An upsurge in Internet piracy is forcing the entertainment industry to grapple with an uncertain future, one where copyright protection and control over product distribution could be rendered obsolete.
It's an unsettling prospect. But this town, long a trendsetter in music and film, is still struggling how best to respond to the challenge posed by new Internet technologies that facilitate illegal digital downloads of CDs and movies.
The clock is ticking. Executives from Viant said today that 150,000 films per day were illegally downloaded last year, a figure they expect to climb to about 350,000 per day this year. By 2001, that number will hit one million.
"This is the way that media will be consumed," said Bruce Forest, a director of media and entertainment for the Boston-based firm.
It's not a prospect many of the executives attending the two-day Herring on Hollywood conference here, hosted by Red Herring magazine, relished hearing. Rampant digital piracy constitutes a severe challenge to the entertainment's industry control over pricing and distribution.
Still, many people in attendance suggested the industry will be forced to adapt, if for no other reason than one of instinctual self-preservation.
"When they figure out a way, the industry will learn how to monetise [this new business model]," said Allen deBevoise, the chief executive of Creative Planet.
Interestingly, a survey conducted by Red Herring in conjunction with the Hollywood Reporter found that nearly three out of four film and television producers believe copyrights can still be protected. The results were published on the same day that Universal Music Group, the industry's largest record label, announced plans to offer songs in a digital format over the Internet on a trial basis.
Doug Liman, who directed "Swingers" and "Go", was one attendee who expressed guarded optimism about the future. "For some reason, I'm excited. I think change is always good," he said. "Shaking up the system might result in us making better films -- anything that forces us to stop and rethink what we're doing can't be a bad thing."
The conference took place as bitterly contested Internet copyright lawsuits are being fought out in courtrooms on opposite coasts of the country. In New York, the big Hollywood studios are suing the publisher of the Web site 2600 for posting source code to the DeCSS utility that lets people copy DVDs and send them across the Web. And in San Francisco, the music industry is suing Napster, accusing the company of facilitating wholesale music piracy.
Needless to say, Napster figured in more than a few corridor discussions, not to mention the organised panels. Indeed, Napster chief exec Hank Barry had been scheduled to deliver a keynote address but was forced to postpone his appearance after an appellate court issued a stay on judge Marilyn Patel's preliminary injunction that could have shut down the service.
Whatever the outcome of those two cases, however, there is a growing recognition within the entertainment industry that the different enabling technologies behind digital downloads are beyond the jurisdiction of any judge.
"You have to accept technology. It's coming," said rap artist Ice T. "I used to have a digital watch that cost $50. Now they're giving them away with chicken dinners. "In five years," he added, "Napster's going to morph into something so devastating. It's going to go down. The world is an open book." That sentiment was echoed by Viant's Forest, who likened piracy to a hydra-headed monster where "you cut off one head and a bunch more spring up".
Forest though did hint at a silver lining, pointing out that "people want films so bad they will steal it". He said that has created a potential opportunity for content providers to co-op the new technology and, in effect, ride a tiger that might otherwise prove fatal.
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