By Stefanie Olsen CNET News.com
SANTA MONICA, Calif.—Digital technology will eventually force big changes on how Hollywood sells movies, but security remains a key stumbling block.
Studio executives gathered at the Digital Hollywood conference here this week debated new business models made possible by the Internet, home networks and a burgeoning array of digital devices. They also warned that copyright concerns could delay for years new products and services that fully take advantage of the new technologies.
At the heart of the debate are so-called digital rights management (DRM) tools that aim to prevent unauthorized access to digital files, including music and video. DRM is considered a crucial glue for new digital entertainment services, giving studios, record labels and others powerful tools for protecting their copyrighted works, and laying the groundwork for profitable new ways to sell their products.
One Sony executive speculated that such technology might one day allow the studio to release "Spider-Man 3" simultaneously in theaters and for sale over Internet-enabled, high-definition televisions. Such a move would be unprecedented, breaking current "release windows" that keep movies off video rental store shelves for months after they premiere.
But Hollywood would need strict anti-copying guarantees first. Specifically, locks would need to be pushed deep into the guts of television set-top boxes, PCs and home networks—broaching a hot-button issue that's riled device makers that largely oppose such measures.
"We don't want to be MP3-ified," said Sony Pictures Entertainment Executive Vice President Mitch Singer, referring to copyright headaches for the music industry that were brought on by the Internet. "We have to make our content better than free and fast. But until there's security...(the PC) will not be the platform of choice for new business models."
Like the music industry before it, Hollywood is at a crossroads. New technologies from digital video recorders to portable video players promise to make its products more available than ever before, and the studios hope to use these to tap into vast new opportunities for profits. But at the same time, executives fear consumers could soon have so much control over when and how they consume their products that the studios will wind up losing out.
Flexing legal muscle
The studios are pushing both legislation and technology to wrest control back. The Motion Picture Association of America (MPAA), Hollywood's chief U.S. lobby group, is backing bills that would criminalize some forms of file swapping. One such bill, known as the Induce Act, is expected to face a Senate committee vote this week.
The measure enjoys strong support from the entertainment industry, which claims it will target file-swapping networks with minimal collateral damage. But it has drawn sharp protests from technology companies, including News.com publisher CNET Networks. More than 40 technology companies and trade associations warned bill sponsors on Tuesday that the legislation would engender an "unmanageable flood of litigation that would tie up innovators and chill investment."
Separately, the U.S. House of Representatives on Tuesday handed Hollywood and entertainment companies a legislative victory, voting to boost penalties for online piracy and increase federal police powers against Internet copyright infringement.
"Millions of pirated movies, music, software, game and other copyrighted files are now available for free download from suspect peer-to-peer networks," said Rep. Lamar Smith, R-Texas, who heads a copyright subcommittee. "This piracy harms everyone, from those looking for legitimate sources of content to those who create it."
Studio executives at the Digital Hollywood conference said that the Induce Act needs to be written narrowly enough so that it doesn't overrule Sony v. Betamax, widely considered a seminal case in home-recording rights. "We don't want to overturn that," Sony's Singer said. Rather, he and other attendees on the studio side said that technology companies should be counted on to provide filtering software to prevent trafficking of copyrighted works.
Locking down content
"We're not anti-technology—we want technology to be smart enough to stop people from stealing our stuff," said Ron Wheeler, senior vice president of content protection at the Fox Group.
On that front, the MPAA has pushed technology known as the "broadcast flag" to ensure that over-the-air digital television broadcasts can't be easily copied and distributed online. The Federal Communications Commission has mandated a shift from analog to digital television for 85 percent of U.S. television stations within the next few years.
The FCC has recently begun to certify technology proposals from dozens of companies that aim to comply with the broadcast flag directive.
Sony's Singer on Tuesday said that Hollywood needs significantly more robust copy protection technology than is currently available. He said Sony and other studios ultimately want end-to-end security from the source to the screen.
Microsoft's new version of Windows, Longhorn, seeks to secure video delivery to the screen, but Singer said he didn't know of any PC that is protected that way today.
What's more, DRM is only as strong as the weakest link in the chain of content transfers across multiple devices, Singer said. He added that unlike the open architecture of the PC, set-top boxes can be more closed and secure, and therefore easier to develop new services for.
In the burgeoning home-networked environment—which Sony, Microsoft, Intel and others are developing—there also needs be a common set of usage rules among consumer electronics devices and content distributors so that consumers know what they're getting and how they can use CDs, DVDs and other content on their devices, studio executives said.
"Interoperability is the biggest challenge to new services," said Kevin Gage, vice president of strategy technology and new media for Warner Music Group. "Next year, you'll start seeing people with potentially large libraries of content that won't play with their devices."