Ignore the Internet at your peril

I stopped subscribing to the Economist some years ago but I think I am going to change my mind after reading the two pieces they published recently about the potential of the internet for the entertainment industry. 
Their editorial introduction of the issues gets right to the point: to ignore the internet is to invite disaster for the industry. This is followed by a superb in depth analysis of the crisis that is coming for the current business model – in short they blame a small handful of agent-repped A listers for grabbing a massive share of the gross while the studios defend a flattening DVD revenue pool.  
They make an argument that is all too familiar to the automobile industry: they went for gas guzzlers and ignored the energy efficiency issues and are now getting clobbered by the Japanese.  There, too, the union put its head in the sand and now finds itself left out in the cold.  The actual number of auto workers in this country has not changed too dramatically but the number of unionized workers has been hit hard as Japanese and German transplant companies opened up more efficient non-union plants, largely in the union-hostile south.
The Hollywood defensive strategy, however, courts disaster as the technology to produce and deliver new content is feeding a range of competitors.  Even studio execs admit their kids download all their entertainment (probably legally and illegally) rather than buy CD’s or DVD’s. And guess what? The Japanese and South Koreans are way ahead of the U.S. in developing high speed downloading technology! Not a big surprise given their commitment to financing intensive research and development.
I have certainly been an advocate of attacking the lopsided DVD revenue sharing model while criticizing Membership First for having no plan whatsoever that could enable them to succeed with such a demand (the test will come soon, of course, once the AMPTP and SAG pass each other like ships in the night and negotiations get serious in the next few weeks).  But that is because the future that the Economist sees coming will take five years or so and of course any union worth its salt has to consider the current revenue structure. 
But the outlines of the future are clear and if the Guilds and other unions are not to lose out as it comes online they have to be far more involved in the emerging architecture.

Hollywood and the internet | There will be blood | Economist.com