I was going to simply update the last …quick clicks… entry, but Roughly Drafted’s latest post (article, really), sparks a lot of further consideration and discussion.

In it, Daniel Eran, in his typically thorough, yet readable fashion, gives an excellent overview of the evolution of home video and the format war that occurred as that industry developed. In the corporate espionage, backstabbing, and hubris, analogies to today’s home entertainment market (especially music) are painfully clear.

Looking back on Sony and its decisions regarding the (clearly superior) Beta format is a fascinating bit of hindsight. Perhaps the kernel of the Eran’s argument is this:

…companies [were given] the opportunity to experience the alternative to standards-based development. Rather than a government-run organization establishing standards, individual manufacturers would all scramble to develop their own proprietary systems, optionally choosing to license their designs to other makers.

In hindsight, this worked out really poorly. While companies were already able to compete in delivering TVs that all worked according to the standard NTSC TV specifications, there were no standards guiding a record or tape delivery medium for video.

Because there were no standards, huge resources were wasted in competing efforts to invent new ones. This same principle was later relearned at considerable expense in the field of software development, in networking, and again in video standards. Open formats and open standards solve a lot of problems for the market.

The lack of an open standard did not actually kill home video, however, and I’m not sure that innovation was truly dealt a serious blow. Interestingly, the VHS juggernaut that eventually squashed Sony’s beloved Betamax was fueled by Sony’s own designs, as they eventually (haughtily) pointed out in ad campaigns - “We Invented The Competition.” JVC, the company that launched VHS shortly after Betamax, was using technology derived from both private demonstrations of the prototype Beta systems years earlier, as well as its experience as a partner in Sony’s earlier professional U-matic video tape systems.

As the interesting summary of The Rise and Fall of Beta illustrates, throughout the 80s, the gaps between the two technologies gradually closed, and improvements were definitely made to both systems, as each side in the “format war” tried to compete.

It’s hard to say that, in the end, brilliant innovation was truly lost. The cost of the format war, though, was evident in the market. Consumers and content producers alike spent much on quickly-outdated or incompatible players and tapes. It’s important to note that neither the content (movies and television shows) nor consumers (or their interests) changed, while the Interface between them shifted almost constantly as the competition between VHS and Beta raged from 1975 through the mid-80s.

Despite the similar origins and functions of the two formats, they were indeed both closed and proprietary. The guarded, rights-conscious licensing of the two formats kept the VHS and Betamax camps clearly delineated, and likely did curtail innovation beyond the companies that controlled the rights. VHS, however, received a boost from being the more open of the two standards. From The Rise and Fall of Beta in regards to Sony falling behind:

In all fairness, we must point out that since the beginning, Sony was virtually alone in devoting time and money for R&D on new developments for Beta, while VHS had the considerable resources of Hitachi, JVC, Matsushita, Mitsubishi, and the others in the VHS family.

There’s no denying that infighting and bitterness fractured the industry, and resources were wasted on both sides of the VHS-Beta chasm in a game of one-upmanship and features imitation. But was innovation truly lost?

It’s easy to see innovation as a loser in the battle — at first glance. Betamax was by all accounts superior technologically. But Sony’s ill-fated decisions — such as assuming that one hour would be an acceptable tape-length limit, while RCA rightly concluded that four hours would be needed for an American football broadcast — are not simply marketing missteps. They are decisions that defined, and doomed, the format. Sony’s stubbornness and self-assuredness also meant that it took years before Beta adopted the consumer-desired features already in use by VHS (The Rise and Fall of Beta).

Yes, capitalism and market forces may have driven the high quality of Betamax out, but those exact same forces drove the VHS camp to innovate solutions to improve beyond the initial limits of VHS, eventually achieving Beta quality (or at least acceptable HiFi quality) with S-VHS. Besides, the factors that allowed VHS to win — interoperability, wide adoption, long recording times — are features that were, in the end, desirable to consumers and content producers. Had Betamax achieved those same features, who is to say that it wouldn’t have triumphed?

Perhaps the Betamax-VHS format wars were dramatic less because closed standards stymied innovation, and more because manufacturers of technology became caught up in pride and shortsighted judgment, leading to a marketplace muddied with a confusing array of changing and incompatible products (even on each side of the chasm, multiple standards emerged like Beta’s BI, BII, and BIII).

As Roughly Drafted points out, similar proprietary standards battles have likewise affected computer software development and networking. I would add that even at the dawn of the twentieth century, the early cinema was similarly threatened by legal maneuvering and standards battles, as Thomas Edison attempted to patent motion pictures, losing critical legal battles in 1902 and 1908 (and again in 1912 and 1915 with his Motion Picture Patents Company finally splintered by antitrust proceedings).

In all of these cases, it becomes clear that it is not necessarily the better, or even most open, standard that wins out. It is the most widely-adopted and interoperable standard. Opening a standard is useful in widening adoption of that standard and insuring its eventual dominance, but is not, in and of itself, necessary for innovation.

There’s another factor at work here — if we look at these ’standards’ as defining an interface by which people (here, movie consumers) are connected with content (movies), we see that there are three primary forces: Content Producers, Content Consumers, and the Interface between them. Beta and VHS are only the Interface part of the equation. While Beta and VHS struggled to neutralize each other’s advantages as the Interface component, consumers and content producers had the power to upset the balance. At the time, Sony made the bet that consumers would chose Beta because they would prefer the smaller size of the format for home-movie recording, whereas VHS envisioned a market dominated by pre-produced movie content.

While Sony’s vision of families filming home movies was compelling, it was not a practical application in 1975 when Betamax debuted. Instead, the company made one often-overlooked critical mistake. It marketed the first Betamax with the even-more compelling argument that it makes time-shifting of television programming possible. (Watch this video preserved by the Beta Info Guide to see Sony’s first marketing push.)

This, of course, framed home VCRs as a method for obtaining content. It established home video as an interface between consumers and the television content they desired. The leap from television content to filmed content is not great, and nearly from the moment VHS debuted in 1976, its success in luring video rental and movie studio interest was ultimately the unravelling of Beta’s superiority. Sony had unwittingly given power to the Content Producers, the element where Beta’s appeal would prove weakest.

When studios and video rental establishments decided that producing and stocking two formats was too much expense, the format with the most content won out. That was VHS.

By 1988, studios had all but ceased Beta output, and Content Producers had tipped the scales with their decision. Sony could see the writing on the wall, but only too late. The Rise and Fall of Beta cites that Sony even established phone hotlines for its customers to obtain Beta versions of popular content and established its own video production label, as it flailed in desperation in the mid-80s.

Some see today’s digital music landscape as engaged in a similarly debilitating format war of closed, DRM-encumbered formats. There’s MP3, currently beset by lawsuits from those who claim to own the rights to license it. There’s Apple’s preferred AAC, a truly open standard, but saddled with DRM in the closed iTunes/iPod ecosystem. And there’s Microsoft’s WMA, a closed standard which is further strangled by multiple, non-interoperable forms of DRM (PlaysForSure or Zune?).

As the doors to purchase-able, high-quality DRM-free AAC open at the industry-leading iTunes Store, many have cheered openness and interoperability and heralded a victory for innovation. But wasn’t MP3 seemingly just as open before the iPod came out?

Again, there are three elements here: Content Consumers, Content Producers, and the Interface connecting them. At the moment, Apple’s iPod and iTunes are winning the Interface battle, but there is still a battle of standards, to be sure.

Meanwhile, Content Producers, the element that turned the tide in home video, are as divided and confused as the Interfaces were in that earlier format war. EMI is pushing for openness, other major labels argue that iTunes is too closed, yet refuse to open DRM for interoperability.

If this theory holds, the power today rests with Consumers. They may comprise the element that decides this particular format war. Already, Consumers, through their choices and wide adoption, seem to have driven the Interface element toward the iPod and iTunes and seem to be driving the shift toward DRM-free music. In my opinion, these seem to be positive, productive moves.

Will Producers and Interface designers fight this motion, or will they, too embrace the path set by the Consumers? The dominant Interface is certainly moving that way, and perhaps the Producers will come along as well.

Wouldn’t it be nice if, for once, all three drove the industry into a new, technologically-advanced era?