With Video, Music Piracy on the Rise, NBC Chief Calls for Tougher Penalties

By Frank Ahrens
Washington Post Staff Writer
Wednesday, October 3, 2007

When Jeff Zucker took over media giant NBC Universal from longtime chief executive Bob Wright in February, he inherited more than the task of lifting the slumping network out of the ratings basement. Zucker also took on Wright's self-appointed role as the industry's torchbearer on fighting piracy.

So far, he has had more luck with ratings than robbers.

Pirated copies of Zucker's hit shows continue to pop up on the Internet and be sold from sidewalk blankets in Times and Red squares, robbing Zucker's network and others of post-broadcast revenue from DVD sales and downloads.

So today Zucker visits Washington to address the U.S. Chamber of Commerce and ask lawmakers for tougher penalties for music and video pirates, to keep consumers from pirating copies of "Heroes" and the rest of his shows. Zucker is not asking lawmakers for economic relief to offset industry losses attributed to piracy.

Recent industry data indicate that despite the music industry's sue-and-shutdown strategy against illegal song-sharing sites and the movie industry's global campaign against illegal DVDs -- and despite industry efforts to sell content cheaply on services such as iTunes -- piracy continues to climb.

"If we don't continue our education campaign," Zucker said in an interview Monday, "I fear that we will lose that momentum that we have gained."

That momentum is tentative at best, according to a Gallup survey of American adults commissioned by the Chamber of Commerce that is to be released today.

In 2005, 5 percent of survey respondents admitted to buying a song or CD that they knew or suspected was "not genuine or legitimate."

By this year, that number had risen to 9 percent, the survey reports. From 2005 to 2007, the percentage of respondents admitting to buying a pirated movie rose to 6 percent from 3 percent, the survey says.

All told, 22 percent of surveyed American adults admitted to buying some form of counterfeit goods in the past year, including illegally downloaded songs, pirated DVDs and knockoff clothing, handbags and shoes, with music by far the most purchased unauthorized product.

When asked why they buy these illegal goods, respondents replied most often that they were "easily available." The most active consumers of counterfeit goods are 18- to 24-year-olds, the survey says.

At the same time, once-soaring DVD sales have flattened in the past two years, and CD shipments to retailers plummeted 13 percent last year, the music industry has reported. Legal digital downloads of both video and music have increased, though the revenue does not make up for lost CD sales.

Despite the rise in piracy in the United States, overseas pirates, chiefly in China and Russia, worry the U.S. entertainment industry more. Of the 13 billion U.S.-recorded songs estimated to have been illegally downloaded in 2005, 9 billion were downloaded overseas, according to figures from the International Federation of the Phonographic Industry, the global trade group for the music industry.

The past month has seen a rash of crackdowns on piracy, all spurred by industry investigations that prompted local authorities to raid and prosecute alleged pirates. Police in Taiwan raided a video rental shop that was hiding an illegal DVD-burning operation, Taiwanese authorities shut down two pirate peer-to-peer Web sites and arrested one site's owner, a man was sentenced to six months in jail in Australia for selling pirated DVDs of movies such as "The Da Vinci Code," Malaysian authorities shut down an unlicensed DVD factory and Turkish police shuttered an illegal CD-burning plant in Istanbul as well.

"If you ask if piracy of movies is worse today, I'd say with movies, we're holding our own," Dan Glickman, chairman of the Motion Picture Association of America, said in an interview yesterday. "It's more serious now with TV [programs] than it used to be."

To help combat piracy and make its programming more readily available on the Internet, NBC Universal and Rupert Murdoch's News Corp. plan to launch a Web site later this month called http://Hulu.com, which will distribute NBC and Fox programming for free on advertising-supported sites such as AOL, MSN, Yahoo and MySpace.

In his speech, Zucker, 42, will tout a study to be released today on the estimated economic impact of intellectual property piracy to the U.S. economy, prepared by the Institute for Policy Innovation, a Texas research group run by former representative Dick Armey (R-Tex.).

The study estimates that intellectual property piracy -- theft of music, movies, video games and software -- costs the U.S. economy $58 billion per year and s 350,000 lost jobs in the entertainment industry and its supplying industries.

For the movie industry, the study used loss estimates from a 2005 study commissioned by the studios. For the music, software and video game industries, the study crafted current loss estimates using proprietary industry data, company filings at the Office of the United States Trade Representative, sales data and academic studies.

The research group's study does not assume a one-for-one relationship between pirated and sold goods. This means the study does not assume that each purchased pirated DVD or CD would have been purchased for full retail price if piracy were non-existent, said study author Stephen Siwek.

Staff writer John Maynard contributed to this report.

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