Hollywood vs. Silicon Valley

The entertainment industry has always been split in two very distinct, extremely incompatible sides: content and technology. Let's call these factions "Hollywood" and "Silicon Valley" for the sake of discussion, because it just sounds a lot nicer.

In a long and (sometimes) glorious tug-of-war, the Valley people keep cooking up some crazy new way of distributing media, thus forcing Hollywood to rethink its entire reason for being. The battleground moves from pirate radio stations to recordable tapes and again into cyberspace, but the changes are inexorable, and the studios always kick and scream about their way of life being destroyed.

What's new?
A
gainst this historical backdrop, the middleman known as the Digital Entertainment Content Ecosystem (DECE) attempts to bridge the gap between the two sides once and for all. The consortium is launching a digital rights management (DRM) system under the catchy UltraViolet name.

Others have tried their hand at this and failed miserably: Microsoft's (Nasdaq: MSFT  ) PlaysForSure DRM scheme was hobbled by minuscule market reach among Microsoft-compatible media players, and arguably died with the PDA industry. Apple (Nasdaq: AAPL  ) keeps its FairPlay solution close to the vest, and seems unwilling to make an industry standard out of it. The short-lived DIVX technology that would render your rental disk unplayable 48 hours after you first played it was a consumer-unfriendly monster -- though the studios loved it.

Let's try again!
This time, I'm told, it's different. The DECE includes players from both sides of the fence, which should make for a reasonable compromise that doesn't leave either content producers or consumer-electronics firms high and dry. That's new. You don't often get Time Warner (NYSE: TWX  ) and Viacom (NYSE: VIA  ) to put their tradition-steeped names on a standard drafted by Cisco Systems (Nasdaq: CSCO  ) and Intel (Nasdaq: INTC  ) , among many other traditionally conflicting interests.

Moreover, some observers who tend to side with consumers on every issue don't hate UltraViolet -- at least, not yet. That's because the service promises decent security without trampling too much over your right to do as you please with media you already bought. A generous allotment of enabled devices per family account should make the service usable even for self-professed gadget-holics like me.

In addition, the centralized rights database could enable a cloud-based media distribution model where you no longer have to shuffle files back and forth between computers, phones, and other gadgets. You bought the rights, so you can access that content anywhere you like, from any of your activated devices.

If all goes well, and UltraViolet does indeed become the media rights standard going forward, I don't see anybody having much reason to complain: It's a win-win-win for consumers, electronics mavens, and content producers alike.

All eyes on Jobs
That said, there are no guarantees that the standard will actually be accepted. Two major holdouts cast some doubts over the viability of UltraViolet. One is Apple; the other, Walt Disney (NYSE: DIS  ) . In some ways, this represents Steve Jobs and his iron-fisted grip on the iTunes media ecosystem versus the world. You almost have to assume that Jobs threw his weight around on the Disney board to keep the company from joining a very non-Apple solution to an industrywide problem. It's no longer Valley versus 'Wood, because Jobs lives in both of those worlds.

Jobs sits in an extremely interesting position; he's a major player on both the media side of things, through his Disney involvement, and on the tech side, via Apple. He is a key player in the future of entertainment, and often one to speak up for consumer rights as well. DRM in music stores is now largely a thing of the past, at least partly thanks to Jobs nixing FairPlay on most iTunes music downloads two years ago.

Will he maneuver for DRM-free movies, too? Will he throw his considerable weight behind UltraViolet if it starts to gain traction? Or will he work hard to keep Apple's walled garden as separate from the rest of the industry as possible, regardless what happens to Disney?

I'm thinking the third option looks likely, but I'm no mind-reader. Add Apple to your Foolish watchlist so you never miss an entertainment story again, then discuss the future of DRM in the comments below.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Walt Disney, Intel, and Microsoft are Motley Fool Inside Value recommendations. Apple and Walt Disney are Motley Fool Stock Advisor choices. The Fool has written puts on Apple. The Fool has created a bull call spread position on Cisco Systems. The Fool owns shares of and has bought calls on Intel. Motley Fool Options has recommended buying calls on Intel. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Apple, and Microsoft. Motley Fool Alpha owns shares of Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


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