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Film

Hollywood scripting effort to fight piracy

By STEVE PERSALL
Published April 1, 2005

LAS VEGAS - Hollywood loves pirates, up to a point. Put Johnny Depp on a ship with a sword and the timbers of moviegoers shiver in anticipation.

Give a pirate a video recorder in a theater, and the film industry trembles.

These days, movie piracy isn't a screenplay plot, it's a $6-billion headache for studios, distributors and theater owners. That's the projected loss this year of ticket and DVD sales worldwide to Internet downloads and bootleg copies of movies, often on the same weekend they open in theaters.

Some movie fans wonder what the fuss is about. Hollywood makes enough money. What's wrong with getting a free movie online, or an inexpensive DVD copy that plays like an authentic version?

The answers, according to an antipiracy panel at the ShoWest convention of theater owners, sound like an action movie outline.

There's an organized crime angle that always thrills, and international locales for flavor. The prospect of terrorism lurks in the background. Lives are threatened, and sweat shop workers add a human interest angle. There are guns, drugs and gambling, even a submarine of sorts, one of several creative ways that crooks cover their tracks. The plot spreads from the halls of Washington, D.C., to the neighborhood megaplex, thickening with each raid on recording labs.

It's the most fascinating Hollywood drama you'll never see on screen.

Antipiracy legislation strikes back at the scourge of seven studios represented by the Motion Picture Association of America. Over the past year, 21 states, including Florida, passed laws making the video recording of movies in theaters illegal. Another 18 are targeted by the MPAA for passing such laws in 2005. The U.S. Senate already sent the Family Entertainment and Copyright Act (S.167) to the House of Representatives for approval that would make in-theater recordings a federal felony.

"Our hope is that the full House will pass it in April or May, and President Bush will sign it into law before the summer blockbusters are released," said Stacy Carlson, the MPAA's vice president of global government affairs.

National Association of Theater Owners president John Fithian, an attorney himself, understands the importance of that bill's passage into law.

"When we're trying to crack down on people who are bigger, badder and making more money than drug dealers, we need every protection we can get," Fithian said. "Having the potential for a federal felony prosecution is a big hammer."

How big, bad and rich those movie pirates are was the focus of the ShoWest forum.

The numbers alone are breathtaking. Smith Barney analysts estimates the film industry will lose $5.4-billion this year to DVD piracy. Informa Media Group projected another $858-million loss of potential revenue to illegal online downloads. Since 40 percent of all produced movies are estimated to lose money, those are formidable losses.

In 2003, law enforcement agencies worldwide seized more than 52-million bootleg DVDs in 31,957 raids on production labs stocked with computers with memories measured in terabytes. The 2004 statistics aren't yet available, but MPAA director of worldwide antipiracy operations John Malcolm said: "I know we had matched those numbers by the third quarter of 2004."

Malcolm used another criminal model to illustrate the low risks and high rewards of movie piracy on DVDs and online. He cited 2002 statistics that dealing a gram of cocaine earned a 100 percent profit. Heroin dealers expected a 420 percent rate of return. That happened in spite of stiff penalties - including execution in some nations - and expensive, mostly illegal manufacturing tools.

According to Malcolm, selling a pirated DVD manufactured in Malaysia with completely legal tools - computers, video cameras, blank discs, etc. - could earn an 800 percent profit. Movie piracy can be cheaper and more profitable than dealing drugs, with comparably minor penalties.

"We are working to change law enforcement and judicial attitudes," Malcolm said. "If you're engaging in piracy, you get a comparative hand-slap. You may get some jail time, if you're a major recidivist, and some fines. But certainly it's far less risky activity than engaging in drug dealing."

Although many such copyright infringements are committed by what Malcolm called "garage pirates," there are indications of organized crime rings involved internationally. Public officials, mostly overseas, are regularly bribed for cooperation. Workers are often paid slave wages for packaging bootleg DVDs. Raids on duplication labs occasionally turn up drugs, guns and gambling paraphernalia. Some pirates have also shown a nasty streak to protect their interests.

"These people are violent," Malcolm said. "We've had our investigators attacked. The wife of our Mexico investigator was kidnapped for a period of time. We had a Russian investigator shot at. In Thailand, our chief investigator had to escape from his car in a river after he had been driven off a bridge.

"In Malaysia, our investigator received death threats. When she was walking home, the maid who was walking in front of her was slashed in the face by a pirate in a case of mistaken identity. These people play for keeps."

There are even more ominous signs that movie piracy profits are being used to fund terrorist organizations. Interpol secretary general Ronald K. Noble recently told British reporters that movie piracy "is becoming the preferred method of funding terrorist organizations."

"There is increasing evidence to back up that point," Malcolm said. "When one looks at the risks and rewards, it's easy to understand why."

Movie piracy usually begins with master copies from video recorders sneaked into theaters. The best pirates have clamps to keep the camera steady, perhaps even monitor to gauge video and audio quality. The equipment is hidden under jackets or shopping bags making the act tough to detect in darkened theaters. Malcolm said approximately 80 percent of master copies come from U.S. theaters since that's where Hollywood releases typically debut. "It's really a slow-motion robbery," he said.

Easily transferred and transmitted over the Internet, the copies are usually sent to overseas duplication labs in countries in economically challenged nations where labor is cheap and laws can be bypassed with a few bribes. A single raid can uncover equipment to produce tens of thousands of bootleg DVDs in a matter of days. They're smuggled worldwide to vendors. One method uncovered in Macau was a submersible tank dragged behind a boat that could be sunk if authorities approached. A global positioning system inside the apparatus enabled pirates to find it later.

You may have seen some of these bootleg DVDs for sale on street corners, flea markets or eBay.

Gaining political support against movie piracy isn't easy. Carlson said many politicians simply don't understand the value of intellectual property ("It's as valuable and real as a plot of land."), or the financial impact of copyright infringement. That's changing in the United States, but internationally the prosecution of movie pirates can be a diplomatic problem.

Malcolm said: "You get people in some countries who say: We live in a poor country. Piracy is part of our underground economy that puts food on the table. Why arrest us to help the fat cats in Hollywood?' It's a touchy political subject."

In the United States, antipiracy measures begin in theaters where security guards are often posted during sneak preview screenings and opening weekends when the value of a pirated movie is highest. They're using metal detectors to find hidden recording equipment, even night vision goggles to catch offenders. The MPAA and theater owners offers rewards up to $500 for theater employees and patrons whose tips result in piracy prosecutions.

So far, the program has resulted in 46 interrupted recordings, 17 arrests and seven guilty pleas. The rewards paid to tipsters total $7,450, a tiny sum compared to the revenues saved.

Stopping the circulation of movies on the Internet through peer-to-peer Web sites is difficult, due to the viral spread of downloads. The battle is focused on the courts, where measures to protect copyrighted material are catching up to technology available for pirates. On Tuesday, the U.S. Supreme Court began hearing arguments supporting the MPAA's case against the peer-to-peer site Grokster.com.

The most daunting task for the MPAA, however, is changing public opinions about movie piracy. The risks are low and rewards are high for users of bootlegged material, too. One obstacle may be the swashbuckling image conjured by the word "pirate," a fantasy as old as Douglas Fairbanks and continued by Disney's Pirates of the Caribbean franchise.

During a question-and-answer period at ShoWest, British journalist John Virgil urged the experts onstage to reconsider their description of the crime.

"We're dealing with copyright theft here," he said. "This is stealing. Let's take the word piracy and put it back into screenplays, and just call it theft."

- Steve Persall can be reached at 727 893-8365 or persall@sptimes.com

[Last modified March 31, 2005, 09:42:04]