Oh What Damage Piracy Hath Wrought

As I previously mentioned, there is an emerging battle over the next generation DVD technology being offered by Sony and Toshiba. As this article mentions, a number of major movie studios have, for the moment, sided with Toshiba's HD-DVD format. While this is unsurprising, the article sites piracy as a key concern of the movie studios:

Both formats promise increased storage capacity and movie resolution superior enough to get the most out of high-definition TV sets. And both would contain stronger anti-piracy protection, a key factor in the studio's anxiousness to adopt a new format. Now, the software protecting DVD is easily circumvented and DVD piracy is an enormous problem for the industry.

While it is absolutely true that piracy will is an ever-growing concern among all who work in the entertainment media industry, it is remarkable that the industry has had such luck in pushing the idea that they are currently facing "an enormous problem". In fact, there is no evidence that the major movie studios, or Hollywood in general, have seen any significant decline in sales due to Internet piracy yet.

This, of course, does not mean there is no piracy, nor does it mean that piracy isn't illegal. But both the MPAA and the RIAA are waging massive campaigns to spread the message that they are under siege by legions or corrupt and immoral downloaders. The President of the MPAA, Dan Glickman, has said that the information age "threaten to unleash a wave of intellectual piracy that will undermine the very foundations of moviemaking.” (from the MPAA).  Glickman also noted that he is eager "to work with the new Congress to protect against piracy and on other issues important to the movie industry and its hundreds of thousands of workers."

Well of course he is. But that's like saying that the starting quarterback is eager to take a few snaps--eager because he's first in line to do so? Or eager because only the industry heavyweights have any meaningful voice at the legislative table? The MPAA and the RIAA are not the underdogs, despite what their ad campaigns would have us believe. They are not victims--the best they can say is that they are trapped in a complicated copyright system just like content users, but they have the money and the resources to reshape the system as they like. Don't believe the hype. Piracy may prove damaging to the industry someday, but so far Hollywood is having an excellent year and Blockbuster is still doing just fine. They just have better PR than the average P2P user.

Comments

[John Arnone]

Piracy may prove damaging to the industry someday, but so far Hollywood is having an excellent year and Blockbuster is still doing just fine.

I tend to see things from the anti-Hollywood side, but I think your argument is too short sighted. The content industry can't wait until the problem is really causing them substantial losses. They have to project what's going to happen and be proactive to prevent losses.

I think it's certainly a reasonable proposition that if the DVD medium doesn't change, piracy will become more of a problem than it is this year. More people are getting faster internet connections and learning that they can download whole movies (in part due to the publicity of stunts like the MPAA initiating infringement suits against users). Consumer technology is getting cheaper too - DVD burners, blank DVDs, and huge hard drives with lots of storage space. The movie industry would have to be stupid to not realize that if they do nothing, they will eventually be playing catch up.

Does all of this stuff mean that 2004 revenues will be adversely affected? Not to a significant degree. But if they do nothing, we might see a radically different picture in 2006. Any sane company HAS to analyze threats/opportunities for the future. Trying to encourage a change to a new standardized platform with better content protection before the companies start becoming unprofitable is just good business for the movie industry. The record industry probably didn't react soon enough to the potential pitfalls of a growing internet and cheap CD burning technology, and look at the ubiquity of music piracy today. The movie industry was paying attention, and they don't want to make the same mistakes as their music industry pals...

[Sam Bristol]

It wasn't my intent to imply that Hollywood should simply take a wait-and-see approach; of course they must do everything they can to prevent their product from being used illegally. Furthermore, they're pretty much required to be hard-asses about such things because they're corporate entities and have a strong duty to their shareholders to maximize profit.

But that's not really the issue I was attempting to bring to light. While the MPAA has a duty to its constituents to promote an anti-piracy message, they do so with both bald-faced lies ("copying anything is illegal") and shady PR campaigns designed to make it seems as if they are being hurt right now. But according to every study done so far, they're not being hurt at all right now. This isn't a war yet, and by unveiling an ad-campaign that implies that thousands of movie studio employees are being robbed without any evidence that such a thing is occurring is a distortion of the reality of piracy.

In reality, piracy exists and the content industry reacts with lawsuit after lawsuit to stop the most egregious perpetrators. But it has yet to be shown that they've lost a significant, or even quantifiable, profit by the activities of the millions of people they target with their PR. They only engage is such underhanded campaigns because they need to soften their image when they go after 10-year-old downloaders. I say, why let them? It's their legal right to sue Little Billy, but they should take the massively bad PR that comes with it without pretending they sued only because they're on the brink of financial ruin.

The record industry probably didn't react soon enough to the potential pitfalls of a growing internet and cheap CD burning technology, and look at the ubiquity of music piracy today.

It is ubiquitous, that's true. But despite the jump it has on movie piracy, even music sales haven't been shown to have dropped dramatically. The MPAA is crying wolf when it pretends to be hurting, and the "wave of piracy" predicted by Glickman will actually never arrive, due to the legal (not PR) efforts of the industry and ever-changing nature of technology.