Piracy a Threat to Motion Picture Industry as We Know It

This week in the Daily Variety there was an article by Ted Johnson entitled “Biz Need Louder Voice to Fight Piracy.” In that article Mr. Johnson makes a case that the entertainment industry needs to be stronger and more vocal in its fight on the piracy issue. His point is made almost entirely based upon a speech given by President of the DGA Taylor Hackford at the “Content Protection Summit.” To quote Mr. Hackford from the article:

Our industry doesn’t get it at all. And I am talking about top executives down to secretaries. I am talking about directors to craft service people. Unfortunately, this is our (DGA) No 1 priority…But within our own members, they just don’t quite understand how serious this is…Hollywood is filled with very famous and successful people…And, we are really famous for our causes. We care about things. We step out, and we have our pet causes…The point is when we care about things, we back it with our money and we speak out. The problem is nobody in this community speaks out about the threat that is actually happening in our community. And, if we let this threat continue, they will not have the money to contribute to these causes.

The remainder of the article is mostly dedicated to the proposition that the problem stems mostly from the internet. Mr. Johnson states that government should control the internet to protect the business models of the content providers. He feels that the bill passed in the Judiciary Committee giving the Justice Department new powers to shut down “rogue” web sites is a good thing.

I beg to differ. Controlling the internet is not the answer. The internet should be used for the free expression of ideas and for the free sale of goods and services. It should not be used for the illegal spread of copyrighted material. Everyone agrees with this. But, shutting down sites without due process of law is a bad thing. It is one more step towards government control of the media and the creating of a de facto communist state.

What should actually be done is what was done to turn Napster into a legal entity. The court system should be used in the manner for which it was created. Criminal actions should be brought against illegal web sites. Civil actions should be brought against those that sell and those that buy copyrighted material illegally. It worked against Napster in the past and it has worked against numerous other web sites as well.

Under no circumstances should anyone’s property be taken whether it be a web site or more traditional forms of property upon the whims of the Justice Department; especially one under the control of the leftist Eric Holder. (I wouldn’t even want someone on the right to have that power either.) The 14th Amendment to the Constitution guarantees everyone due process of the law. This is not archaic law. This is law that makes sense. Let’s not chip away at our Constitutional right just because a problem exists.

And, to emphasize piracy is definitely a problem. According to the International Motion Picture Association, $6.1 billion was lost by the major motion picture companies to piracy in 2005. If you include the worldwide motion picture industry which includes independents, the number rises to $18.2 billion. Mr. Hackford is correct about one thing: if this is not stopped, there will be no motion picture industry left and no more rich Hollywood elites to support their various causes.

However, according to the same study, only 38 percent of that piracy, although a big number, is from Internet sales. The remainder is from the sale of hard items such as DVDs. The biggest offenders are: China where 90%, Russia where 79%, and Thailand where 79% of all estimated sales are lost because of piracy. I can confirm this about Thailand personally as any movie can be bought on Thanon Sukhumvit, a main street in Bangkok, usually one week or more before it is theatrically released in the United States. And, to make matters worse, the quality of these pirated DVDs, is not bad. In some cases, it is as good as commercially available legal DVDs.

But, that’s not the whole problem. It is not limited to developing nations. Twenty percent of all piracy according to the above study was directly from the United States. Again, it is not difficult to find pirated DVDs in downtown Los Angeles or on Canal Street in Manhattan. And, again, the quality is usually pretty good. The days of the video being captured by some pirate in a movie theatre with a handheld camera appear to be gone. The piracy is going on in the labs. And, I’m sure, for the most part, it is the labs in the United States and probably Los Angeles; the same labs that we entrust with our intellectual property.

And, let’s even take it one step further; here are some additional facts according to the same study:

• $5.5 billion in lost annual earnings among U.S workers
• 141,030 jobs lost
• $837 million in lost annual tax revenue
• $20.5 billion in lost annual output to all U.S. industries

And, this was all in 2005 when Facebook was merely a year old and most of us had not even heard of it. If Facebook now has over 500 million members, imagine how these numbers may have grown in five years. Please note that I am not stating that Facebook has anything to do with piracy. I am only stating that if Facebook has grown by the numbers it has, imagine how much the potential reach of piracy, both internet and otherwise has grown during the same period.

I can state for a fact that it has affected the way we do business in the independent world. Watermarking delivery items to specific buyers is now common place. Screeners are not sent out to the media without careful protections in place. Day and date releases worldwide are now commonplace not only for the major studios but for the independents as well. This alone increases costs geometrically as you can no longer ship used prints overseas when the American release is finished. You must now make prints for delivery all over the world even to the smallest countries. In return, licensing fees have gone down in smaller countries because more of the capital expenditures must go to the cost of making prints than to the copyright holder.

So, in conclusion, the problem is very prevalent. It may eventually lead to the end of the motion picture industry as we know it. Mr. Hackford, the director of many great films, may have become a soothsayer. But, regardless, more government control is not the answer. Due process and the Constitution must not be ignored. Let the court system handle the problem. Keep our freedoms as the Founders intended.