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Content Versus Technology Battle Continues at Digital Hollywood

6 May, 2009 By: Chris Tribbey


SANTA MONICA, Calif. — In what’s become a recurring theme here at the Digital Hollywood conference, the arguments over digital rights management (DRM) come down to the Consumer Electronics Association against pretty much everyone else.

“DRM has morphed over time into something that’s more restrictive on consumer behavior,” said Jason Oxman, SVP of industry affairs for the Consumer Electronics Association. “Everyone agrees that piracy is wrong, but DRM as a way to fight piracy is a failed experiment.

“It annoys the consumer instead of giving them what they want.”

But while Oxman called DRM “dead” — an opinion he’s rendered before at this twice-a-year event — the owners of content couldn’t disagree more: Consumers can’t have anything they want, unless they pay for it.

“You can say you have the right to buy a DVD and make a copy to your iPod, but that’s not the agreement you made when you bought the DVD,” said Albhy Galuten, VP of digital media technology strategy for Sony Corp. of America. “[These people are] millions and millions of criminals.”

Jim Williams, SVP and CTO for the Motion Picture Association of America, pointed out that DRM keeps consumers honest, or at least makes those who would steal movies and music work harder “for something they refused to pay for.”

“It’s not only in the interest of film producers and film companies, DRM is in the reason consumers have choices,” he said.

Paul Jessop, CTO for the Recording Industry Association of America, added that he was concerned to hear DRM “dissed,” lamenting that his industry has been hardest hit by the lack of DRM on CDs.

“Looking back, the CD didn’t have DRM, so we started in a non-DRM world,” he said.

DRM is an essential tool in a digital age, most here agreed, and if basic copy protections had never been included on DVDs, movies may have suffered a worse face than music, panelists said.

“Suppose that when TiVo was launched, you couldn’t skip commercials. Consumers would have had that expectation that they’d have to [watch them],” Galuten said.

Susan Cleary, VP and general counsel for the Independent Film and Television Alliance, said independent owners of content are especially damaged.

“You cannot not protect your product,” she said. “Intellectual property is too important, and DRM is the only way to protect it. If you don’t, the next Crash doesn’t get made, the next Gandhi doesn’t get made.”

David Mathias, senior manager of Deloitte Consulting LLP, called DRM “the wrapper around the content,” adding that DRM that doesn’t get in the way of a consumers’ experience is the best kind.

Broadband and set-top boxes

Zillion TV, Vudu, Hulu. It seems like every couple of months another on-demand content company is butting in on an industry long ruled by cable and satellite.

Digital Hollywood speakers say the “I want it now” mentality of today’s consumers make these products necessary.

“The glimpse of the future is that we can have access to everything we want on one click,” said Vic Odryna, co-founder and CEO of ZeeVee, whose technology links HDTVs with computer content.

Richard Bullwinkle, chief evangelist for Macrovision, said people may have once been content to let networks determine what they watch and when, but no longer. “There are a lot of people who think that what they have is just fine. That’s called status quo inertia,” he said. “Nobody thinks that what we’re working on is necessary, until we put it in front of them, and they go, ‘Wow, that’s cool.’”

Force-feeding content to consumers just doesn’t work anymore, said Phil Wiser, president of Sezmi, which produces Internet-connected personal TV set-tops.

“Look at CDs,” he said. “They made people buy stuff they didn’t want. Consumers and technology will win.

“The [television] industry is about to get turned on its head. There’s never been this much turbulence for the TV industry. The cable industry is not on secure footing.”

He said that the idea of hudreds of channels running 24 hours a day would be “a quaint concept” to future generations, as people go online or to on-demand services for their content.

“There are a whole bunch of things I watch from Showtime, but I don’t subscribe to it,” Bullwinkle concurred.

But while cable companies scramble in the wake of lost subscribers and an influx of free content online, Tracy Geist, SVP of market development for personalized programming company OpenTV, said that cable wouldn’t die any time soon, though cable companies have become “arrogant.”

On the issues of connected TVs, speakers agreed that bandwidth issues persist. Delivering content through existing infrastructure has proven difficult enough to force some cable operators to try out bandwidth limits on their customers.

“The Internet is going to need to be treated like a utility,” Bullwinkle said.

And while Internet-connected TVs open up all sorts of avenues for new and interactive content, there are pitfalls too. “The first time I’m watching a TV show and my son’s Facebook app shows up on screen, the TV goes in the trash,” Bullwinkle said. “And the kid’s not far behind.

“It’s a very compelling platform, but it’s not about turning a TV into a computer.”

Internet video advertising

More and more online content aggregators are going toward the free content route, with embedded advertising paying the bills. But they’re also running into a problem: what, exactly, is online advertising worth?

Nielsen ratings and general ad rates among the networks kept this from becoming an issue for traditional TV, Digital Hollywood panelists said. But with no advertising standards in the online realm, and ad agencies and Web sites charging in a wide range, the online world has become very uncertain.

“The problem is the ad agencies are talking about three or four different things when it comes to impressions,” said Mark Rotblat, VP of business development for TubeMogul, which tracks online viewing trends.

Did the ad earn a consumer impression if it was only partially watched? What about ads that users need to initiate? What if the ads can be muted?

Mariana Danilovic, managing director of digital media company Hollywood Portfolio LLC pegs the overall North American online ad business at about $700 million annually, and said that it could be worth so much more. After all, consumers are more likely to watch a show wrapped in ads, then pay for the show without them, she said.

“People are paying so much already to get on the Web, paying for content is hard for them,” she said.

So content owners “have to engage their audience with content they want,” said Dan Rosen, head of Americas for online video company KIT Digital, if they expect consumers to watch the ads, and for advertisers to pay for them. “It’s not rocket science, or too different from traditional media.”

Joy Marcus, United States GM for online video site Dailymotion, added: “I think this medium is generating enough volume right now to allow for a variety of advertising opportunities.”

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