Transcript of the Peter Douglas Interview

Like the soothing sound of ocean waves, it's Silicon Valley Radio. When your dad is Kirk Douglas and your brother is Michael, you know the entertainment business. But Peter Douglas also knows the Web business. He and brother Michael have a new company dedicated to creating compelling Web content.

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Silicon
Valley
Radio
:
Why don't you talk about the business a little?
Peter Douglas:Well, I think what you're looking to hear a little bit about is what [my brother] Michael and I are doing up here, and I think that that very simply is a desire on our part to be positioned and be players in what we'll just call "new media" for the sake of this conversation. And that's a pretty broad term. But as we see it, and from our family history in the business, things have changed a great deal.

And if you just take the concept of theater evolving, with the help of photography, into film, there was a certain scope that expanded there in terms of entertainment. And then gradually into, you know, television, and with recording media you had videocassettes, and now you're getting into CD-ROMs and high-density disks and so on.

You start to, each step of the way, get new product or expand in new areas, where entertainment as both a form of enjoyment, or just from the standpoint of motivation, becomes essential. A lot of products don't work that should work because they're not compelling enough.

So as you track new media into other areas, that same compelling nature that we tend to bring successfully to old media is what we're trying to find a way to bridge into new media -- both for ourselves in our business as well as for our peers, if you will, which would complement our business -- and try to find ways to take people who aren't currently playing in that area and utilize those talents in conjunction with our company to develop products, channels.

SVR:Is it a challenge, considering the nature of the Web -- in that it's really a multimedia medium -- figuring out what you're going to get involved in? It sounds like your company might get involved in everything from representation of talent to being a production facility.
Douglas: Well, no. No. We're definitely very focused on that level. We're not agents. We are content providers. We are a studio model, if you will. In that regard we actually would employ talent. Or joint-venture with talent.

But the products that we tend to be influenced [by] or interested in are specifically products that are platform-independent and that deliver content in one form or another -- whether it's a comedy, a linear piece of information, an interactive series, a piece of health care -- there's a great variety of areas to play in. And it's a question of where we think we can be most effective.

We have a small company that's based out of Santa Barbara. It's called Santa Barbara Digital Ventures. It's a small venture-capital operation that we funded and that is really set up to make small investments in either business plans or in small, new start-ups -- both as a learning experience for us, as well as to be players and, you know, out and exposed to the deals. And that goes a little bit further than the traditional studio model, but it's important to make that extension so that we're out in the forefront of where it's happening, because it is happening as we're doing it.

It hasn't been around for 50 years, and we're just taking the skills that have been established; we're actually having to create certain skill sets or understand certain skill sets or new technologies before we can actually apply our skills, which is on the creative side.

SVR:Do you have any projects set to go up anytime in the near future?
Douglas:Well, we have a couple of things, some of which I can't share. I think we're particularly interested in the area of health. I think that from my position -- having been for the last seven years on the board of directors of Cedars Sinai and intimately involved in the restructuring from a major institution's point of view of its health care system -- there's a lot of value added that the right kind of compelling programming can bring both to the consumer and the professional field, let alone education. So that's a whole piece of business that we're very interested in.
SVR:So it's far from just being entertainment. It sounds like health care to education?
Douglas:It is. Well, but bear in mind, we're there to service the consumer or the public. And entertainment doesn't necessarily -- remember we're talking about new media now -- it doesn't mean linear programming anymore. The minute you define entertainment as a multimedia environment, you're not limited to TV as we've known it. It could be in a professional environment. It could be whatever.

When you look at television, you're there to compel an audience member basically to buy a product. You create this filler called "entertainment" to fill in the gaps that would just be too uncouth or too gaudy to stick a lot of commercial time in.

But you're really there selling commercials. That's the compelling nature of entertainment. It seems to sell products. If it's not selling the product, it gets off the air. That same compelling nature really applies to a much broader array of issues than strictly the traditional household cleaning product, as you get into multimedia. It could apply towards motivating people to do things or towards getting professionals to be more attentive to things that they traditionally haven't been.

If you take one of the most simplistic terms -- the old term of "dumb terminals" that they used to use -- from a medical point of view the doctors never used them to complete their charts. If you look at them, you don't blame them.

And yet if you created just a simple Windows interface, let alone something that might be more compelling to them -- whether that's supplying them with value added, but it's the way that that interface is created -- that in itself could be entertainment. That in itself could be compelling. I'm not suggesting that filling out of charts is necessarily the most compelling thing in the world. But there are ways to do things that will make it more user-friendly, and will make it more fun.

So we're trying to look at those areas -- and not try to answer them all ourselves, but find ways to apply our thinking, with the help of others, to tackling some of the new frontiers.

SVR:What's been the greatest challenge in trying to get a bead on this new medium, and trying to figure out its possibilities?
Douglas: Well, I think first of all, learning who the players are, and also who the players are not. I think that a lot of people, some people from my industry, who go into new media tend to go into new media because they're not really working out too well in old media.

But I'm thinking in terms of the nature of new media tends to come from the least expected resource. And the more traditional resource, the people that are in the old media world, aren't perhaps particularly motivated to go into the new media, just because they've got their hands full. At the same time, a lot of them would like to.

A lot of them would like to find ways to experiment and get involved. And there's a number of issues that they have to understand. They have to understand the structure. They have to understand the risk. You're not going to get $20 million a Web site, you know, as some actors can command for their movies.

But as that unfolds, they still want to take certain chances and risks and learn new things. And you can create a pathway for some of those people to be able to look at and understand and, if something intrigues them, participate.

From our point of view, our model is the studio model. And that is that the top talent are going to not just take a fee -- and we can't even afford to really pay them, by the definition of new media, a fee that's going to make it worthwhile -- but they can get a royalty position that will give them a really big upside if it works. And I think that's very exciting for at least our peer group that we talked to.

SVR:What's going to prevent the Web from being a vital medium? In a worst-case scenario, what would keep it from being a vital medium?
Douglas: I think the biggest thing interfering with the Web being a vital media has less to do with bandwidth, as a lot of people might say, and more to do with latency.

I think that the latency is probably going to be the ultimate downfall of the Web vision that people are currently seeing it as. And by that I simply mean that I think that what's going to happen is people are going to tend to evolve small Internets, if you will, all interconnected, but all directly accessible and sort of redefining the Web structure a little bit. So that at least, you know, if you're delivering programming, particularly if it's important programming -- health programming is an example -- it has to be delivered with a certain degree of reliability.

Right now I have ISDN in my home and in my office. If I go to my office to pull a file up, it's terrific, it just comes right up. But if I call in to another service to pull up some information, I'm subject to the latency of that service, even though when the frame does catch, it pops right up a lot quicker than a 28.8 or 14.4 modem. That latency, though, can sometimes only save you a matter of seconds, if it's a high-usage, bad router, and it gets bounced around a lot. I don't know what the short-term solution is to that; I'm not even sure there's a long-term solution.

I do understand the long-term solution to bandwidth: bigger pipe. You know, over time we will just have bigger pipe, whether it's in the form of cable or in the form of broadcast. It's just bigger pipe. And that's sort of an evolutionary process.

But this latency issue, with all these myriad of systems out there, and different routers and different skill sets of management of those tools and different reliability levels -- I think that's the ultimate problem that will stop the Web from really being a robust medium.

SVR:From the point of view of a consumer just checking out the Web for the first time, how might that person be turned off, given this latency problem?
Douglas: An initial venture onto the Web is provoked often by a curiosity. And the Web is totally fulfilling as a curiosity. When you look at it beyond that point for functionality, what is your interest?

You're into music. You want to sign up to a music Web site. You want to chat with a real good spinner from the local club, or from a club up in San Francisco that you're into -- whether you're into jazz or into abstract music, or whatever your taste is -- you want to venture into that environment. You want a relatively comfortable, back-and-forth flow of information. If you find that you've got to wait because, well, it's six o'clock and everybody is on the Net, or Netcom's overloaded once again, those problems, because of the design of the Net, aren't really easy to solve.

I mean, I can make a good system and have a reliable router and have a maintenance team on 24 hours a day; but what about the other 200,000 points that I might be hitting as I jump out there?

Those are things you just can't control. And as the product becomes more and more important, for example, gets bigger and bigger ad dollars -- because it's worth the dollars to the advertiser, or it's a health product, or it's prescriptive in nature -- let alone, people's addiction to television: I mean, how do you think the majority of people would feel if they had to wait for Roseanne? You know these big gaps between commercials and shows, where it wasn't filled because the guy forgot to throw the switch? Or they had to reroute through New York?

SVR:There's a lot of fear of Microsoft taking control of the Net. Do you have any perspective on that?
Douglas:I think that Gloria Nagy said it. What was it? "[It's about] motivation, rather motivated by fear or fantasy." And I think that there's a natural inclination to be motivated by fear. I certainly fall into that category at times, I think, objectively, as I look at it. I don't think we're threatened by Microsoft. Or at least I don't feel threatened by Microsoft.

I think that Microsoft has certain talents and certain skill sets and lacks others. And they are not the all-seeing, all-knowing. And, in fact, neither are AT&T or any of the other companies who, less than six months ago, were proprietary systems and now suddenly saw this new vision that hasn't been a secret to any of the rest of us as to how the world's going to turn out.

I think they all make mistakes. I think that nature has a way of sort of taking care of things. And the Net is very much sort of chaos-theory nature, at least from my perception. And one thing that it does give you -- I think there is some validity to the content rules.

SVR:Can you give me a quick summary on your diverse background?
Douglas: Well, my background probably started as a photographer in my late teens. I then joined the Director's Guild training program and went through the training program to become a first assistant, and very quickly became a producer on my first film, which was The Final Countdown. I graduated from UCSB.
SVR:Was that a fun time?
Douglas: Yeah. Well, actually, I was a little bit more serious about working than I should have been, now on hindsight, living up there. But it's the kind of environment where I have a little girl now, and I know I'm going to be having this conversation with her. I'll be saying, "Go have a good time." I was in this head set that I had to work all the time.

I mean, there were a lot of things that I was doing and I was really into enjoying them. But I was constantly trying to get ahead. I was really a type A personality. But where that took me was doing my first film, and pushing into television, into cable. And through that process, I was tinkering with computer systems.

I was one of the earliest subscribers to the Source, if you remember that. It was an online service -- I guess it became Compuserve, or they merged. And I couldn't afford at the early onset to buy name-brand, or at the time, IBM equipment, because they were 10 times more expensive. And I found out through friends that I could build my own. Only to discover that after I'd dumped a grand in to build my first PC, I then had to fix it because nobody else could.

So that was my technological background. And I've been online forever, both on the Net and through the different services, and seen them grow and sort of been aware and had an understanding of the technologies behind them. So this is kind of a convergence for me -- as it is for every one of us, right? -- between a skill set that I've developed over the years for entertainment, having produced and written some films and television (and I won an Emmy award for one of my shows).

I now look at this convergence of my technological side and an understanding of where we're going, or maybe a better than average understanding of where we're going, and we're trying to make some use of it. Michael and I share a common residence, which is in Santa Barbara. So we're trying to make use of it there. Because hopefully, if it does well, we won't have to go away so much.

SVR:What essence does Michael bring to the business and what essence do you bring? And how do you guys work together? And what does your father think of the Web?
Douglas: My father doesn't have any idea about the Web. Nor does he have any interest in having any idea about the Web. First of all, you can't yet play a good game of golf on the Web. So that takes the priority out of it.

Michael brings a lot. Michael is a creative force; he has tremendous contacts, people that we can get to, by virtue of his access, that normally you could not get to.

He also brings a certain amount of funding, which we both bring to the venture. But the ability to get investment -- if we put in our money, and we look at outsiders or some of our friends who have invested with us -- they do so because we're at risk, and look at Michael and figure, "Well, he's got a good track record." He's in it, so they ride along. So there's quite a bit of value added, having him there.

Plus, it's a natural evolution for him. I mean, he's a very well-established producer/actor. He wants to do some things in Santa Barbara. He loves the community there; he's lived there for almost 20 years.

So it's an opportunity to kind of have a little bit of opportunity to pay back the community if you can set something up there that's helpful for them. And at the same time, set up a sort of new venture, create sort of a new frontier in a business you've been in for some time.



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