Washington Post writer Rob Pegoraro recommends the movie industry start making the same "mistake" the music business made, and fast.

After years of resistance and complaining, the music labels decided to monetize the flow of downloaded music — but not until the iTunes Store showed them how to do it. iTunes isn’t the only distribution model but it remains the most lucrative at this point by giving customers what they want in a way that lets everyone get paid.

Well, almost everyone. Downloading cuts retailers out of the loop and the last few years saw a strong downward pressure on the size and salaries of music company executive teams.

Still, no one is talking about the death of the music industry like they were for a while. The business is forever changed — there’s no doubt about that — but neither dead nor dying.

Now the film industry is where the music business was, making it ridiculously difficult and expensive to download high quality digital movies legally, even as hackers and pirates demonstrate how easy and cheap it really is.

"The studios continue to show an amazing proficiency for finding reasons not to sell or rent digital downloads in ways that customers might value, all for the sake of protecting their existing retail channels," The Post’s Pegoraro writes. "Hollywood’s attitude has been ‘movie downloads on our terms.’"

Hollywood’s terms have included pricing content without regard to the delivery medium, a practice that makes consumers scratch their heads at best; at worst it makes them angry. Meanwhile the studios cut a deal with with rental houses that undercuts the foundation of the house. What Blockbuster began and Netflix extended, Amazon and Apple are now finishing. There is very little reason for most people to own DVD movies today. In about a minute, there may be no reason whatsoever.

Just to get it out of the way, Yahoo Video, Google Video, YouTube and MySpace videos are all in the same service category. They post uploaded video, primarily from users, and you get what you get. Some video are downloads and some are streaming Flash movies. The quality and content are all over the map. Users police the site and report inappropriate and illegal content . . . or not, and the services remove it per their end user license agreements. YouTube currently rules the class. Stay tuned.

Into the middle of that model, which has yet to generate much money for anyone, NBC Universal has introduced NBBC — the National Broadband Company. NBBC is an aggregating syndicate delivering video from willing content licensors to willing online distributors. Along the way, they attach advertisers (Banking giant JPMorgan Chase and the ubiquitous Procter and Gamble were the first to sign on).

NBC Universal Television Group President and Chief Operating Officer Randy Falco told AdAge that the infamous "Lazy Sunday" incident — in which a Saturday Night Live sketch was watched by five millions viewers on YouTube before NBC Universal demanded it be taken down — was a lesson that need not be repeated. "We have no issue with YouTube. If we have a valuable piece of content you won’t find it in the marketplace not being monetized," Mr Falco said. NBC affiliates and partners are cut in on the NBBC deal. NBC’s partners include Forbes, Newsweek, A&E, About, Vibe, Fox’s IGN Entertainment, CBS’s CSTV, CNet, HowStuffWorks and Artists Den. 230 NBC affiliates own a third of the new enterprise (in exchange for local news and sports content).

Back to the main thread. The first week of August 2006, Amazon entered the downloadable video market with Unbox, selling and renting television shows and theatrical releases to Windows XP users with Microsoft’s PlaysForSure digital rights management software on their PCs. Most rentals time out in a month. The purchase option includes two versions of the movie — one for PCs and one for handheld players — which can be stored on two computers and two handhelds as long as they are PlaysForSure compliant.

The second week of August 2006, Apple expanded the iTunes Store, adding theatrical films to the 220 television shows on the site. Beginning with 75 movies from four Walt Disney Company studios, Apple promised to add new titles and studios as part of it’s weekly new release pattern (on the music side, Steve Jobs cited Nielsen Soundscan data confirming that 88 percent of legal music downloads in the US are currently sold by iTunes).

Mr Jobs, whose Pixar studios The Walt Disney Company bought in January 2006, shared the spotlight at the launch with Disney Chief Robert Iger. Mr Iger said:

We’re here today to take the next step, to make a step in what we believe is going to be a natural progression of moving media from traditional platforms to new platforms.

…

Now we’re making movies available on this new service, on this new platform, giving people basically more opportunities to buy movies, more places to watch those movies.

The new platform Iger spoke of delivers a single video file playable on two authorized computers and two iPods. In Q1 2007 Apple will deliver a tiny box, code-named "iTV," which wirelessly transmits that same file (along with iTunes TV shows, podcasts, music and iPhoto still slide shows) from Macs or PCs to standard and hi-def television sets. The iTV box retails at US $299.

It appears that Apple will continue playing the role of game changer by creating fluid synergies between technologies and art forms. For Rob Pegoraro, it is inevitable that the studios will follow:

Essentially, the Internet at large determines how movies reach customers, and studios need to figure out how to fit a cash register into that pattern — that is, by charging for quality and convenience that you can’t get with a peer-to-peer service’s random selection.

Media companies who join Apple in delivering on that challenge will capture the next round of consumer attention and the profits and brand equity that go with it.

The question for the rest of us non-media-company types seems straightforward:

Are we holding on to business models that cannot survive because they are being rendered obsolete by people paying better attention to our customers than we are?

It was not music companies that came up with iTunes, nor (though one could argue that Steve Jobs wears two hats in this drama) is it film studios that are inventing new opportunities to get movies from Hollywood to our homes efficiently and cost-effectively. Will it take outsiders to open the next opportunity in your industry or will you and your colleagues and competitors get there first?