The Mummy with Tom Cruise.  Alex "I want a franchise NOW and I don't care what it is" Kurtzman was a bad choice for this.  Also, they've given creative input to Patric Stewart... and he's an awesome guy but he's not a Star Trek Writer.  He's an MCU actor and has been in a rich-person bubble for a long time.  He has so much money he hasn't had to wash his own dishes since before I was even alive, and he's on half-his-age hot trophy wife #3, so, what are we really get from that?  Nothing relatable.

You didn't need me to tell you Star Trek: Picard was gonna suck, it was pretty obvious.

Same has been true with the Harley Quinn series available only through DC Universe.  You see it?  It's not as good as you were thinking it was gonna be was it...?   Sure you're still excited because because of the novelty "ooo animation where they say fuck and tits!  ha! Take THAT people who say cartoons are just for kids... like SPAWN, remember AEON-SPAWN & STIMPY?"  but that will ware off soon enough.  Now imagine you paid for that up front and there's nothing you can do about it.  The warning signs were there.  The delays, and the character design change to full on suicide-squad Harley and away from the original Paul Dini version (which should always be a red flag that someone involved doesn't know what they're doing).  But I am biased in favor of the original version of Harley Quinn and not the Suicide Squad anorexic with a face tattoo played by someone who speaks in a condescending Mary Poppins accent IRL.

Girl you know it's true.

You're Not Helping: Why some fan-based "marketing" is actually not that.

It's still piracy, even under that egalitarian labeling you've put all over it.

The Japan Society, New York.

You otaku should pay way more attention to them than you do.

At The Japan Society in New York on Wednesday, May 17 2017,  there was a buzz in the air; Manga Manga Manga.  How does it come to exist in English speaking markets, what does the future hold, and all that jazz.  From e-book/digital distribution platforms, to content that appeals to international audiences, and a weird look at the activity that is page layout, this was a picnic of forward looking optimism of English translated manga publishers (sans Vertical, because their scheduled staff member has taken a position at another company just a few days earlier, so they couldn't participate),  Well of course it was, you are not going to hear companies badmouth their own industry.  But over that picnic was a cloud of resentful tepidness that will steer the industry more than most people know, and the people who do know, will not care to admit.  It was the black flag of Piracy.

YAR HAR HAR!  HARDEE HAR HAR HAR HARRR!

After the stage lights were off, after the general milling around that happens at the end of these types of things, getting myself into the hushed whispers of people in the know wasn't hard, and it painted quite a picture. 

Within anime/manga fandom there seems to be this notion that if someone translates and then makes available any IP on their own time using their own resources, then it's OK so long as they're not "earning a profit" on it... (just donate to my Pateron "squee").   The thing is, that's just not correct.  I've mentioned it before regarding anime, and now it's time to mention it about Manga.  Scanlations are indeed theft.  No, not theft of inventory, but theft of a license.  Scanlators go out and do what a licensee intends to do, but scanlators don't pay for a license and for some reason don't think they should have to.  Why?  What makes you so special?  Why should you get to do something that other people have tried to invest their money and time in so they can create a business that employs people and actually licenses IP through proper legal channels?  Here are some of the BS answers that I've heard before:

-I'm just making it available for other people, since I'm not profiting from it, I'm not stealing.
Really numb-nuts?  If you rob a bank and get away with $20,000 but the operation cost you $25,000 do you think you still didn't steal anything just because it was a net loss for you?   What you are stealing is revenue that the licensor has to count on to recoup their own costs.

Stick to the plan.

-It's really helping more than hurting.  We're giving the title exposure and that will make it more popular!
Yeah, so you just design our website for us, but we won't pay you, but you will totally benefit from the "exposure" right?  What you're doing is actually hurting these artists, writers, publishing staff, and other employees the most.  You are making these titles available for free to the people who are most likely to buy them in a legally published form.  But now that they have unlicensed versions they aren't going to buy them just to have a second copy.  ...way to go guys.

-I only use them for review purposes, so it helps with "brand awareness" and will generate sales.
What, just because you don't disclose your source for where you got a scanlation means none of your readers will straight up look up where to find it?  (Yeah Anime News Network, I'm looking at you).   This is actually the worst argument of all.  Again, it's something I've mentioned before with AMVs although this time unlike being helpful, it is indeed detrimental.  That is because publishing companies see this stuff.  They see their own title, out there, being reviewed, in (poorly translated) English, and know it's not from a release they created.  You are just rubbing it in their face that scanlations not only exist, but you are now generating web traffic revenue off of something that was stolen from them.

I am sure there are many other arguments that try to paint the scanlators and their accessory helpers in an innocent light, but there is one fact that is indelible;  They are all doing something that they literally have no right to do. They did not license the rights, someone else did, and they are not only stealing from that someone else, but from the entire artistic staff that spend their lunch break, stayed late, missed their mom's birthday, or maybe worked themselves to death (this is Japan) who made sure that said issue of One Piece, Monster Musume, Dragon Maid, Vinland Saga, or anything else, made it in on time.  All that work, and no salary from the international markets that are consuming it at a ravenous pace?  That's enough to make you wanna jump in front of the Yamanote.

There's a Light ...Again.

Manga publishers are actually the last licensees of Japanese pop-culture to experience the bootleg hoards.   This is because paperless-publishing is new development.  The first industry segment to have to deal with this was actually the home media market.  VHS was easy as all kinds of fuck to copy and yes a genlock was needed but there never seemed to be that much of a shortage of fansubs out there.  DVD hits and not only does the entire VHS business go kablam, but now anyone and their idiot friend who just finished Japanese 201 in undergrad thought they could subtitle anything and send it out there on them interwebs (and they did).  And you could argue that anime as a watchable commodity is still something that goes on, yet most of the companies that made it that way are no longer around for failing to capitalize on future developments (CPM,. AD Vision, Anime Villiage, hell even Manga Entertainment might as well be on that list). Before that, it was music that suffered the backlash against bootleggers, with "real" fans refusing to buy SM (Son Mei) CDs of their favorite anime music, although this was back before the recession and when having a job meant you could buy things other than food and payments to your student loan.

So now it's printed media's turn.  Will we see a decimated landscape of former Titans of the industry before the new adopters create and support something like "Crunchy-Scroll" ...you know, something like an unlimited library of licensed and translated manga from a multitude of labels made available to subscribers for a set monthly fee (maybe with a few premium one-shots sold digitally for a little extra a la cart?  Yes, yes we will.  Because if history has taught us anything it is that companies that have found a big cash cow are really slow to change and that goes doubly so for Japanese companies. Their strategic planning moves at a glacial pace and their implementation is always a day late and a dollar short.  This will lead to regression and insular strategies that ignore international markets and as such, may end up producing nothing but titles that resonate exclusively with a Japanese audience.

Big fat I told ya so.

Human psychology says that there will always be bootlegging idiots who think their not stealing by creating scanlations, but they totally are.  What the industry needs to do is be open to third parties that maintain digital subscription services which are ubiquitous to the point where it's actually easier for 90% of the fanbase to just get their manga fix from that source than it is to download it from a bunch of people who's translation skills aren't strong enough for them to get a job professionally doing it, and so they make scanlations to try and be cool.

After some "off the record" talking with people at this past event I don't think a single company has any plans to do so.  Don't fear the reaper kids.  Or the pirates.

Garage Kit Renaissance: MakerBot opens a window into otaku merchandise

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A look at the Good Bad & Ugly of Santa Claus Machines in the anime landscape;

Properties too obscure to justify any mass-production merchandise are now the potential cash cow of a new global market

MakerBot (recently featured on The Colbert Report) isn't the first Santa Claus Machine to exist out there in the great big world, but with its high level of public accessibility (the low price and small size) and its support via the Thingiverse community of design, it is the first device of its kind to seriously exploit avenues of application that go far beyond engineering; applications like character goods and branded merchandise. Where once it would have been 99 different kinds of impossible for a small company to make a 1/10 statue of an obscure manga or anime character, you yourself as a consumer now have the ability to make it right in your own living room with the likes of MakerBot. Anime and manga characters and properties too obscure to justify any mass production of merchandise are now the potential cash cow of a new global market for Japanese pop-culture goods, with no in-process time, and no costly global distribution network, served only by software and JIT end-user manufacturing.

Anyone who has followed this blog knows I usually come down on the side of rights-holders when it comes to technology that can be used to proliferate media. But that doesn't mean I am touting MakerBot as some destroyer of worlds for the Japanese animation and Asian pop-culture character goods and branded merchandise market. This development has some great potential for forwarding the progress of fandom while contributing to the health of creative companies as well (how often does THAT happen?).

The Good:
D&D applications aside, you can't tell me that as an anime fan you never wanted to see figures made of characters which you like, but Kaiyodo never made them because the only people in the world who would buy them were you and 2 other guys. This has been a major imbalance in the otaku world for a while; Anime otaku demand some of the highest quality and detail in the figures they purchase, but that has pushed production costs through the roof, ensuring that companies would take very careful studies of how many they could expect to sell before jumping into production thereby choosing only the highest of high-profile character licenses. The result was a limited market with low profitability, and the subsequent evolution of the Garage Kit. G-Kits were an interesting thing, and one could easily tell if you were getting a real licensed production or a bootleg knockoff made in some shady Hong Kong warehouse somewhere. I still have a bunch of my old G-kits, and their appeal was that you not only had access to characters that were relatively rare, but the customization levels started with painting options and progressed (via skill level) to changing poses with acetylene torches, sanding, or pinning on other parts. Their availability was limited, they were tough to track down and if you were going to make them from scratch involved some nasty chemicals.

Characters from different universes can now be put together in ways never before possible outside of a professional sculpting studio

Like digital video opened a new universe of fan-subbing, MakerBot is going to change otaku culture on a quantum level. Now, you can get hyper-creative with not only the design of any figure, but also in terms of characters crossing intellectual property lines. Characters from different universes can now be put together in ways never before possible outside a professional sculpting studio. Ranma in a StarFleet uniform? Not a problem. Vegeta punching out Spider-Man? Easy peasy. The mechs from Macross and Gundam having dirty dirty robot sex? Hell, that's probably half rendered by now. The creativity offered by this design software will allow for unique character goods to be made by the end-user, who will have a willingness to pay if it means they can get exactly what they want. Part of the fun with G-kits was also that you could paint them differently from their original designs (unlike PVC), and one of the best ever was a one of a kind setup we sold at Anime Crash, which consisted of 2 of the same Rei Ayanami figures (16 inches, standing, original white plugsuit w/ longinus spear) where one was painted normal and the other was painted photo-negative. It was awesome and the set sold for $1,000.

See, someone actually already thought of that... don't click on it.

Characters that would have been too costly to manufacture merchandise out of due to limited demand can now have digital blueprints made and sold to key consumers on a global scale, allowing them to purchase and then manufacture what they want. The overhead for a company selling these would stop at the fixed costs of design, with no variable costs what so ever. Even brick & mortar retailers can stop worrying about inventory issues for these pieces, when they can simply create products on-demand without ever dealing with over-stock and the associated shipping and storage costs. "Limited Edition" and "Sold Out" in terms of these figures and other types of merchandise will become terminology of the past.

The flurry of change doesn't stop with just animation and comic properties becoming more available as figures, but will also effect independent artists and creators who will now have access to a global market for their figures by skipping the cost-prohibitive stages of production and distribution, going straight from design to sale. As this technology develops and machines which can produce multi-color products become more prevalent (they exist from other technology companies but are very expensive), many of the barriers to entry which existed in the character-goods/figure/merch market will cease to exist. Waste and the cost of doing business will no longer keep creative artworks from being made available to the public. Just think of the money to be saved on shipping alone.

What would have been one single unique figure ...is now millions of potential pieces

The Bad:
Just like with Garage Kits it's a nebulous area when it comes to what this means for intellectual property rights. Sculpting a figure of your favorite character out of whatever material yourself, and putting it on your shelf doesn't technically violate a copyright, but that won't stop a company from interpreting that as a lost sale and hating you for it. This was never a problem because the time effort and skill to do this were only possessed by so few people that it didn't dent their customer base. With this new technology, we're getting closer to that event horizon tipping point. Although to properly design a dynamic character figure as a digital blueprint for the MakerBot would still take an insane amount of skill and time, the current dynamics of technology make things much more impacting. What would have been one single unique figure for the garage kit maker upon finishing is now millions of potential pieces in the new digital form thanks to the ability to transfer/copy files across the globe in seconds. A one time sale of an anime garage kit for $3,000 at an auction somewhere... companies don't bat an eye. But a MakerBot design of that same figure that's downloaded 1,000,000 times across the globe over 6 months? That's a big deal, and the rights holder is going to feel screwed.

Hypothetical situation to help you better understand how this is straight up bootlegging: You take one of these things to an anime convention and start producing made-to-order figures or merchandise (cups, rings, toilet paper holder, whatever) featuring popular characters. Congratulations, you're breaking all kinds of copyright law and are gonna get sued. The Artist Alley operates in a quasi legal space due to selling things at very low volume and combining original characters into their offerings. Here's another way to think about it: If you had some OEM factory make a bunch of Pokemon figures and then hauled them somewhere and sold them, you'd be a bootlegger. The fact that now the factory is in some little box on a table filling single orders doesn't change that. Small retailers who live day by day, and who can barely make their rent payments are going to abuse the hell out of this, and stopping them from the outside is going to be quite difficult.

Now, combine this issue with the possibility that these devices will proliferate to something like 1 in 20 American households (less than Netflix proliferation), and you're dealing with another huge problem all together: Software piracy. Think about it, the utopian era of zero inventory and no shipping costs for retailers is going to rely on the ability of patent and copyright holders to control who gets the digital blueprints that these machines use to make stuff. Without an airtight iTunes-style network where these designs can be properly sold, licensed, and distributed by their owners and monetized accordingly, the internet is going to become a free-for-all where protected IP would stand no chance. Need a specific tool made right now which is patented by not-you? Just torrent that design and no one will ever know. Maybe you're a Ctrl+Alt+Del fan (really?); Just download that design for that awesome figure in that awesome action-pose that some fan made and put on the internet, and you'll have a great product based off of characters that will never send even a fraction of a penny to their original creators.

Her baby dun got bootlegged down to Peru.

the easier you make the legitimate distribution channel... the more people will gladly become paying customers

Moderate DRM, first mover advantages, and proprietary software/materials are going to be useful tools and strategies to combat this problem, but the number-one way to limit this kind of potential IP anarchy is to set up very strong barriers of convenience. What's that you ask? Netflix and iTunes work because going and torrenting that shit is too much trouble for enough people, and the result is that a stable customer base is created. Constantly changing code, or requiring that these machines use cloud computing to function properly is only one side of the coin. The more important side is; the easier you make the legitimate distribution channel to use compared to any alternative, the more people will gladly become paying customers.


The Ugly:

Yeah, weirdos who get a boner for a blow-hole are still out there

So you've come up with a 3D design that is of a 4 breasted Sailor Moon performing fellatio on a Totoro while he gives a rim-job to Inu Yasha and Sasuke as they kiss each other... the furry version! Oh, those furries... you almost forgot about them in all this mess didn't you? Yeah, weirdos who get a boner for a blow-hole are still out there, and they have enough cash and enough computer skills to make something like that a reality. So think of every possible pop-culture piece you could make with this thing, -and- now come to terms with the fact that there will be an X-rated furry version made out of literally everything you just thought up, where Kirk is like, an Ocelot or something. This is section is going to trudge into some nasty territory for marketing people looking to protect their brands as well as enter the arena of establishing real legal precedents in American law.

From a marketing standpoint, if you work for Ghibli and come across something like the above mentioned, you're going to want to smash it into the machine that made it, and then smash that machine over the head of the freak who designed it. But, unless this person is selling/distributing that piece/it's design or charging others to come see it, there is no legal recourse in the USA that you can realistically expect to take. If he carved the thing out of wood or made it as a sand-castle or ice-sculpture it wouldn't break the law, so without legislation specifically regulating the use of "replication machinery" (a term that has yet to be legally defined) there's nothing a rights-holder could legally do. The only legal issues in such a case would be in regards to distribution of obscene material if that raunchy sand-castle was in full view of the general public. But I'm pretty sure the Skunk-Fuckers* wouldn't be quick to display that kind of thing in their front window. ...hopefully. (* Link is not to actual skunk fucking or the fucking of skunks).

Laws applying to this machine and its capabilities in terms of subject matter are likely to be ineffective even if they are drafted into legislation, as the obstacles to making them realistically enforceable, are A) If the US constitution protects your ability to make anything you want from a block of wood with a chisel, then it also protects the same ability to do so via plastic and this machine, and B) it would require a government agency to monitor what you make on these things in your own home, bringing up some Supreme Court level privacy issues (well, any few that are left thanks to George W. Obama's extension of the Patriot Act).

Now, imagine something worse. The kind of stuff that would go far beyond what got Christopher Handley into trouble. I've always had a problem with the notion that drawn, sculpted, or otherwise fictitious depiction of something illegal is the same as a photo or video of the actual thing happening itself. So if someone uses this machine to make some pretty nasty stuff, we might see more court cases involving the notion of art as protected speech.

The fact of the matter is, that once some weirdo gets a hold of this thing, we're bound to see some crazy fucked up shit at some point. But the same thing happened with the internet, and even with Rule 34, the world didn't end. The kinds of people who are going to make the nasty stuff are probably not going to have that many people over to see it. They're gonna be messed up anyway with or without this machine, so let's just take it as a side-effect that is bound to happen.


Conclusions:
The proliferation of MakerBot and machines like it is going to happen and that's that. If anyone should freak out about it, it's Wal-Mart, everyone in China, and UPS. Like any emerging technology, it's going to take use by early adopters to determine how it will develop as a part of modern life. I want one myself, just so I can make my own personalized coasters and poker chips.

the Japanese company doesn't see a whole lot of $5 sales where none existed before, they see a whole lot of $25 losses

I worry about Japanese companies accepting this as a viable channel for the global sale of character goods. They're not going to. They tend to measure loss in such a way as to simply create unrealistic pictures of how markets operate. If, for example; "Character A" has a figure out there in stores and that figure sells for $30, and "Character B" doesn't have a figure because B isn't very popular, but then this machine comes along and the digital blueprints for figure B sell for $5 each; the Japanese company doesn't see a whole bunch of $5 sales where none existed before, they see a whole lot of $25 losses because that's what the price difference was. Never mind the fact that Character B was never going to get a figure otherwise, or that the sales are profit-generating since there was no overhead... it's going to be felt as a loss, no matter how loudly the math says otherwise. Video and book publishers have a tendency to see one torrent or download as one lost DVD sale, and miss out on other opportunities because the square peg of their product marketing doesn't fit into the little round holes of niche markets (though sometimes this is out of their control due to the high costs of reaching those smaller markets). Changing the thought process of the right decision makers could prove to be a very tough task.

There is an episode of Oedo Rocket where the characters find out that a play they put on has been surreptitiously recorded and posted to a youtube-type website. It's an anime inside joke and they feel a sense of loss and violation, and to an extent that's totally justified; people who didn't buy a ticket are seeing this and all that. But what escapes this mentality, is that now people who never could have possibly bought a ticket due to geographic distance now have access to this material -- and a portion of that group will be willing to buy it as a product. While that youtube example can't show an effective example of this monetizing process, the MakerBot is probably the closest thing yet to making that an achievable business model.

I'm working on the proforma now, so if anyone is interested in a micro venture-cap raise for an idea involving this (my idea, it's awesome), let me know.

Where do we go from here: Manga consumption in a paperless world.

Omens, Portents, Forewarnings. Never are they understood objectively until after the fact. Such are the oddities and anomalies that are being observed in the development of the evolution of paperless media products. From novels to fine art, technology makes physical distribution a nonexistent entity in a market where consumption occurs via network service. As pointed out in a recent article in Forbes Magazine, the constraints of capital are now quick to lose almost all stature as barriers to entry into “publishing” as we know it. As with many historical examples, resistance to change by the large incumbents force younger more nimble companies to spearhead their own initiatives, making little progress in terms of effecting macro changes. A small label like Media Blasters could never hope to spearhead a new format such as Blu-Ray but could reap the benefits of such an option being available.

While a fan at the NBA Finals may feel very connected to the game as they sit in their ring-side seats, the reality is that their presence makes no difference to the outcome, because if it did, they themselves would be on the court, directly participating. Such is the case with manga in the USA. All the whining and bellyaching about how the “industry” is run by “old men” being the problem, fail to take this into account.

These new formats, as emergent technology, are currently generating dictionaries worth of new contract law terminology and changing the very structure of binding agreements in licensing. To expect Manga to take the lead in such efforts is seriously overestimating the ability of licensors and publishers like Vertical to literally lead a multi billion dollar industry by the nose with their initiatives. Impossible and foolish come to mind when thinking of it that way. Small airlines don't build their own airports, pro-golfers don't build golf courses, tire companies don't build roads. Publishing companies (smaller ones at least ) cant be expected to create dominant proprietary formats for digital media consumption... do they have a whole lab in the back that we didn't notice until now? Nor can these companies be reasonably expected to take what is a substantial risk in paying for a license of a digital format which may or may not generate revenue, while at the same time taking time and money away from their current print format (people can't work on 2 things at once).

The effect on revenue that scanlations have is devastating, and if you think it’s not, you don’t know how this works. The cost of the license itself or even (proper) localization is huge, and that license being stolen by the scanlators, who take that property and put it into the market means that recouping the staggeringly expensive process of putting out a printed manga and distributing it for sell-through revenue at net terms, becomes impossible.

Enter the Kindle or some iPad/Droid app or whatever is going to become dominant, and you have the magical cure for sell-through for struggling publishers. Retailers hate this, because they take advantage of returns to the point where they would gladly put a label out of business if it means they can gain any points in the next quarter. The accounting difference between inventory and in-process inventory is huge for a retailer. So, if publishers never had to print another page again and continue business as usual, they would see it as the best thing since Gutenberg.

There’s a snag there. Did you catch it? “Business as usual.” These formats require new legal contract terminology, half of which doesn’t exist yet, channels and accepted formats that have yet to materialize, and a new set of barriers to entry. That last one is important, since all you have to do is look at youtube, podcasts, or deviantart to realize what would happen to publishing if there were no barriers to entry. Look how hard it is to wade through the seas of truly terrible productions to find ones that have not only genuine talent behind them, but (more importantly) the resources to be consistent, on-time, and well presented. A publishing marketplace where there is no macro-flow of customers towards legitimate works means that the shittiest fanfic abominations would stand at equal level with professional works by professional writers in terms of market presence and availability. Barriers to entry in the media entertainment business keep out a vast amount of crap that would otherwise choke the channels of product awareness and necessary marketing. There's a reason FurNation Press never got it's SKUs into Barnes & Noble (or Diamond for that matter)... so do you really want to have to look at 5 deranged versions of Halo where everyone is a gay ocelot before you get to something by the next Neil Gaiman? With no financial risk what so ever, anyone can publish anything, which is not really a good thing.

In order to jump the last chasm of adoption, these new products and formats must be one thing over all else. More convenient than any alternative, including whatever is happening now. Look at the electric car: Even if electricity was free and the range was the same, the 30 minute charge time vs/ a 90 second fill-up time for a gas engine creates such a Reverse Value Ratio (yes RVR is a real formula), that people still would not adopt electric cars because... seriously, fuck 30 minutes.

There are always multiple ways around this issue. If you can’t speed up the time, electric cars could partner with every free commercial parking space around, so that the 30 min charge now happens when you’re at Wal-Mart or wherever and so you don’t notice that 30 min because it’s no longer a dedicated use of time (ie “they were gonna be parked there anyway” so no big deal). We’re close to finding the necessary “anyway” for manga.

This is a good sign:

From the Sandvine Global Internet Phenomena Report for Spring 2011 (p 6), you can see that Netflix (a single media company) is producing a bigger footprint than torrenting anything. Although the true total average difference is 1%, the fact that this even is happening is a pinhole snapshot of this tenant of Consumer Behavior ringing true. The path of least resistance is going to be a legit commercial one, and that’s going to win the day if it can continue increasing the convenience factor. Netflix is dependable, faster, easier, and an acceptable cost (they have higher than break even WTP). That’s not true for every consumer in America, but it’s true for enough people to get that company into the positive side of market equilibrium.

It shows that it's not all about getting it "for free" ...rather it's about getting it "easy" - which is not (always) the same. Additionally, with the high amount of intense social gamification behavior indicative of the manga/anime market, it's also about getting it "first." This "path of least resistance" in marketing goes for any kind of business, and the different degrees on the scale of decision making are unique to each market. The American manga market is indeed a unique mix of ingredients that make up these "tipping point" degrees between consumption via torrent or consumption via service. Those specifics will have to wait for another time.

And before anyone wants to get technical about “BitTorrent” nomenclature:

That’s on p. 12

Mobile access is another big indicator. I like to look at the Baltic States and Scandinavia for wireless usage info, but I don’t have that handy so here is South America:

Sandvine p 12

That bump in Sept 2010 is probably a result of the ruckus over the Chilean miners, but real-time entertainment and web-browsing can get mashed together when you think about marketing factors that have to do with the possibility of consuming manga (legally) via wireless device. This means that as a dominant format emerges, and non-paper manga is available at a reasonable cost to access, digital device manga will be a viable product, even if the rate of piracy through scanlation remains the same as it is now. The disappearance of physical media will drop the costs of doing business to a level where publishers will actually be able to operate properly, despite the damage done by piracy. This is currently how big publishers and big Hollywood have been able to stay around despite piracy (and terrible titles); make enough successful properties to carry the others. But that type of arbitrage activity in today’s media markets which still require manufacture and distribution of physical products (books, DVDs) requires levels of capital well out of reach for the few remaining US manga publishers.

This means the charge for digital media is going to be led by bigger players like Comcast, NCAA, WSJ, AOL-HUFFPO, Fox News, NY Times, and other companies that fart more money in a day than a company like Funimation sees in a decade. So until these channels solidify, being in the manga business in the USA isn’t exactly a peachy place to be. Despite a rosy looking future in terms of generalities, we’re still a ways away from being able to pop the cork on the Champaign. Right now, the publishing industry is about to enter a state where it will look like a lava-lamp in a paint mixer. Things are going to get shaken up and it will take a while for elements to separate and form the shapes of this segment of the new media horizon. Manga will be there. Paper won’t.

Make no mistake, from otaku demographics to creative tastes, there are still many factors that I have not addressed, but they aren't here because we're looking at the big picture of publishing as a business, to which manga is only a small part of... and you've had to read too many words already.


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The Prefect Drug: Why the iTunes model will not work in curtailing online manga theft.

:
Looking at some of the data available for the Japanese domestic market, it’s easy to be drawn to the conclusion that manga will soon see a significant portion of general revenue generated through distribution to customers via mobile network sales, through a combination of subscription service and pay-per-download sales. A little further down the line, and that mix will reach a 50/50 split when stacked against printed distribution and digital distribution. There is a significant upward trend when you look at traditionally printed media (manga and non-manga) from 2007-2010. The data is proprietary so I’m not going to repost the original here and my own infographics are part of an ongoing project, so no freebies, sorry.

There will be trade-offs of course, there will have to be a bigger revenue split between publishers and telecom networks, but through that new relationship the cost of physical printing will be jettisoned, so revenue actually goes up. The implied decrease in WTP for a digital version of a manga vs a print version that would be present in the USA, would be much more muted in Japan; a combination of the trust that Japanese consumers can have in their mobile technology and service providers actually working better (they totally do), and the fact that manga itself has always been seen as much more disposable even when it was physical media, and so the “fear of loss” that keeps people buying actual albums instead of downloading music from online services, rears not its ugly head. The transition from printed media to a medium of both printed and mobile distribution, and finally a dominance of mobile distribution with high end printings still being sold, will happen relatively smoothly for the Japanese market. Who knows, we might even see streamlined preview and download stations in the corners of all the convenience stores that dot the Japanese landscape.

So much like iTunes, and the later proliferation of many other commercial music services has made music piracy a less viable option for many consumer groups, keeping it profitable enough to continue as an industry, can a similar distribution channel for manga be far behind, and stop the theft of manga and make it a more viable business to be in?

The problem is, this isn’t going to change very much in terms of what’s happening with manga in the USA. That’s because of a perfect storm of factors which all must be adequately addressed in order to stop people stealing manga from Japan. Let’s apply the old consultant standby of the two by two matrix:

(I don't give it away for free people).

This isn’t a standard 2x2, where the factors are counter-related, but rather a larger look at a macro whole, each segment of which is in and of itself an entire business universe of operation. Looking at these factors (hopefully) can highlight the lopsided strategy that’s being employed to combat the situation. However from the vantage point of those employing such strategies, the tactics are not lopsided... and they are correct. The tactics are not lopsided, the market or “field of battle” is itself very lopsided, and the vacuous dark abyss that seems to consume all efforts and show no progressive change. A singularity, black hole, capable of sucking off and compressing the skin of all the efforts done not only directly against it, but to other sectors thought separate from its influence. Bonus points if you already know which factor I speak of.

Mindset, has been and will always be the greatest asset and liability to the success of Japanese entertainment media in America. This quadrant, being labeled as such, wears a deceiving veil of simplicity and smallness of form, but in fact, it is an area as vast as an entire market itself, taking into account aspects of sociology, economics, cluster-demography, politics, access to wealth, and age based psychology. Try to take that all in, and you realize the immense undertaking that the strategy and follow through of public relations, is something that would require a division led by a Chief Engagement Officer. Something no company is prepared to do logistically, financially, or ideologically. It is in fact the barrier of ideology, which will prevent any company from undertaking such measures, since any positive progress in abating manga theft is beneficial to their competitors as well, making those competitors “free riders” in the eyes of management.

There is no current independent body inside America that is going to undertake this, and unless the manga and anime market increase in size by about 10,000%, there may not be one any time soon. The type of problems they are up against can be seen in the case study of the Son May music label and the grassroots anti bootleg marketing of the 1990’s. Being on the front lines of that operation, it was amazing to see emerging otaku demand anime music as cheap as it could get, and then swing to a high willingness to pay for legitimate releases once they were successfully educated as to what SM actually was and how it did actual damage to the anime industry as a whole.

The “Mindset” quadrant in and of itself can actually be understood as an operational triangle, with the 3 angular nexuses of (Cluster) Demography – Economy – and Psychology, connected by the three communication mediums of Communal Exclusivity – Gamification Behavior – and Consumer Behavior. These are in tern all operational maxims that have been established by business analysts and strategic consultants form here to Kalamazoo, with their unique operational variances. Additionally, the hard data and direct knowledge needed to correctly interpret and apply that data are all very necessary in not only understanding this previously “unwinnable” quadrant of the above Manga Matrix up there, and they are all here behind the curtain that is my hard drive. You out there in cyberspace get the simplified version, because the real deal is going somewhere important where it will be seen by important people.

Like DaVinci would mix up his designs to prevent copying, so too have some components been moved around... or have they?

Unlike the S.W.O.T. analysis which is intended to condense broad expanses or the F.O.M.I. analysis (a derivative of M.E.C.E.) designed to narrow down sources of negative cash flow (something the English language manga industry is grappling with), this method of looking at things is designed to allow us to effectively get a grasp of the size and shape of a strategy that’s going to be needed to approach the problem. To get all metaphor-like; doing this is like doing an exercise to properly know not only the size of a container needed to carry a certain volume of water, but also the proper shape it’s going to have to be to fit into a very particularly shaped spot. This is very much a “measure twice, cut once” approach to the daunting task of American otaku customer engagement. This is very important, because the world is full of examples of how much damage can be caused in failed approaches to customer engagement.

It’s also a pipe dream of sorts. For reasons that we have covered here and for other obvious factors out there, some change in the way things operate isn’t going to be happening any time soon. ...or is it? Well, I am working on something for someone regarding this after all.

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Tolkien-Temper-Tantrums, Katsucon Catastrophe, & Funimation vs The Congressman’s Daughter: 3 kinds of "Doing it Wrong"

The Streisand Effect is something that can rarely be used as an effective marketing tool. In the times it has had demonstrable positive effects in marketing, 90% of those instances have been due to retroactive strategy changes, where the instigating party simply comes to terms with the extra attention and does what it can to take advantage of the newfound publicity, rather than continue to fight a losing PR battle. Almost never, can a marketing strategist plan and then successfully implement a Streisand Effect from the ground up. Hence;


#1 Tolkien Temper Tantrum:
Recently, there’s been an anime related blip on the Streisand Effect radar in the form of a fan-produced button with the slogan “While you were reading Tolkien, I was watching Evangelion” that was taken off of Zazzle.com at the C&D behest of the Tolkien Estate. This non-infringing product had long since exhausted its life-cycle in terms of pop-culture buzzmetrics and relevancy in general. It was just another microscopic fleck of dead skin on the pile of old-meme that was the internet from 2009 that no one cared about. Suddenly, in steps the Tolkien Estate with a behavior which violates the unwritten social standards of internet pop-culture community, and boom; it’s viral in the blogosphere. The result being that now, someone like me, who never knew about this has; A) found about it, and B) based on the behavior of Tolkien Estate I am now very motivated to make something for myself with this slogan on it and proudly display it at the next convention I go to. I think you should too.

This is news via BoingBoing.

[Added Mar. 7 2011]
Since I wrote this a while back (these posts are usually written a number of days, sometimes weeks before they're posted using Bloggers ability to schedule auto-uploads), there has been a development in this issue. That development seems to be something along the lines of the Tolkien Estate coming out and stating that they have had no involvement in this situation, and leading to the conclusion that it was Zazzle.com which pulled these things of their own accord. Something later confirmed by Zazzle.com via BoingBoing...apparently. However, in Giro.org's post containing the original Zazzle.com emails, the words "We have been contacted by The JRR Tolkien Estate" clearly appear in their correspondence dated Feb. 23 from "Mike" at Zazzle.com. There are only 3 possibilities as things stand:

1) Zazzle is lying. They were never contacted by the Tolkien Estate, and took it down themselves because someone over there has just learned what copyright infringement is and is taking it too far (see Katsucon Catastrophe below).
2) Tolkien Estste is lying, and backing off real fast to avoid a wrath of the internet type incident, either asking or leaving Zazzle to take the PR hit, with the message that it's Zazzle's doing and not Tolkien Estate, and Zazzle is complying since they... who fucking knows.
3) Giro.org is lying and this has all been concocted as some insanely ballsy method of publicity in the hopes of... who fucking knows.
4) My own opinion/desire is a combo of 1 & 2, being that Zazzle.com knows exactly how this works, and was able to explain to the Tolkien Estate how they might just become the Cook's Source of 2011 in terms of internet wrath... and so they both are back-peddling the hell out of this.

Either which way, I'm done caring about it at this point, thought I still will be wearing a home-made version of this thing to the next con I go to.


#2 Katsucon Catastrophe:
Now, when it’s really “Fair Use” like the above, I am always supportive of this kind of thing and fostering all kinds of creativity. This support usually is something I often extend even when it’s technically over the line of the copyright issue. There are many examples where it’s more beneficial to allow the activity to continue rather than to force a confrontation. Case in point; the Katsucon Artist Alley disaster of 2011. Let’s get the technicalities straight; Most artist alley transactions where people buy things from the artists/vendors are in actual violation of copyright since the character rights are clearly being infringed upon. The fact that an artist drew/painted/sculpted an existing character or a combination of original character in an existing profile, by itself isn’t infringement... until that piece is sold for money. In that case the rights holder is entitled to a portion of that sale, and if there is no existing agreement in place, they can take legal action.

That doesn’t mean shutting down the artist alley is a good idea. Unless you’re selling a hundred pieces of Naruto fan art at $10 each, the small transactions of an artist alley are not something that licensees should think are worth the customer alienation that comes with wielding the bludgeon of "enforcement." But like a college undergrad who just learned something new, Katsucon blundered into this big time due to a lack of real-world knowledge. My own notion is that some staffer (who is probably a pre-law student somewhere), realizes that there’s a technical copyright violation going on, and institutes an over-kill policy, demonstrating a serious lack of knowledge of how this works. I could be wrong, but for some reason I don't think I am. Knowledge is information + experience. Guess which part of that was missing from the thought process of this Katsucon genius... Now because this mess’s Streisand Effect brings unnecessary scrutiny to artist alley activities at conventions in general, it can only lead to problems. Best case scenario is that this just goes away by the time convention season gets into full swing.

My Katsucon 1 (1995) con badge.
Katsucon, I love ya, and I was there in the beginning, but you better not fuck this up for everyone.

#3 The Funimation vs The Congressman's Daughter
Then there are the straight up a-holes who are so steeped in gamification behavior within the fan community, that they will actually hurt the anime business to get e-peen points. While the targets of the litigation aren't the worst offenders, Funimation suing the 1337 to set a proper example of “yes, this is stealing, and this is what happens when you do it” is not surprising, and is only unfortunate in that it takes capital away from Funimation's budget that could otherwise be used to get more anime out. Anime as a commercial product has been seriously hurt by attention whores who make terrible translations and post them online before legit streaming sources make them available merely a few hours later. These lawsuits will win (if legal procedure is done properly) because the law and politics are very friendly to copyright and the billions of dollars it pumps into the economy. Here's a bit on that:

The US Government is in love with Copyright. Some relevant background (Napster case study): In 2001, Napster tried the ridiculous failure that was the “Million Fan March” on Washington DC, as a part of their platform for a complete revision of copyright law, the end goal of which was to make p2p media sharing legal under fair use, and thus clearing the way for Napster to operate on a very large scale, immune from civil actions of music labels and artists. This event, combined with the activities of the Napster D.C. lobby team of Manus Cooney and Karen Robb, was called the “Congressman’s Daughter” strategy. It was the idea that if a member of congress just had their kid show them how Napster worked, they would have some kind of awakening and Congress would make sweeping changes to Intellectual Property laws. Napaster actually put off negotiating a deal with music labels in order to further this strategy, thinking it would work, and then they wouldn't have to deal with labels at all. But the problem is, Congress had just changed I.P. laws, and not in the way Napster wanted. This was the 1998 Mickey Mouse Protection Act, extending the period between creation and entry into the public domain to well over a century in most cases. The law was further cemented into an indelible presence in American jurisprudence with the later 2002 case of Eldred v. Ashcroft. Pile on top of that the DMCA getting through the Senate unanimously in1998, and U.S.A. participation in the GATT Treaty on copyright issues, and it should have been painfully obvious to anyone that this hoped-for outcome of Napster's wasn’t going to happen. The U.S. Government has consistently realized that patents and copyrights are among the top 5 contributors to the entire U.S. economy, with the biggest players in intellectual property issues being Pharmaceutical, Agri-business, and Software entitles, along with Entertainment Media. They all have DC lobbies too... really really big ones.

"Bubble? What do you mean Bubble? Nah, this is totally gonna last forever!"

So the F-1337 don’t have the law on their side, and can only hope public opinion becomes strong enough to serve as a motivation for Funimation to back off, or see if they can sidestep on a legal technicality. And for those of us in the business, it’s very painful to see idiot fans supporting thieving activities because of some perceived entitlement - the "right" to watch anime. It’s not really 100% their fault though, there just isn’t enough information getting through to people to dissuade them that; no, your American otaku demand for HD video perfectly translated commercial-free simulcast foreign TV programs at no cost to you is actually unreasonable believe it or not. The problem is, the way we live doesn’t make that easy to realize. For example; when Verizon was advertising high-speed internet access with the tag-line “download thousands of songs,” they were really hurting things. Downloading 1,000 songs from iTunes is kind of pricey, and Verizon knows that people aren't going to be paying for all those downloads, but they are going to perpetuate the entitlement anyway. The entitlement of “well I just bought a big computer and am paying for broadband, so that’s my investment, and that’s all I should have to be out of pocket” seems to be enough to justify not actually paying for the entertainment media they consume. Again, an internet entitlement notion that only is shown to be completely absurd when applied to a real-world example; “Well I got up out of the house and paid for my subway ride here to the movie theater, so that’s enough of a reason for me to get in without a ticket.” Yes, it’s just that stupid. And no court in the land is going to have sympathy for people who buck the system that greases the wheels of politics.

In this last case, the party who’s “doing it wrong” are the fansubbers, the torrent hosts, and the people defending what they do. When you dabble in piracy, there’s a risk that they’ll nail you. The internet-rage from the ignorant otaku masses is creating a pseudo Streisand Effect in the regular channels, which is just a reminder to the rest of you to play by the rules or risk being #1338.

Fools, You Know Not What You Do: How American Otakus are going to use Tanaka's RIETI Report to make themselves look stupid.

As much as I love statistics and business and the like, I can’t go into the veracity of this report as much as I would like to, but rather make the following, zero-sum, blunt, inescapable point to the American Otaku out there because I know what you're thinking:
NO.

Just stop right there.

Headline: Internet Piracy Boosts Anime Sales, Study Concludes. Reality: No. Well maybe, but just in Japan. With American otaku already loading their own petards for a strong self-hoisting with the strength of all the self-righteous uninformed opinion of a birther, one can hardly expect my efforts at damage control to be of any effect. These people who hurt the anime/manga market outside Japan with fansubs and scanlations will see what they want to see, and think they do no wrong. The happily smug reaction that American Otaku (Clarissa at AWO, I'm looking at you) will feel in their misplaced vindication is no doubt to be so thick, that no light of fact or reason shall be able to cut through it, and thusly such illumination shall be felt by only a precious few (Daryl at AWO I'm looking at you). It is in the hopes that I can reach said special precious few who can further illuminate the true meaning of the RIETI report that I am writing this here.

If you don’t know what the Tanaka RIETI report on anime piracy is ... just follow the link to the story I'm not going to recap the thing here. The story itself (not the report) exemplifies the aforementioned problem. It does a great disservice by inaccurately equating this report's findings to the Funimation lawsuits, and simply garners its information from what seems to be only the English description of the report itself:

Whether or not illegal copies circulating on the internet reduce the sales of legal products has been a hot issue in the entertainment industries. Though much empirical research has been conducted on the music industry, research on the movie industry has been very limited. This paper examines the effects of the movie sharing site Youtube and file sharing program Winny on DVD sales and rentals of Japanese TV animation programs. Estimated equations of 105 anime episodes show that (1) Youtube viewing does not negatively affect DVD rentals, and it appears to help raise DVD sales; and (2) although Winny file sharing negatively affects DVD rentals, it does not affect DVD sales. Youtube’s effect of boosting DVD sales can be seen after the TV’s broadcasting of the series has concluded, which suggests that not just a few people learned about the program via a Youtube viewing. In other words YouTube can be interpreted as a promotion tool for DVD sales.

That's all some people are going on. Lots of people commenting on this can’t read the report. This is literally judging a book by its cover, and then writing book reviews as well.

Seeing this, it is easy to be drawn to the conclusion that this somehow applies to English speaking markets. It does not. This study only encompasses sales and after-market piracy within the domestic Japanese market. While it’s nice to think that English speaking markets somehow play any role which can have an effect on the producers of anime/manga in cases like this, it is because of piracy circumventing and preempting licensed distribution that they do not. So let me say this again, the report is not applicable to English speaking markets (or any markets outside Japan). However it is reasonably detailed, rather specific, and looks like this:


It asserts a specific point about anime DVD sales and rentals in Japan. Regardless of veracity, these conclusions cannot be superimposed to the USA or any other market in which the legitimate media delivery channels are preempted by people who steal the work and make it available for free in the form of fansubs and scanlations. In Japan, these properties do not have to worry about online bootlegging BEFORE the episode airs on TV. Because of this, they can make pre-agreed advertising agreements, accurately predict revenue, and start a genuine product lifecycle for a property.

This devaluing effect that anime piracy in the form of fansubs and scanlations in international markets has is very real and I have detailed it before. I have also noted that without the ability to sustain the regular needs of a business, international markets will have no input in the type of anime and manga that are produced, leading to a Galapagos effect in the type of stories that evolve. Some have argued that it is because anime/manga are “different” from American media is the reason they do like it so much, but Turkish Tapdancing is “different”... the South African Vuvuzela Philharmonic Laser Light Show is “different.” The quality of “different” is in no way the exclusive deciding factor in why people in English speaking markets like Japan's anime/manga. It is that, along with a combination of other qualities, which causes the popularity of such material and changes in what the Japanese market likes could easily change that balance to the point where although it remains “different,” fails to resonate with audiences outside Japan. That is a real possibility.

The Japanese DVD market is miniscule compared to the USA. It really is a different universe. Where as in the USA, some labels exist only as home media entities, the Japanese DVD labels don’t go through the licensing and localization dance to get a title out (for their domestic anime obviously, not for Hollywood productions). Additionally, media consumption habits (both legit and pirated) of consumers in general create a very different animal in terms of commercial markets between Japan and the USA. This difference in media consumption created a very different set of metrics and mechanics which going into detail about would simply lead to a post of biblical tl;dr proportions. So let's just call it a case of "apples and oranges."

To conclude; In Japan, anime/manga productions FIRST reach the market through a legitimate media distribution channel (TV broadcast, online/mobile download, direct to DVD, etc.) and are then pirated. In the USA anime/manga productions are pirated FIRST, and then (because of the time it takes to license and localize) released through legitimate media distribution channels. Do we understand?

Japan:-----Commercial release --> then --> Pirated.
USA:__----Pirated --> then --> Commercial Release.

That difference is the game changer. In international markets, the fact that the target audience has already consumed an anime/manga before a license can be obtained for that market, means that said license is worthless. Fansubbers and Scanlators are stealing the license that the original producers have every right to sell. The fact that they (fansubbers and scanlators) don’t charge anything means nothing, because the damage done to animators, artists, writers, assistants, and publishers is the same as if they were selling bootleg DVDs at $100 a pop. They are actually worse than for-profit bootlegers because they honestly believe they are doing nothing wrong.

It is true that Japanese production companies have constantly and incorrectly harped that if piracy just went away everything would be sunshine and smiles, which is a very Japanese thing to do. Every Japanese industry and political party does that. Additionally, half of the major entertainment execs in Japan have no idea what youtube really is, but just know it's part of that big scary internet. But in case you weren't paying attention, that's totally beside the point. This publication is going cause a problem in American fandom, by giving a moral ego boost to people who know they are hurting the business that creates the things they love, and they’ll take that boost because they want to think what they are doing is helping. And nothing said or done, will assuage their misplaced self-granted absolution.

This is no "get out of jail free card" for fansubers, scanlators, and the American Otaku that keep them around. No matter how much they want it to be.

ANN also helpfully points out that this is a paper by Tetsuo Tanaka, published by RIETI, and is not specifically all encompasing of RIETI's official platform (which is a political force to be rekoned with at times). It is also important to note that Professor Tanaka had already expressed some views to the same effect as the paper's findings, so this may be a case of some tunnel vision.


[July 17 2011]: Just in case anyone was wondering, I added that little stop-sign graphic because I was sick of the thumbnail on the top 5 posts being almost impossible to make out. This looks a little better.
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A Response to Justin Sevakis:

Better late than never.

In the infamous words of Rockwell, “I got a feeling somebody’s watching me.” Although the comments may indicate otherwise, it does seem that a number of people do actually read this ongoing muse into anime as an entertainment market, and as such is the case I believe it my duty to make it worth reading.

Not so recently (late November 2007), Justin Sevakis wrote Editorial: An Open Letter to the Industry over at ANN, where he is Director of New Media. In contemplating a response there were a few key points that were very interesting and carried with them many more industry related aspects than they may have appeared on the surface, to an audience on the outside looking in. After mistakenly thinking I had sufficiently addressed the heart of those issues back on a few audio podcasts I may or may not have made it into (I don't check up on these things), I believe that the indelible written word is the only forum for this expression that is truly appropriate.

Justin Sevakis's article is not going to be reproduced here, as doing so would cause this entry to reach a level of tl;dr approaching biblical proportions. Each section of Justin’s piece has a title and it is that title that is listed in red at the head of each section of my response to it.


Editorial: An Open Letter to the Industry
Link to Article

Justin’s opening simply sets the stage of what being in the fandom used to be in terms of obtaining anime. It was a time when anime (and almost all international media for that matter) could only exist in a physical form subject to the same rules that govern any commercial commodity whether it be shoes, bread, MRI machines, or heroin. Those commercial maxims are simply those of production and distribution, and for a long time their effects dictated market growth extending into and past the DIC era of anime exposure and the basic creation of an actual anime specific market.

Then came a market boom. At first it was truly a boom in the traditional sense, that of product sales, and because the only product that could be both easily licensed and easily produced was home video, that’s where those boom sales were to be found. Eventually this made the consumer market grow, and people wanted modern anime and more of it as well. Strong home media sales were the only thing that allowed anime on TV specifically labeled as anime. More shows got on TV, there was still no internet to get to the viewers first, and anime became a more expensive media commodity. When Toonami/Adult Swim and Tokyo Pop combined to create almost the perfect storm of more than doubling the size of the anime market in a single year, the speculation passes an event horizon which can only be seen in hindsight.

Yes the market grew huge, convention attendance soared, and moreover there were tons of cosplayers there. To add to the frenzy, a staggeringly large number of cosplayers were appearing as characters from titles that were not even licensed in America yet. What does that mean? If you are the Japanese, you start thinking that for every attendee, you are going to see DVD sales, and you are thinking this because that’s what history has shown. This is where Justin fails to take into account the very real impact of the market mirage created by this growing fandom, which gave the impression of a safe investment and a strong belief that these immense asking prices for licenses were justifiable. It’s not as if 100% of the license price was simply the Japanese thinking they had the greatest thing since sliced bread or simply wanting to make a big quick buck (though there can be no denying that is as equally responsible) but a signifigant portion was simply a genuine assumption that a very large fan community support a consumer market on a certain level. After all, this is a very solid conclusion to draw and is still something that rings quite true outside the entertainment media industry.

What happened instead was the perfect market killer otaku was born, with a combination of otaku aspects that are individually very good for a market, but in specific combinations absolutely deadly. This new otaku was consumed not only with a simple desire to absorb as much anime as was possible, but a willingness and eventual demand that the anime they watched was as close to its original form as possible. That acceptance of “that which is subtitled” combined with a distorted picture of how markets and licensing work fueled by youth and willful ignorance, and a final notion that watching anime as a basic right and not a consumer good (a notion amplified by aspects of American lifestyle such as car-culture, consumerism, over-eating and a ridiculous belief that Youtube videos are protected by the first amendment) meant that the attitude of wanting anime and wanting it now would be tempered neither by the natural obstacle of needing an English Dub, or an awareness that such activities are damaging to the market. Investors, producers, and media labels walked onto what looked like a very solid foundation of a growing fanbase with large amounts of brand awareness, only to have it turn out to be quicksand. Fool them once shame on one, fool them twice and shame on the other.


HOW DID WE GET HERE?
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Once technology made it possible for video footage to be taken straight off the airwaves, then entirely put into software which allowed for rapid subtitling without the previous need for extra hardware (production), and then made available via the internet in place of needing to have a physical piece of media (distribution). In the previous sentence “made available” is very appropriate while “sent via the internet” would be a tremendous misstatement. To explain, “sending” requires a “sender” and specific recipient, much like VHS fansubbers were contacted by a party whishing to receive something by providing direct or indirect means of fulfilling that request, the fansubber then undertook to allocate specific resources to send which was requested on a media capable of containing it. I am of course describing the days of padded envelopes and Maxell tapes. Days now long past and about as alien to the modern anime fan as a modern person relying on passenger pidgins to send e-mail.

When everything changed in the world of fansubs and moved away from the need for physical media, these very real rules of production and distribution were effectively taken out of the fandom equation. Their absence completely rewrote the laws of physics for the universe of American fandom on a scale so vast the only analogy I can possibly think of is one in which biology ceased to be a factor in human existence and we never again needed to eat, sleep, breathe, age, and so on. For the first time, an anime fan could find a fansubber, get the anime episodes they wanted, watch them, and then throw them away (delete) them, all while the fansubber themselves slept through the entire process.

To summarize, “how we got here”: An expanding market brought in loads of people, but almost no consumers, and nobody figured it out until it was too late (“consumers” in the traditional sense, meaning people who buy things).

Now because of this, I must take extreme issue with the almost complete absolution that Saint Sevakis gives to these modern fans, suggesting that their activities are something as natural as hurricanes in the Caribbean and those in the industry and something a well run industry should be able to deal with without batting an eye. He completely dismisses the fact that this development is known to be detrimental on all levels of the media production and licensing business and is simply a manifestation of the otaku public’s inability to control itself. The counter analogy Justin gives to Arthur Smith’s i-phone comparison is wrong in every respect, even by the standards he sets up in his own article. I will try to explain why I feel this way as succinctly as possible since this is already getting a tad long:
Earlier the article states that Anime was a consumer good, provided by fansubbers using a traditional set of maxims which govern all consumer goods while otaku watched anime via tapes that required storage space and money, and this was done out of pure necessity as there was no alternative. Enter digital fansubs and the market explosion in America, and all of a sudden the rules and limitations no longer apply for better or for worse, all the while otaku keep doing what they do best, watch anime. What’s wrong with this picture? The technology making getting fansubs as easy as checking e-mail is beyond any industry’s control. This is not the industry putting a box of i-phones on the street unattended and then being surprised they’re gone. It is a radical change in what it means for anime to be a consumer product, all brought about by that external force. The more correct analogy would be the Apple store being smashed into by a truck and chronic grand-scale looting commencing; all the while the owners, managers, investors, third party manufacturers, A&TT, and the police all look on, powerless to stop it from happening. Or perhaps a better analogy would be one that uses actual technology as the external factor, such as if all of a sudden Star-Trek transporters became a reality and all you had to do was push a button and an i-phone appeared in your house, never mind that it was beamed out from the store that you didn’t break into.

From a media perspective, it would be like someone leeching the satellite feed of the final episode of an immensely TV series (MASH, Seinfeld, Sopranos, whatever), then airing that episode before it was scheduled to go on TV, on a pirate station or the internet or both, without commercials. Well that’s stealing, because the company that made that episode, (that paid the editors, office workers, gaffers bla bla bla) , needs to make the investment back by selling advertising based on a guarantee. A guarantee to advertisers that a a relatively certain approximate number of households will watch the program with that advertising, and that guarantee is legally protected and has been the source of fierce contention since the days Gilbert & Sullivan wrote HMS Pinafore. If you actually think advertising isn’t an important part of every piece of consumer media that gets made, then after watching “Good Night and Good Luck” come find me and I’ll punch you in the face just to make sure you got the point.

As is correctly pointed out Justin’s opening, getting the anime to the market first, effectively makes a license worthless, and from an anime company’s perspective (yes anime comes from companies, not from farms where it’s grown on trees) if what you make is going to be made worthless by people you can’t stop, then why bother… since the domestic TV ad sales and merchandising isn’t going to support your efforts alone?

It is important to note, that one download of an anime is not one lost DVD sale but there was a ratio for X amount of fansubs there were going to be Y amount of home media sales. But this external factor changed that and while convention attendance and anime fandom grew larger, that ratio shrank and DVD sales didn’t even stay level while more and more people entered into the anime market. Media giants like Viacom and Warner are still struggling with this and have no real solution, and a tiny anime company with 21 employees is supposed to be able to deal with this global phenomenon?


GETTING OUT OF THE RUT
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This “rut” came from the surrounding market growing up around a traditional industry which up until that time had worked well. I think that what’s happening with anime is a very good barometer for where general media is headed in the near future. This is where Justin Sevakis proves he most certainly does know just about everything there is to know about the mechanics of the media industry as a whole. Though I have to say the reason fansubbers fansub anime doesn’t come from some selfless proletariatism (that dies with VHS), no it’s the internet points.

Regardless of who is to blame and what is to be said, Justin’s piece nails it on the head that two tings remain constant. First, the anime fan will satisfy their craving (or simple curious interest) via the path of least resistance. Even though downloaders offer up the most sanctimonious self-excusing dribble such as the “well I wouldn’t buy the DVD anyway and it’s just replacing the function of what TV would do” line (even though no ad revenue can be realized by the production company so they can't make more anime) and these same people completely obliterate any validity to that notion by showing up to conventions dressed as characters from that very same show, or review that show on a blog, or recommend that show in a podcast, etc, completely feeding into that false inflation of the market, all the while eroding the viability of the show as a viable license. This will most certainly continue as long as there is a mechanism which allows it to operate. Secondly, the only way for the industry to continue in a way that will allow for sustained productions and further growth, is to make fansubs and their downloaging, obsolete and unnecessary. Correctly noted is the fact that no matter how many carriers an anime channel can get on, if the only offerings are an existing home media library or mostly acquisitions from a single production studio which are not up to date, the channel will have little viability in sustaining sales, or advert sales.

Coming up with the magic pill is not an easy task seeing as how no other aspect of consumer media has been posed with the same life or death situation, nor have they come up with an existing solution. Anime companies make anime, not trail-blaze the technology of media delivery.

DRAGGING THEIR FEET
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Nobody’s dragging anything really, it’s just that this could not have come at a worse time. The entire American home media business is in decline, and that’s partly because the entire American economy is crap thanks to another 8 years of a Bush Whitehouse. Japan’s economy isn’t that great either, making it a time to tighten belts and refrain from investments with questionable ROI. A few entries ago I extolled to the public that the ICv2 Panel at NYAF simply gave the Japanese the impression that if the “big bad internet” went away, this giant market would support those geysers of DVD sales that the licensing agents out in LA assured them were a slam dunk (hey they got their commission so what does it matter now amiright?).

Yes making a co-pro is almost impossible. I have been involved with two (One with the Shiden production and Micronauts with Mego, Takara, and Geneon Japan though we approached Aniplex first but SONY couldn't play nice with Takara because of Mego's bad blood... long story. It’s always one side arguing that they know what the market wants more than the other), and so far it hasn’t happened in the true sense of the word. Appropriately noted is the more practical solution to minimize the time between a TV licensed anime’s airdates between the Japan and America, and to find a delivery system that can get subtitled anime to American audiences that can somehow be monetized. The problem is that aside from embryonic concepts from the start-ups Node Science, and RayV TV, (which both seem great), there’s nothing out there that the anime companies wouldn’t have to invent and then maintain themselves, making the overhead of such a system prohibitive.

As far as what we’ll see in the future, after checking out some of the announcements and sneak peaks at the NYAF, I am happy to say that I don’t think we’re in for a Soujitz sponsored moé flood. It really does look like in general things are getting darker and more action oriented like Death Note and Ninja Scroll. But since what I am responding to was written before the NYAF, it’s fair to assume that such a moé flood has been a genuine fear since the TAF of 2006.

LAST CHANCE
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We are looking at a last chance of sorts. Something needs to come along and prove that investing ten or twenty million dollars making an anime series is still worth it, or that perhaps smaller investments for shorter productions will be a bankable commodity in the future.

Perhaps what we are living in is nothing but the aftereffect of a kind of vampire byte from the evolutionary force of entertainment culture. Perhaps east is east and west is west, and although the twain have met in both the best of times and the worst of times, no matter how bad or good those meetings are they are destined never to last. Anime may well have no choice but to go back to the rollercoaster of American interest ups and downs, as this latest influx of anime simply serves to change our own domestic American entertainment product into something that this and future generations will respond to, but more importantly, that domestic media companies can control. If this is true, then things like Teen Titans were the primordial walking fish that would later evolve into Avatar, an early hominid of what may become a new anime-born, uniquely American entertainment era.

There’s a fork in the road, and it seems like no one is at the wheel.

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T.A.O.