Media & Entertainment Law

What Does the Internet Mean for the Movie Business?

By Jonathan Handel, Esq.

There?s been a lot of discussion lately about the relationship between the Internet and television. The talk focuses on such sites as Hulu and such issues as whether and/or when the Internet will overshadow television, or whether all television will be Internet based. The debates have been especially fierce in the context of the SAG stalemate, since compensation and residuals are much lower in new media, and union jurisdiction more limited, under the model proposed by the studios to SAG and adopted by the DGA, WGA, AFTRA and the IA.

But with all the focus on television and the Internet, there?s been little discussion of late on the relationship between movies and the Internet. Sharon Waxman?s recently launched site The Wrap remedied that somewhat with a panel (and party) Wednesday night. Entitled ?Hollywood 2.0: Transformation as Opportunity,? the session was moderated by Waxman, and featured Universal Pictures chairman Marc Shmuger and Yahoo! SVP of U.S. audience Jeff Dossett.

It turns out, according to Shmuger, that the Internet doesn?t mean much at all to the movie business yet. He remarked that the Internet is a ?broad marketing tool,? but went on to say that $3 million invested in a TV buy creates more awareness than the same amount invested online. He also remarked that the Internet ?is not a key influencer? of audience choice in what movies to see. Rather, it?s number three behind trailers and TV spots.

Dossett, for his part, spoke more enthusiastically, asserting that the ?efficiency and reach of the Internet is phenomenal,? and offering as evidence the metric that movie trailers on Yahoo! can receive from one to five million views. He also noted that it was ?very unlikely that Yahoo! will create feature length movies.?

Asked what the movie industry can learn from the Internet industry, Shmuger cited that sector?s nimbleness, responsiveness, and ?courage to act quickly.? He noted that Hollywood doesn?t have nearly enough two-way communication with the audience.

Discussion of the Internet as a distribution platform, rather than just a marketing tool, was striking for its absence at the panel. Shmuger stated that studios were ?not making any real money in the digital world,? and asked ?Where?s the beef?? in such transactions. Neither panelist discussed piracy in any depth?an example of the Internet as a highly successful distribution platform, albeit one where no revenue is generated for the content?s legitimate owners.

What I didn?t hear was any innovative ideas on how to use the Internet as a distribution medium that allows a uniquely personalized relationship with each audience member. So, as I left the session and grabbed a few remaining tasty desserts, it was hard to escape the notion that Hollywood might well be repeating the mistakes of the music industry. Let?s hope not.

???????

Subscribe to my blog (jhandel.com) for more about digital media. Go to the blog itself to subscribe via RSS or email. Or, follow me on Twitter, friend me on Facebook, or subscribe to my Huffington Post articles.

Full post as published by Digital Media Law on February 22, 2009 (boomark / email).