The digital revolution will profit studios in many ways, Lucas and other
Hollywood visionaries believe. Computers can replace expensive sets, equipment,
and even actors with cheap pixils. Movie files on hard drives can be edited,
copied, and stored at a fraction of the cost of bulky, scratch-prone film. And
digital movies can be distributed directly to consumers over the Internet and,
eventually, by satellites. Viewers will have instant access at any time to any
movie they want -- and Hollywood will be able to bypass theater owners,
Blockbuster, HBO, and every other middleman who now has a finger in the
celluloid pie. Cheaper and better in every aspect, the new technology, Lucas
has long maintained, will empower a new generation of cinematic artists and
What Lucas seems not to have perceived is that the new technology would also
empower the audience -- including his own fans. It's no secret that many of the
most passionate "Star Wars" devotees -- the kind of people who think nothing of
wearing Darth Vader masks in public -- were disappointed by "The Phantom
Menace." The loudest complaints concerned Jar-Jar Binks, a loquacious,
computer-generated alien who was widely deemed the most tiresome entity ever to
appear on a movie screen. Another source of fan wrath was the young Darth's
exclamations of "yahoo!" and "whoopee!," which were deemed too inane for a
future Dark Lord. The Phantom Editor neatly trimmed the roles of both the
gibbering alien and the annoying kid. To keep the file size manageable, the
film has been reduced to a 2-1/4" x 5" frame onscreen; except for that
(granted, a big exception), average viewers would have had no way to tell, from
technical quality alone, that they were watching a kind of home movie. And more
versions are on the way -- already someone has re-edited the re-edited version,
dubbing in entirely new dialogue for the despised Jar-Jar Binks.
In the past, disgruntled film buffs might have been able to obtain and cut up
movie prints -- an unlikely scenario, true, though not impossible. But they
would have had no way to share their work with a wide audience. And apparently
this was initially the case with "Star Wars 1.1." The Editor released it on
videotape sometime last spring. Fans who obtained copies made more and gave
them out at fan and comics conventions. A group calling itself "The Phantom
Edit Fan Network" organized mass distributions, handing out dozens of copies a
day. More copies were surreptitiously sold on eBay. But these events were
always on a small scale. Then someone converted the videotape into two
100-megabyte computer files in September and placed the Phantom Editor's work
on the Internet. That was when, a rueful Lucasfilm representative admitted,
"The thing took on a life of its own."
Today the Internet offers a plethora of cheap, fast distribution methods:
file-sharing services; Web, FTP, and Hotline sites; Usenet; instant-messaging
or IRC chat sessions; and even e-mail (although Internet service providers
often set limits on the size of files that can be transmitted by e-mail). "Star
Wars Episode 1.1" seems to have quickly appeared on all of them, along with
such favorite Net fare as "The Matrix," "Pulp Fiction," bootleg Japanese
animated movies, and a clip from French television of Britney Spears falling
out of her dress. How many full-length films are available this way? Cyrill
Glockner, Microsoft's European business manager for digital media, estimated in
October that the number was around 600,000. A more accurate answer might be
that no one knows, but the number is growing every day.
All of which is a dilemma for Hollywood. Every one of the good things that
Lucas sees in digital technology may well come true, not least because Lucas is
making them occur -- Episode 2 of "Star Wars," scheduled for release next
spring, will be the first live-action
feature film entirely shot and edited digitally. By the time Episode 2 hits the
screens, in fact, the studios should have already launched their first forays
into sending movies over the Internet: Movies.com (a partnership of Disney and
Fox) and Moviefly.com (a joint venture of Sony, MGM, Paramount, Universal and
Warner Brothers). The two consortia plan to offer feature films for
downloading, as a kind of precursor to the anywhere-anytime access that digital
pundits see in the future. (Dreamworks, the studio set up by Steven Spielberg,
Jeffrey Katzenberg, and David Geffen, says it will do business with both.) To
be sure, the first downloadable movies will hardly be exciting: small, blurry
rectangles on computer screens. But by gradual steps, the studios say, their
efforts will lead to a Lucas-style digital utopia -- digital movies on demand,
accessible twenty-four hours a day from anywhere in the world.
Unfortunately for Hollywood, the worries about digital technology's dark side
may come true, too. Most of the major studios belong to conglomerates that have
their own record labels, with the exact configuration varying from media giant
to media giant. Studio honchos thus have only to look down the hall to see
people who have spent millions of dollars trying to prevent their customers
from seizing control by distributing music on the Internet without permission.
At least thus far, the labels have failed utterly. Last April, a court order
effectively shut down Napster; within six months, according to the
digital-media firm Webnoize, fans were using new file-swapping services to
download even more files from different file-trading services -- 1.81
billion music files per month on the KaZaA, MusicCity and Grokster
networks alone. Worse, from the labels' point of view, many of the new services
were either based offshore, making them harder to sue, or configured to take
advantage of legal quirks which made them possibly legal.
And the file-trading networks hardly exhaust the studios' fears. In November,
Sonicblue, a small, feisty technology company, released the ReplayTV 4000, the
first device that lets people digitally record broadcast television shows and
movies and send them over the Internet, though for now the files can only be
played on other ReplayTV 4000s. (TiVo, a startup that also makes digital TV
recorders, announced the same month that its recorders would be available to
all AT&T Broadband subscribers, but thus far it supposedly prevents people
from e-mailing those recordings.) And companies like ShowShifter, SnapStream,
and CyberLink are marketing software that lets PCs capture TV broadcasts; users
can then freely dispatch the resulting files around the Net.
Partly because of the multiplying threats to their revenues, the studios are
following the labels' path to the courtroom -- they joined up with the music
companies to sue KaZaA, Grokster, and a third service called Morpheus in
October. Perhaps the most important digital courtroom battle for Hollywood
began two years ago, when the DVD Copy Control Association -- a trade
organization that controls the licensing of the encryption technology on DVDs
-- sued 21 people in several countries for posting on the Web a program that
let people copy DVDs. (A note of explanation: DVDs have large encrypted files
that can readily be copied in their entirety by any computer; the software,
known as "DeCSS," let users illicitly decrypt the files, which could then be
stored and disseminated in uncontrolled formats.) The DVD Copy Control Association has, for the
most part, won decisively in court. But the DVD-cracking software was already
released, which meant that it was all over the Net. It still is -- a recent
Google search for DeCSS turned it up in less than a minute. Indeed, the Phantom
Editor named the two files of Episode 1.1 in such a way that computer
cognoscenti would recognize that they had been created with DeCSS.
In the most recent litigation, Disney (which owns ABC in addition to its
eponymous movie studio), Viacom (owner of Paramount Pictures and CBS), General
Electric (owner of NBC), and AOL Time Warner (owner of the Warner studio and
various TV networks) sued ReplayTV maker Sonicblue in October and November.
Sonicblue is familiar with litigation: the Recording Industry Association of
America, the record labels' trade group, tried to stop it from releasing the
Rio, the first-ever portable MP3 player, in 1998 (the labels lost). But this
suit has a curious difference: Sonicblue bought ReplayTV earlier this year in a
stock swap from its investors, which included Disney, Viacom, and General
Electric. In consequence, the studios find themselves in the ludicrous position
of suing a company that they partially own.
As these contretemps suggest, litigation is unlikely to be a successful
long-term business strategy. Recognizing this, both the movie studios and the
record labels have announced plans to launch services that will provide
authorized access to their material online. (The music equivalents to Movie.com
and Moviefly.com are Pressplay, formed by Sony and Universal, and MusicNet, a
partnership of Warner, Bertelsmann, and EMI.) But the media conglomerates'
efforts to maintain control may backfire -- Congress, the Department of
Justice, and European trade regulators have already announced that they plan to
investigate whether the new music ventures violate antitrust laws. Yet even if
studio- and label-controlled consortia survive legal scrutiny, the illicit
channels in many ways will still have the edge.
To begin with, millions of unprotected CDs and DVDs have already been released, all of
which can be readily copied and posted onto the Internet. Working with
companies like Microsoft and RealNetworks, the studios and labels have spent
huge sums trying to come up with secure formats -- software locks, if you will
-- so that movies and music cannot be played, copied, and distributed without
the copyright owners' permission. The labels are experimenting with such
formats today -- in November, Natalie Imbruglia's "White Lilies Island,"
released by Bertelsmann label BMG, became the first widely released CD with
anti-copying technology. (It can be copied onto cassette tapes, but not
transformed into computer files.) In every known copy-protection effort in the
past, someone somewhere has figured out how to go around it and posted the
method on the Internet, thus equipping millions of others to do the same. And,
indeed, copies of Imbruglia's music are easily available online. Not only that, but the anti-copying technology is so buggy (in this initial version, anyway) that BMG has been forced to issue unprotected versions of "White Lilies Island" to purchasers who cannot make their CDs play properly.
The studios and labels -- "content owners," as they have come to be called --
hope to overcome that problem by making their offerings so easy and cheap that
audiences will prefer to use them, rather than hunting for hackers' copies.
There is clear merit to this argument. Even with a broadband connection to the
Internet, downloading an unauthorized version of a movie from, say, KaZaA can
take many hours. (A test copy of "Star Wars 1.1" took all night to dribble in.)
Clearly, many Net users will not exert the time and effort to grab movies
illicitly if they can quickly and simply download authorized copies. Alas, the
people most likely to take the trouble to ferret out bootlegs may well be the
people most likely to put up with the relatively unpleasant process of watching
a movie on a computer screen -- the "lean-forward experience," as it has been
called. In the future, Hollywood hopes to have cable-like, set-top boxes that
let viewers transfer downloaded movies directly to their TV sets. But by the
time that happens, piracy may be so ubiquitous -- and young viewers so
conditioned to thinking of Internet movies as free -- that the audience may
have no need or desire to pay.
Ultimately, content owners may be able to win the battle against unauthorized
distribution by persuading or forcing Internet service providers to monitor
users' accounts and block the use of networks like KaZaA or BearShare. But this
would require, in effect, ISPs to spy on and harass their own customers -- a
prospect that, unsurprisingly, ISPs thus far have resisted. Fans don't like
copy-protection much, either -- already they are organizing against record
labels' copy-protected CDs. Yet if content owners can't put a lid on customer
behavior they may ultimately lose so much revenue as to imperil their ability
to create new movies, television shows, and music.
In the past, many of the dilemmas posed by new technologies have ultimately
been resolved to everyone's satisfaction. At the moment, George Lucas must be
worried that copyright on the Internet will be an exception. Looking at the
list of hundreds of copies of Episode 1.1 available at different Net services,
it was hard not to wonder if the train had already passed through, and if
anybody would be able to halt its progress.
+ "Has Hollywood Met Its Napster?"
(The Guardian, Oct. 29, 2001)
+ "Video-on-Demand, Hollywood Style"
(Business Week Online, Aug.
+ "Net-to-Set Convergence Is a Story Currently in Development"
Angeles Times, Sept. 13, 2001)
+ "Is Hollywood Net-Ready?"
(InternetWeek, Aug. 23, 2001)
+ "Securing the Broadband Revolution"
(Wired News, Aug. 22,
+ "Broadband's Coming Attractions"
(Technology Review, June
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