Pirates of the Cinema - "Who" and "Why"

February 15, 2004
A thought by James Berardinelli

There are typically six questions worth answering about any subject: the "five w's" (who, what, why, where, when) and "how." For Part One of my examination of movie piracy, I'm going to concentrate on "who" and "why." I'll cover the other four in Part Two.

Although one can reasonably debate how much money motion picture theft is costing the movie industry, there's no doubt that piracy is a rampant situation. Hundreds of thousands of movies are illegally copied each day, either via downloads from file sharers or through specially rigged DVD recorders that are able to circumvent copy protection techniques. And, as big a problem as piracy is in the United States, it's an even more serious concern overseas, where law enforcement authorities are lax in tracking down those who are responsible.

Generally speaking, there are two groups of pirates: the amateurs and the professionals. For those in the former category, piracy is a game - a source of bragging rights and one-upsmanship. In underground circles, it's a big deal to be the first person to get a copy of a hot movie on-line. For those in the latter category, it's big business. Trumping official video releases and offering cut-rate prices can generate huge profits, especially when there are no royalties to pay. When Paramount issues a DVD, they incur a great number of costs. When someone sells a copy of a pirated Paramount movie, the only cost is that of buying a blank DVD.

Amateurs pirate movies for fanboys and collectors - those who think it's cool to have a copy of a movie before anyone else. Quality is often, but not always, suspect in such cases - a great many of these pirated movies are obtained by pointing a camera at a movie screen and recording. Often, however, quality isn't the point. In fact, many of the people who own these pirated titles don't bother to watch them. It's enough to be able to say they have them.

And here's where the discrepancy comes between loss of revenue and theft of value. Most people who illegally download movies have either already seen the movie in a theater or wouldn't see it at all if they couldn't download a copy. The net loss in both situations is zero. Consider a few cases. Someone who downloads a copy of a movie he likes has usually already seen it theatrically and fully intends to buy the legitimate version when it arrives on DVD. The pirated version is a stopgap means of instant gratification. (How cool would it be to have a chance to purchase a legal DVD copy of a movie on the way out of the theater?) Alternatively, someone might download a movie he never intended to see. However, since it's for free, it becomes worth a look. If there was any cost associated with it, the movie would be out of bounds. (Theft of value = cost of a movie ticket; loss of revenue = $0, because he would never have gotten the ticket, even if the movie wasn't available illegally.)

It's rare for a downloaded movie to take the place of a theatrical viewing or a DVD purchase. Therefore, most of the lost dollars attributed to on-line piracy are false numbers, representing value of theft, not lost revenue. How much money are the studios really losing because of file sharing? That's impossible to say, but it's not close to the billions of dollars they claim. And there's even some anecdotal evidence to support the notion that piracy can help the revenue stream for certain low-budget, non-mainstream motion pictures.

The following is a true account of something that occurred involving an acquaintance of mine and his experiences with Cabin Fever. He's a big horror movie fan, but also a fairly selective one. When he heard about Cabin Fever, he was skeptical. To him, it sounded cheesy and he decided not to see it. Then, a few days after its release, he noticed a copy of it on file sharer. So he downloaded it. After watching it on his 18" computer monitor, he decided that he wanted to see it on the big screen. So, along with four friends, he went to a local multiplex and caught a Monday night showing. The following Friday, he returned with two more friends. That's about $70 revenue that the makers of Cabin Fever would not have seen without the "word of mouth" that piracy can sometimes generate.

The argument is that piracy can (albeit on rare occasions) have positive repercussions. If the studios would put forth an effort to think "outside of the box," rather than react in predictable ways, they might be able to capitalize on this aspect of the trend. Obviously, this isn't going to work with Spider Man 2, but it could be a useful marketing tool for movies that often fly beneath the radar. If attempting to stamp it out is proving difficult, why not switch tactics and use it.

The industry is focusing an inordinate amount of attention on on-line piracy, which is a relatively small part of the problem. The real demon that needs to be dispelled is professional piracy, especially what goes on in Asia, where the pirating of movies is an accepted part of the culture. In many Asian countries, hardly anyone buys a legitimate copy of a movie, because pirated versions are (1) readily available, (2) of equal quality, and (3) much cheaper. There's no associated stigma and it isn't viewed as unethical; in fact, perhaps 90% of those making such purchases don't see anything wrong with it. If you look through the DVD collection of someone living in the Philippines, you might not find one legitimately produced title.

There's no denying that a lot of revenue is lost through these professional operations. Most do not operate in the United States, although there are a few smalltime distributors who sell poor quality DVDs of current theatrical releases on big city streets. But, compared to the huge operations that pump illegal titles into Asia, these guys are irrelevant. If the studios really want to cut back on losses, these are the operations they need to go after. But, because of where they're located and how they operate, they are almost impossible to shut down. (Enter the impotent politicians.) So the movie-makers target the amateurs. It's a foolish and shortsighted policy that's likely to breed a lot of ill-will, and which will make some in this arena all the more determined to steal.

For Hollywood to be able to make inroads against rampant piracy, there needs to be a clear understanding of where the genuine danger lies. Targeting downloaders is a poor and ineffective approach. It gets press, but that's all it accomplishes. Shutting down Kazaa would be a big victory in the newspapers, but, when it comes to the bottom line, the result would be insignificant. Closing down a major copying and distribution operation in Hong Kong, however, would be a huge blow.

So that's the "who" and "why." Next time, I'll take a look at the "where," "when," "what," and "how." And, once all those questions have been explored, then it's time to look at the biggest issue of all: can the war against piracy be won, or, like the war against drugs, is it a bottomless financial sinkhole?