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Dust-Up: How big a risk does piracy pose to the entertainment industry? [Round 1]

March 15, 2011 |  1:11 pm

Piracy-Social Network

Will illegal downloading drive independent filmmakers and, eventually, the entertainment industry out of business? Absolutely, says Andrew Keen, the author of the upcoming "Digital Vertigo: An Anti-Social Manifesto" and the advisor to Arts and Labs, a coalition of entertainment and technology companies and some of their leading tech-industry partners. Not only is piracy crippling the industry as a whole, Keen contends, but it's hurting the little guy, the artists; and he's worried that without stricter laws, piracy will eventually drive away independent filmmakers because they can no longer afford to tell the important stories that help to influence our culture.

On the other side of the debate is Harold Feld, legal director of Public Knowledge, a Washington-based advocacy group that frequently opposes the entertainment industry on copyright issues. Speaking for many Internet users and online entrepreneurs, Feld argues that the entertainment industry ought to accept the new reality and adapt.

Says Feld:

When Hollywood loses touch with reality this badly (and when Washington follows), it is time for a reality check. Is digital shoplifting really so much a threat to the very survival of the entertainment industry that we need to place the stability of the Internet at risk and jeopardize our relationships with our international trading partners in the fight against real piracy?

This week, Feld and Keen face off in our occasional Dust-Up feature, a point/counterpoint debate that'll continue for three consecutive days. In their first exchange, they both offer their version of a reality check. (Read their opening arguments after the jump.)

Check back Wednesday for whether the entertainment industry ought to accept piracy as a cost of doing business; and then again on Thursday when they discuss new laws versus new approaches and the impact of piracy on arts and culture.

--Alexandra Le Tellier

Photo: Piracy is also a problem in China, where these DVDs came from. Credit: Ricardo DeAratanha/Los Angeles Times

 

Point:

Pretty much everyone agrees that while theft is wrong, we treat shoplifters differently than Somali pirates. Despite the fact that retailers lose an estimated $25 million a day to shoplifting, more than $9 billion a year, no one wants mall cops to carry automatic weapons and have them blast into crowds to nail suspected shoplifters. Nor would anyone think much of an argument that we need to strip search every customer on his or her way out of the supermarket because anyone might be shoplifting and how can honest merchants possibly compete against the “five finger discount?”

Unfortunately, this common sense vanishes as soon as we move from the physical shoplifting to illegal digital downloads. In the virtual world, the real but mundane problem of shoplifting undergoes a Hollywood-esque transformation into “piracy,” causing the entertainment industry and folks in Washington to lose all perspective. Consider that Rep. Howard Berman (D-Valley Village) proposed a bill in 2002 to allow record companies to hack into your computer to search for illegal downloads. And how did Berman justify the equivalent of an electronic strip search? “There is no difference between pocketing a CD in a Tower Records and downloading copyrighted songs from Morpheus,” Berman told the crowd of aghast tech executives. “Theft is theft.” True, theft is theft. But I suspect Berman would have objected to an amendment allowing Tower Records to break into your home to recover a stolen CD.

It would be nice to think that nearly 10 years later, with the Internet less mysterious than the waters off the Somali coast, we might see an interest in workable proposals to address the real problem of illegal downloads. Unfortunately, Hollywood and their adoring fans in D.C. still cling to the fantasy that they are fighting the scourge of civilization rather than dealing with mundane digital shoplifters, and proposals reflect this unfortunate frame.

Delusions of grandeur shared by media moguls as heroic defenders against a horde of digital pirates should be harmless. But when Washington takes these seriously, they do serious harm. One bill proposed last year would have required messing with the Internet’s fundamental address system to go after "pirate websites." This drew sharp condemnation from technical organizations that if the bill became law, it would put the stability of the entire global Internet at risk.  Despite these concerns, the bill in question passed the Senate Judiciary Committee and seems likely to be reintroduced again this year. On the international front, the inability to distinguish between real pirates and digital shoplifting nearly derailed the Anti-Counterfeiting Trade Agreement, or ACTA. Despite broad agreement on provisions to coordinate international enforcement against real pirates with warehouses full of fake medicines and counterfeit designer jeans, the U.S. held out for months trying to force through highly controversial provisions designed to stop 17-year-olds from downloading Justin Bieber singles.

When Hollywood loses touch with reality this badly (and when Washington follows), it is time for a reality check. Is digital shoplifting really so much a threat to the very survival of the entertainment industry that we need to place the stability of the Internet at risk and jeopardize our relationships with our international trading partners in the fight against real piracy?

Measuring losses from digital "piracy" has proved rather difficult, as most studies (sponsored oddly enough by the entertainment industry) usually start with the assumption that everyone who downloaded an illegal copy would have otherwise bought a copy at full price. But evidence suggests that annual losses to Hollywood from illegal downloading do not even begin to approach the losses that American merchants routinely suffer from shoplifting.  Recently, the Motion Picture Assn. of America announced another record year of profit, earning more than $10 billion in global theater revenue. While it is no doubt true that MPAA members lost some sales to illegal downloads, does anyone really believe they lost another $9 billion in sales from illegal downloads? Yet, American retailers, who lose $9 billion a year to physical shoplifting, somehow manage to survive without treating shoplifters like pirates.

The greatest irony in all of this is that the utter insistence of the entertainment industry on framing this as a struggle for its very survival against global digital pirates is that it prevents any effort to develop sustainable responses that minimize losses and maximize sales. In the real world, merchants take common-sense precautions to fight shoplifting, and we punish shoplifters in a manner commensurate with their crime. But rather than try to figure out the digital equivalent of security cameras and mall cops, Hollywood and its enablers insist that critics are "in cahoots with powerful interests" bent on destroying their business and who "simply don’t want to pay" for content.

--Harold Feld

Harold Feld is legal director of Public Knowledge, a Washington-based digital rights advocacy group.


Counterpoint:

With all his “Hollywood-esque” talk of “piracy” in the mysterious waters off the Somali coast, I worry that Harold has been watching too many Johnny Depp movies. Hopefully, at least, he paid for them. Certainly his portrayal of the entertainment industry as made up of people with "delusions of grandeur" who fantasize about themselves as "heroic defenders against a horde of digital pirates" is highly fictionalized. It might make an entertaining movie (who would play the Weinstein brothers?), but it bears little relationship to the real world.

The truth about how entertainment professionals fight online theft is much more mundane than the swashbuckling adventures of Somali pirates. Take, for example, Penelope Spheeris’ struggle to fight the digital theft of her work. Managing online theft is like "putting out a force fire with bare feet," the director ("Wayne’s World," "Little Rascals") told me last month. Especially since many of the online thieves she confronts on the Internet are abusive, calling her a "bourgeois capitalist pig" and many less printable insults. One kid responded by telling the film director that he would "beat the snot out of her."

No, not even Johnny Depp, at his most rotten, would threaten to beat the snot out of a lady.

Or take the struggle of the independent film maker Ellen Seidler, the co-producer of the lesbian comedy "And Then Came Lola," a movie funded with her own life savings. As Seidler said last October, the illegal streaming of her film -- in itself bad enough -- seems to be benefiting third-party websites like Google, which are selling advertising off the back of this stolen material.

Larger movies are also victims of the epidemic. According to the monitoring service BayTSP, "The Social Network" has been illegally downloaded 9 million times on P2P networks since its release six months ago. Harold is right is not all those 9 million thieves would have paid for the movie, but he’s wrong to suggest that these millions of pinpricks don’t add up to one giant pain in the behind for the movie industry that is in the business of making money.

Like Harold, I agree that theft is wrong. I also agree that people who steal online content are more like shoplifters than Somali pirates and should be punished accordingly. (I agree: no walking the plank for illegal file-sharers.)

In New Jersey, for example, people who shoplift goods of under $200 in value are liable to punishments of up to six months in jail and fines up to $1,000. While in California, "grand theft," which means shoplifting goods worth more than $400 (that's 25 albums or movies), can punished with up to a year in a state prison.

But the problem, as Harold conveniently ignores, is that online theft is much more difficult to police than shoplifting. As James Madison reminded us long ago, we aren't angels. And that $25 million a day American retailers lose a day to shoplifting would be a daily $25 billion if it was as risk-free to steal from stores as it currently is to illegally download movies or songs on the Internet.

I like Harold's argument about adopting common-sense precautions against online theft. He is right too that the punishment for online property thieves should be commensurate with their crime. But the big question remains unresolved. In an online world where stealing has become so easy that 9 million people have already illegally downloaded "The Social Network," how do we get these millions of normally law-abiding people to stop breaking the law?

-- Andrew Keen

Andrew Keen is the author of the upcoming "Digital Vertigo: An Anti-Social Manifesto." He is also an advisor to Arts and Labs, a coalition of entertainment and technology companies. 

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