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Digital Tools Transform Future of Movie Making; Travel the World by Traveling the Web; New Cell Phones Dial Up the Future

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ANNOUNCER: Today on CNNdotCOM...

PERRI PELTZ, CO-HOST: The technology behind this movie could put you in the director's chair, digital technology that has the critics talking about the future of movie making.

Travel the world by traveling the World Wide Web.

(BEGIN VIDEO CLIP)

JAMES HATTORI, CO-HOST (voice-over): So you want to go to Costa Rica, but you don't really know what's there.

(END VIDEO CLIP)

PELTZ: How to turn the Internet into your own personal travel agent.

And cell phones for the ultimate couch potato. You can make calls, surf the Web, download music, even watch TV without ever having to get up.

So don't move, it's all ahead on CNNdotCOM.

ANNOUNCER: CNNdotCOM with Perri Peltz and James Hattori.

PELTZ: Welcome to CNNdotCOM. I'm Perri Peltz.

Opening this weekend in the United States, a new movie called "Timecode." But this isn't just any movie. "Timecode" is billed as the first Hollywood feature shot entirely on digital videotape instead of film. That shift in formats could make a huge difference in both how movies are made and who makes them.

It's even changing where we see movies. They're not only coming to a theater near you, but to your own PC. To see how digital tools are transforming the movie industry, let's go to Hollywood.

(BEGIN VIDEOTAPE)

MIKE FIGGIS (ph), DIRECTOR, "TIMECODE": A-marker, B-marker.

PELTZ (voice-over): "Leaving Las Vegas" director Mike Figgis is breaking the rules in Hollywood. In these times when an average feature film costs $60 to $70 million to produce, Figgis managed to make his newest release, "Timecode," for a fraction of that cost, just between $2 and $3 million.

How did he do it? Figgis shot the movie, which will be screened in quadrants, on four hand-held digital cameras, eliminating high- priced celluloid film.

FIGGIS: I used to be a snob. Like a lot of filmmakers, I used to say, you know, celluloid is the only really medium for working like this. And then I started looking at ways of making films in a much cheaper, quicker, more satisfying way.

PELTZ: Also eliminated by shooting on digital video is the costly lighting and staffing that usually accompanies a film production.

ROGER EBERT, MOVIE CRITIC: The cameraman has to have a big truck with a lot of lights in it to show how important he is. Then he has to set up all the lights, because otherwise why did he bring them along? Then he has to put up a lot of black velvet shields to block the lights because they aren't needed. So that he said (ph) half of the budget for a movie these days goes to illuminating large squares of black velvet.

UNIDENTIFIED MAN: Hi, Mike, you want to grab me a camera with 30 seconds?

PELTZ: Along with video cameras, digital technology has also given us desktop editing systems, allowing anyone to become a director of sorts.

EBERT: Karl Marx talked about putting the means of production into the hands of the workers, and that's what the Internet has done, along with the digital revolution. You can make a movie now with $3,000 worth of equipment. You need a $1,500 camera and a $1,500 computer, and you can shoot the movie and you can edit the movie.

FIGGIS: It's been a very exclusive profession up until now.

PELTZ (on camera): So will everyone be able to make a movie?

FIGGIS: Sure.

PELTZ: Can I make a movie?

FIGGIS: Yes, you can make a movie, anybody can.

PELTZ: That's a big change.

FIGGIS: It really is. And it's not an amateur thing any more. A really true artist from, say, Milwaukee or New Mexico or the Sahara Desert can actually make a technically perfect film for nothing, for $5,000 or $10,000, or whatever. The next challenge will be, how do you get a really great film out to a public, you know?

(BEGIN VIDEO CLIP, "TIMECODE")

ACTRESS: You don't know what this means to me.

(END VIDEO CLIP)

PELTZ (voice-over): While Figgis's movie "Timecode" will go directly to the theaters, many amateurs who are using digital cameras are also turning to digital distribution, on the Internet.

NIKA SALMI (ph), FOUNDER AND CEO, ADAM FILMS: It's a new environment, and so the demand side also has opened up a possibility that, OK, if you're going to create something, there -- and if it's good, there's an outlet for it. In the past, it was, like, where are you going to put it, into a theater? Onto television? (inaudible) and those are very, very narrow.

PELTZ: Nika Salmi is founder and CEO of Adam Films, an entertainment company for the new age. Adam Films is a home for amateur filmmakers looking to make it big.

UNIDENTIFIED FEMALE: And you're thinking about what rights you might be interested in retaining.

PELTZ: Adam Films buys the rights to short films and animations, making them available for free download at Adamfilms.com. The company also distributes its films to more traditional entertainment outlets, such as cable channels and airlines.

Adam Films views itself as a gatekeeper of sorts.

SALMI: What are you watching there?

Hopefully, we are kind of a marquee name that when you see on our Web site or you see attached to us via a television channel or on an airline or something, you think, Oh, that's going to be good.

PELTZ: In its short 20-month life, Adam Films has had to sort through 200 to 300 submissions each week.

SALMI: We've seen to date over 30,000 animations and films. From that, we've been selective, and we have about 1,000 in our library.

PELTZ: With individuals using digital technology to gain more control over both the production and distribution processes, there may be some major Hollywood players getting the squeeze.

(on camera): If anyone can make a movie for under $10,000, $20,000, how have the studios reacted to that?

PAULA PARISI (ph), TECHNOLOGY CORRESPONDENT, "HOLLYWOOD REPORTER": They're all scrambling to get some sort of involvement with the Internet, because they do see the writing on the wall. But I don't think they quite see it as a threat to their business at this point.

PELTZ (voice-over): Paula Parisi covers technology for "The Hollywood Reporter."

PARISI: It's almost like a political regime, and,you know, overthrowing a government or something, to get the studios to the point where they're truly nervous about their futures.

FIGGIS: The wave is coming. Either buy a surfboard, or get out of the way. I don't think it'll be a situation of armed kind of revolution at the gates of the studios. It's almost like they'll run past the studios.

PETER GOOBER (ph), MANDALAY PICTURES: You have to decide whether you're involved in this revolution or you're not.

Just remind me at my Thursday meeting, bring it up (inaudible).

PELTZ: Peter Goober is a 30-year veteran of the film industry and the former head of Columbia and Sony Pictures.

GOOBER: OK, put this on my calendar.

PELTZ: Having been a part of old Hollywood, Goober is determined to be a part of the new, as head of his own independent venture, Mandalay Pictures.

GOOBER: All revolutions are great unless they kill you. And all change is hazardous and potentially lethal. The idea is to be at the front end of it.

PARISI: I don't know that the corporate mentality is going to really jibe with what these filmmakers are doing. But the studios have embraced it to the extent that it's just, you know, streaming more talent their way.

(BEGIN VIDEO CLIP)

UNIDENTIFIED ACTOR: With (inaudible) taking a large (inaudible) as possible...

(END VIDEO CLIP)

PELTZ: And according to Goober, it is still that talent which will determine success regardless of technical advances.

GOOBER: If it's not on the page, it's not on the stage. I don't care if it's digital, or I don't care if it's Viewmaster slides, and I don't care if it's the campfire 20,000 years ago. It's that ability to get that idea off of the tongue and onto the page that creates the blueprint for all this. It is still the seminal element. It's still what it's about.

PELTZ: Even if the story is good, do people really want to watch movies on their computers?

PARISI: I don't think people want to watch movies on what we know today as a computer screen. But I think, you know, TV screens will be computers, and you can download a movie, and it'll come through that cable modem that you use to get information on your computer, but channel it to your TV screen and watch a movie that way.

PELTZ: As digital technology enables us to beam any and all entertainment into our home or anywhere else, even the most progressive Hollywood insiders believe we'll still crave that cinematic experience.

EBERT: People want to be in the dark with a bunch of strangers and a giant screen. They want to not be in control. They don't want a pause button, they want it to happen without them being able to stop it. And then they want to have that experience. And that will never be replaced by the Internet, just as it hasn't been replaced by television or home video.

(END VIDEOTAPE)

PELTZ: Adam Films is also making its movies available on Microsoft's new Pocket PC just launched last week, as well as on other wireless devices. So now you'll be able to catch a flick whenever, wherever. But you'll have to make your own popcorn.

We're going to be right back.

ANNOUNCER: For more information on digital filmmaking, log onto IDG.net/films.

Still ahead on CNNdotCOM, making a virtual vacation a reality.

(BEGIN VIDEO CLIP)

KIM ZETTER, "PC WORLD" MAGAZINE: It's an elegant Victorian mansion, restored to its turn-of-the-century glory, and located in the cultural heart of Santa Fe.

(END VIDEO CLIP)

ANNOUNCER: Finding just the right hot spots, ahead on THE DOT.

(COMMERCIAL BREAK)

ANNOUNCER: From the Tech Museum of Innovation in San Jose, here's James Hattori.

HATTORI: The Tech here in San Jose offers a window into the present and future of technology. In this week's NewsFiles, a window into the continuing saga of the Department of Justice versus Microsoft.

(BEGIN VIDEOTAPE)

(voice-over): Baby Bills? The feds and the states suing Microsoft for antitrust violations are calling for the software giant to be split in two. Under the proposal submitted Friday, one company would make the Windows operating system, the other would handle software applications like Word and Excel. The judge in the case is waiting for Microsoft to file a reply before deciding a suitable punishment. With Microsoft employee morale sagging as low as its stock price, the company announced a huge stock option grant this week. To boost recruiting, CEO Steve Ballmer is even giving out his home phone number to promising college kids. No crank calls, please.

Napster's bad rap. Add hip-hopper Dr. Dray to the growing number of recording artists suing Napster over copyright violations. Napster is an online service that allows users to download and trade MP3 audio files for free. The heavy metal group Metallica sued the firm earlier this month. The band's lawyer says other musicians will follow suit.

Another Web music service, MP3.com, lost big Friday when a judge ruled the company violated copyright law. The ruling stemmed from a lawsuit filed by an association of the world's largest record companies.

Dog eat dog. The Pets.com sock puppet is socking it out in another courtroom battle. The manic mongrel is suing another hand puppet, Triumph, the Insult Comic Dog, featured on "Late Night With Conan O'Brien."

(BEGIN VIDEO CLIP, "LATE NIGHT WITH CONAN O'BRIEN")

CONAN O'BRIEN, HOST: It's going to be a terrific show.

TRIUMPH THE INSULT COMIC DOG: (inaudible)

(END VIDEO CLIP)

HATTORI: The cigar-smoking pooch uses profanity regularly and gets amorous with other dogs. Pets.com accuses the "Late Night" writer who created Triumph of disparaging the sock puppet. The suit also claims he publicly called the Pets.com puppet "a ripoff." Actually Triumph did make his debut more than two years before the sock puppet.

PETS.COM SOCK PUPPET: I never ripped anybody off. Yes, I did sell some tourists some imitation Rolexes, but those were very good watches at a very reasonable price.

HATTORI: Pets.com is asking for more than dog food, demanding $20 million in damages.

PETS.COM SOCK PUPPET: The horror!

HATTORI: And that's week's NewsFiles.

(END VIDEOTAPE)

ANNOUNCER: Up next, IDG's Nerd Word. Know what lossy compression means? The squeeze is on to come up with the right definition.

(COMMERCIAL BREAK)

PELTZ: Now, Nerd Word. Today's diggie definition, "lossy compression." No, it's not the ailment that afflicts deep sea divers who come up for air too fast. And it's not the mysterious frenzy fueled by the slightest rumor that causes high-tech stocks to plummet in value.

Lossy compression refers to data compression techniques that result in some loss of information. Digital pictures, sounds, and video clips can be very big. They take up lots of disk space and lots of Internet bandwidth, which translates into long transmission time. Lossy compression can squeeze files to the smallest size by eliminating redundant or unnecessary information. But the loss of quality may not be noticeable, such as on a Web site, where the full quality isn't visible anyway.

And speaking of quality, there's much more ahead right after this.

(COMMERCIAL BREAK)

PELTZ: Summer is fast approaching, and you've decided you need to take a well-deserved vacation. Well, why not join the more than 50 million people who used the Internet last year for travel planning?

James sat down with "PC World"'s Kim Zetter to get some Tools for booking a vacation.

(BEGIN VIDEOTAPE)

HATTORI: Say you want to go to Costa Rica, but you don't really know what's there, how you want to spend your time. Where can you find some information about that?

KIM ZETTER, "PC WORLD" MAGAZINE: Well, you can go to a site like Lonely Planet. They have information on destinations all over the world. We just typed in "Costa Rica" here, and it's giving us a map of Costa Rica, it gives us an idea of where San Jose is so that we know that it's kind of in the middle of the country. And gives us the national parks, places that we might want to go.

They have a service called Subway, which is a link to other sites based on country. So if we go down here to Costa Rica, we can find that there are a number of personal pages that people have put up here. Two guys travel through Central America and South America. You can follow their journey and maybe get some information about places to go.

So it gives you an idea of what to expect, the animals that they encounter, the flora and fauna.

HATTORI: We can read about how this guy had his boots sunk into seven inches of mud...

ZETTER: Of mud.

HATTORI: ... in Costa Rica. It's something not to be missed.

So we've found out some information about where we want to go. Now it's time to actually try and make arrangements, book a flight or a hotel.

ZETTER: Expedia is one of the sites that we like best for booking, because it makes it really easy to plan your trip from the very first page.

So we're leaving from San Francisco, and we know that the airport code is SFO. We know that a good time for traveling in Costa Rica is in May. So let's say we'll go on May 7, we'll leave in the morning. The airport that we'd fly into is SJO in San Jose. And we'll come back on the 17th.

You click on the button Go here, and it goes looking for a flight.

HATTORI: So it comes up with the best priced trips for the date and time.

ZETTER: Right. And we've got, let's see, a $570 trip, this is on Mexicana Airlines. And it displays them with the least expensive flight first.

HATTORI: What about a place to stay? Is it good to book on Expedia, a general site, or are there other sites?

ZETTER: We liked a site called Hotel Discounts. We're going to Costa Rica, so we'll hit on Central and South America and see what they come up with there.

We've got the name of the hotel and where it's located, Costa Rica, San Jose, here's one. It gives you the price in U.S. dollars. It's going from $66 to $75. And gives you a description. This is a -- this is a lodge tent camp in the outskirts, on the outskirts of a national park. That has 20 rooms.

Let's maybe not go to a lodge.

HATTORI: That's kind of rustic.

ZETTER: How about this, Fleur de Lys? That sounds interesting. This is in San Jose. It says it's an elegant Victorian mansion, restored to its turn-of-the-century glory, located in the cultural heart of San Jose.

HATTORI: Sounds good.

ZETTER: Right, and it's $60 to $80, which is not bad.

HATTORI: So is making travel arrangements on the computer and on the Internet going to replace the travel agent?

ZETTER: The best way is to do your own research on the Web first, find the best fares that you can, and then go a travel agent and see if they can match it. Or go to the travel agent first and see what fares that they can find you, and then hit the Web and see if you can find something better.

(END VIDEOTAPE)

PELTZ: If it seems to take forever to download some of those travel sites, you might want to check out getting broadband. But how do you decide which form to choose?

For the answer, we asked Karen Silver, senior editor at "PC World," just one question.

If you're looking for faster Internet access, should you go with cable or DSL?

(BEGIN VIDEO CLIP)

KAREN SILVER, "PC WORLD" MAGAZINE: Really you should see first which one is available in your area. Most likely it's one or the other. But if both are available, for home users, you could really go either way. If you need reliable business service that isn't going to slow down at 6:00 when everybody surfs new sites, you should probably go for DSL.

(END VIDEO CLIP)

ANNOUNCER: Up next on THE DOT, dialing into the future. Using your cell phone just to make a phone call is becoming a thing of the past.

(COMMERCIAL BREAK)

PELTZ: Fed up with all those people talking on their cell phones while they're driving? Well, just wait, because now they're going to be able to watch TV and listen to the latest hits all on the same phone they're jabbering on in traffic. It's all part of the growing trend that's bringing various electronics together into one gadget.

Rick Lockridge reports in this week's TechnoFile.

(BEGIN VIDEOTAPE)

RICK LOCKRIDGE, CNN TECHNOLOGY CORRESPONDENT: You hear the word "convergence" a lot these days, as in, the convergence of the TV and the PC and the Palm Pilot and the refrigerator and the lawn mower. And you wonder if one day we will live out our entire lives from our recliners, just beaming signals from a pinkie ring.

(voice-over): These new cell phones by Samsung make you wonder just how far the whole convergence thing can go. This is Samsung's new TV phone, the first cell phone in the world, the company says, to have a TV screen built right into it. You'll never have to miss "Jenny Jones" again. The little screen is only 1.8 inches across, but it's pretty sharp. With a local TV antenna, you can watch almost three and a half hours of TV before your battery runs out.

And by the way, you can also use this device to make phone calls. The TV phone is available only in Korea right now, the cost about $500 U.S. This isn't on-hold music you're hearing. It's digital music from your own collection, stored on Samsung's $300 MP3 phone. MP3's high- quality compressed digital music files are wildly popular on the Web. This phone can store up to eight of your favorite tunes in its internal flash memory, downloaded from your PC or copied from your CD player. It's like a Walkman that talks too.

The MP3 phone can also browse the Web while you're listening. It has a built-in e-mail program, calendar, and to-do list.

Watch phones are already on the market. Motorola says it's developing a pager that'll be able to make phone calls using a plug-in headset. And yes, now even recliners have entered the Internet age. La-Z-Boy is now selling a Web TV-equipped recliner.

Looks like we're in danger of turning into a civilization of multitasking couch potato maniacs. Sounds like a show for the next "Jenny."

That's TechnoFile.

(END VIDEOTAPE)

PELTZ: Now, get up off that couch and give us your feedback. E- mail us at thedot@cnn.com.

That's it for this week. Thanks so much for watching. For all of us here at THE DOT, I'm Perri Peltz, and we hope to see you again next week.

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