Hollywood: Digital dummies finally wise up

The large film studios have wrestled digital piracy for more than a decade now. DVDs become easy to unlock and pirated versions of movies grew into the millions of copies, especially in markets like China. File sharing services like KaZa and BitTorrent made sharing illegal copies over the internet easy and fast.

While the studios insisted that consumers could only watch films in theaters or on DVDs and VCRs, the incentive for consumers to turn to other means grew with the technology that allowed them to exploit the weaknesses in Old Media systems.

Hollywood has not only gone digital, it has gone Darwinian. The big film companies are releasing feature-length content on everything from download services at outlets like Wal-Mart Stores, Inc.'s (NYSE:WMT) Walmart.com to the Apple Inc.'s (NASDAQ:AAPL) video iPod to file-sharing services gone legit. The latest such service is from BitTorrent, once Hollywood's great digital nemesis. Now the tech company is about to offer films using its system and digital rights management from Microsoft Corp. (NASDAQ:MSFT). Several studios will sell their movies on the new service.

Hollywood has gotten bright fast. Digital film distribution has been inevitable as has an e-commerce system that would get some money back to the content owners. So far, however, the studios have opted for a chaotic system whereby a large number of digital companies will have distribution rights. That means that those companies that can find a large audience for content over the internet will survive. The others will go the way of the Dodo. Big media has set up a race. The winners will be the de facto best partners, but the studios don't appear to care who those winners are.

To the victors go the spoils.

Douglas A. McIntyre is a partner at 24/7 Wall St.