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From USA Today: Technology

Hollywood hunts for pirates

By Michael McCarthy, USA TODAY

If you're thinking about downloading a bootlegged copy of X2: X-Men United or The Matrix Reloaded, you might want to look over your shoulder for the feds.

After watching the music industry be financially hammered by piracy, Hollywood moguls want to follow its recent lead and go after individual consumers who illegally download or file share copyrighted films.

"We can't allow what happened to the music industry to happen to the movie industry," says Jack Valenti, president and chief executive of the Motion Picture Association of America (MPAA). He says the group will "seek enforcement of the breaking of copyright law" by the authorities against offending consumers. The MPAA also is launching public service ads urging consumers to just say no to piracy.

The reason for the new stance is that movie executives are having nightmares that file-sharing consumers who've swapped music for years are developing a growing appetite for free movies. And they've been watching the Recording Industry Association of America's increasingly aggressive response to the piracy that is feeding a decline in sales. Four college students were sued in April for online swapping and settled for up to $17,500 each. In June, subpoenas went out to universities and Internet providers to identify more swappers, and the RIAA plans "hundreds" more lawsuits against individuals in September.

To send a strong message that movie piracy is a crime, "There will probably have to be some people charged with the criminal downloading of movies," says Bo Andersen, president of the Video Software Dealers Association, which gathers in Las Vegas for its annual meeting this week. "It has to be made clear this is criminal behavior, and not just something fun to do on your computer."

Worldwide piracy now costs the studios an estimated $3 billion to $4 billion a year. Much of that still is lost the old-fashioned way sales of bootleg DVDs and videos.

But as the music business has shown, potential losses from online digital piracy are much higher. And more and more consumers have access to high-speed Internet connections, which make it feasible to transmit movie files. They now are downloading 400,000 to 600,00 movie files a day, according to industry estimates.

Digital piracy directly threatens the most lucrative sector of the movie industry: home video. Consumers spent $20.3 billion to rent and buy movies in 2002, according to Scott Hettrick, editor-in-chief of trade magazine Video Business. That's more than twice the record $9.3 billion fans spent on movie theater tickets last year.

In a recent America Online poll, nearly 70% of respondents did not believe or weren't sure that "swapping" movies online was illegal. But studio executives don't buy that.

"They know what they're doing. People are just ripping this stuff off," says Danny Kaye, senior vice president of business development for 20th Century Fox Home Entertainment. "They're more than aware of the economic value. They're just shifting the dollars from the studios and the artists to themselves."

David Bishop, president of MGM Home Entertainment Group, says his studio has an internal team constantly checking "how much piracy is going on around our titles," including the upcoming home video release of Legally Blonde 2.

The studios also are working on the next phase of DVD technology, with tougher encryption codes that might solve the problem, but that technology is still three to four years from market. "We're confident the next wave of DVD products will be much more difficult to file share with," he says.

How Hollywood is fighting back for now:

Jail time. The recent federal prosecution of 25-year-old Kerry Gonzalez of New Jersey for stealing a preview copy of The Hulk and posting it online before the film's release was a warning shot. Gonzalez pleaded guilty to one count of copyright infringement and faces up to three years in prison and a $250,000 fine.

Coming is a likely series of lawsuits and prosecutions against individual consumers who are heavy file swappers.

Winning hearts and minds. "Consumer awareness" ads will try to educate consumers who think piracy is "no harm, no foul." In the five commercials, workers from the 580,000 in the movie industry such as a stunt man and a makeup artist describe how piracy costs jobs. The spots started airing today on 35 network and cable outlets and will show in 5,000 theaters across the country.

Closing the windows. Studios are moving to open major movies and release anticipated home videos in all major markets worldwide in the same month, rather than spreading rollouts up to a year. The goal is to close the window of opportunity for pirates to step in to sell ripped-off copies awaiting official release. Warner Bros. used this strategy this summer with The Matrix Reloaded and will again with The Matrix Revolutions this fall, spokeswoman Barbara Brogliatti says.