Hollywood tactics again...

Dwayne Horner | August 17, 2009 12:00 PM

In the past, I've written about the counter-productive and heavy-handed efforts of the big Hollywood movie studios to kill an innovative technology called RealDVD, a product which would allow consumers to save a personal copy of a movie onto their computer's hard drive.

This is no different than what happens when you copy a song from a CD you own onto your computer or iPod -- yet, instead of embracing this new technolgy as an add-on -- Hollywood studios sued them.

Unfortunately, just last week, RealDVD was dealt a major setback as a judge granted a temporary injunction against selling the product.

But my issue is not with the judge's decision, but rather with the decision of the studios to sue over this. ... And apparently, I'm not alone in thinking they are unwise. Over at Big Hollywood, Ken Blackwell has authored a piece saying,

Hollywood has long presented itself as “cool” and “cutting edge,” yet when it comes to guiding their own industry, they seem mired in a 20th century mindset. The irony here is that instead of allowing a legitimate and innovative company flourish, the movie industry will likely find that more and more piracy sites will emerge and that fewer and fewer people will be buying what they are selling.

But it is not just entrepreneurial conservatives who are echoing this same sentiment. In an editorial out today titled, "Hollywood's Control Freaks," the LA Times' editors note that,

RealNetworks' RealDVD software and Kaleidescape's home servers drew fire in part because they can make permanent copies of the rented or borrowed discs. But people who are so inclined can do that already with tools that are cheaper and less restrictive. More important to the studios, RealNetworks and Kaleidescape add value to a movie collection by making it easier to manage and watch. In so doing, they increase the incentive to own a movie rather than just rent it.

One lesson from the technology industry is that there is a trade-off between controlling products and unleashing the innovation that spurs growth. Just look at how well the iPhone has fared since Apple invited independent developers to create applications for it. Hollywood should remember the principle underlying the case against China: Centralized control stifles a market. Rather than trying to stop potentially disruptive technologies and business models, Hollywood should find a way to harness them.