Priority No. 1 at Digital Hollywood: Find the Golden Egg

In the shadow of the towering Hollywood sign, executives in the film, TV, music, telecom, Internet and technology industries are convening this week to compare notes on a new starlet: the tech-savvy consumer -- one who wants an all-access to pass to any and all content online.

More than 2,200 Digital Hollywood conference attendees are crowding the hallways, ballroom and meeting rooms of the Hollywood & Highland entertainment complex and the adjacent Renaissance Hollywood Hotel, all eager to meet consumers' growing expectations and figure out how to monetize more online content.

However, while the consumer is ready for the floodgates to open, Hollywood isn't unlocking its vaults just yet. Conference topics focus less on the here and the now, and more on the future of the digital age and how content providers, distributors and mobile carriers can keep pace with high-tech demands, such as those associated with mobile video.

Mobile Madness

Apple's (Nasdaq: AAPL) iPhone -- a product so revolutionary that it warranted its own session, dubbed "The iPhone Paradigm" -- has accelerated the mobile video race this year.

While the iPhone undoubtedly raised the bar in the mobile arena, there are still some questions about the value of mobile-only content.

"I personally don't think that there is any content that people only want to see on a mobile device," John Smelzer, senior vice president and general manager for the mobile division of Fox Interactive Media, says during "The Rush to Mobile Video" session.

Mobile-only content does indeed exist -- including the mobile TV network GoTV and TV Guide Mobile -- but many content providers and carriers are still analyzing costs and consumer demand.

"There's major, major challenges to this business, and we've only just started," Smelzer adds.

Others aren't so cautious. At the "Hollywood and the Digital Consumer" session, Jason Hirschhorn, president of Sling Media, argues that there's a market for content created only for mobile devices. He envisions "a different creative approach for different devices."

The New Digital Consumer

The halls are also abuzz with discussions about social networking and user-produced content. While social networks like MySpace and Facebook are evolving, they are creating more viral marketing opportunities and expanding the C-to-C (consumer-to-consumer) effect.

"Two-thirds of the content consumed on MySpace [is] on other people's pages," says Shawn Gold, senior vice president of marketing and content for MySpace.

Indeed, much of this consumed content includes user-generated products.

"There's a big change and a swing happening that content is being provided more and more by the user," Paul Torok, accounts director for Proxivision, tells the E-Commerce Times. Proxivision is a digital media consulting, technology services and creative services outsourcing firm.

However, monetization of this content isn't enticing Madison Avenue just yet -- despite Google's (Nasdaq: GOOG) introduction of in-video and video ads for YouTube.

"What ad would you possibly attach to a five-second clip of [a] chipmunk turning around?" asks Erik Flannigan, executive vice president of digital media for MTV Networks Entertainment Group and a speaker on the "Hollywood Reinvented" panel.

The ad model isn't exactly baked yet for Internet content, he says.

Time will tell, comments panel member Lewis Henderson, senior vice president of the William Morris Agency. "You've got to take it seriously -- and there are dollars to be made."

How to address the monetization challenge is one of the refrains that is heard repeatedly throughout the conference.

Behavioral marketing will play a large role in this drive to collect more ad dollars online, Rob Rustad, director of marketing for Collarity, tells the E-Commerce Times. "Advertising [is] being reinvented. ... Everything is moving from what was a closed television system to what is an open Internet system, so all of the plumbing is being 'rearchitected.' This isn't something that happens overnight, and everybody with a vested interest in the old model is trying to figure out the new model."

Hollywood Drags Its Feet

Meanwhile, full-length professionally produced content is slowly but surely making its way online. This week, NBC and News Corp. launched a public beta of Hulu, an ad-driven Web site that lets users view TV shows, clips and movies for free.

Also, Comedy Central recently released its archived episodes of "The Daily Show with Jon Stewart" to the Web.

However, Hollywood is still closely guarding its most prized titles in terms of copyright protection and programming rights.

"Rights to programming is a mine field," says Sling Media's Hirschhorn. "There's all these artificial walls."

Hollywood is also moving at what appears to be a turtle's pace in terms of creating and developing programming when compared to mobile-only or Internet-only content.

"[The process] is incredibly archaic and slow," comments "Hollywood and the Digital Consumer" panelist Donick Cary, formerly a head writer on "The Late Show with David Letterman" and co-executive producer of "The Simpsons." Cary created what is believed to be the first mobile-only show to move from the cell phone to the television -- "Lil' Bush." He is now producing the show for Comedy Central.

Listen and Learn

Hot topics aside, attendees at the 14-year-old annual Digital Hollywood event appreciate the opportunity to share information and keep pace with competitors.

"It's just a good place to hear different people who spend a lot of money and a lot of time researching, trying [to figure] out what direction we're heading in with respect to digital media," Proxivision's Torok explains.

"People are here to share information, share perspectives, and understand opportunities and threats," Collarity's Rustad notes.

"It's a vibrant, nascent business," Jayant Kadambi, cofounder and CEO of the broadband video advertising firm YuMe, tells the E-Commerce Times. "You have to talk to lots of people to see what's going on."