Silicon Insider: Hollywood's Shallow Victory

July 7, 2005 -- -- The entertainment industry celebrated its victory last week before the Supreme Court as the long-awaited triumph of the traditional media over the upstart new media.

Instead, it may prove to be a last hurrah.

Just to summarize, for all of you readers who may have been distracted by the other big Supreme Court ruling -- the one that turns over all private property in the United States to rich developers -- the Supremes sided with the big names of traditional entertainment against two music and video download services, Grokster and StreamCast Networks (the suit was filed by MGM). Hollywood can now sue these two outfits for copyright infringement; or, more likely, just throw enough lawyers at them until they bleed to death.

In his decision, (the soon-to-be-homeless) Justice Souter stated that, "The unlawful objective [of the two companies] is unmistakable." And he is probably right: the whole download industry has always been a sort of nudge-nudge-wink-wink to the illegal theft of intellectual properties of the movie and music industries -- kind of like giving a printing press to teenagers and making them promise to never, ever print fake IDs or phony report cards.

But even if it is difficult to feel much sympathy for the Groksters of the world, it's even harder to share in the triumph of Old Entertainment. They have won this round, but nobody seriously believes they've accomplished anything against the real problem of media piracy. On the contrary, having killed Napster, and now Grokster, Hollywood has effectively crushed the one part of the download world it could actually negotiate with, even co-opt. Now music and video piracy have been driven down into the anarchic underworld of freelancers and freeware -- where there is no hope for collaboration, no one to threaten, no organization to sue. Hollywood is going to look back on the last couple years as the good times, when piracy was still a tangible opponent, not an immense and amorphous shadow opponent.

If you want to see Hollywood's biggest enemy now, look into the face of your teenage child … or the mirror. Every teenager I know casually downloads pirate movies and music without a second thought. And I can guarantee you that somebody on my block, and on every other block here in Silicon Valley, has a source for any bootleg first-run movie delivered within hours after that film's opening day.

In other words, Hollywood's biggest threat is not the Groksters of the world, but teenager LAN parties, cable modems, DVD burners and small digital video cameras -- a combination of technology and distribution that cannot be defeated, even with the help of the United States Supreme Court.

And thus, even as Hollywood moguls clink their champagne flutes in celebration of their historic legal victory, the ground is already giving way beneath their feet. The perversity of life is that tipping points always seem to arrive just when you think that you've escaped and life will at last return to normalcy.

Other Signs That Hollywood Is in Trouble

And that is just what is happening to the world of Old Entertainment. Besides the Supreme Court ruling, there were two other interesting bits of news about the movie industry in the last month. The first was yet another week of bad box office numbers in a long and gloomy summer for movie receipts; the worst in two decades. Even boffo box office for "War of the Worlds" isn't likely to make more than a temporary dent in the bad news.

Most movie commentators blamed the poor numbers on the generally mediocre quality among the summer's supposed "blockbusters": the new Batman is too dark, "Bewitched" isn't funny, etc. Others say, "Just hang on: We've still got 'War of the Worlds' and 'Willie Wonka' to pull things out of the fire at the last minute." And some just shrug and say, "Next summer's movies will be better. Just wait."

But you and I know the real reason why people aren't going to movies any more: mainstream Hollywood movies these days are terrible. Too many recycled plots, recycled actors and recycled marketing campaigns. Too many special effects and not enough characterization. Endless crappy remakes and stupefying dialog. We go into a movie theater now knowing not only how the movie will end, but every plot turn getting there. And we find ourselves applauding even terrible movies that manage one or two brief moments of originality. I actually cheered "Star Wars III," despite some of the worst acting I've ever seen in a major film, because Lucas had the guts to horribly mutilate his lead character.

(That's not to say that great movies aren't being made: the finest film I've seen in a long time is the DVD version of "The Station Agent," an indie flick that must have cost 11 cents, and yet contained more emotional truth than 50 Hollywood blockbusters.)

So the real reason why people aren't going to the movies this summer is that they hate them -- and, on the rare occasions when they do go, they hate themselves for being suckered one more time by Hollywood. Now, they are returning Hollywood's contempt in kind.

Staying Away From Theaters

And, as much as they hate the movies, they apparently hate going to the movies even more. That was the other little item in the news last month: a poll that found a majority of Americans don't like going to movie theaters and would rather watch films at home.

Gee, big surprise. Of course, movie critics and fanboys hissed their disapproval: surely, everyone loves the communal experience of watching a film together, to see those flickering images up there on the big screen? How could anyone not love going to the movies?

Well, let me count the ways … See, I used to be a movie critic, so I know what it's like to drive up to the screening room, park in a private parking place, be greeted and escorted into the theater by paid industry representatives, and settle my butt into a soft theater seat (don't forget, the critic for the Chronicle doesn't allow anyone to take the seat on either side of her) and watch a brand-new clean print on a perfect aspect-ratio screen. But for 20 years now I've been a civilian, and like you I know what it's really like to go to the movies: endlessly driving around a mall looking for a parking place, buying overpriced snacks, and spending 50 bucks to take my family to see a bloated, scratched, predictable Hollywood movie in a crowded theater with sticky floors and sprung seats, while some moron three rows up is answering his cell phone -- and did I mention the four minutes of commercials before the endless trailers? Ohhhh boy, good times, eh?

Is it any wonder that the average American would rather sit at home in a comfortable chair, watching a movie on the plasma big screen with the surround-sound speakers, eating good popcorn and drinking a beer, and be able to stop the damn film at any time to answer the phone or go to the bathroom? Do any of you doubt that if Hollywood were to actually release a new blockbuster on DVD the same day it opened theatrically, that the nation's movie theaters would be deserted but for a few necking high schoolers?

So let's add it all up: a degraded product, an obsolete distribution system, and a core audience that is actively trying to undermine you even as you try to criminalize them. If this was any other business, it would either be in Chapter 11 or the shareholders would be demanding that it rethink its business model.

But this is Hollywood. Where dreams are made. I used to think that the entertainment industry was using the courts merely to buy time and fend off new competitors as it rushed to replace its old infrastructure and distribution systems with new ones that more accurately reflected the changing marketplace. But more and more, I'm convinced that all of this is merely a desperate attempt to preserve the status quo. Forever.

It won't work. It never works; not when technology is calling the tune. And when the revolution comes, it comes fast. I hope those moguls savored their victory last week; because they have already lost the war.

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Michael S. Malone, once called “the Boswell of Silicon Valley,” most recently was editor at large of Forbes ASAP magazine. He has covered Silicon Valley and high-tech for more than 20 years, beginning with the San Jose Mercury-News as the nation's first daily high-tech reporter. His articles and editorials have appeared in such publications as The Wall Street Journal, The Economist and Fortune, and for two years he was a columnist for The New York Times. He has hosted two national PBS shows: "Malone," a half-hour interview program that ran for nine years, and in 2001, a 16-part interview series called "Betting It All: The Entrepreneurs." Malone is best known as the author of a dozen books. His latest book, a collection of his best newspaper and magazine writings, is called "The Valley of Heart's Delight."