Viacom CEO doesn't back free content

Philippe Dauman says Americans falling behind in education

NEW YORK -- Viacom CEO Philippe Dauman on Tuesday took issue with "Wired" editor Chris Anderson's assertion that in the digital age the most effective price for content is none at all, highlighting the cost of production.

"The 'free is the right price' position has a fundamental blind spot," Dauman said in a speech at the Executives' Club of Chicago Global Leaders Luncheon Tuesday in a reference to Anderson's book "Free: The Future of a Radical Price." "It emphasizes the falling cost of distributing intellectual property, but ignores the high cost of producing it -- not to mention the fact that its creators have a right to earn a living."

As an example, he mentioned that "Transformers 2" cost $200 million to produce. And he called the amount of lost revenue due to piracy "astonishing," citing how for every authorized stream of "South Park," there are ten times as many unauthorized streams.

The Viacom then gave a nod to the Obama Administration, saying it "recognizes this challenge and has been receptive to helping the industry address the issue."

According to a copy of his prepared remarks, Dauman concluded: "If U.S. businesses were properly compensated for all of the products that are being stolen through piracy or counterfeiting, imagine the impact on our economy and how different our trade deficit would look."

The economy also played a role in other parts of his speech.

Dauman, for example, said the "severe recession" in the U.S. is turning into "a tentative recovery," and the country must focus on creating new jobs to "prevent a regression in the economic recovery." With U.S. unemployment expected to reach 10%, he called for targeted investment tax credits.

The Viacom CEO also said the digital age requires intellectual property protections, a well-trained workforce and creative collaborations embracing global growth opportunities for businesses to remain competitive, he argued.

On the workforce issue, he expressed concern that younger Americans are falling behind students in China, India and other countries. "This country is moving backwards," and this will hurt the economy, Dauman said, pointing out that Viacom has developed a national education initiative with the Bill & Melinda Gates Foundation dubbed "Get Schooled" to address the problem.

And discussing global business, he pointed to strained U.S. consumer budgets in calling for the need to do business with other countries. The U.S. film and TV industry is already a key contributor to the country's trade surplus, carrying a $13.6 billion trade surplus around the world, he said.

"We cannot take our success for granted," Dauman warned though. "We feel pretty good about our standing, but we also know that our competitive position can only be strengthened through global collaboration."