... creative talent, and innovate new business models around digital distribution. The VCR is a prime example — once the industry focused on positive innovation, it realised a bigger billion-dollar business than from traditional box-office receipts.
Second, the very entertainment execs who architected the fight against digital distribution are well on their way to overcoming their fears. Years of evangelism by dedicated entrepreneurs (myself included) of the legitimate uses of peer to peer have gone a long way. The development of technologies like Snocap and Audible Magic to identify, filter and "protect" online services closes the final gaps that will make the executives' transformation to innovation a reality. For example, utilising Red Swoosh peer-to-peer distribution technology along with Snocap's identification and registration technology could make an infringing peer-to-peer service into a non-infringing one with the flip of a switch. As such, the entertainment industry not only publicly recognises that digital distribution is an opportunity, it has even started to point out in the last six months that peer-to-peer technology is not all bad, singling out and even licensing to commercial peer-to-peer businesses.
Third, the market is ready. Broadband penetration has gone well past 50 percent in the US. Devices that play high-quality audio and video (in cars, living rooms and via mobile devices) are deploying in the tens of millions — soon to be hundreds of millions. The online-advertising market that will support online content is quickly becoming a substitute for the traditional broadcast media. And, most importantly, the demand is there. Early experiments in online music, television and movies have passed the test. After only 18 months on the PC, iTunes accounts for a few percent of the global music market and is a huge growth vehicle (more $500m in sales expected this year; over $2bn in sales expected next year), leading the way for many initiatives across music, television, movies and other services, with ultimate market sizes that will dwarf their analogue equivalents.
Regardless of whether we agree with the entertainment industry's means to this end, it is inevitable that a huge wave of digital distribution is about to come ashore. Licences are coming, and lawsuits against technology companies will recede — the quest for massive commerce will trump the use of unproductive wasteful lawsuits against technologies.
This huge wave means enormous opportunities to innovate with widely available licensing that enables massive commercial distribution. And with content distribution everywhere, we should keep our eyes on the prise — if iPod/iTunes tells us anything, it's that for every $100m in content revenues, there is more than $1bn in technology purchases.
There will be hiccups and hard work along the way. Some of the more extreme digital rights management technologies and other security mechanisms are not the most fun, but market forces could make some of these paranoia-induced features go away. And for those who cringe when they hear the term "filter", I have some advice: Integrate filtering into all of your search, peer-to-peer and consumer applications and make it optional for the user (users get a checkbox that turns on safe, legal, filtered file surfing; unchecked users are on their own).
Media companies have nowhere else to go but online. The consumers are there, the advertising is there, and the technologies are there. But after the Supreme Court case, the perceived corporate "bad actors" that scare entertainment companies are not.
Content won't be free, but our ability to innovate will be — at least more than it was during the last decade.
Travis Kalanick is the founder and chief executive officer of Red Swoosh.
