A Tale Of Two Cities: Silicon Valley And Hollywood

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Editor’s note: This post was written by guest contributor Aaron Levie, CEO and co-founder of Box.net. You can read his previous posts here.

Silicon Valley and Hollywood: so close geographically, yet so distant digitally and philosophically. You would think we’d understand each other better. In the Valley, we circulate pitch decks. In Hollywood, they shop around scripts. We strive for exits, while they sell distribution rights. They have record labels, we have venture capitalists. They have agents, we have recruiters. People on Sunset Blvd. obsess over the next “hit” that will draw viewers, ears, or butts in seats. On Sand Hill Road, we toast to market disruptions and business model innovations.  Ultimately, both are working towards bringing transformative experiences (content and apps) to market.

Yet for all the apparent ecosystem similarities, our two worlds are surprisingly at odds. I know first hand. When I was in college at USC, up-and-coming actors, directors, and musicians were just a dorm room away generating art while I was glued to my laptop building sites. And I’ve found myself at the intersection yet again with my company, Box, as a large number Hollywood studios and labels are now moving their information and collaboration to the cloud.

Hollywood’s creators and the Valley’s innovators could achieve so much together.  Instead, we’re clashing, and neither viewpoint is wrong. Of course content creators should be able to get paid for their works, and of course those works should be free to move across any device, platform, or service. When Steve Jobs was here to mediate – or rather monetize – we were somewhat pacified because the experience was so robust for the producers and so great for the consumers. Even then, though, we only got so far: iTunes was continually blocked out of important content deals, and lawsuits came up frequently. But now, within just a few months of Jobs’s passing, we’re back to our early 2000’s ways: a wild west, pre-iPod world, where no one quite knows what equilibrium looks like, and justice is pursued through legislation and lawsuits that only widen the divide.

Where did we go wrong?

In his usual zen-like manner, Jobs explained the dichotomy of the Valley and Hollywood: “…people from technology don’t understand the creative process that these companies go through to make their products, and they don’t appreciate how hard it is. And the creative companies don’t appreciate how creative technology is.”

Hollywood is a special kind of beast: it’s as insular as the Valley, but success relies far more on the connections between individuals than the decisions of markets, making it more complicated, slow, and inflexible. In a world where middle-men have their own middle-men, the Valley’s egalitarian, direct-to-customer, democracy-rules-all ethos does not apply. In Silicon Valley, we don’t think to ask for permission or support before introducing hopefully world-changing products. That simply doesn’t happen in entertainment. You fundamentally need support from others, many others in fact, and paradoxically that collaboration tends to be hard in LA.

These differences have created a digital divide. In the Valley, we demand more from our southern neighbors, wondering why content is priced at uncompetitive rates, why it’s so hard to get a deal done, and why lobbyists are hired to block innovation.

Paul Graham’s answer to Hollywood’s modus operandi and slow pace is just to disrupt the entire business model. How? By usurping the power of ‘entertainment’ from those in 90210 altogether. Basically, what Atari and EA kicked off in the 70’s and 80’s, but modernized: moving far beyond traditional forms of entertainment, where the Valley builds the creation and consumption platforms, and owns the rights to the content. This future state, where people entertain themselves (either through shared status messages, photos, or virtual worlds) is far easier to grok, “simpler” to monetize, and seemingly more in our control.

It’s an aggressive response to Hollywood’s perceived unwillingness to participate in the new environments technology is creating and powering. But as Sarah Lacy points out, “disposable content isn’t bad, it’s just not everything. And as long as that’s all that the Valley is putting out, we won’t kill Hollywood.”

Can we create a better future together?

Can there exist a world in which Hollywood leverages more efficient channels to reach a broader audience? Where they reduce the release windows to reach more consumers, faster? Where the Valley can introduce more seamless monetization platforms, helping artists make more money? Where content quality is enriched through different mediums or interactive experiences, and the creative and cultural influences of LA are amplified by the innovations of SF?

I actually don’t think we’re as far off as we think, or as recent legislation proposals would suggest.  In fact, there are plenty of people and examples that have made this work, however painstakingly, in recent years.

On both sides of the fence, Daniel Ek, Steve Jobs, Jason Kilar, Jeff Bezos, Reed Hastings, Jeffrey Katzenberg and others have brokered adequate and attractive solutions to these challenges.  If you compare the world today to the world of 10 years ago, it’s obvious that we’ve come pretty damn far: I can stream nearly any song instantly from my iPhone; I can watch a growing number of movies and TV shows on demand from my computer or TV; and I can read almost any book from a Kindle or Android device after waiting just a few seconds.  Entrepreneurs, lawyers, venture capitalists, and entertainers climbed mountains to make this happen; none of this was possible, or even legal, in the 90’s.  Cars, finance, education, healthcare, and even enterprise software have all changed considerably more slowly than the entertainment world in response to this technology revolution known as the internet.

But we want more speed and openness, and without an easy “API” into Hollywood, the rest of the Valley remains dumbfounded. The opaque and murky process of getting things done isn’t in our nature; we don’t like worlds that require connections, contracts, or consent. We like elastic consumables, whether it’s computing resources or maps data, that are easy to understand and priced fairly.

The primary methods the entertainment industry uses to protect its value include locking it behind closed doors or aggressively penalizing those that take it. This is magnified in part by the fact that the digital files holding Hollywood’s value are already so free-flowing, no one knows how much they should be monetizing, and most contracts are so convoluted you wouldn’t even know who to pay if you could. But, just to put this environment in context, Google won’t let you freely build a search engine with unfettered access to its information, nor does Facebook allow data to flow freely out of its service. The Silicon Valley approach is different, but the motivation is the same.

I’m going to choose to believe that Hollywood wants to change, and they’ve clearly shown they can and have. Responding to disruption at the same pace that we cause it is no small feat, and failure to do so does not necessarily signal distrust of technology. Most people simply don’t respond well to their industry turning upside down every five years.

Yes, SOPA sucked. Like, it was a really bad idea. When people think their backs are up against a wall, sometimes they do weird things.  But consumers, the Valley, even many in Hollywood took a stance, and the proprietors backed down. In the aftermath of this ‘victory’, we should try harder than ever to fuse these two worlds, particularly before SOPA II is attempted. We need more cooperation, less antagonism.

Perhaps I’m just empathizing with my former film school roommates, or maybe I’ve just read one too many books on the film business. But it could also be that there’s something so powerful – magical, even – about clicking a button and instantly watching The Dark Knight. We need far more of this, not less.

Hollywood needs to understand that every hour Americans spend tending to a virtual farm is an hour they’re not watching Family Guy. Now is the time for reinvention and innovation, on both sides. Some things might be painful at first, some margins will decrease, and powers may shift a little. But the responsibility for creating a viable resolution belongs to both industries.

Oh, and one last thing.  Hollywood, Please stop making Jersey Shore. It’s ruining America.