Who, what, where, when ...
Sit up and take notice, Hollywood. Just a few days after the Oscar gala airs on Disney's (NYSE: DIS) ABC network -- or doesn't, depending on how that writers' strike works out next month -- a film festival five hours up the Interstate will show you once again how to distribute secure, digital movies without racking up huge bandwidth bills.

The Cinequest Film Festival, now in its 18th year, lets you play along at home with downloads of its movies through a peer-to-peer file-sharing system dubbed Kontiki, a BitTorrent competitor owned by security specialist VeriSign (Nasdaq: VRSN). Rather than each user downloading movie files from Cinequest's servers at several gigabytes per file, most of the bits will come at you sideways, downloaded from the completed or partial sessions of other customers.

... and why
Festival arranger Halfdan Hussey doesn't seem worried about the fact that the same technology is often used to share unauthorized copies of copyrighted content, or that the material he's selling might end up back on the same system after hackers strip out the DRM copy protection.

"You don't lose money by expanding awareness of your work," Hussey told the Associated Press. "No artists have ever starved because too many people knew about them."

That's why the unprotected MP3 downloads from Amazon.com's (Nasdaq: AMZN) music store is a great idea, and why simple, standards-based streaming without paranoid restrictions would serve Yahoo! (Nasdaq: YHOO) or Apple (Nasdaq: AAPL) much better than the draconian packages forced on them by record labels and movie studios today.

Here's how
FM radio isn't copy-protected at all, and the government had to slap fines on the record companies to stop them from paying radio stations in exchange for more exposure there. You could stop people from making MP3s off a store-bought CD, but a bungled attempt came back to haunt Sony (NYSE: SNE) BMG badly.

And yes, if I use my wannabe TiVo (Nasdaq: TIVO) box to record a movie off the air, I'll probably fast-forward through the commercial breaks -- but I end up watching a lot more TV with that box than without it, and the networks have proven that they can be innovative when it comes to pushing advertising on a reluctant audience.

Back to Hussey. So what if some egalitarian cineaste grabs a copy of Nobody The Great off his or her download services, and decides it would be worth the trouble to hack off the protective bits and turn the film loose on the illegal downloading subculture?

It's free publicity that might make honest festival attendants out of people who'd otherwise never know about the director, the studio, or the event. And at least it'd be a clean copy rather than one from some shaky, surreptitious cell-phone camera in the back of a crowded theater. The movie will probably show up for free anyway -- you might as well present the work in its best light. Dropping DRM altogether would be the next logical step here, but one thing at a time will have to do.

Business impact
Cinequest has been experimenting with high-quality downloads in unusual channels and formats for many years, but I think it has been ahead of its time. In the current YouTube-esque media culture, we all have the means to watch high-quality video on our computer screens. In the next year or two, you'll see a flurry of methods for hooking the system up to your plasma TV, and then it's off to the races for digital distributors.

So if this year's Cinequest attendance figures don't grow by leaps and bounds, it'll be because the audience is waiting for a better viewing experience. Next year, the online audience will be there in force. And in 2010, I predict a massive turnout at the festival -- and massive profits for companies following the same enlightened path. This is the gestation period for future fortunes.

Over here, Sony! Disney, that's how you do it! And all without breaking the bank to distribute the content.

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Fool contributor Anders Bylund owns shares in Disney and in YouTube's famous parent company, Google, but holds no position in any other companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure would break down and cry if we tried to slap a DRM collar on it.