Coming PC Attractions

Bill Gates swept into Hollywood last week to trumpet his latest technology--Windows Media 9--as the answer to movie studios’ prayers.

Studios have held off putting the bulk of their movies on the Internet until they can be convinced that doing so won’t result in the kind of massive piracy that has plagued the music industry.

Studios also have been skeptical of the quality of experience that can be delivered over the Internet. Even over broadband, watching Internet video has been like watching an aging videotape through a mud-splattered window.

Gates tried to address those twin concerns, saying Windows Media 9 can stream TV-quality video over the Internet, linked with digital rights management -- or DRM -- software, which regulates and tracks how consumers watch and store movies.

For Gates, who runs Microsoft Corp. in Redmond, Wash., Windows Media 9 represents a three-year, $500-million project to build a digital foundation for Hollywood to distribute its wares via the Internet.

Question: You’ve spent a lot of time talking to movie studios about what they need to digitally distribute their movies. How is Windows Media 9 a response to what they’ve said?

Answer: There’s a bunch in Windows Media 9 that relates to how they build media, both video-and audio-type experiences. We talked to them about [how] they want to expose consumers to their best work. Whether they deliver it across the PC or not, they want to get trailers or promotional things out there to all PC users. And so there’s things in Windows Media 9 that make that a lot cheaper, easier for them. Then we talked about the PC as a delivery channel. Obviously, there’s the quality issue that [Windows Media 9] is a huge breakthrough on, the digital rights issues that [Windows Media 9] is a big advance on. This represents three years of having listened to users and media company people. So it’s a pretty big investment for us.

*

Q: There [was] a noticeable absence of major movie studios on stage with you at your launch event. Why do you think they [weren’t] there?

A: Actually, we’ve had a lot of meetings with them, a lot of discussions. As you see movie services like Movielink moving to broader things, I’m sure there will be events where we [will be present] as a platform provider to them. I’m sure we’ll do events together when we get to those uses. The time to bring the businesspeople in--you might say the moguls--is when you have the services built around these things.

Some of the things that come out of the technology, there never will be a big press conference about: the fact that it helps creative people and the fact that it brings the kind of equipment you need [down to just] the software on a PC without compromising what you see in video quality and audio quality. That’s the biggest milestone we’ve got here. What is the best media creation and manipulation device? It’s now the PC. And that wasn’t true before.

*

Q: Content providers say they are looking for technology to help them deliver more business models. How flexible is your technology?

A: Software on the PC is infinitely flexible. If someone wants to say you can listen to this five times, or you can listen to this in three locations, or you can listen to this for two years, or you can listen to everything by this artist because you’re paying an annual fee, our [digital rights management] technology supports any [of these] business models. That’s part of the magic of software. It’s not like a dedicated device. We can accommodate every request we’ve heard.

But it’s not some lack of technology that’s holding us back. Part of the reason we’re having this event here is to underscore the investment we’ve made in working with content companies. We’ve chosen not to be a music company or a studio, but rather a partner with all music companies and studios. And the incentive for us is to come up with software that makes the PC more and more exciting.

*

Q: Is it largely a learning curve issue for the studios that makes them reluctant? As you say, it’s not the technology. What is it?

A: There are learning curves on both sides. There’s certainly learning curves by us of their needs, interests, who’s who, what’s what. Because between the artist and the listener, there’s lawyers, businesspeople, marketing people, different companies. So we’re coming up the learning curve here too.

The thing that makes people move fastest here is a big opportunity or a big crisis. And we have both of those here. We have a huge opportunity to let people get at the music and video that they want, in more flexible ways, with more quality. And we have a challenge, certainly in the music space, [in that] the most convenient way to get music is one that you can’t pay, even if you want to. Then [there are] all the massive number of issues about, OK, what are the rules in this country, what are the rules in other countries? So it’s very complex.

It’s radio on a PC. Wow. Home theater driven by a PC. Wow. Motion video coming across any type high-speed connection better than you see it anywhere else. It’s not like, oh just because it’s on a PC, it’s going to be crummy, which is sort of where things were.

Now the very best experience for all of these things is on a PC. And that just sort of supercharges ... the whole industry behind these digital approaches.

*

Q: Talk about getting into the living room.

A: Thirty-five percent of home PCs are in the living room or family room. They’re shared devices, and it’s trivial to cable those up to whatever the large display is. You see it in dorm rooms [where it’s] the everything device. And you see it in the living room where the PC has multiple displays including, essentially, the TV set.

Right now, the percentage of entertainment experiences that are coming off the PC--music, videos--is under 10%. And we think just in the three years ahead that of the people who buy new entertainment systems, in over half of those the PC will be at the center of those systems.

*

Q: Are there copyright issues around being able to share copyrighted media across multiple devices?

A: If you have two PCs, we don’t want you to transfer [copyrighted content] from one PC to the other PC. The infrastructure that recognizes that those two PCs are both owned by you--we are working on that.

But we can’t discriminate in a strong way between the second PC that’s your friend’s PC who may not have rights, versus the second PC that’s your PC where you do have rights. Because we couldn’t distinguish between those two, unfortunately, we took the conservative approach--the pro-copyright approach. We’re working on this stuff.