Why Technology Is the Friend, Not the Enemy, of Hollywood (Guest Column)

Aaron and Jared Leto

Like many Hollywood stories, mine started with Harvey Weinstein. Well, sort of.

In 2004, during my freshman year of college, I was lucky enough to land a summer internship at Miramax in New York. As a film school reject, this was the holy grail, and the closest I figured I’d ever get to a movie set. While there were no Marty or Leo run-ins that summer (though I did get a “hello” from Mr. Weinstein), lessons about the entertainment industry were abundant.

Being a geek, one thing that stood out for me was the industry’s curious relationship with technology. Few things followed the path of least resistance in the media business whenever software was involved. This wasn’t unique to one studio, production company, or agency. Across the industry, whether it was the distribution of content to affiliates, artwork approval for a poster, getting a press release edit to a publicist, or making media available to consumers en masse, a barrier always stood in the way. Contracts, firewalls, licenses, legacy business models, or DRM wrappers were obstacles to getting the job done.

This was nothing new, of course. From the advent of television to the VHS, Hollywood has long had a bumpy affair with new technology. The root of this friction tends to be the assumption that previous standards will get fully displaced as new tools and experiences emerge, destroying the existing economics and experiences in the process. In fact, most often the opposite is true. As Jeffrey Katzenberg once said, “It seems that all the zero-sum thinkers should reconsider their math… throughout this history, in not one instance did a new form a mass media replace an earlier form.”

Predictably, the first wave of Internet-driven digital disruption was met with aversion. Beginning in the 90s, the web and its disintermediating power — catalyzed by Napster, though certainly not limited to the music business — upended long-standing business models and distribution channels, and record labels, production companies and artists alike scrambled to figure out what it all meant. With the risk that the Internet would reorder the media business as we knew it, some responded through the courts, and others held back their content to see if the whole thing would blow over.

Since then, however, the industry has powered on, proving the durability and timelessness of great entertainment, even in the face of massive change. Yes, the record store has gone away, but music consumption has gone up. Cable subscriptions have fallen slightly, but there’s higher quality content than ever before. Yet amidst fairly glowing results, talk to any artist or exec, and they’ll tell you they could be doing so much more.

Today, the cloud, virtual reality, mobile device ubiquity, and an Internet population approaching three billion all collude to change the nature of the media industry for good. The industry now faces a second wave of digital transformation, and it’s more significant than ever. If the first era of this change was about catching up to or neutralizing the onslaught of new technology, the current era is about optimizing for it.

In front of every studio, network, firm, label and agency is an opportunity to embrace innovation and evolve its business model to compete on a scale and in a style commensurate with an industry capable of reaching half the planet in a click. Early examples are inspiring: U2’s latest distribution deal with Apple, Thom Yorke’s surprise direct album sale, Jared Leto (pictured above, right, with the author) and his venture VyRT monetizing an online community around live events and concerts, DreamWorks Animation and Disney both acquiring major YouTube channels and producers, and disruptive new content licensing models led by Netflix. But these are still the exceptions in a sea of business deals done the same way as they were when Lew Wasserman presided over MCA.

The true opportunity is in re-imaging the industry end-to-end: a record label will know the complete value and inventory of all its assets, even that rare recording of a lesser-known artist from 15 years ago. The supply chain of a film project could be rendered digitally so any change and event can be tracked by anyone, anywhere. Vast amounts of data can be gathered and crunched to make better decisions on where the market is trending for a new TV show. A new album would be available to every Internet user at launch. Transactions — directly from fans and consumers, not just through intermediaries — could be a major source of revenue for the industry.

In almost every industry where this type of profound modernization has taken place, massive productivity gains have emerged. More products are released, projects are completed far faster, relationships with customers tighten, new business models emerge, and additional profits are generated.

The same can be achieved in Hollywood. With content remaining king and technology by its side, the entertainment industry has an unprecedented opportunity ahead of it.

Aaron Levie is the CEO and co-founder of Box.

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  1. guess who says:

    I`m not a bussinesswoman and I don`t speak english:) What can I say.I agree with Aaron Levie. the farther away the more interesting. I think soon it`ll be achieved in Hollywood.We will not be able to stop the technological process, and it is not necessary.

  2. kendraro says:

    This article is spot on. The fear of these new technologies really prevents innovation. I have been with Vyrt from the start and it is great. Long ago I had the idea of being able to virtually visit your favorite tv show, click on selected items to purchase. Can’t imagine why hollywood hasn’t come up with this yet.

  3. Sinead says:

    The VyRT platform actually enhances the experience of watching a movie or concert .It ties together our constant need to be social and share while immersing you completely in the experience and is a great way to generate buzz around an event.Gerard way had a listening party on VyRT while was a great success and VyRT has so much more to add to the entertainment industry .It could be used for workshops ,concerts ,live film premiers ,behind the scenes on TV shows .A director could even show a film while discussing said film .The possibilities are endless .It even solves the problem of bootlegging because by offering a unique interactive social experience which when people try once they keep using .The film industry and music industry should pay attention to VyRT because it very well could be the answer to loss of earnings through bootlegging .

  4. Rhonda Allen says:

    You have a choice embrace technology, advance and move with it in every aspect if life and business, or try to hide from it, run the other direction and be left outdated, unwanted and out of business.
    I have been in the IT field for nearly 20 years and everyday you have the ability to learn and improve. Technology is to make life better, easier if you just embrace it. Jared Leto has done that and with his VyRT platform is revolutionizing the online experience drawing a closer connection to those who support him, the Echelon. Being a marketing genius, he gets technology to work for him and look at what it has done for his career.

    People in all types of businesses can learn so much from his work ethic and the way he embraces technology to have it work for him.

  5. CJ Lawrence says:

    Aaron I have to say Mr.Ebersole is right on the money in his comments about your guest column.

  6. George Ebersole says:

    A day late and a dollar short. This comment might as well have come 20 or even 30 years earlier, and it would have been the same thing. This article is vapid, and does not touch on any of the specific aspects of how technology has benefitted and hampered content. This page took forever to load, and when it did, I read an article that wasn’t worth a great deal, and spoke strictly in generalizations. Next time, Variety, please get someone with a tech background to comment on technology influencing media markets.

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