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The Long and Winding Road To A Bad Call On 'Piracy'

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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 and the University of
Virginia
(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
Results

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
Questionable

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
listen.com 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 theaters 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 percent 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., they would get some of those
truck driver jobs back.  In British
Columbia
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
Anyway

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 websites 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
files. 

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.    SOPA and PIPA are gone and aren't coming back. No back-room deals are going to cut it.
It's time 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.

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