Michael Stroud
iHollywood Forum’s Michael Stroud

The “digital revolution” may seem a relatively new phenomenon to some, but for iHollywood Forum’s Michael Stroud, it’s defined his entire career. “From my freelance days 20 years ago writing about Taiwan’s nascent computer industry to my most recent freelance gigs for Wired News writing about entertainment and technology,” Stroud says that he’s always been involved–and interested–in digital technology in one sense or another.

Five years ago, Stroud took that interest to a whole other level when he founded iHollywood Forum with his wife, Zahava, “in the midst of the Internet boom… because I was appalled at the lack of perspective in Silicon Valley-dominated seminars and conferences about Hollywood.” Today, the group is a leading producer of roundtable discussions and networking events for digital entertainment executives to further discuss the business and legal ramifications of their industry. On April 28th, Stroud will host the third annual Digital Media Summit in Los Angeles, and be joined by more than 400 attendees. In the week leading up to the event, Stroud spoke with MM about what attendees can expect of their latest Summit and the issues that concern him most in regards to digital moviemaking and Hollywood.

Jennifer Wood (MM): People talk about the “digital revolution” as a sort of ongoing phenomenon, but the medium has played a vital role in moviemaking–especially independent moviemaking–for many years now. When do you believe this “revolution” really kicked in? What do you see as the one event that really kick-started its current importance as it relates to movies?

Michael Stroud (MS): I suppose many people would point to George Lucas shooting and projecting his Star Wars prequels digitally as a defining moment for digital technology in filmmaking. But, in many ways, the independents and their adoption of digital filmmaking is far more important. Previously, it took millions of dollars to create a major motion picture. Now, using digital technology, you can do it for far less. That means there’s a real potential for democratization in the film business.

The problem until now has been the studios’ stranglehold over the distribution system to theaters. Once digital projectors and computers become common in theaters, you may see independent filmmakers going to their local art house theaters and cutting their own deals to show their digital films. That to me would be truly revolutionary.

MM: You founded the Digital Media Summit in 2002. What made you feel that it was the right time to get this event started and how have you seen the event change the most dramatically–even in the short two years it’s been in existence?

MS: When we started the event, music distribution over the Internet was definitely an unprofitable activity, and none of the labels were buying into it. Now, there’s an explosion of legally purchasable music available for streaming and downloading. That sets a very strong precedent for movies to follow. Today, movies are where music was a few years ago. Some services, such as MovieLink and CinemaNow, are already selling downloadable or streaming movies on the Internet. So far, the revenue opportunities are minuscule. Once you hook a broadband connection to a converged computer/HDTV set in your living room, though, movies over the Internet could become a big business.

MM: It’s this sort of issue, which to me, is the great thing about being able to have this Summit once a year. Not only do you get to introduce and keep abreast of the changing technology, but you also get the chance to address the various business issues that result from this fast-changing technology. For example, this year’s Summit will look at whether peer-to-peer distribution will affect the film industry in the same way it has the music industry. Was this an obvious topic to include in the program for you guys? Generally, how do you go about choosing which topics will be addressed in the Summit agenda?

MS: Peer-to-peer distribution of movies is already a big phenomenon. You can download a first-run movie from the Internet as soon as it appears, and in many cases, long before. As more people get broadband connections, and connections get faster, the phenomenon is going to spread dramatically. You can’t download a feature film over a dial-up connection unless you’ve got a few days to tie up your telephone connection; but it only takes a few hours to download a feature film over one of today’s cable modem, and considerably less than that over a T1 connection. So the problem of unauthorized films appearing in people’s hard drives could potentially become as big a problem as music.

The question is how filmmakers deal with it. Are they going to sue individual downloaders, running the risk of alienating consumers? Or are they going to work hard to find compelling ways to persuade consumers to buy their products legitimately? If you know you can download an independent filmmaker’s product legitimately for, say, $5, and be able to keep it indefinitely, you might well do it–especially if you knew that the money went directly to the filmmaker. That might enable thousands of people who otherwise would never be able to sell their products to video stores to build an audience, just as some musicians are today doing on the Internet.

MM: Though your event is certainly not alone in addressing the role of digital technology as it relates to the entertainment industry, the Digital Media Summit is unique in its specific focus on the repercussions–legal, etc.–and business issues that arise as a result of the changing world of technology. Do you feel that, in the rush to keep improving on the digital technology, these issues sometimes get swept under the carpet?

MS: In the midst of the Internet gold rush, people often got caught up in the “eyeballs” mentality: attract enough eyeballs to your site, and the money would follow. After most Internet entertainment start-ups tanked, investors assumed that no content models worked on the Internet, and investment dried up. The answer is in between. Consumers are demonstrating they will buy content on the Internet if it’s affordable and high quality. Just look at Apple’s recent earnings, which got a big boost from iPod sales.

It’s still very easy to get caught up in new technology, and we look at a lot of it at the Digital Media Summit: video-on-demand, interactive television, mobile entertainment, personal video recorders. But we always try to keep our eyes on the money. Are cable operators actually making a lot of money on VOD yet? Most aren’t. Why are PVRs still in only a fraction of consumers’ homes? What kinds of mobile entertainment make money? It’s no comfort to our attendees to know that they’re on to a great idea that will someday make a lot of money if they themselves go bankrupt next year because they missed the consumer adoption curve.

MM: One of the benefits of being the chair of this event would seem to be the sneak preview you get of the various new products and services that are introduced at your Product Showcase. What are some of the products and services you think will be of the most interest–and best use–to indie moviemakers?

MS: I’d say the companies on our “Film Bytes” panel would all be of great interest to indie moviemakers: MovieLink, for a big studio perspective on the future of downloadable film; CinemaNow and Movieflix, for perspectives on movie streaming and downloading, and how small companies created profitable models for showing films on the Internet; and DivX Networks, the leading proponent of the DivX standard for encoding movies on the Web.

Among our presenters, moviemakers will probably be particularly interested in Maxtor, which will be discussing some of its new, low-cost storage technology, one of the key components of any digital editing system.

On day two, we’ll have a panel of college students and consumers, who will discuss their film downloading habits. Anyone who’s concerned about film piracy over the Internet and how the film industry can address it will want to be there.

MM: Who are some of the filmmakers you feel are best utilizing these tools today–and what are some of the films you feel are the best representation of what the digital medium is capable of, as far as Hollywood is concerned?

MS: Robert Rodriguez comes to mind. He’s taken his independent, digital filmmaking sensibilities into the heart of the studio system–shooting Spy Kids 3D: Game Over and Once Upon a Time in Mexico entirely on digital film. He made SpyKids 3D for $29 million, $10 million less than the original movie, despite the fact that it had 1,400 effects shots in it and 90 percent of it was shot in 3D. He made Mexico in just five weeks, an unheard of timeframe for an epic film. He couldn’t have accomplished either feat if he hadn’t been working digitally.

MM: As the technology continues to grow and evolve, what role do you see yourself and the Digital Media Summit playing in that change?

MS: I see us always being about the “cutting edge” of digital media distribution and content production. Digital Media Summit is only one component of the summits we do: the upcoming Digital Living Room launching next fall will look at the living room of the future–from wireless video distribution to media centers that can pack hundreds of films; our third Digital Studio Summit (also next fall) will look at the top digital tools and techniques being used by studios and independents. Wherever the boundaries in digital media are being pushed, that’s where we want our conferences to go.