NEWS
Digital Hollywood:
I Have Seen the Future of Digital Entertainment, and It Belongs to the
OUTLAWS & OUTCASTS
by Patrick Gregston
 Cartoon by Daryl Cagle, Cagle Cartoons, Inc. |
Having become a regular stop on the circulation of numerous entertainment middle managers, Digital Hollywood has established itself as a barometer on the state of the future in the entertainment marketplace. Held this spring at Loews Santa Monica Beach Hotel in Southern California, the event drew hundreds of entertainment industry people to “the No. 1 conference in the country,” as it describes itself. With subjects ranging from extraction of value in ring tones to the challenges of advertising in the digital age, this conference offered the opportunity to check on the future health of mainstream entertainment.
Checking in on a wide variety of panels, one finds that the future is still a matter of “when” and “if,” as the vocabulary of panelists were dominated by the “should” and “will” far more than the “here” and “now.” The future is being realized by some, but judging from the conversations among the experts sitting at this edition of Digital Hollywood, it helps to be an outlaw or an outcast.
By far the most lively and illuminating sessions were those regarding the use of peer-to-peer (P2P) technologies, and the adult entertainment industry. In comparison to the discussion about games and telco-entertainment convergence, the P2P operators had panelists who are engaged in new forms of commerce today, despite the fact that the underlying technology involved is a key element in the MGM vs. Grokster case currently before the US Supreme Court. In fact, according to Mitchell Reichgut, founder of Jun Group, a P2P-based marketing group as well as a writer and director of the online series The Scene, the case is somewhat irrelevant: “If 50 million people are using the technology, what the Court says isn’t going to stop their use.”
According to Tom Masur, whose firm represents and participates in P2P operations, the possibilities of digital content distribution have yet to be explored fully. “China has people who create content and make money,” he explained. “While they don’t share our ideas about copying, they still have a culture, and people make money generating that culture.”
Indeed, if the business examples discussed at the “Next Generation Music and Film” panel are extended, the efficacy of P2P technology in getting conventional merchandise marketed and sold are almost guaranteed to establish that extra-legal technology as the preferred method of rapid marketing on the internet, if not outright distribution of content. One example, shared by Chip Venters of Digital Containers, showed how peer networks were being used to drive customers to purchase items like clothing and furniture. In another example, Reichgut outlined how over 200,000 pre-qualified customers were brought to a website through the peer network distribution of a Steve Winwood performance video that had only four seconds of advertising in eight minutes, at a cost of less than $3,000.
This was in distinct contrast to the voices heard at another P2P panel that featured Micheal Weiss of StreamCast Networks (a participant in the Grokster case by virtue of StreamCast’s ownership of the Morpheus software, which is included in the suit) and Ted Cohen, senior vice president of digital development and distribution at EMI Records. Weiss suggested to Cohen that they work together to build a legal distribution of online music files, to which Cohen replied, “If we put up legal files, will you take down the illegal ones?”
Marc Morgenstern, vice president of Overpeer, interrupted to ask Cohen, “What do you care about the illegal files if the legal ones are making money?” Cohen suggested that the notion of a “good user experience” has become an unrealistic tyranny. “A new Mercedes for $5,000 would be a good user experience but you won’t see it happen,” he analogized. This was a typical example of a panel that resembled a good tennis match with no winner.
The panel “Adult Industry Business Models: Understanding the $10B Opportunity and How Adult Pushes Technology To Mainstream” demonstrated some very practical lessons for all business. “People are passionate about sex,” stated Ken Boenish, president of the Erotic Networks. “And our products are, by their nature, restricted. So it behooves us to explore every channel by which we can reach those people who want our products.”
Listening to this panel, it was clear that the “push” of the adult industry is not strategic, nor even technical aggressiveness, but as organic as water seeking the lowest ground. Spike Goldberg, CEO of New Destiny Internet Group, suggested that technology has very little to do with his companies’ embrace of new technologies. “We have to be careful with our products to make sure we are always dealing with adults,” he said. “If we can find a way to connect with our customers that is direct and discreet, we are going to do that.”
Despite the apparent lead of these out-of-the-mainstream trailblazers in embracing the future of the digitally networked world, mainstream Hollywood wasn’t without news on the subject. In a panel titled “Hollywood and the Digital Home: How Technology and Content Establish the Next Level of Consumer Entertain-ment Experience,” senior vice president of Sony Pictures Digital Entertainment Michael Arrieta detailed his company’s strategy in online movie distribution: “I think you’re going to see a lot more content coming online with much more flexible usage models. A good portion of the Sony Pictures library will be made available online in this upcoming 12 months, and that’s a pretty big shift from the years gone by.”
His reason for this change was simple. “I think you’re going to see a lot of the studios, ours in particular, opening up access to the content in ways that haven’t been done before because, frankly, we need to,” Arrieta admitted.
Certainly if the studios are to maintain their dominance of the motion picture
marketplace that is unfolding, they will be moving faster and sooner than
previously stated. If and when they do, they will be following the tracks
of outlaws and outcasts that are today already making money in the wild, wild
west of internet distribution, where the laws may or may not have any impact,
and where the profit is currently going to those who are there first.
In other words, stay tuned.
Patrick Gregston is an assistant editor member of the Guild and serves on this magazine’s Editorial Policy Committee.
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