Marginal Revolution: The fall of Hollywood?

Marginal Revolution made a post yesterday titled, "The fall of Hollywood?" that speculated on various reasons why the current Hollywood business model might be failing (Namely that they are being locked into more and more advertising costs to get the same dwindling box-office fix). Personally, I think that if Hollywood really is losing money (and not making it all on the back-end trading in heroin and infant kidneys or something) that a studio collapse might even be a good thing for the movie industry. Last time it happened was in the 70's and we ended up with a glut of some of the most original, dynamic films in the history of American cinema. I suppose it's naive to think that this could happen again, but perhaps when Hollywood stops mainlining super-hero movies and hits bottom, the business model will have to change. They'll put money into niche markets and distribute films over the internet. They'll losen the laws and DRM that traps movies on little thirty-dollar(!) plastic discs and let us manage and organize our collections of movies on our hard drives.

Just a thought.
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