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.

Hollywood: Digital dummies finally wise up originally appeared on BloggingStocks on Mon, 26 Feb 2007 10:14:00 EST. Please see our terms for use of feeds.

One thing that is clear: the music industry knows how to score with litigation. Its latest is a $115 million settlement with Kazaa. Several years ago, Kazaa had a YouTube-like trajectory in traffic.

But there's more: Kazaa will take measures to guard against illegal file sharing. Yes, it's like a hard-rock band moving over to Christian music.

Actually, it's unlikely Kazaa will return to its prior glory. Now, the market is flooded with many choices, such as Apple's iTunes, as well as offerings from Yahoo, MTV, and Napster. Besides, Kazaa built its model on giving things away. Now, are people going to be interested in paying? Probably not.

Rather, they will look elsewhere -- most likely, that will be file sharers that are offshore and do not care about US Supreme Court decisions.

The co-founders of Kazaa are also the co-founders of Skype: Niklas Zennstrom and Janus Friis. Apparently, both are pitching in to pay for the settlement. It's really a small price to pay - in light of the fact they got $2.6 billion from eBay when they sold Skype. And, with all legal claims cleared, both can now finally visit the United State without getting served.

Kazaa Skypes-Out originally appeared on BloggingStocks on Fri, 28 Jul 2006 09:36:00 EST. Please see our terms for use of feeds.