• by Jonathan Blum , January 6, 2006

Las Vegas--If the corridor talk and cab line schmoozes here at the Consumer Electronics Show are any indication, Hollywood remains stuck in its analog past, even as digital technologies and trends take center stage. This could be bad news for advertisers and media strategists who are attempting to divine the digital future and determine how to re-deploy media dollars.

Executives speaking on panels at the show point to ominous trends. Despite major announcements, like Walt Disney Co.'s deal with Apple for downloads to portable devices, or Starz Encore Group's creation of an on-demand Internet movie service, tensions with cable operators, satellite providers, and other networks continue to impede deals.

Also, distrust of consumers has slowed alliances. Lawsuits against illegal downloading were brisk last year; the pall of mistrust continues to hover over digital rights management, or DRM, nearly a full decade after the transition from traditional movies and television became clear. Most major film libraries aren't digitally available, and fresh turf battles continue to surface as new features debut with content. For example, a benign service found on some Time Warner Cable networks called "Start Over" is causing a lot of controversy, according to Chris Marlowe, editorial director, Digital Media at the Hollywood Reporter, who spoke on a panel here.

Marlowe suggested that copyright holders felt the service counted as another presentation of their program, while Time Warner considered it a video-on-demand function covered under existing agreements. Either way, this rather harmless service is causing some content providers to re-examine their digital content distribution deals to include this provision.

On the music front, while America Online enjoyed a seminal moment in the history of the Web last year when it streamed the Live 8 concert from multiple global venues, concerns persist around basics, including paying talent.

Digital content executives point to an increasing demand for marketing material and collateral which must be provided free by artists. David Kang, senior vice president at The Firm--a leading entertainment management firm--described a maze of promotions, exclusives, contests, and fee waivers that must be proffered to launch an album.

"We are constantly creating free content. The artist is doing more and studios are doing less," Kang said. "Unless we get it sorted out things like Live 8 won't happen often."