The Failed Case For New ‘Piracy’ Laws
The Failed Case For New ‘Piracy’ Laws
The Failed Case For New ‘Piracy’ Laws

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    It’s hard not to feel sorry for Al Perry these days.  As Paramount Picture’s vp for worldwide
    content protection and outreach, he has been on the road a lot, mostly to law
    schools. The past few weeks, he’s been to the University of Michigan, the
    University of North Carolina, Yale, Brooklyn Law School, the University of
    (UVA).  Next month, at least, he
    will be able to stick close to home for once, speaking to a group at UCLA. But
    he also goes to the University of Chicago. 
    That’s a lot of miles to hit up generally unsympathetic audiences.

    It’s not only the traveling, which is bad enough, and for
    which he deserves great sympathy.  The
    reason he’s on the road so much is that he’s trying to connect with (mostly)
    law students to impress on them the harm that “content theft” is
    doing to his industry.  In his
    presentation at UVA (at which I was the respondent) he talked about the evils
    of cyberlockers, the fabulous lifestyle of Megaupload founder Kim Dotcom, the
    losses of jobs to his industry, the lowered output of the film studios (albeit
    only the six making up the Motion Picture Association of America).  He warned about dangers to consumers of Web
    sites with unauthorized movies and criticized those sites selling ads around
    those movies.  (Note: there is no audio or video of these sessions because Paramount didn’t want them recorded.)

    He also defended the Stop Online Piracy Act (SOPA) and
    Preventing Real Online Threats to Economic Creativity and Theft of Intellectual
    Property Act (PIPA) as necessary.  In
    other words, it was a fairly standard industry presentation, given multiple
    times to audiences that, to varying degrees of skepticism and civility, weren’t
    buying what Perry was selling.  The frustruation is best illustrated in this Oatmeal cartoon.

    Perry is doing his best, but he’s been dealt a very weak
    hand.  The crucial question is not
    whether unauthorized viewing takes place. 
    We know that it does.  The question
    is whether said viewing justifies a continuing campaign with ever more
    Draconian legislation that threatens the working of the Internet while giving
    private companies quasi-official police powers. 
    The answer is clearly no, but the content industry doesn’t see
    that.  The corollary question is whether
    the industry is adapting to the needs of consumers, as this cartoon illustrates
    and as many students in the sessions with Perry demonstrated, that answer,
    unfortunately, is “no” also.

    Bad Movies Lead To Bad

    The content industry’s basic, unavoidable, problem is that
    things happen for a variety of reasons. 
    At any given time, businesses do well, and businesses do poorly.  To say that “piracy” or “content theft” is
    driving the results is just not realistic on any level.  The movie industry is looking forward to a
    “record summer” this year, with lots of blockbuster films that people will want
    to see – a new Men In Black, a new Spiderman, and the Avengers superhero
    confab.  If projections hold, the results
    will be spectacular, but even then, the industry will carp.

    Last year, 2011, was a different
    story.  Movie attendance was down, box
    office receipts were off.  Was it
    “piracy” that caused the decline?  Not
    according to any industry analyst.  At
    mid-year, The Wrap quoted one key
    analyst, Vincent Bruzzese, president of the Worldwide Motion Picture
    Group:  “For moviegoers this age, it’s not the ticket prices, it’s
    not streaming or piracy, it’s that there was nothing they wanted to see.
    Studies show that low on the list of reasons people don’t go to the movies are
    alternative forms of entertainment.”  Or, as he put it more bluntly,
    “It’s the product, stupid.” 

     “Forget pirates, the film industry has
    plundered itself,” was the headline on another story. Greg Jericho looked at
    the all-time top 100 films, saw some declines after 2002, well before Pirate
    Bay and other sites.  The “plunder” came
    as the industry changed its business strategy, to make movies that made most of
    their money in one weekend, but which left a lot of people out in the
    cold.  His bottom line:   “The key for the industry is:
    Don’t make crap, and don’t treat your audience like crap either. Can’t be that
    hard.”Two words –
    John Carter.  Disney lost $200 million on
    that one picture and the head of the studio quit.  No piracy needed.  (Dare we say that maybe some piracy would
    have helped it?)

    Economic Losses

    The industry likes to talk about all the economic losses
    from piracy, but those, too, are built on a very shaky foundation.  The Motion Picture Association of America
    (MPAA) claims that $58 billion is lost to the economy every year from “content
    theft.”  As Rob Reid, founder of and Rhapsody said in a TED talk on “copyright math,” that total
    is equal to the entire American corn crop and all fruit, tobacco, rice,
    sorghum, wheat. To put it another way, the MPAA reported on March 22 that global box office receipts for all films released around
    the world reached $32.6 billion. So the industry is claiming losses to the
    economy greater than worldwide box office ticket sales.   

    When the industry claims that 373,000 jobs are lost each
    year due to “piracy,” it’s hard to believe given that there are only about
    400,000 people who work in the industry all together.  While they want to claim collateral damage to
    florists and others, there’s no way to prove that.  It’s like NBC claiming that corn farmers are
    being hurt by piracy because theatres won’t sell as much popcorn. (Not true, BTW.)

    The definitive word came from the Government Accountability
    Office (GAO), which did a study that came out a couple of years ago. 
    The April 12, 2010 GAO report: 
    “Intellectual Property: 
    Observations on Efforts to Quantify the Economic Effects of Counterfeit
    and Pirated Goods,” found that: “Most experts we spoke with and the literature
    we reviewed observed that despite significant efforts, it is difficult, if not
    impossible, to quantify the net effect of counterfeiting and piracy on the
    economy as a whole.”

    The GAO also noted: 

    Another example of the use of surveys is the study by the Motion
    Picture Association, which relied on a consumer survey conducted in several
    countries. This study found that U.S. motion picture studios lost $6.1 billion
    to piracy in 2005.  It is difficult,
    based on the information provided in the study, to determine how the authors
    handled key assumptions such as extrapolation rates and extrapolation from the
    survey sample to the broader population.

    Study after study has found that the effects of “piracy” are
    vastly overstated.  Mike Masnick found
    that consumer spending is shifting out of movies into other parts of the
    entertainment universe as consumers alter their spending habits.  Ispos MediaCT, a market research firm, found
    in 2009 that the people who the industry sees as pirates (whether for music or
    video) can be seen in another light:  as fans.  Their study found
    that, “Again on a monthly basis, those using unofficial sites are more
    likely than average to also use official sites (90 percent vs. 53 percent), pay
    to stream or download (82 percent vs. 55 percent) or buy DVDs in a store (67
    percent vs. 44 percent).”  Ispos recommended that “the industry
    needs to find ways to meet the needs of the valuable audience.”

    Academics Felix Oberholzer-Gee and Koleman Strumpf have made
    a career out of poking holes in the industry “piracy” alarms.  In the face of industry claims that continued
    “piracy” will mean that creators won’t have an incentive to create,
    they note that since 2000, the annual
    release of new music albums has more than doubled, and worldwide feature film
    production is up by more than 30% since 2003. 
    Confronted with those statistics, Perry (from Paramount) cited only
    production stats from the big six studios who are the members of MPAA.  And there are lots of reasons why productions
    are down, unrelated to allegations of theft. 
    The threats to general entertainment welfare are old, and are getting
    older.  A University of Minnesota study similarly found little harms from ‘piracy.’

    MPAA Chairman
    Christopher Dodd is fond of talking about the truck drivers and others who
    aren’t big movie stars who lose their jobs due to “content theft.”
    Perhaps if his members moved production back to U.S., would get some of those
    truck driver jobs back.  In British
    alone in 2011, there were 58 movies, 24 TV series, 11 movies of the
    week, and 11 TV pilots filmed.  While
    it’s true that the industry spreads their money around to states, studies also
    show that the incentives states give out in no way compensate for the losses of
    revenue, putting more strain on state budgets.

    Attacks Continue

    And yet, even with
    the flimsy foundation, the content industry continues with its plan of attack
    on technology and innovation.  Mistaken
    take-down notices of Web sites are legion, in part because there are no
    penalties for filing them.  The latest industry
    targets are the cyberlockers, where millions of people store work or other
    materials, as the industry simply sees them as havens of piracy rather than a
    new business that makes things more convenient for people to store and ship big

    In going after
    these businesses, the industry uses automated techniques that simply scan file
    names.  In the case against Hotfile,
    Warner Brothers admitted it didn’t know what material it was telling the
    company to take down.  Because there is a
    movie, “2012,” any file with that string of numbers was deemed to be potentially
    infringing. TorrentFreak published emails from Disney to Megaupload in 2009 inquiring
    about “offering opportunities to syndicate our exciting entertainment
    content (e.g. Dark Knight, Harry Potter, Sex and the City clips and trailer)
    for your users.”  Perhaps they
    didn’t get the answer they wanted.

    At the end of the
    day, the case for any harms caused by whatever the industry wants to call it is
    sufficiently questionable that it’s time to call a halt on the industry’s
    perpetual campaign for new legislation.   It’s time also for the industry to start
    listening to what they have been told by their audience – that there have to be
    new, better and more convenient ways to get access to content — so that all of
    Al Perry’s travels won’t have been in vain.