Date: August 8, 2000

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"Herring on Hollywood" Was Held July 31 - August 2, 2000,
at the Century Plaza Hotel, Century City, California
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JUST HOW MANY CHANCES SHOULD
HERRING GIVE HOLLYWOOD, ANYWAY?

Tinsletown, the Capital of the Deal, Sure Wasn't
for These 3 Summer Dog Days

by Graeme Thickins
grt@gtamarketing.com

Is "Herring on Hollywood" skating backwards down the Avenue of the Stars? Is the town that's famous for deal-making letting the buzz slip away from one of the main tech events to grace these parts?

While the Republican National Convention raged on across the country in Philly, The Century Plaza Hotel, nicknamed the "Western White House" in the Reagan era, seemed to be home to nothing much special this time around. In what I was surprised to learn was the fifth year for this event (when you count its predecessor titles), one had to wonder if "Herring on Hollywood" would ever succeed in getting this town to realize its future lies in new technology and the Internet.

The convergence of Silicon Valley and Hollywood is still not there, in my observance -- certainly not in a cultural sense. And it seems a long way to go. These are two radically different environments, friends -- in style, ways of thinking, business models, investors, whatever comparison you choose.

It's almost as if the mainstream in this entertainment power center decided it could rest easy now because one court ruled against Napster, a little more than a week before the conference. Could it be they somehow feel the pressure is off, and it's back to business as usual? Duh! I assure you that many tech folk who attended this one have doubts about whether a large portion of this town will ever "get it" (likely including the Herring).

Put It In Reverse

Attendance numbered 640 on the pre-registered list, maybe 700 final -- down as much as 30% according to my 1999 notes. (Realize that maybe 200 of these would be affiliated with the exhibiting companies.) And I had a hard time believing there was anywhere near even 500 as I looked around the main room for most of the two days. Attendance in many of these sessions was embarassingly thin, making it appear almost as if many people paid, then didn't bother showing. And applause from the laid-back (apatheic?) crowd was mostly anemic. What's more, I counted only 54 on the attendee list, or 8% of this year's total, as venture capitalists and investment bankers (even if you include those from the ubiquitous "incubators") -- way lower than other Herring events. And many of those listed may have blown it off at the last minute, too, because there sure wasn't anywhere near that number of money guys noticable to me by their badges.

But, perhaps more importantly, the number of major Hollywood or Silicon Valley power brokers who bothered to show up this year was...a joke. When you count out speakers (let's face it, there only to hype their own company or agenda), I venture to say that virtually *no* big names showed their faces, from either camp. Oh, some players showed up in the hallways, ever so briefly. And maybe a few crashed the evening parties. Many, like power-VC Tim Draper, did their presentation (his an opening talk at the pre-conference workshop Monday morning), then were never seen again. (Note to conference promoters: require your speakers, some of them anyway, to actually *participate*! Virtually none of the speakers this year was anywhere to be found in the hallways or during other parts of the event for networking.) Many other names, including some quality attendees at last year's event, were also noticably absent this year. Which is really too bad. Why weren't they back? If I were a struggling entrepreneur who'd scratched together the dough to attend this one, after hearing how great it was last year, I'd be damn pissed -- plain and simple.

Was the subject of this event, and the content, lacking that badly in drawing power for the major guys? Are they that terribly *un*interested in any possible deals to be done here? Don't they care that this is the Entertainment Capital ofthe Entire Free World? Is this only one big, long *yawn* for these guys?

We may remember this year's event as the one when we started to wonder.... "Hmmm, maybe content really *won't* be king?"

Glitz-o-Rama

I don't mean to be totally negative, however: HOH was well conducted, again, by an experienced, competent events organization. John Mecklenburg, Herring's editor of events, and his staff do a top-notch job -- great logistics, a right-on-time schedule, well planned and moderated sessions (generally), and very cool and fun parties, at the hippest of West-side venues. Plus the best production values I've seen at *any* event, anywhere -- but, then, this discriminating audience must pretty much demand that! (What got me is how almost nonchalant the locals seemed to be about it. Like, hey, nothin' you can pound through these speakers or flash on that screen will impress me, dude. Okaaaaay...)

But, many kudos to Herring -- the "show" part of the event was spectacular. (The bump music, especially....Sexie Sadie being my personal favorite.) The one logistical thing I found strange was the much bigger meeting room this year, when attendance was so down. Last year, they had to overflow to another room with closed-circuit TV -- thus, the apparent need for a move. But it backfired on them, actually making the crowd seem even sparser. And the sound system or acoustics in that room, to hear the panelists anyway, was awful.

More important than attendance, though, the tone of the event was nowhere near as upbeat as last year. One could say, "Well, it's Post-April Bubble -- what do you expect?" But that would not totally explain the marked difference. The Nasdaq, after all, was up almost another 10% the week before.

Sobering Up

Not so much cocky talk this year....like, "It's time for the geeks to get into the bottom of the boat and row!" (as in, content WILL be king). But, in a very heavy dose of reality for Hollywood entrepreneurs, frustration had to be reigning bigtime in regard to trying to get the attention of venture investors -- who are obviously not interested, nor apparently will be antime soon, in funding content-related startups. We kept hearing it over and over again. One money-management guy said to me after the final session, a VC panel, "These kids must go away from these things feeling like they've been hit in the head with a board." (Hey, if content's really being shunned that badly, maybe the event should be called "Herring on Media Infrastructure Technology" or something. If there was any action at all, it was there.)

The pre-conference entrepreneur workshop on Monday was weak, again. They need to fix that. Even less of the Digital Coast's important startup support professionals seemed to attend this time. And, weird as it may seem, the entrepreneurial community here is so low key as to almost seem half-dead. Heck, even conservative, old *Minneapolis* would put them to shame. We gotta get these guys on some caffeine!

Speakers at the main two-day event included some excellent names, and were generally good. But a major panelist no-show, Napster VP of marketing Elizabeth Brooks, was a disappointment for many, I'm sure. (They wouldn't let her out.)

Highlights and Lowlights

The surprise appearance of mega-supermodel Claudia Schiffer, for the announcement by Palm of her branded device, was a nice diversion. (Gee, do that many photographers really come out every time she shows her face? I guess so, when you make the Guinness Book of World Records for magazine covers....)

Regarding the panel discussions: two were great (the respective Futures of Music and Movies), one horrible (i-TV), and the last one (the VC panel) was less than profound or satisfying...and unfortunately closed the event on a major downer note for the local startup community (see above).

In an attempt at humor, a game-show segment called "The VC Game" (modeled after "The Dating Game") bombed pretty badly. The participants (real people) were ill prepared as actors, especially the VC looking for a date, Frank Creer. But, gee, could it possibly have anything to do with the fact that Frank *wasn't looking for one* -- at least from this crowd? And note to Herring: forget trying to out-showbiz this town -- it ain't gonna happen.

A segment on the making of the movie "Matrix" was....well, let's put it this way: I hope the Hollywood guys got something out of it, because it didn't do a thing for me. (But then I wasn't there to look at sci-fi special effects.....puh-lease!) I mean, I'm glad Herring had the president of production for Warner Bros. Pictures ask to come and speak...and, gee, it's nice that they have these cool computer systems now...which take blowing things up and killing people in realistic animation to a whole new level...but what does that have to do with the price of eggs?

The Pure Skinny

Hollywood is no Silicon Valley. The power center in this town is about control -- pure and simple -- of a series of distribution channels. And an almost maniacal protection of intellectual property -- with lawyers outnumbering damn near any other function you can name there. And that, friends, just doesn't connect with the open, freewheeling fund-crazy-new-ideas-that-cannibalize-the status-quo spirit of the entrepreneurial Internet environment and Silicon valley. That's it in a nutshell.

A few more positive comments on the event I could manage to cough up: The first morning press breakfast was a nice touch, and well attended -- a great idea that more conference promoters should take note of. The demo/exhibit areas were well placed, and Herring once again arranged the schedule to encourage traffic to these rooms. For young companies, buying a table at a Herring event has to be a good move, if the amount of activity I saw happening in the demo areas here was any indication.

But the buzz, the tone, the attendance by major players -- all was less than stellar this year. Nonetheless, Herring does get the right speakers together at these things to focus on the hot issues and controversies, and some good insights do result. Here are some quotes of particular interest:

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Quotes from session introductions:

"Never has a series of events in one year been so significant. Napster last week accounted for one-eighth of all 'Net traffic!"
- John Mecklenburg, Events Editor, Red Herring

"We need the 800-pound gorillas down here, the Warners, Viacoms, Paramounts, to start embracing technology, unlike some of their music colleagues, who got caught with their pants down."
- Tim Draper, General Partner, Draper Fisher Jurvetson Venture Capital

"Either sign up for this revolution, or fight it. But if you fight, you won't win."
- Tony Perkins, Chairman and Editor-in-Chief, Red Herring

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Quotes from the music panel:

"There's a tremendous *under*-consumption of music now because of the way it's priced and distributed....If Napster was about being evil, it would have been done a lot differently."
- David Goldberg, CEO, Launch Media

"Maybe one day you can't sell records." (answering the question, what will the new music pricing models be?)
- Ice-T, Musician, Producer & Actor

"Giving away or sampling on the 'Net will be justified by revenues generated in other places."
- David Helfant, entertainment lawyer

"Technology is coming in a mean way. Gonna get real crazy....If Napster is shut down, 25 more will pop up."
- Ice-T, Musician, Producer & Actor

"Artists now want *control*. I see it little by little, every year."
- Peter Standish, VP Marketing, Warner Bros. Records

"Streaming is Space Age Radio! I don't mind that -- like radio that works!"
- Ice-T, Musician, Producer & Actor

"We're still in the early stages of the 'democratization of music discovery.' There may not be as many superstars. It may be more spread out, and that may be a good thing."
- David Goldberg, CEO, Launch Media

"With the 'Net, we can find out very quickly if (our music) is 'street.' That could never happen so fast before."
- Ice-T, Musician, Producer & Actor

"Millions of dollars are being invested now in DVD music -- it will explode. The CD market will disappear."
- David Helfant, entertainment lawyer

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Quotes on the "convergence survey" conducted recently by Red Herring and The Hollywood Reporter (polling film & TV creatives and producers):

"The 'Net puzzles a lot of these people. Even with anonimity, many didn't respond. Of the 80% non-responders, about half told us they didn't feel comfortable or qualified to answer the questions."
- Paula Parisi, Editorial Director/Special Issues, The Hollywood Reporter

"Hollywood has a history of co-opting new technologies, then making big revenues from them. But the 'Net they perceive as a different technology. It's more dastardly."
- Robert LaFrannco, LA Bureau Chief, Red Herring

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Quotes from the opening keynote:

"Selling music today at traditional prices is like trying to sell lemonade when the guy down the street is giving away free beer."
- Nicholas Butterworth, CEO, MTVi Group

"Our studies show simultaneous PC and TV activity has rapidly increased. There's a critical mass now to make convergence happen. This is news!"
- Nicholas Butterworth, CEO, MTVi Group "TV viewing is not being hurt by the PC--it's rising! Consumers will drive convergence themselves, unless you put something in front of them. The audience is growing up, and demands interactivity." - Nicholas Butterworth, CEO, MTVi Group

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Quotes from the second-day keynote:

"As an economy gets more efficient, profit tends to go to the *services* associated with a product."
- Don Listwin, EVP, Cisco...introduced as heir apparent to John Chambers (explaining how car and refrigerator makers have big plans to make money on Internet services related to their products)

"The reason there's so much concern about Napster is not that people are sharing music. It's that there are so many of them doing it, and how fast it's happened....the 'network effect'."
- Don Listwin, EVP, Cisco

"The Internet is the most global standard in the world. And 'Net user growth is exploding -- from 196 million in 1999, to what we estimate will be 502 million in 2003."
- Don Listwin, EVP, Cisco

"Our advice to Hollywood is to get out of the courtroom and into the board room. Take advantage of the business opportunity, figure out the business models....Embrace the new! Eat your young!"
- Don Listwin, EVP, Cisco

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Quotes from the panel "Can the Movie Industry Survive the Internet?"

"Hollywood's gone through five stages of denial over the years, and they've added incremental revenue as every one of these new technologies has been introduced. Now consumers are demanding content online!"
- Patrick Kennedy, Sr VP, Sony Pictures Digital Entertainment

"Monoliths have a tendency to move slowly. But the *minute* it starts to affect their ability to make money, they'll act."
- Howard Weitzman, CEO, Massive Media Group

"We need to move beyond just thinking about the 'Net as a revolution, and do what the kids do -- just start using it! ...Young people don't view the 'Net as special. It's all they know. It's the content that's special."
- Doug Liman, Film Director, and Chairman, Nibblebox.com

"Yes, studios have smart people -- they have all the advantages. But they also have their legacy businesses. And they can't just put all that on hold for five years while they figure the 'Net out."
- Steve Stanford, CEO, Icebox.com

"The latest estimate, from Morgan Stanley, is that by 2003, 35% of U.S. homes will have a broadband connection."
- Kevin Wendle, CEO, iFilm

(In answer to the question, "If content is so promising, why is it so hard to get venture capital for it?":)
"It takes strong believers, with patience. MTV took five years to start showing promise. The Fox Network was almost shut down -- now it's worth billions! These things take time."
- Kevin Wendle, CEO, iFilm

"It's important to establish a brand -- have a point of view. It *is* possible to build brands in this business."
- Steve Stanford, CEO, Icebox.com

(In answer to the question, "How are VCs valuing content?":) "They're seeing that different models need to experimented with, and some will win. Just like the cable networks -- it takes time. Now they're worth more than the broadcast TV networks." - Allen De Bevoise, CEO, CreativePlanet

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Quotes from the parties:

blah blah blah blah.....dahling, good to see you! [kiss on the cheek].... [clink, clink] [drink]....blah blah blah blah.....soooo good to see you! [another kiss].....[burp] [more clinks!].....blah, blah, blah, blah.... y-o-u  l-o-o-k  *m-a-h-*velous, you [hiccup] FOX, you! ...dahling, I think I'll call you the..."21st Century Fox" -- yes, that's it!....heard the old Doors tune lately, dear?--one of my favorites....but, heavens--soooo [hic!] last millennium, n'est pas?...[clink, clink]...[blah, blah, blah].... oh, be-haaave!

gee, can't seem to read the rest of my notes here--I'll have to get back to ya....let's do lunch sometime, ok?

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Guess that's it for this event, folks -- I've now emptied my bag....or my notebook, anyway. But, if you have any questions about my latest excursion, I'd love to hear 'em. Email me--please, dahling--at grt@gtamarketing.com.

Oh, another thing -- almost forgot, since I am in the naming business, after all....

Cool Names I Heard:

Well, DoDots.com caught my eye, and is a very cool concept. Dots are "packaged pieces of branded Internet content and apps that reside on the desktop with any application."

Then, there was Nibblebox.com, a content site for college kids that impressed me. But, alas, the window may have slammed shut on "box" names, folks. We already had IceBox.com (a content site represented on the movie panel, who just did what's being called the first 'Net content deal with a cable network)...and another firm (one of only a few presenting companies that drew good applause) was an educational site for kids called ThinkBox.com. Boxes everywhere. So, please, people -- don't try this at home. The presenting company that drew the most applause, though, was Scale Eight -- also a cool name. And their domain name is of the type even more lusted-after: two characters.... www.s8.com.

By the way, I didn't try to recap the startup company sessions (20 of them presented), but the sponsors themselves -- in this case, a Herring Online reporter -- did a nice job of that, which you can read here.

So that's it. Stay cool. Wear those sunglasses. Do lunch *a lot*. And tell all your friends about your favorite conference report email list, okay?

your roving, ever-skeptical, getting
*really* hard-to-please conference reporter,
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Graeme Thickins, Founder & Principal Consultant
GT&A Strategic Marketing Inc.
*Twin Cities *LA *San Francisco *Anywhere
Voice: 612/944-1672
Fax: 612/944-1673
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