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THE MORNING BUZZ: In and Out the Window

2 Oct, 2002 By: Holly J. Wagner

The digital age has been generating some interesting debates in our industry recently. One I find most interesting right now is the filmmaking community vs. the movie maskers -- folks who offer various home video editing services on Hollywood movies.

Most of these services sprung from the Mormon community. The edits often reflect those values, but some of the services offer tiers of editing (censor nudity, allow swearing) with controls in the consumer's hands. That, I believe, gives their product much more appeal.

The Directors Guild of America (DGA) has responded to this new type of service with a lawsuit claiming they are illegally corrupting the directors' creative vision in violation of copyrights. Actually one of the services, Clean Flicks, first sought a court order declaring its activities legal. Then DGA countersued and named all the similar services it could find.

Which I think is a huge gamble for the DGA. I think Solomon is going to have to split the baby in two on this one because the editing services are in two distinct categories: those that slice and dice existing product and those like ClearPlay that merely offer a digital fig leaf.

One kind of service buys Hollywood VHS and DVD product, physically alters it to remove or block certain images or sounds, then lets members check out edited copies. The legal issues would be substantially different for a company like ClearPlay, which offers an external home editing system that filters content somewhere between the player and the monitor. The consumer buys or rents any legal studio product and chooses which content the ClearPlay box should nix. That's no different from a V-chip or AOL's Parental Controls on the Internet.

As I watched a debate between ClearPlay CEO Bill Aho and a DGA attorney on CNN the other day, the real issue suddenly became clear to me. Aho pointed out that the industry controls similar edits for broadcast television without complaint, so the creative vision can't be that big of an issue. The DGA attorney countered that sensitive consumers could wait for the broadcast TV version.

And there it is. Hollywood is organized around release windows. It counts on a certain amount of revenue from each window. One of those windows is broadcast television, which carries the bulk of paid advertising. So the guilds are ticked off because these devices reduce the incentive to watch broadcast television. It moves the abridged cut back to the rental window and potentially diluting the TV broadcast audience a few months down the road, when sponsors will pay for it.

Hollywood is all about personal advancement and where you are on the food chain. It's no secret that climbing is about money, fame and juice. Every waiter with a screenplay in Los Angeles wants to be able to fax advice to Dick Gephart like Barbra Streisand does and live in her fancy house.

The food chain is built around windows and the digital age is rearranging them faster than Hollywood can keep up. The system is springing leaks all over the place -- from movies on the Internet before theatrical release to editing services that leapfrog a title and audience back months.

It's causing chaos in a panic-stricken executive network that depends on consistency and can no longer predict consumer behavior. One CEO even made the desperate statement that viewers are stealing if they run to the bathroom or refrigerator during commercials.

It gets more complicated because home video rental is already a thorn in the studios' side. Studios would love to eliminate any middlemen and deal directly with consumers. The home editing devices in particular threaten to shift even more power to home video, which is already 60 percent of most films' income, by drawing in a new audience that formerly waited for commercial TV.

The entertainment industry is on the verge of a critical mass that will change the way business is done. Technology will force it. It's just going to take longer because the people resisting technology in Hollywood aren't doing it because of the technology itself, but because that technology threatens their personal niches on the food chain.

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