Internet Movie Piracy: A tale of illegal file-sharing in the United States

Movies explore the edges of human emotion, freeze culture and show us how creative we can be. So why are people stealing this creativity? The lure to break copyright law to download movies illegally is alluring because advancements in technology create an umbrella of anonymity. These laws are inadequate because there is a lack of enforcement, advancing technology that makes movies a click away, and the aggravated state of reform. Within the following pages we’ll take a look at piracy issues for movies within the United States from the studio and consumer’s side. Technology is facilitating an acceptable bend in the law from the consumer’s perspective, and creating increased difficultly for the movie industry to adapt quickly. Movie piracy laws will remain a grey area for consumers and the industry until the struggle for reform is initiated. If not, we face a whole generation of children growing up thinking its right to illegally download movies. Eli Roth, director of Hostel, said in an MTV interview, “Unless you start an awareness about it that it’s not ok, it’s never going to change.” 

Movie studios saw what happened to newspaper and music, and it’s reasonable they would want to fight for their content. They’ve tried to keep up with pirates by publishing harsh FBI warnings before movies, encrypting DVDs and punishing offenders. But pirates still continue to break down these barriers. Breaking DVD encryption is a game pirates play in an effort to validate a subculture of people. One goal of this paper is to find consumers perception of movie piracy and look at ways to help the industry align better to these perceptions.

What is movie piracy? “Downloading, burning or otherwise obtaining a movie you didn’t purchase.[1]” Movie piracy is a big topic, one which most have likely dabbled in. If you’ve conducted a screening for your church group, or made a few backup copies of a DVD without the copyright owner’s permission, you’ve committed movie piracy. Stealing the physical print, burning a disc for sale, recording while in the theatre and downloading from the Internet, are other more severe forms of movie piracy. Internet movie piracy is by far the most prominent today.

Surprisingly, the US is falling behind in the piracy game, holding only 20% of the losses worldwide against major players like China and Russia. According to a 2008 study The Cost of Movie Piracy, China blames 90% of their potential film losses on piracy.

Movie piracy is illegal under the Copyright Act. According to the MPAA, “downloading movies without the authorization of copyright holders is a growing international phenomenon, and it has serious consequences.” Since signed into action, the Copyright Act has had many alterations to evolve with technology. In 1996, the DMCA (Digital Millennium Copyright Act) was enacted to help support laws for individuals breaking DRM (digital rights management). In 2005, the Family Entertainment and Copyright Act passed to help prevent in-theatre recording. According the law[2] this specifically states: “Any person who, without the authorization of the copyright owner, knowingly uses or attempts to use an audiovisual recording device to transmit or make a copy of a motion picture…or any part thereof, from a performance of such work in a motion picture exhibition facility, shall – Be imprisoned for not more than 3 years, fined under this title, or both; or if the offense is a second or subsequent offense, be imprisoned for no more than 6 years, fined under this title, or both.”

Since the Family Entertainment and Copyright Act was passed and enforced, in-theatre recordings have declined, although the decline is because of new piracy strategies, not enforcement. New technology removes the contributory infringer from the theatre and allows them to manipulate the digital copy in privacy. Studios are in a continual battle to create innovative ways to brush pirates away. Technology is leading to near perfect copies of the films verses “murky, muffled copies of films taken by someone who snuck a camcorder into a theater,” Greg Sandoval of CNet, vividly notes.

Tools of the trade: Movies or ‘warez’ are typically accessed over the Internet three ways: IRC, BitTorrent/P2P, and FTP.  IRC (Internet Relay Chat) allows you to access another person’s files in a one-to-one sharing scenario. Often one person would have the full file the other is looking for. BitTorrent or P2P (peer-to-peer) is the most popular and mainstream way to download movies illegally. This technology, often a site, serves as a file aggregator scouring the Internet for bits of the larger file requested. Serving strictly as a facilitator for illegal downloading, sites like Pirate Bay, BTJunkie and Mini Nova don’t actually house any of the file bits.

FTP (file transfer protocol) or ‘distro’ sites are built on credibility within the online community, mainly due to the quality and speed of the movie. A whole subculture has arisen from this type of piracy that validates people’s place within the circle. For example, there are ‘rippers,’ who are focused on ripping the highest quality at the lowest file size. They work with the ‘couriers’ who tag[3] the file, much like a graffiti artist, and release it to pre-defined ‘distro’ sites. Then eventually the content bubbles up to mainstream P2P aggregators like Pirate Bay. Done for practically no monetary exchange, pirates would rather build and enforce their “street credit” within this illegal community. The Pirate Bay case “proves that people who spend their lives ripping movies aren’t in it for the money—and that even if you put them in jail, someone will always be right behind them,” remarks Chris Thompson of Slate.

In addition to Internet sites, there are plenty of devices that rip or burn to another device. For example: Netgear’s ITV3000, the Diamond VC500 One Touch Video Capture Device, and RealDVD, are all examples of technologies that allow you to manipulate your media. These products demonstrate how important the consumer’s push for alternative ways to manage their media is being heard by businesses. Just recently, Epix announced a new streaming service that is aimed to work with local cable companies and provide free movies online. “The Epix TV network will air movies that are in the ‘pay-TV’ window, those weeks before a film appears on DVD in which it is available on pay-per-view or HBO, among others.”

One argument favoring piracy considers that file-sharing is exposing people to films they wouldn’t ordinarily pay to see through traditional channels. This could mean increased fans and revenue for the movie industry in the long run. It is also often true that the most pirated films make the biggest splash at the box office.

Piracy is forcing studios to modify their business models and offer digital solutions to compete with pirates. It is obvious consumers are ready for a change. But do alternative legal downloads make piracy more confusing? If it’s ok to view a movie from one site, why can’t you watch it on another site? What sites are legal? According to the MPAA’s annual report,  they are “collaborating with other industries to enable ‘buy once, play anywhere’ downloading, providing consumers with digital copies of films with their packaged discs, enable rich digital and online features on Blu-Ray discs, and permit DVD-burning of legally downloaded content, while still protecting the investment of the creator.”

What’s the big deal? Look around you, it’s reported that 1 in 5 people connected to the Internet have BitTorrent software on their machines. Also, more than 70 million movies are downloaded using Pirate Bay each week. With movie piracy such a high profile situation presently, you’d expect a downward trend in sales to fuel the drama, but studios and the MPAA are not reporting a loss. The MPAA reports, “Worldwide box office reached another all-time high in 2008 at $28.1 billion, an increase of 5.2% over 2007.” Although, according to Sandoval, the industry’s main issue is with sales and how piracy “undermines[s] a movie’s box-office prospects.” Some argue the movie industry and MPAA are being greedy and assuming each illegal copy would have been a paying customer. But with recent cases like Pirate Bay, this is a perfect opportunity for the movie industry to make waves in promoting anti-piracy laws. But some tune out the MPAA. They’ve been accused of being too aggressive, as seen in 2005 when they laid blame on college students by misrepresenting their impact on illegal downloading by 200%[4].

The lack of a cohesive digital strategy across the industry is also hurting studios. Some companies like Disney are quick to publish their content online, and others like 20^th Century Fox are more than willing to pursue pirates to the fullest extent of the law, like they’re doing with the X-Men Origins: Wolverine turmoil. The movie industry also refuses to see any potential in the sub-cultures that drive pirate communities.

How does the film industy feel? The studios opinion of movie piracy is obvious, but it doesn’t just deal with frustration for loss of sales. Protecting the creator’s product and investment is important as well. While different than paintings, sculptures and novels, movies are copyrighted material and should be protected. The movie industry urges people to think about who piracy affects, stressing consumers look past overpaid actors and actresses. John Malcolm, director of worldwide anti-piracy operations for the MPAA asks movie lovers to “stick around and watch all of the credits. When you see hundreds of names scrolling across the screen, those are the people whose talents contributed to making that movie, and they need to make a living.”

In a yearly MPAA report The Economic Impact of the Motion Picture & Television Industry on the United States, 2.5 million jobs are dependent on this industry in the US. Production sites help the local economy by generating revenue; $35 billion in states like California according to governor Arnold Schwarzenegger. Tourist dollars also increase when people visit the location after they’ve seen the film. The recent film Twilight pumped “new blood into Forks,” according to the Seattle Times. This small town, hardly ever the center of much since the once vibrant logging industry collapsed, is gaining much recognition and economic boost thanks to the film and author.

How do consumers feel? To find out perception about movie piracy, I conducted an online survey with 19 participants. It was not surprising to find that a consumer’s opinion is much different than the movie industry. There were many that felt films should be respected, but others expressed a need for reform. When an industry is making millions it’s hard to feel bad for them, but it doesn’t change that movie piracy is illegal. In fact, the MPAA reports the average consumer still sees a movie in the theatre about every six months[5]. And, although only rising 1.1% from 2007, DVD sales are still increasing against these odds.

When the spotlight is shone on consumers, they agree people should be punished for pirating their artwork. Movies are astronomically expensive to produce and unfortunately only a few are hits, so people question “if it’s so easily available online why is it illegal?” In addition, how much of an impact can just one consumer make? Are they stealing the cost of the ticket price, or can you argue they wouldn’t have seen the film in the first place? In a 2007 TechDirt article, author Mike Masnick states, “Movie theaters are doing great this year, suggesting the big “threat” of piracy had a lot less to do with its troubles than the fact that it just didn’t have that many compelling movies the past few years.”

It was even was proposed by NBC’s lawyer Rick Cotton that movie piracy hurts American farmers because they grow corn. More movie attendees equal more popcorn sales and increased income for farmers. This flawed remark from Cotton shows just how infuriated the studios are with loosing unsubstantiated potential revenue.

Consumers are frustrated because they keep paying for the same product and want better policies around media ownership. The typical movie-goer might buy a ticket opening night, rent a copy later and finally decide to add it to their collection. This fuels the urge to travel outside the law and provides the right amount of justification to illegally download.

Law professor at Columbia, Tim Wu, when asked about movie piracy stated “An elephant might complain a lot about mosquitoes, but is that elephant in any danger of dying?” This was pretty much the essence of my survey results. I also included a CNN debate on movie piracy which asked the question “is online piracy a good thing?” Monique Wadsted, the lawyer prosecuting the Pirate Bay case remarks: “What is going on now is actually a plundering of author’s works. If some authors find it good to market their products using file-sharing they are free to do that. But, that is not what is happening at the moment. What’s happening at the moment is that authors’ and rights holders’ works are file-shared against their will and that is not acceptable.”

Co-founder of Pirate Bay, Magnus Eriksson, remarks about piracy: “File-sharing is a neutral endeavor. It has great opportunities to be at the center of a dynamic cultural life where you don’t need large resources to participate and get a global reach where hidden gems from the cultural history can be revitalized…In today’s economy, innovation and new expression comes from the margins… access to all is the best way to promote the creative diversity that makes society resilient to changes and shocks.”

The majority surveyed believes it’s bad to download a movie they found on the Internet, but not that bad. The majority choosing 1 or 3 out of a scale ranking 5 as the worst offense. Punishment for offenders was all over the board though. Some feel the movie industry serves as a cultural institution and should be preserved, while some feel punishment is due, but should not carry the weight it currently does.

Overall, people felt the time and money needed to enforce the law should be spent somewhere else. Real enforcement should start with educating our children. The MPAA currently has a reward program for identify pirates, some surveyed felt this might work, but then who should fund the investigation?

What does the law say? To see the law in action we can read the story of the “Prince of Piracy,” Johnny Ray Gasca. In 2005 he was sentenced to 7 years in prison for profiting by using a camcorder to record and sell movies. Gasca’s case was monumental because he was the first person to be tried for camcorder piracy. More recently, David Kravets, a Wired journalist, comments about 20th Century Fox’s premature release of Wolverine, “The defendant faces up to five years in prison under a closely guarded copyright law making it a criminal offense to upload pre-release material.” Below is the punishment noted in the Copyright Law:

Any person who willfully infringes a copyright shall be punished…if the infringement was committed —

1. for purposes of commercial advantage or private financial gain;
2. by the reproduction or distribution, including by electronic means, during any 180-day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000; or
3. by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution.

Evidence. — For purposes of this subsection, evidence of reproduction or distribution of a copyrighted work, by itself, shall not be sufficient to establish willful infringement of a copyright.

Definition. — In this subsection, the term “work being prepared for commercial distribution” means —

1. a computer program, a musical work, a motion picture or other audiovisual work, or a sound recording, if, at the time of unauthorized distribution —

I.            the copyright owner has a reasonable expectation of commercial distribution; and

II.            the copies or phonorecords of the work have not been commercially distributed; or

1. a motion picture, if, at the time of unauthorized distribution, the motion picture —

I.          has been made available for viewing in a motion picture exhibition facility; and has not been made available in copies for sale to the general public in the United States in a format intended to permit viewing outside a motion picture exhibition facility.[6]

Is there a way to get around the law legally? Yes. You can either obtain the correct permissions from the copyright owner, or use the works according to the Fair Use Act. Fair Use encompasses using the copy for “criticism, comment, news reporting, teaching, scholarship, and research.[7]”

Can movie piracy be fixed? Will this problem be fixed over night? No. But the MPAA and movie industry can work with consumers to build a digital strategy that puts less reliance of pirated works. If a change is not made, consumers will continue to find ways to adapt the media for themselves and lock the process into our permanent culture. According to a CNN article by Lisa France: “Advances in technologies that enable filtering and other anti-theft tools will help curb piracy. So will creating more sites where viewers can legitimately access movies, shows and music, such as Hulu and the recently announced Vevo, a partnership between Universal Music and YouTube.”

At a conference in March, CEO of Disney Robert Iger acknowledged the industry’s business model was dying, and the sooner the studios realize this, the better. “When it comes to piracy, are we better off moving content faster and cheaper than if they steal it and we get nothing?” Disney, being the entertainer of our youth, is perfectly positioned to embrace a change to how content is accessed and viewed.

Recently the Copyright Alliance has started an educational program (Copyright Alliance Education Foundation) that teaches the importance of copyright to youth. This curriculum stems from the idea that schools are “teaching our students how to produce, but not educating them on how to protect what they produce.[8]”Although the Copyright Alliance seems to be providing a valuable resource, some argue that alternative views are not being taught and children are not allowed to think critically about copyright. So its important students see this enforced with the media they consume as well.

It’s apparent from my research that we need to reform the Internet movie piracy policies. Consumers perceive file-sharing as a “slap on the wrist” when it really carries a heavy penalty. But with lack of enforcement this really becomes a one sided battle. Technology is a big component in fighting piracy, but as it advances so should the studios defenses. The MPAA promises to react to the problem, but what we see is them enforcing the law on the big guys, which allows smaller pirates to feel free of burden and guilt. What does this perception say about our need to follow rules?

Piracy should be researched to see how it can be integrated into the film industry’s business model. Instead of hunting down the pirates, use those extra resources to focus “on giving people a real reason to go see the film in theaters.[9]” Coming together as an industry will have the biggest effect. Building a cohesive plan that is standard for all studios will help brand the correct privacy policies for consumers. Pirates are not bad guys; they’re just regular people like you and me.

To learn more about movie piracy, “A to Z of online piracy”http://www.cnn.com/2009/SHOWBIZ/Movies/04/16/atoz.piracy/index.html

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Cheng, J. (2009, May 21). Night in front of console more popular than night at movies. Ars Technica. Retrieved May 26, 2009, from http://arstechnica.com/gaming/news/2009/05/night-in-front-of-console-more-popular-than-night-at-movies.ars

Copyright Alliance Launches New Educational Foundation (2009, May 21).

Ionescu, D. (2009). Studio bid on liberating digital media ‘ecosystem’ Retrieved June 2, 2009, from http://blogs.pcworld.com.offcampus.lib.washington.edu/staffblog/archives/007744.html

 

Masnick, M. (2009, April 2). In an alternate universe, how 20th century fox could have responded to wolverine leak Retrieved May 15, 2009, from http://techdirt.com/articles/20090402/0316244351.shtml

MPAA. (2009). The Economic Impact of the Motion Picture & Television Industry on the United States.

Nichols, S. (2008, July 15). Movie piracy may not impact DVD sales afterall Retrieved June 13, 2009, from http://blogs.pcworld.com.offcampus.lib.washington.edu/staffblog/archives/007276.html

Sarno, D. (2007, April 29). The Internet sure loves its outlaws Retrieved May 30, 2009, from http://www.latimes.com.offcampus.lib.washington.edu/entertainment/news/la-ca-webscout29apr29,0,1261622.story?coll=la-home-entertainment

Stevens, T. (2009, May 14). RealNetworks steps up its RealDVD legal cas, just wants your approvalRetrieved April 29, 2009, from http://www.engadget.com/tag/RealDvd

Thompson, C. (2009, May 19). Saving Hollywood. The Big Money. Retrieved May 26, 2009, from http://www.thebigmoney.com/articles/reboot/2009/05/19/saving-hollywood

Whitney, L. (2009). Survey: Consumers prefer DVDs to downloads, accessed 5/26/09.

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[1]Quoted from my survey results.

[2] Referenced from http://www.copyright.gov

[3] For more details: http://en.wikipedia.org/wiki/DrinkOrDie

[4] Referenced from: http://cornellsun.com/node/27049

[5] According to http://MPAA.org

[6] Referenced from http://www.copyright.gov/title17/92chap5.html

[7] Provided by the U.S. Copyright Office: http://www.copyright.gov/fls/fl102.html

[8] Referenced from http://torrentfreak.com/pro-copyright-propaganda-enters-us-classrooms-090522/

[9] From http://techdirt.com/articles/20090402/0316244351.shtml