The overture to 2008′s changes has begun

platform.jpgIn musical theater, especially opera, the orchestra will start playing the brief snippets from the music of the show arranged into one piece before the curtain goes up. The overture is designed to familiarize the audience with the musical themes they’re about to hear. It serves to set the tone and begin the process of bringing the audience into the world of the show.

Looking past on the developments in the digital download market I can’t help but feel that we’re hearing the overture to 2008, catching little bits of the themes we’re going to hear as we progress through the year.

The strongest theme that’s being played, of course, is the one that’s coming from Apple. The company, as has been widely reported, seems to be on the cusp of announcing a deal with 20th Century Fox to rent movies through iTunes, with other studios rumored to be just working out the details of their involvement as well. Holdouts include Universal, which is doing everything it can to distance itself (wisely or unwisely) from Apple, Warner Bros. and one other studio, but it seems like they’re going to be in the minority when this finally gets rolled out.

In every story it’s mentioned that Apple currently lags behind other services such as Amazon in the online rental distribution field, but very few of them mention that’s largely because there are so few studio partners in iTunes right now. Disney is the only studio selling current movies, with Paramount only chipping in catalog titles and other less fresh films. Let’s review this in a year.

Apple brings with it two extremely important features: 1) Portability – You don’t have to be tied to an Internet connection in order to watch the movie like you do through Movielink or Netflix with their “Watch Now” service. And 2) Familiarity – Once people can find the movies they’re looking for with the iTunes Store I truly believe you’ll see rentals skyrocket and iTunes become a market leader.

And if you think this is going to end with rentals you’re mistaken. Studios will eventually begin testing selling movies through iTunes day and date with DVD releases and, as downloads speed up, a critical mass will form that will turn download-to-own into a viable option for just about everyone.

The brand loyalty Apple enjoys with iTunes will likely save it from a fate like that which has befallen Wal-Mart. The superstore giant, which is the largest seller of DVDs in the U.S., quietly shut down its year-old video download store just before Christmas. The decision was so quiet, in fact, that no one noticed until about six days after it happened.

The reason given by Wal-Mart was that Hewlett-Packard, which was supplying the technology for the service, pulled its support. But you have to think that if the service were viable and profitable, Wal-Mart could have found a substitute technology provider if they really wanted to. The signs point to Wal-Mart knowing deep down this wasn’t feasible and no one else being willing to step up and fill H-P’s shoes.

Meanwhile Blockbuster has raised the price of its Total Access service at the same time its cut back on the program’s features, eliminating in-store rentals for members and making other adjustments as well. And they’ve filed a trademark for something called “Blockbuster Media Minutes” that reads to me like they’re trying to supplement declining membership revenue with some online advertising dollars.

The movie industry is, it seems, trying to not make the same mistakes the music industry began making in 1998, some of which they continue to make today. While it is arguably true that 2007 has seen a good amount of innovation in music retail, especially in terms of more and more options that do not include convoluted and restrictive DRM schemes, they still seem to be prone to Hoof in Mouth Disease outbreaks. Take the recent news that the RIAA is now arguing that people who have made a personal back-up of the music they’ve bought on CD have actually violated copyright.

But just because it’s not making the same mistakes the music industry has doesn’t mean they’re not making a whole batch of their own. There’s been reluctance to let people burn DVDs of legally purchased movies, the inability to see iTunes as a partner instead of a competitor and a mess of others, including an uncanny knack to back download websites that went out of business six months after the announcement of the partnership. There’s also the MPAA’s apparent inability to link correctly to legal downloading stores, but that’s a separate issue.

The failure to innovate in a timely manner – not even in terms of breaking new ground but simply meeting the desires of the consumer – is going to come back to bite Hollywood in the back side in much the same way it has the music industry. By the time the studios decide how they’re going to allow people to watch movies in an easy to use and portable manner, people will be using their mobile devices for broadband video. Or, as we’re now seeing as video game makers move in to take advantage of the TV writer’s strike, people will simply gravitate toward what is available on the platform of their choice and decide to do that instead.

That last point is the key and is something that needs to be built into all consumer-facing programs: People have decided what platform they prefer to use and are looking for content there. If there are movies there, they’ll take them. If it’s just games, they’ll take that as well. If it’s something else, then that’s what they’ll consume. The same goes for distribution points within each platform as well. Most of the television networks have figured out they can’t count on everyone to come to their own official website to watch streaming programming, so they’re distributing it via Joost, Hulu, AOL Video or any of a dozen other major sites that people are already using. Being seen, they’ve found, requires checking their egos at the door and just allowing the content to be out where the people are.

Record labels never figured this out, that it was better to form partnerships than draft lawsuits, and that’s why they’re dying quickly while illegal downloading continues unabated.

But Hollywood, if they can wake up to the notion that making content A) hard to find online and/or B) difficult to use because of DRM or other nonsense, both will contribute to no outcome but their eventual demise, can survive in the new media age. That requires putting the audience first. Without their support – both financial and in terms of word of mouth – the movie studios will find themselves with a comfortable, familiar business model that’s being clung to even as it’s failing them completely.

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