As the growing piracy of content continues to threaten entertainment revenues worldwide, affecting both the below-the-line and the above-the-line communities, the industry is taking aggressive measures to reduce the problem while trying to preserve individuals’ civil liberties.
Piracy has been a thorn in Hollywood’s side since the introduction of consumer camcorders and VCRs. But today, with the proliferation of broadband Internet access, peer-to-peer networking and the ability to make near perfect copies of digital content, the problem has become a major international trade issue.
According to the Motion Picture Association of America, on a global scale, piracy is costing the industry an estimated $18 billion a year in losses. More than $7 billion of that is attributed to illegal Internet distribution, while $11 billion is the result of illegal copying and bootlegging.
The association estimates that some 81 million counterfeit DVDs have been seized by authorities worldwide over the past year, but that’s just a drop in the bucket compared to the number that weren’t seized. Meanwhile, MPAA member companies spend an average of $106.6 million to make and market a major motion picture, and six out of ten movies never recoup their original investment.
U.S. trade representative Susan C. Schwab has been quietly negotiating a tough new trade agreement with other first-world countries, including Canada, the European Union, Japan, South Korea, Mexico, New Zealand and Switzerland. And while such negotiations usually take place behind closed doors, the whistle-blowing website wikileaks recently leaked a discussion paper for a proposed Anti-Counterfeiting Trade Agreement (ACTA).
While the story made front-page headlines in Canada and other parts of the world, it received little attention in the US.
Under the new proposals, customs agents would be empowered to search laptops, iPods and cell phones for illegally copied material. The proposal calls on member nations to enact laws that grant police and border guards “ex officio authority to take action against infringers” (authority to act without complaint by rights holders); “authority to order ex parte searches” (authority to search without a lawyer present); and the authority to seize and destroy infringing equipment and materials used to make them.
The treaty would also require signatories to impose new sanctions on Internet service providers, compelling them to hand over the personal information of users who may be sharing copyrighted content over the Internet.
According to a report in The Vancouver Sun, ACTA is expected to be tabled at July’s meeting of G8 nations in Tokyo. The report cites David Fewer, staff counsel at the University of Ottawa’s Canadian Internet Policy and Public Interest Clinic, saying: “Those negotiations can take place behind closed doors. At the end of the day we may be provided with something that has been negotiated which is a fait accompli in which civil society gets no opportunity to critique it.”
And while the deal raises a host of civil liberties issues, it demonstrates that worldwide, the highest levels of government are starting to take notice of a growing problem.
In May of 2005, the U.S. federal government passed tough laws against camcording in theaters. Last year, Warner Bros. canceled promotional previews of its movies in Canada, citing rampant, unauthorized pirating of new releases north of the border. At the time, Warner Bros. claimed that: “Over the last 18 months roughly 70 percent of Warner Bros. titles released have been camcorded in Canada.”
“Canada is the number-one priority in terms of anti-camcording legislation,” said Darcy Antonellis, senior VP, Worldwide Anti-Piracy Operations, Warner Bros. Entertainment, and executive VP, Distribution and Technology Operations, Warner Bros. Technical Operations. “Within the first week of a film’s release, you can almost be certain that somewhere out there a Canadian copy will show up. Within the last 12 to 18 months we’ve seen a significant increase in terms of first-source proliferation that shows up on the Internet and subsequently shows up as hard goods elsewhere.”
In response to pressure from Warner Bros. and the Canadian Motion Picture Distributors Association (CMPDA), Canada’s federal government fast-tracked legislation to criminalize camcording in theaters, which was enacted last year.
But the problem remains rampant in countries like Russia, India and China – nations that are not a party to the ACTA negotiations.
The leaked discussion paper calls for “special measures for developing countries in the initial phase… As a second phase, other countries would have the option to join the agreement as part of an emerging consensus in favor of a strong IPR (intellectual property rights) enforcement standard.”
To see why Hollywood is so worried, one need look no further than the music industry, which has suffered severe losses to piracy. According to a study by the Institute for Policy Innovation, global music piracy causes $12.5 billion of economic losses every year. That translates into 71,060 U.S. jobs lost, a loss of $2.7 billion in workers’ earnings. It also means a loss of $422 million in tax revenues, $291 million in personal income tax and $131 million in lost corporate income and production taxes.