KUHN CAPITAL Tuesday, October 17, 2017
Dispatches from the front

Hollywood Versus the World
(1/29/2003)

A powerful new tech industry trade group, the Alliance for Digital Progress (ADP) recently formed to counter Hollywood’s escalating efforts to further restrict consumers’ ability to duplicate or access copyrighted media. See our prior news blurb for some history on this Hollywood offensive, starring Sen. Fritz Hollings.

The ADP feels that existing intellectual property (IP) laws are sufficient to the task at hand, and that Hollywood and the tech industry are both better served by working together on solutions without invasive, heavy-handed government intervention.

ADP is comprised of a number of big tech players like Intel, Cisco, Apple, Motorola, IBM -- even Microsoft with its own well-defined position on IP rights. In its fact sheet, the group makes the following argument, and we paraphrase:

Publishers opposed photocopiers. The result: business greatly benefited, and publishers emerged unscathed.

Hollywood opposed VCR’s. Jack Valenti said they were “… to the American film producer and the American public as the Boston Strangler is to the woman home alone.” The result: VCR’s became a large contributor to Hollywood income.

Hollywood reluctantly and eventually embraced DVDs. Since its introduction, DVD’s have become the single fastest-growing media format in history. Last October, The Washington Post reported that, even as box office sales set records, income from ticket sales "makes up less than a quarter of a film's total take. The largest piece of a movie's money pie comes from sales and rentals of its DVDs."

Thus does ADP point out that history doesn’t support Hollywood’s fears of revenue loss in the face of innovation, and in fact argues that in the most recent case – DVD’s – cooperation between Hollywood and tech vendors produced record-high revenue and increased access for all.

But the current situation seems different. Never before has copying and distribution been so convenient. Hollywood’s fears of uncontrollable distribution seem rational to us. On the other hand, what Hollywood proposes to do about the situation is intolerable: government-enforced searches and seizures of our hard disks? Elaborate and soon-to-be obsolete hardware security experiments financed by the consumer? While we’re no legal scholars, at least some of these prescriptions appear simply impracticable and worse, to run smack into Constitutional rights.

So while we disagree with ADP that today’s Hollywood quandary is like prior media-meets-technology crises, we do agree that cooperation between technology vendors and Hollywood seems the most promising route.

Even that road won’t be easy, though, because in the process, Hollywood must likely adapt novel business models that carry some risk (for presumably greater reward). Such change is especially difficult for a particularly hidebound industry. On the other hand, what alternatives to fundamental change does it have? Lobby for increasingly invasive legislation every time some bedroom hacker devises another way to break the code? And what about hardware vendors based in countries that don’t share our enthusiasm for copyright protection: will Hollywood turn our government into a global copyright police? There’s got to be a better way.

Ryan Kuhn


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