Digital dilemma in Hollywood

Panel: Tinseltown must offer content online soon

CHICAGO — If Hollywood is slow to make affordable the digital versions of its movies, TV shows and other material easily, it could get slammed by the same piracy problems ravaging the music biz, said an all-star panel at the National Cable TV Assn. annual show, which kicked off in earnest Monday.

Digital cable offers Hollywood content creators huge business opportunities, but more flexibility should be combined with better anti-piracy technologies, the panel said. Speakers consisted of Microsoft chairman Bill Gates, Viacom prexy and chief operating officer Mel Karmazin, AOL Time Warner chairman-CEO Richard Parsons and Comcast prexy-CEO Brian Roberts.

Together, they gave the show a dose of opening-day star power.

Coming a week after massive changes in FCC media-ownership rules and a landmark deal between the companies Gates and Parsons run, the panel ranged widely across digital technology’s impact on cable but returned repeatedly to copyright-protection issues.

“The music case is a very cautionary case,” Gates said. “If you don’t provide the right flexibility in a licensed form, you get the habits (of pirate file sharers).”

Music too slow

Parsons and others acknowledged the music biz was far too slow offering more flexible ways to get and use digital tunes. That led many music fans to use pirate peer-to-peer networks, where they faced no such limitations.

Gates credited Apple Computer, his sometime competitor and collaborator, for its month-old iTunes Music Store download service, saying it allows consumers more flexibility in using the digital music they buy while still limiting excessive copying abuses.

“I’m hoping that’s going to start to shift things,” Gates said.

“Had that (iTunes Music Store) product been here five years ago, there would be a lot more of the Kazaa people (who trade illegal files) doing that instead,” Roberts said.

Security issues

Karmazin said he’s still uncomfortable putting Paramount movies and other Viacom content in digital form online due to the potential for piracy.

“We would certainly like to be able to make our content available increasingly, but we really do need to feel secure, to make sure we get paid for our content,” Karmazin said.

Parsons said current anti-piracy technologies are about “a three or four but moving in the right direction” on a scale where 10 is the best.

“We could actually all be losers if we don’t solve this security issue,” Parsons said. “At the end of the day, that’s what’s holding content folks back. If we don’t have any means of securing content in this broadband world, it will choke out content creation.”

Gates in turn said various companies have developed several important pieces of anti-piracy technology, but those now must be “pulled together so consumers know what parameters there are and what flexibility they have.”

The just-signed deal between Microsoft and AOL is one example of an entertainment conglom enlisting new anti-piracy technologies to make its entertainment widely available in a protected digital form, Gates and Parsons said.

A key provision of the deal, which settled the Netscape lawsuit for $750 million, cleared the way for Warner Music tracks and other AOL TW material to be encoded in Windows Media Player 9 Series software.

Joint effort urged

Parsons called for a joint effort between tech and entertainment companies, saying strong copyright protection would encourage more digital content, which “backs up through the whole value chain.”

Consumers would then buy more advanced electronics devices, helping that industry and in turn boosting all the companies creating high-end graphics and computer chips and many other related technologies.

“We need to create an environment with the software industry where things can move around and be protected,” Parsons said. “We all have skin in this game. Let’s all come together to come up with ways of protecting this goose that lays the golden eggs.”