Hollywood takes another stab at download dollars

Some of Hollywood's largest players -- including Warner Brothers, Paramount Pictures, MGM and 20th Century Fox -- announced this week that they are making yet another attempt to jump on the Internet bandwagon by providing some of their movies for download.

But does this latest effort have any better chance of success than its predecessors? To put it bluntly, the odds don't look great.

The studios have signed an agreement with a firm called BitTorrent Inc., whose software is one of the most popular ways of downloading movies and other copyrighted content illegally. According to some estimates, BitTorrent file swapping accounts for as much as 30 per cent of all Internet traffic.

One of the unique things about BitTorrent is that the software (using a protocol known as "peer-to-peer" networking, which doesn't require any central servers) is structured so that users download and upload pieces of the same file simultaneously. The more people share a file, the faster everyone's download becomes.

P2P technology is a very efficient way to distribute large files. Unfortunately for the movie studios, however (and for music labels, software companies and others), BitTorrent doesn't have any "digital rights management" built into it, so there is no way to keep track of which files are legal and which ones aren't.

As part of the deal with the studios, BitTorrent has created a version of its software with Microsoft's DRM technology built in. Movies -- which cost $3.99 (U.S.) to rent -- can't be burned to a DVD, can't be copied to another computer, and are only playable for a 24-hour period. They can only be played in Windows Media Player.

The BitTorrent deal is the latest attempt by the major studios to make their movies available online, but so far only one of those attempts has had any real success, namely, Apple Inc.'s iTunes.

Other efforts include CinemaNow and MovieLink, which have attracted small numbers of users, but nowhere near as many as traditional renters such as Blockbuster or Netflix (none of the movie download services are available in Canada).

Online retailer Amazon offers a movie download service called Unbox, and several studios (including Warner and Sony) have an alliance with a software company called Guba to offer movie downloads. Retailing giant Wal-Mart also recently started offering a movie download option when you buy a regular DVD movie.

Renting a movie from one of the existing services costs between $9.99 and $14.99, and every one except iTunes gives you rights to the movie for just 24 hours after you first start playing it (although you have 30 days to do that). CinemaNow allows you to burn it to DVD, but charges $14.99 for the right to do so. Many argue those prices are too high, particularly with so many restrictions placed on the downloads. In a New York Times story about the BitTorrent service, CEO Ashwin Nevin said the firm could have offered people the right to buy a movie, but prices demanded by the studios were higher than what BitTorrent wanted.

The new service faces some other hurdles as well, and one of those is technological. Because P2P file swapping is such a big component of Internet traffic, many Internet service providers put limits on applications such as BitTorrent. That kind of "bandwidth shaping" could slow down the new service and make it less efficient.

The bottom line is that the movie studios are trapped between an old business model and a new one. The existing structure, where films are released in specific patterns to specific forms of media -- first in theatres, then to DVD sales, then rental, then pay TV, and so on -- is designed to maximize revenue, since some films can cost $150-million or more to make.

But downloading -- both legal and illegal -- is eating into that business model. So the studios are still trying to maintain as much control as they can, by imposing DRM on downloads and restricting which movies are available when. And that makes sense if you assume that they need to make up for the lost revenue from theatre sales, DVD sales, pay TV and so on. But does it make long-term sense?

At the moment, people seem content to either download free movies illegally, rent them in the traditional way, or perhaps not even watch Hollywood movies at all. And that's not a pretty picture.