Certainly, the few attempts that entertainment companies have made to accommodate downloaders have come across as halfhearted and have turned out dismally. Five major movie studios—Sony, MGM, Paramount, Warner Bros., and Universal—sank $150 million into a cumbersome film-downloading service called Movielink, rolled out in 2002. In August, they unloaded the unit to Blockbuster for $6.6 million, after concluding that few consumers had the patience to master a technology that didn’t match the ease or quality of that being offered by the pirates. NBC and News Corp. are optimistic about Hulu, a site that offers new and archived TV fare, but the shows contain unskippable ads and can’t be downloaded, a disadvantage in this era of DVRs and iPods. All this comes after years of the music industry’s blundering around for solutions. “The music companies were put on earth to make the video companies seem like visionaries,” says Michael Gartenberg, research director of analysis firm JupiterResearch.
So the entertainment business lives by the motto “If you can’t join them, beat them.” As with all wars, of course, escalation most benefits the arms merchants. In 2005, the music portal ArtistDirect purchased MediaDefender for $42.5 million, making Saaf and his remaining co-founder, Octavio Herrera, multimillionaires at age 29. To retain the two men, ArtistDirect paid them an additional $525,000 each and gave them easy-to-hit bonuses that would keep their income at about $700,000 a year each. And the clients continued to come, even though those inside MediaDefender could see they were losing ground.
