The Hollywood Pirate Hunt

n 2003 actor and Screen Actors Guild national board member Paul Christie was anticipating the premiere of Brother Bear, a Disney film in which he had a voiceover role. But four months before the release date, when he emerged one day from the Manhattan subway, he found that Brother Bear had already premiered: on a table on 23rd Street in the form of hundreds of bootleg DVDs.

"The packaging we were going to use was entirely the same," said Christie. "It was a crusher, a knife to the gut."

Christie did not accost the seller at the table, but he took his story to SAG, which, along with other entertainment unions, the studios, and the government, is engaged in a fight against Internet and street piracy. Now, with new media and DVD residuals at the forefront of a union contract debate, all the players still have a common enemy in piracy—a multibillion-dollar-a-year "crusher"—but have not always found common ground on how best to defeat it.

In 2006 the Motion Picture Association of America commissioned a study that determined that its member studios lost $6.1 billion to piracy in 2005. Of that total, about $2.4 billion was lost to bootlegging, $1.4 billion to illegal copying (making illegal copies of a legitimate DVD or VHS tape for oneself or friends), and $2.3 billion to Internet piracy (illegally downloading copyrighted material from the Internet). According to the Entertainment Software Association, the video and computer game industry in the United States lost about $3 billion to piracy in 2007.

A comprehensive study of piracy's impact on television and theatre has not yet been published, but the Institute for Policy Innovation, a nonprofit public-policy think tank in Lewisville, Texas, estimates that piracy cost the four major U.S. copyright industries $25.6 billion in 2005. The organization calculates that losses such as these cost the economy more than 370,000 jobs every year and cost federal, state, and local governments at least $2.6 billion in tax revenue annually.

According to SAG deputy national executive director Pamm Fair, actors, writers, directors, and crew suffer directly from piracy because they lose residuals and/or contributions to their health and pension funds. "When post-profit is cut into by piracy, thus impacting the sales of DVDs, there is a direct correlation to the amount of money the actor is going to get for the newly reduced sale for this product," Fair said. "This is all straight from the actors' wallets."

Among the current anti-piracy efforts is an ad campaign in the New York City subway system, sponsored by the city and the MPAA, that uses film-style ratings to disparage the quality of bootleg DVDs and raise the issue of job loss. Fair said she agrees with the campaign and believes that actors' performances are degraded by the poor or altered quality of pirated videos. "We believe that when an actor renders a performance that it must be displayed in the way it's filmed," she said. "It definitely affects the actor's performance when people record a movie by walking through a movie theatre with a camcorder."

Piracy damages actors in other ways, said John Malcolm, executive vice president and director of worldwide anti-piracy operations for the MPAA. For one, he said, piracy increases the risk for investors, threatening the production of independent films featuring undiscovered talent. The investment climate is already risky; according to the Alliance of Motion Picture and Television Producers, six of 10 films never recoup their investment and 85 percent to 90 percent of TV series fail before they can be syndicated. Piracy might entice investors to bet only on sure things, such as an action film with a bankable star, because such movies are more likely to make money in theatrical release and are less dependent on DVD revenue. "With piracy, it becomes safer to make a blockbuster, because if an edgier film is stolen, nobody will get paid," said Malcolm. "Piracy affects not only the number of films made but the types of films made."

Piracy is also hovering over the current battle between SAG and the American Federation of Television and Radio Artists. Producers want to create a market for clips of movies and TV shows in new media—a market that's already flourishing illegally, the AMPTP has argued. For this market to be developed, producers say, the unions need to change the rules regarding the use of actors' images. Currently, every time a producer wants to license a clip, he or she must get consent from every actor in the scene. According to the AMPTP, it's a cumbersome process that stifles the market.

"Fifty-year-old union rules no longer function in the Internet age," said AMPTP spokesman Jesse Hiestand, "and unless we change those rules, our entire industry will be prevented from developing a profit from a new and legal market in clips. A clips black market is already flourishing on its own without any compensation for actors and with no regard for a performer's image."

The tentative deal the AMPTP reached with AFTRA in late May contains a compromise on the use of clips in new media: For content created after July 1, actors can negotiate the terms of their consent at the time they are hired. For existing content, within 90 days after ratification the two sides will develop a mechanism for granting consent.

However, the clips-consent provision is one of SAG's main objections to the AFTRA deal, even though SAG negotiators offered the identical compromise to producers earlier this spring. The guild argues that the safeguards protecting how an actor's image is used aren't strong enough.

In response to Hiestand, Fair said, "Clip consent is fair for actors and is consistent with functional new-media business models that help combat clip piracy. We want to work toward a solution, but it must be one that works for actors without destroying the consent protections they have now and have had for 50 years."

In the film industry, over 90 percent of bootlegging begins with a camcorder in a movie theatre, according to the MPAA. The bootlegger typically conspires with a release group, a technologically savvy, highly secretive operation that is often international in scope and gang-related. A similar process occurs with entertainment software. The result is bootlegged movies on the street, exchanged on peer-to-peer file networks, and uploaded to sites such as YouTube, which does not sanction pirated material and is being sued by Viacom for $1 billion, though punitive damages were denied in March.

The Pirate Bay and isoHunt are examples of websites that pride themselves on directing users to copyrighted material, and both are being sued by the MPAA. Malcolm said the MPAA prefers not to prosecute individual downloaders, as the music industry has done, in order to focus its energy on distributors. "As you get down to the college-dorm-room end user," he said, "they're doing something that is wrong, but it's not too productive to talk about whether it's legal or illegal."

The MPAA, SAG, AFTRA, NBC Universal, the Writers Guild of America, the Directors Guild of America, and the American Federation of Musicians are among the many organizations lobbying for anti-piracy legislation and law enforcement on the state and federal levels. Currently, the federal Digital Millennium Copyright Act of 1998 makes it illegal to circumvent anti-piracy measures, while the federal Family Entertainment and Copyright Act of 2005 prevents the use of camcorders in movie theatres and increases copyright infringement penalties. Other recent measures, such as the use of dogs to sniff out bootleg DVDs in warehouses, have proved successful.

But Richard Cotton, executive vice president and general counsel of NBC Universal and chairman of the U.S. Chamber of Commerce's Coalition Against Counterfeiting and Piracy, said enforcement, particularly in the realm of Internet piracy, isn't working. "Enforcement is in danger of losing the match," he said. "If you turn to the professionals in the business world, or individual companies in the sectors with counterfeiting problems, the consistent message is this: The problem is getting worse, not better."

Technology, education, and cooperation are the necessary components in combating piracy, said Cotton. New technology has been developed in recent years that can scan websites for the digital fingerprint of copyrighted material, allowing copyright owners to combat pirates or to count the number of downloads in order to assess the compensation due artists, as is the process on the News Corp. and NBC Universal website Hulu. "Up to now, technology has communicated among the younger generation that if it's so easy to download copyrighted material, it can't be wrong," said Cotton. "What needs to happen—and is happening—is that the technology itself needs to distinguish and put roadblocks on the way of the easy distribution of copyrighted material."

Internet service providers, user-generated-content sites, law enforcement, and the entertainment industry are also cooperating to combat piracy, said Cotton, citing the October 2007 announcement by MySpace, Microsoft, Disney, Viacom, and NBC Universal that set forth anti-piracy guidelines and ensured the companies' collaboration. Last, educational initiatives such as the MPAA ad campaign need to penetrate the public consciousness.

The traditional notion of stealing—that is, "a truck coming into Best Buy and loading DVDs," said Christie—needs to incorporate bootleggers and Internet pirates. "People are referring to it as not a big crime," he said, "and in my mind it's exactly the opposite, because this is what crime is going to look like now. It's the same thing as if I had a whole bunch of stolen material on a blanket, which might raise a few eyebrows, but piracy for some reason or other doesn't—yet."