TCS Daily

Pirates in Tinseltown

By Diana Feygin - August 20, 2004 12:00 AM

As college students prepare to return to their respective campuses, some will be greeted this fall with an unexpected surprise. Partnering with the Motion Picture Association of America (MPAA), many colleges and universities are developing rigorous measures against illegal file sharing on their networks. They will likely face an uphill battle.

Initially, downloading "free" versions of popular movies via peer-to-peer (P2P) file sharing services such as Kazaa and eDonkey seems victimless and inoffensive. According to a July survey of eight countries by global research group OTX, one in four Internet users currently engage in the practice. Fifty-six percent of the survey's participants plan to continue downloading "free" movies, and 17% plan to try it for the first time within the coming year. Furthermore, 38% of regular downloaders believe it legitimate to download a movie before its release in theaters, and 48% approve of doing so before the movie's release on home video.

To justify their actions, some students argue that film executives "deserve" piracy as retribution for their high prices. Others say that clicking one's way to a "free" movie does not cause tangible harm.

Many also believe that large file sizes and slow downloading speeds will limit bootlegging to those with exceptional patience, rendering the impact of movie piracy on the film industry a microscopic one. However, with current research promising 4-5 second movie downloads in the near future, slow connection speeds will soon be a relic of the past. This makes piracy a pressing threat to property rights.

Supporters of piracy claim the movie industry won't miss the money lost to file sharing. But according to entertainment analyst Jill Krutick of Smith Barney, piracy cost the U.S. film industry $1.5 billion in 2002 sales. This encompassed the damages caused by bootlegging of both videocassettes and DVDs. Worldwide, piracy-related losses rose to $3.3 billion in 2003, depleting 14% of potential revenue. Next year, Krutick projects, workers in all aspects of the industry -- everyone from set crews and labor workers in film production to employees in the movie theaters, video rental stores, and DVD factories -- will lose $5.4 billion to the P2P phenomenon.

Because moviemakers invest a great deal of creativity, skill, and time into their films, piracy translates into a significant waste of their labor and capital. To compensate for this loss, moviemakers will generally increase prices. In this way, illegal file sharing exacerbates the very problem it initially seems to solve: inflated prices in theaters and DVD stores.

Some argue that file sharing provides consumers with a "test run" and encourages them to purchase their own, top-quality version of the movie. But evidence from the recording industry, a similar market, casts a shadow of doubt onto that notion. Over the last five years, in tandem with the rise of music-sharing networks, CD album sales dropped by 30%.

In her report, Krutick notes a trend of falling sales in DVDs among households with DVD players. In 2001, these households bought an average of 20 DVDs; by December 2003, that number fell to 5.5. Smith Barney concluded that piracy, which became easier and more widespread over the same period, was a prime factor in this decline.

These statistics are hardly surprising. Instead of the so-called "sampling effect," too many file sharers use the logic of common thievery: "If I can get it free, why pay for it?" With the recent upsurge of "screeners" -- hacked versions of DVDs sent to reviewers in advance of the movie's official release -- Internet users can easily download a movie as high in quality as any a theater might offer. Why miss the opportunity to obtain a high-quality, penalty-free version from the comfort of one's home or dorm room?

Movie piracy disregards the rudimentary lesson against stealing that which belongs to another. When "free," high-quality pirated movies become easy to obtain, the incentive for moviemakers to produce movies is diminished. Thus, the efforts of educators (and maybe even those of legislators) to protect intellectual property rights in moviemaking should be commended. Those who support the P2P sharing of unlicensed DVDs without compensation to moviemakers flout one of the basic principles of our nation: that private property is fundamentally inviolable.

Diana Feygin recently served an Intellectual Property Intern at a legal foundation in Washington, D.C. and is the Editor-in-Chief of The Yale Free Press.


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