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

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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