Stealing movies: Why the MPAA can afford to relax [printer-friendly] • The Register

Original URL: http://www.theregister.co.uk/2004/11/09/movie_file_sharing/

Stealing movies: Why the MPAA can afford to relax

Spinning the exploitation cycle

Posted in Music and Media, 9th November 2004 13:37 GMT

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Analysis Another great hullabaloo has been going on this week over the fact that the Motion Picture Association of America (MPAA) plans to start the same kind of debilitating legal actions against illegal file sharing of movies, that the recording industry has been filing for the past year.

Online music file sharing is measured in billions of files downloaded, but the MPAA says that under 150,000 movie titles are traded each day in the US on file sharing services.

MPAA member studios now plan to file 230 legal actions in their first wave of lawsuits early next week seeking damages up to $150,000 for each movie placed online.

Faultline thought it might well be worth making a few notes about just how different the circumstances are for these legal actions and their likely outcome, compared to the rampant piracy affecting the music industry.

The first thing to remind everyone of is that when record labels were first hit by the sharing of files on peer to peer networks, those networks had not been legally challenged and for the most part were not understood. That was over four years ago and now people are beginning to come to terms with the existence of P2P networks, and how to go about stopping distribution of content over them and know what is and what is not allowed in the way of legal challenges.

Record labels are also coming close to an accommodation with the super distribution business models that P2P has been pushing for all that time, and, perhaps out of desperation, are talking about offering legal P2P delivery.

This might be with hybrid services, where low quality or incomplete tracks are free, and the full version is paid for, something that was suggested three years ago, but which has taken years to be tried, due to prejudice and only then because of the failure of the legal system to close down P2P networks.

Also, for the most part, film has always had encryption protection and it is possible to protect film throughout its conventional distribution process and the early part of its earning lifecycle.

High watermark

It's true that motion pictures have emerged on P2P networks "before" they have made it into the cinema, and that once a single copy is out there, it gets copied many times over and within days becomes easily available. But this is because there has been insufficient protection during the editing and promotional phase of a film's life and that can be fixed.

There have been successful attempts at stopping this from happening, and gradually "best practice" in basic DRM and watermarking means that it gets harder to steal a digital copy and if it is stolen early on in a film's economic life, it is easier to trace who leaked it.

Films are mostly distributed in non-digital, tape format to cinemas and this is likely to be true for some time, despite the advent of digital cinema. There are few, except the most well organized pirates that can take a tape copy and produce a digital work, but none at all that we know of that can take out the watermarking that would identify which copy was stolen in the first place.

It would be naive to suggest that it is difficult to break the DSS (DVD Scrambling System) that has been used universally to encrypt DVDs, if only because the DeCSS code can still today be downloaded from web sites which are situated in countries that have not yet currently enacted the World Copyright Treaty.

That treaty is the agreement by which 179 countries have said they will enact a piece of legislation based on the US Digital Millenium Copyright Act, including the elements that make it illegal to break encryption or copy protection, even if no breach of copyright is intended.

This is a controversial component of the agreement, but it has been enacted in half of Europe and will be law in most countries within two more years. It gets harder to post code that explains how to breach encryption keys, and with that, the leaks will fall to fewer and fewer individuals that are committed to piracy. That means that the net will tighten initially on individual countries, then later on individuals, and there is the potential to strangle film piracy over the next few years.

In music, fear that CDs will not play in cars and on other mobile CD players, has meant that many of the record companies have eschewed copy protection and that has meant that copying a CD is as easy as point and click, with no law being broken until the files are posted on the internet.

The other thing that makes it quite easy to stop films being copied on the P2P networks, is that the experience can be so easily degraded. It takes anywhere up to 10 hours to download a film from a P2P system. New systems are coming online that can cut this to about a third of the time.

But if at the end of even three hours, followed by an hour of watching the blockbuster movie, a pirate finds that instead of the ending, he or she is left with a message saying that this is a pirated copy of the film, and that they have broken the law and that if they want to watch the film, why not pay $3 to Blockbuster instead of breaking the law, or better still go buy the DVD.

That way the pirate has invested a lot of time, and may even repeat the experience and find that after ten hours of effort he or she still cannot enjoy the fruits of their piracy.

The systems that exist for putting up dummy files are now established and seen to be working, and yet the film file downloading business is barely out of its infancy. The music industry had to protect songs that were easier to download, and where the investment in finding out if they were the genuine article was only 4 or 5 minutes.

They can repeat the dummy file download many times until they get a genuine copy. For a film this might take a month of Sundays and there is still no guarantee that they will ever get the correct file.

There is also the whole issue of just how few file sharers have enough equipment to offer many film downloads, and how few downloaders are prepared to take up much of what might be wasted time. Films will need to be on a big server to hold multiple films in the first place and that limits the number of people that will do it. If there are less people doing it, it is easier to sue them into stopping.

Exploitation cycle

It is also important that the film industry is not threatened at the same point in the economic cycle in film as is the case for music. Music is threatened the moment it is put on the market for first revenues. Films for the most part should be able to stave off leaks during the cinematic phase of their operation, and then only begin to encounter them once it has earned something close to half of its expected revenue in the pay per view and DVD part of the exploitation cycle.

It has also learned from music piracy that it can offer DVDs with two versions of a film, one that CAN be read on a PC and once that can't, which includes all the special features that go with a production these days, such as alternative endings and the like. In this way the pirated version may only end up being a promotion for the better experience of the DVD.

We know from surveys that music pirates are the same people that buy CDs. So it's not an alternative to buying music, so much as a way of sampling the music, for most people. And the same can be said of moviegoers.

People that go to the cinema, also buy DVDs and will be the same people that are interested in downloading files. If the film industry embraces the P2P networks quickly, with some innovation, then they are in pole position to take more money from their films, not less.

Many films on the P2P networks are not even in their pay per view cycle and the broadcast flag, preventing broadcast films that are from being stored with consumer electronic equipment, will improve this further. The result will be P2P networks which are mostly restricted to films that are in their broadcast cycle, a period when less than 10 per cent of total revenue is left for the film to attract.

And finally the music business has set up the legal challenge for suing file sharers anonymously and applying to the courts for the names of the filesharers which have deliberately been flaunting the copyright laws. So the film industry has a ready made framework for legal action, which it is now, finally, embracing.

Backward nature

However we would like to offer a word of caution. Right now there are NO services like iTunes that are available for films. iTunes has a strict philosophy whereby content ownership is guaranteed. You do not "rent" a music track, but pay a license for it for life.

iTunes has made it possible for music fans to experience a system "like" online piracy, but better, and the outcome is that a collection of music can be set up which can be moved from computer to computer for a lifetime as well as copied to CD.

Film rentals services like Movielink and CinemaNow in the US are very strict on viewing cycles, when they need to be relaxed on them, granting no more than 24 hours in which to view a film.

Services that allow the keeping of a film file, such as that launched last week by Akimbo, are really in their infancy. This is due to the backward nature of the film businesses attitude to legal film downloading.

Either allowing a film to be viewed as many times as a customer likes while it is on a piece of DVR storage, or allowing the permanent burning of DVDs from such a file, just HAVE to be allowed (for the appropriate price), along with the ease of use features of iTunes, before piracy will be totally stopped in its tracks.

The studios must not mistakenly think that the online services are the same as iTunes, they are inferior ways of operating, devised almost entirely to keep other existing outlets, such as Cinema groups, happy.

In the end, film will be offered via an online film store, for permanent ownership, running under a library application with online search and online programming guide functions, from the first day they hit the market. As the cinema continues to decline as the biggest revenue stream for films, DVD will be confirmed as the big money engine, and it will be that much bigger if the studios can bypass the retail payout and offer films online for burning, giving a new meaning to the expression, "going straight to DVD."

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here (http://www.rethinkresearch.biz/subscribe.asp).