HOLLYWOOD, CA:  I've been speaking for several years now on the fact
that the creative industries continue to show more flexibility in terms of
licensing their works to platforms and distributors. What's nice is, every time
I speak at a conference like Digital
Hollywood, there is still more evidence to support that, and more panelists
and attendees who not only agree with it but are living it.

Is change occurring fast enough for all? No. But it's always hard to ask
someone with a consistent revenue stream to potentially cannibalize that for an
untested model that may be not a stream but a dry riverbed. Many panelists here
over the last few days with more business knowledge than me — including many
platform managers — have made that point.

I was on a panel this morning with a diverse group of individuals
representing rights management and protection companies, creative works
producers, distributors and others. (My apologies that I won't be quoting
anyone, I find it hard to take extensive notes when I'm on a panel.) We had a
wide-ranging discussion, including:

*    The issue of whether a platform provider should obtain creative works
first and then seek a deal or obtain permission first. It should be no surprise
where I came down, and I didn't get too much pushback on my permission
approach.

*    The difficulty of licensing in the digital age. As the digital age
brings us more ways to enjoy contant, that introduces more complications for
licensing. No way around that, short of taking an extreme free culture approach
and ripping all rights away from creators, at which point you can have all the
fun you want with existing works, but don't expect as many new ones to be
produced. As stated above, there is a consensus here at Digital Hollywood that
licensing difficulties are being reduced and that licensing is essential.

*    The issue of net neutrality, which has also been debated on the Hill
this week. I noted one positive, namely that everyone in the debate seems to
agree that net neutrality rules should not be meant to protect infringing
content online.

*    The future role of DRM. On mine and other panels, including one with
MPAA's Fritz Attaway, many echoed the point I made — other than diehard
cyberlibertarians, few object to DRM, they object to inconvenience. When DRM
allows a consumer to do what they wish with creative works they buy or rent,
when the rights extended are understood and seen to be reasonble, there are no
problems. Trust me, this is hardly a new concept, and it was echoed repeatedly
here. On a separate panel, RIAA's David Hughes repeated something I believe I
heard him say at MIDEM, namely that there are 22 business models in existence to
distribute music online, and 20 involve DRM. There is more to life than
unprotected MP3 downloads, in other words, such as my Napster to Go
subscription.

On the DRM front, I liked the way Albhy Galuten of Sony described DRM on a
panel following mine. Galuten is a longtime veteran of the industry, and his
observation was that DRM enabled more marketplace options for both consumers and
rightsholders. His language is more direct than mine, but he summed it up by
saying: "DRM is capitalist. Fair use is socialist." Those words are charged, but
to the extent "socialist" in the academic sense of the term involves the
dilution of property rights, that is accurate.

Asked if watermarking could replace DRM on DVDs, Attaway said no, because
nothing would prevent a consumer, perhaps inadvertently, from violating purchase
terms by distributing the work more widely. "Our only recourse [in that case] is
to sue our customers. That is not a good business model." The RIAA's Hughes
agreed, noting the association loses money on every suit, and that the suits
haven't changed behavior as much as they'd like, instead they've just let
everyone know infringing is wrong, even if many still do it anyway.

As to the point above that creative works industries may not be moving fast
enough, Attaway said that question implies everybody knows where we're supposed
to be going: "There is no clear Point B." He said studios are experimenting with
new business models, adding that while there are about 40 Internet services
showing movies or TV shows, "I daresay none are making money."

That cycles back to the original point of this post; it's always hard to walk
away from a flowing stream to a dry riverbed where a venture capitalist is
assuring you it will be the Amazon any day now. The venture capitalist has
invested other people's money in multiple riverbeds; he has factored into his
operating costs the likelihood that most of those riverbeds will remain dry.
Despite that, some of those riverbeds will surely find themselves flowing,
although none likely with the volume of water we've seen in the past prior to
the Internet; creators will have to swim in more streams. But it's anybody's
guess which riverbeds will become streams.

This entry was posted on Wednesday, May 7th, 2008 at 6:45 pm by Patrick Ross and is filed under drm, market forces, network neutrality. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.