Hollywood determined not to be stung by a Napster-like service is becoming energized about finding ways to profitably distribute movies and other content over the Internet.
In the wake of last week's appeals court ruling declaring that Napster Inc.'s free file-swapping network is tantamount to theft, various efforts to create protected Web-based movie distribution and beef up enforcement have been invigorated.
Among those efforts are:
-Miramax Films has entered a 12-film distribution deal with Internet company SiteSound for movie releases. Miramax became the first major studio to release a feature-length movie over the Internet, charging $3.50 for a 24-hour rental of the company's 1999 offering "Guinevere."
-Later this year, Sony Pictures Entertainment and other studios are expected to offer films over the Internet on a pay-per-view basis. A number of other companies, video rental king Blockbuster Inc. among them, are investing in technologies to offer similar services.
-Studios are eyeing a model represented by Intertainer, a Los Angeles-based outfit that licenses content from studios and TV networks and contracts with broadband providers to offer that content via high-definition television or through the Internet.
-Companies such as the newly formed Digital Media and Entertainment Group at CenterSpan Communications Corp., are angling to set up secure and legal systems to pave the way for swapping digital film files in much the same manner that Napster facilitates sharing music.
-Hollywood-based MovieFlix.com and others are concentrating on streaming content over the Internet instead of offering content in downloadable form.
"I think we will be faced with exactly the same issues as the music industry. The only thing preventing that so far is the lack of bandwidth," said Ken Jacobsen, senior vice president of worldwide anti-piracy for the Motion Picture Association of America.
The film industry is actually benefiting from the limited availability of high-speed broadband Internet service. While individual songs are easily downloadable through a typical 56K modem, film files require more bandwidth to ensure quality. This is buying Hollywood more time to address the problem.
Taking a lesson from the woes of the music industry, film companies believe their best bet for avoiding rampant piracy on the Internet is to provide consumers with the product they want in an affordable, attractively packaged and user-friendly way.
Miramax was the first to jump in with its for-pay online release last month of "Guinevere." But many analysts saw the choice of that low-profile film, rather than a blockbuster, as an indication that Miramax is hedging its bet proceeding cautiously while it evaluates the success of the latest encryption technology which is being developed and tested by the MPAA, individual studios and a growing number of online entrepreneurs.
The company plans to take it one title at a time, according to Miramax spokesman Matthew Hiltzik.
"We retain the right to remove any film should we feel our security is being compromised," Hiltzik said. "We're looking for ways to utilize this medium without endangering our copyright."
Intertainer is taking a broader approach to content distribution.
The company which is backed by Microsoft Corp., Intel Corp., General Electric Co., Sony and others has deals with many of the big studios and television and cable companies to offer first-run video titles and other content through broadband distribution.
Like pay-per-view cable programming, Intertainer's content is made available to subscribers of various broadband services, for a modest additional fee.
"It's a legitimate way for people to get what they want, when they want it," said Jonathan Taplin, Intertainer's president and CEO. "I think people (are) willing to pay a small fee for content they want. That's where this (entire industry) is going."
Similarly, in the MovieFlix approach, about 2,000 titles ranging from films in the public domain and vintage television shows to "B" movies and works by USC and UCLA students are offered, all for free. CEO Opher Mizrahi said the company plans to add more titles this year and will introduce a pay-per-view component for the most popular fare within the next couple of months.
"Our model basically mimics the cable industry in the early days," Mizrahi said, referring to MovieFlix's relatively low-grade programming. As for concerns about piracy, he said that streaming technology makes the most sense for the film industry because it's harder to capture, and therefore, to copy.
Although he sees unlimited potential in distributing films and other data-heavy content via the Internet, Mizrahi said that, so far at least, the studios' eagerness to protect their copyrights leaves much to be desired from a consumer perspective.
"Hopefully, they won't be as closed-minded as the music industry was at looking at new technologies and working with new companies," he said. "There's a lot of fear and basic ignorance. They haven't taken the time to explore the Internet and see what it can do to help raise revenues."
But the MPAA's Jacobsen said that the film industry is walking a fine line as it attempts to stamp out piracy and create industry-wide technological standards while not infringing on the rights of legitimate innovators.
In 2000 alone, the MPAA issued thousands of cease-and-desist orders to Internet users who were illegally reproducing copyrighted content, he said. The group employs a full-time search engine to scour the Web for pirated material.
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