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Transcript

Internet Movie Piracy

Gigi Sohn
President, Public Knowledge
Friday, November 5, 2004; 11:00 AM

The Motion Picture Association of America said Thursday that it will sue people who download movies from online file-sharing services, joining the U.S. recording industry in using lawsuits to try to stop Internet piracy. washingtonpost.com reporter David McGuire discussed the likely impact of the lawsuits with Gigi Sohn, president of Washington, D.C.-based Public Knowledge.

A transcript follows.

Gigi Sohn (Courtesy Public Knowledge)

_____Background_____
MPAA to Sue Over Movie File Sharing (The Washington Post, Nov 5, 2004)

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

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David McGuire: Hi Gigi, thanks for joining us. Your group has encouraged the movie and music industries to protect their works using the legal system, but you've also openly questioned whether the legal campaign launched by the recording industry will do any good. Are these industries right in pursuing this strategy? If not, what should they be doing to protect themselves?

Gigi Sohn: I do think that strategically targeted, appropriate legal action against actual infringers is a proper strategy for the content industries. At the very least, it serves to deter some illegal conduct and educate the public. However, I don't think it should be the *only*, or even the *main* strategy. First and foremost, the industries must develop attractive business models so that they can "compete with free." I don't believe that music and movie lovers are criminals. I think that they will pay for high quality, reasonably priced music and movies that are made available online.

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Cleveland, Ohio: Hello. Does this lawsuit plan to target anyone who downloads material, or just those who distribute? I must admit to a download or two, but I never share files. I mean, when a dealer on the street is selling pirated stuff, you arrest him, not the people shopping at his table, right?

Gigi Sohn: Hi Cleveland - it isn't clear whether the motion picture companies are going to target both uploaders and downloaders. If the these lawsuits track the music company lawsuits, however, they will focus on uploaders, for the reasons that you state.

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Annandale, Va.: sounds like the idea of suing kids for downloading movies is losing battle. Do you think these types of suits will have much of an impact in stopping people from stealing movies? Would it help if the Justice Department started prosecuting these people?

Gigi Sohn: I agree. Suing kids for downloading movies *is* a losing battle. That is why we have encouraged the industry to be more strategic - go after large scale distributors, not someone who downloads a movie or two. Again, I do think that the number one thing that will stop people from stealing movies is a reasonably priced, easily accessible legitimate alternative. As for the Justice Department, I do *not* think that they should be given the authority to file civil suits, but if they do engage in criminal prosecutions, they should be similarly strategic. With a war on terror and homeland security concerns, IP prosecutions should have lower priority.

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Arlington, Va.: Hi Gigi, I've heard you say many times that the content industries need to embrace new distribution models that give them a chance of competing with free. I strongly agree. But realistically, how close is are the movie/music industries to seeing the light themselves?

Gigi Sohn: Hi Arlington -

I am pleased to say that I think that the music industry may finally be seeing the light. The LA Times reported on 10.29 that Sony BMG and Grokster are cooperating in a venture (called Mashboxx) wherein the record company would sell and give away legal downloads over Groksters' P2P network. As for the movie companies, they do have a bit more time to figure things out, since it takes a very long time to download a movie, there isn't the same threat as the record companies face. The current online movie business models clearly are not catching on with the public - but it gives the industry time to experiment.

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Washington, D.C. : Do you see anything wrong with what the movie industry is doing here? Don't they have a right and in fact a duty to protect their intellectual property? What other options do they have?

Thanks

Gigi Sohn: Again, I have no problem with the movie industry bringing infringement lawsuits *if they are targeted at the most egregious file traders.* While they may have the right to sue every Tom, Dick and Sally, that would be a waste of resources and time that could be better spent trying to figure out how to harness the speed, ubiquity and low cost of the Internet to make more money. In many ways, this is the same debate we were having 20 years ago over the VCR. The movie industry didn't like it, tried to destroy it through litigation, lost and then made (and still makes) huge profits from home video and DVDs.

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Bethesda, Md. : Last year around Oscar time, there was a controversy surrounding the circulation of screeners and the potential for piracy. Though these lawsuits will target online file sharers, I wonder if the filing of the suits in mid-November is partially intended as a preemptive strike to quell piracy of all kinds and avoid a similar problem during this year's Academy Awards voting.

Gigi Sohn: Bethesda - there may be some coordination of timing here, though I understand that the MPAA has been trying other ways to stop their own people from engaging in piracy. I had read that they were going to send out DVDs that only played on special machines, but the machines were not ready in time to ship. Last I heard was that they were just going to send VHS tapes to screeners. In any event, expect to hear a lot of grumbling about that.

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Arlington, Va.: Isn't this a waste of time? It seems like illegal file swappers are going to find new sites and new ways to stay under the radar screen of the MPAA and their lawyers.

Gigi Sohn: I think if you asked the record companies, they would disagree. At the very least, these suits serve to educate people about file trading and the legal risks one takes when they do so. I understand that the recording industry is actually making money from these suits, which get them about $5000 a pop. I think they figure that if they can deter even several hundreds of thousands of people, it is worth it. But I think they know, as you do, that people who really, really want to engage in illegal file trading will find a way. They know you can't completely stop this activity. They just want to get it down to a point where they can live with it.

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Washington, D.C.: I sympathize with the movie industry to a degree, but maybe the growing problem of piracy should serve as a wake-up call that ticket prices have gotten out of hand. The music industry has had to bite the bullet and lower prices on CDs and offer cheap downloads. Perhaps the movie industry should consider the same?

Gigi Sohn: That isn't a bad idea, although I'm not sure that file trading will affect theater-going. New technologies - TV, the VCR, etc. have never negatively affected theater sales, and I'm not sure this will either. The movie industry's concern is so-called "secondary markets," like DVD sales. But I'm skeptical that P2P file trading will hurt them either.

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Arlington, Va.: What can be done about all the foreign pirates? I know of people who travel to other countries, buy DVDs (that aren't out here in the states yet) for $2 and have no problem with it.

Gigi Sohn: Arlington - you put your finger on a very interesting dilemma - physical piracy of the kind you speak of is a *far* bigger problem for the movie industry. Foreign factories, particularly in Asia, purposefully overproduce DVDs to sell on the street at low prices. Curbing that takes a great deal of both private and government enforcement, not just from the US but also from the countries most likely to pirate. The US is also engaging in bilateral negotiations with a lot of these countries to try and get them to engage in greater enforcement.

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Boston: The Washington Post reports Dan Glickman as saying that the movie industry is working to adopt these business models you suggest. Are you saying it is "ok" or even should be legal for us college students to download movies and music at will in the meantime? I mean, isn't it still theft?

Gigi Sohn: No, I do not encourage anybody to engage in illegal activity, ever. What I did say was that the best way to curb that activity is to provide a legitimate alternative.

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Takoma Park, Md.: I don't like these lawsuits, but I have to say, I greatly prefer them to some of the laws the movie/music cabal is trying to pass on Capitol Hill. Do those bills (Induce, etc) have a chance of passing? And aren't these lawsuits a preferable alternative?

Gigi Sohn: I would agree with your core point. It is far better to have strategically targeted lawsuits than to have silly technology mandates like the broadcast flag, or lawsuits like the Induce Act that target manufacturers and funders of legitimate technologies. I am very concerned that there is an omnibus Intellectual Property bill that is sitting in the Senate that could be acted upon in the lame duck session that will start on Nov. 16. It is called the Intellectual Property Protection Act of 2004, HR 2391. This bill has a lot of very bad provisions, including one that would make it easier to criminally prosecute people for engaging in file sharing. I encourage everyone to write to their Senators to tell them to not let this bill reach the floor during the lame duck session.

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Arlington, Va.: Aren't such lawsuits really meant to scare people into not sharing files or downloading in the first place, rather than recouping actual losses? In other words, to maximize profit in a purely cost-benefit analysis kind of way?

Gigi Sohn: Yes. These lawsuits are about deterring illegal conduct, not recouping actual losses. Though I should make clear that it is unclear, in the music context, whether the deterrence is really working, as P2P usage has increased since the RIAA lawsuits started (traffic has gone down on some P2P systems, but has risen on others). Also, nobody has shown a direct link between decreased sales of CDs and file sharing. Factors such as CD prices, a bad economy, and a lack of good music could also be factors in the decline of CD sales (although in the first half of 2004, CD shipments have increased 10.2%!).

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Woodbridge, Va.: The movie industry has seen record revenues and profits rise consistently every year. This year is no different. How can the MPAA claim they are losing "billions" of dollars and it's "harming" the industry when profits continue to increase?

Gigi Sohn: Good question. When they talk about the money that is allegedly "lost" to piracy, they are assuming that every illegally traded movie is a lost sale. Of course, you cannot make such an assumption - in fact, someone who sees a movie that they like may go out and see it in the theater or buy the DVD. What the movie companies don't like, is the fact that you might watch a movie beforehand, decide it stinks, and then you won't waste your money seeing it or buying it. Some blame the easy availability online of the Hulk for its demise at the box office - people saw it early and didn't like it, so they didn't bother to go see it.

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Washington, D.C.: How is the MPAA waging this campaign without knowing how big of a problem movie file-swapping is? They don't have accurate tracking numbers so how will they get their arms around it without being able to quantify the damage?

Gigi Sohn: I think that they have seen what happened to the record companies, and are engaging in a preemptive strike of sorts. They can track individual infringers, and I believe that their hope is to prevent a culture of movie sharing before it ever become a problem.

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Bloomfield, Ct.: What will it take for people who download music and movies for free now, to be convinced to pay for content?

Gigi Sohn: Well, people are starting to migrate to paid music services. iTunes, in particular, is doing very well. I think the migration will continue when 1) the catalogues of legitimate services get bigger, including independent music and genres other than just rock, 2) the per-song prices go down, 3) the music companies use P2P technology, a la Sony BMG, rather than run away from it, and 4) the free P2P services become unbearable to use because of spyware and viruses. The latter is starting to happen now. I would give a similar answer for movies - you need large catalogue, easy access (including via P2P), flexibility of use and reasonable price to "compete with free."

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Belmont, Mass.: A little bit off topic, but how does the election affect the bills you mentioned? Are they more or less likely to pass with a stronger Republican majority?

Gigi Sohn: Good question. In the past, the Democrats were far more likely to favor the content industries' copyright agenda than the Republicans. That is starting to change a bit, largely because the RIAA smartly hired Mitch Bainwol, a Republican to be its head lobbyist. I do think that there is a serious debate going on in both parties as to what their IP positions should be. For the Rs, they are looking to get tougher, for the Ds, I think they may start to reconsider their wholesale support of the content industries' agenda, because of folks in the party who disagree with that agenda.

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Washington, D.C.: DO you think this action will help or harm the movie industry's PR image? I've seen what it's done to the recording industry and I'm worried that I will have to start boycotting movies like I have with music.

Gigi Sohn: There is no doubt that these suits are very risky from a PR perspective. I think that is why Jack Valenti, the previous head of MPAA, refused to oversee them. But clearly the movie studio heads have decided that it is worth the risk.

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Alexandria, Va.: I'm pretty net savvy, but even I can't be bothered to sit through movie downloads on my cable connection. It seems that the movies on the internet are similar in quality to what you can buy on the streets of NY, that is to say, pretty crappy. How big is this problem really? Music files are a much different animal from two hour movie files.

Gigi Sohn: You are very right. For technological and other reasons, you cannot compare the movie and music industries from a P2P file trading perspective. I think even the MPAA would say that this is not a big problem yet, but that they fear that faster broadband connections and easier availability of perfect digital copies will make it a big problem in the future. My sense is that they don't want to be caught with their pants down like the recording industry was 5 or 6 years ago. But again, I think the best way to make sure that doesn't happen is for the industry to provide attractive legal alternatives very very soon.

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David McGuire: Unfortunately we're out of time. I'd like to thank Gigi Sohn for taking the time to join us today and our audience for asking so many thoughtful questions.

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