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APAR's WORKING WEEKEND: Napster Is Hollywood's Wake-Up Call

1 Dec, 2000 By: Bruce Apar

There was so-called “news” this past week that Sony, Disney, Warner, Paramount and Fox are kicking around ways to deliver feature films D2D (direct to desktop).

We beg to differ about the news designation: It would be huge news if it had taken much longer before the rights holders that rule Hollywood had not done something to quickly command control--in the digital space--over the only meaningful assets they own: intellectual property.

After witnessing the anarchy of Internetworking that has upended the music business-- thanks to Shawn Fanning, the prodigiously precocious pre-adult paterfamilias of Napster--the movie majors don’t have much choice but to do just what they are doing. The alternative is to wait for a spawn of Shawn to make merry mockery of movie copyrights the way he has with music.

What about storefronts? To paraphrase the immortal words sung by Gloria Gaynor, they will survive. Exactly in what form is hard to say. It would seem that the more narrow the product and services offered in an entertainment emporium, the greater its chances of closure. That doesn’t bode well for rental-only VHS and DVD merchants, but that’s not news either. Clicks-and-mortar establishments merchandising a broad band of packaged media and services will be best posited to stay connected with consumers, even as downloading and streaming goes down in cost, and up in convenience and quality.

It’s market segmentation. Not everyone will want to receive movies from outer space, since old habits die hard, especially for older demographics, those people more at home with old-fashioned tapes and discs than new-fangled modems and megabytes.

Still, Hollywood’s not-so-warm-and-fuzzy feelings about bricks-and-mortar distribution has never been closer to the surface. While current trade customers might argue that the studios are being careless by alienating their bread-and-butter aftermarket with digital forays, others would contend that studios could care less about what retailers think.

Last July at the Video Software Dealers Association convention, a studio executive famously told a British retailer, “I don’t give a rat’s ass whether you live or die.” In a recent issue of Red Herring magazine, Frank Biondi, a veteran of entertainment conglomerates’ executive suites, is quoted in widescreen fashion as saying the studios’ wish is to get rid of “the Blockbusters of the world.”

Whether book publishers, music companies or movie studios, what intellectual property owners pine for is a distribution channel as friction-free as possible. The studio-storefront relationship has been fraught with friction, arguably more so than any other channel in which Hollywood trafficks.

That’s because retailers were the first and remain the only customer over which Hollywood does not exercise the kind of control it covets, thanks to the First Sale doctrine that protects stores’ rental rights.

In a cover story on the e-book in the December issue of Time Digital, there’s a cogent quote that sums up the sentimental value held by rights holders for any single channel (with the possible exception of movie theaters): “…the sign that a real revolution has taken place will be that we won’t care how the book [substitute “movie”] got there.”

Comments? Contact Bruce directly at:bapar@advanstar.com

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