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Posted at 01:10 PM ET, 02/27/2012

Dear Hollywood, nostalgia is not a business model

At a time when Hollywood and the film industry are locked in a debate over Internet piracy and the support of controversial legislation such as SOPA, last night’s Academy Awards showed what was wrong with the industry. The problem with the entertainment industry is not the Internet or overseas foreign pirates — it’s a nostalgia for a past that will never return. Unfortunately, nostalgia is not a business model. The relentless pace of business in today’s digital world means that you either innovate or get out of the way.

While it can be fun to re-live the cinematic glory of Hollywood, the entire Oscars evening felt like a vintage re-run of Hollywood as the Washington Post’s Hank Stuever noted in his review Monday. In fact, with “The Artist” winning nods for Best Actor and Best Picture, among other awards, the whole evening felt like a throw-back to the days of Hollywood before color film and the “talkies,” not to mention the Internet. In one montage, today’s best and brightest actors reminisced about the impact that watching films in the theater — not on their laptop or mobile phone — had on their commitment to a career in the movies. Ah, nostalgia.

Billy Crystal performs during the 84th Academy Awards on Sunday, Feb. 26, 2012, in the Hollywood section of Los Angeles. (Mark J. Terrill - AP)
However, these are elements of the film-going experience that are not going to change anytime soon. The era of Netflix and Video-on-Demand (VOD) has created a “long tail” of content such that even the most-beloved films of our current era will never have the same size of audience as they did 20 or 30 years ago. When people think back on what drew them to the entertainment business, it may be a video download to their smart phone, not a $15 ticket to the multiplex. The fact that the Academy Awards were held at the once-named Kodak Theatre had a second, more subversive meaning: Just as Kodak failed to keep up with digital innovation and filed for bakruptcy, Hollywood, too, is clinging to a past that will never return.

During the show, the mock focus group dating back to roughly 1939 and the "Wizard of Oz" was a nice nod to the magic of Hollywood storytelling, but felt distinctly dated. While the point of the focus group could be interpreted as, “Amateurs should get out of the way and let professionals do what they do best,” it’s no longer the case that there is a steep divide between professionals and amateurs. Off-the-shelf technology means that young kids with a budget of $1,000 and a Macbook can create a credible film in a short period of time.

Actor Christopher Plummer accepts the Outstanding Performance by a Male Actor in a Supporting Role award for "Beginners" onstage during the 18th Annual Screen Actors Guild Awards on January 29, 2012 in Los Angeles, California. (Kevin Winter - GETTY IMAGES)
Christopher Plummer picking up an Oscar at age 82 was nice, Meryl Streep picking up another Oscar was nice, and seeing Billy Crystal hosting his 9th Academy Awards show was nice, but where were the young faces? During the show, Crystal even quipped that the average age of the award recipient was 67, while Plummer joked that the show was going to win the all-important 78-to-84 demographic. Yes, it’s important to recognize legends of the Big Screen like Martin Scorsese and Woody Allen, but it’s also important to prepare the way for up-and-coming talent, especially in emerging, new demographic groups.

It’s clear that the business model of Hollywood is built around scarcity, while the business model of Web-based companies is built around abundance. How the leaders of these two industries handle the vast dichotomy between these two models will tell you a lot about the future of video entertainment. During last night’s Academy Awards, the Hollywood message was distinctly one of scarcity, and it went something like this: It is only a few unique individuals, trained for generations, who can create this magic on a consistent basis. Anyone who has spent more than a few hours on the Internet knows otherwise - that the world is full of uniquely talented people, crowdfunding their ideas, embracing off-the-shelf digital tools and experimenting with innovative new formats for film.

Read more news and ideas on Innovations:

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By  |  01:10 PM ET, 02/27/2012

Categories:  Business, Dominic Basulto, The Arts

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