Booting
The Bootleggers
An Interview
With New MPA Copyright Cop John Malcolm
Movie
theft is not a victimless crime, says John G. Malcolm, who 15
months ago joined the
Motion Picture Association as senior vice president and director
of its worldwide anti-piracy operations. “It is highly
likely that every dollar paid to a pirate vendor is going
into the hands of bad person who will use that money to perpetrate
other illegal activities and to spread violence and misery.”
Meanwhile, illegal downloads
of “Revenge of the Sith” blight
the Internet. Illicit DVD mongers hawk “Batman Begins” on
street corners from Omaha to Osaka and back again. The bootlegging
of filmed entertainment has vexed Hollywood for decades,
and the MPA says it accounts for $3.5 billion in lost revenue
annually.
In Focus interviewed Malcolm,
a Harvard Law honors grad who once served the U.S. Justice
Department's Criminal Division
as a deputy assistant attorney general, on the perils and
promise of purging piracy.
IN FOCUS: A visit
to the Internet’s sundry BitTorrent
menus suggests that none of the major upcoming summer films – with
the exception of a few that have already seen foreign release,
like “Unleashed” – are yet online. When
did the bootleggers stop camcording pre-release screenings?
JOHN MALCOLM: I don’t think that bootleggers have stopped
trying to camcord pre-release screenings, but we have been
making it increasingly difficult from them to do it. Our
member companies have stepped up efforts considerably to
improve security at post-production houses and, working in
cooperation with NATO members and other theatre owners, at
promotional screenings.
Which foreign governments do you believe have been the most
cooperative in the fight against movie theft?
Several countries have proven to be reliable partners in
our joint fight against intellectual property theft. In
Hong Kong, for instance, government officials really cracked
down and brought what had been a deplorable piracy situation
down to more manageable levels. Swedish authorities
have also elevated the level of their enforcement efforts,
as have the French. There are other countries that
have also indicated a genuine desire to protect intellectual
property and to encourage respect for the rule of law and
creativity in their own countries and abroad. We are
pleased to assist them.
What countries do you think are the most improved since you
joined the MPAA?
Since I joined the MPAA in March 2004, several countries
have shown noticeable improvement, including Mexico, Brazil,
Spain, Turkey, and Malaysia. I would also add that
I have seen an improvement in the responsiveness of law enforcement
authorities at the state, federal, and local level in the
United States. This does not mean that serious piracy
situations no longer exist in those countries, but we have
seen a noticeable improvement in law enforcement’s
willingness to take action against thieves. Sometimes
it is the case that they are doing so because of pressure
that is being brought to bear by our government, and at other
times it is an explicit recognition that hard goods movie
piracy is usually conducted by organized criminal gangs who
use the profits that they make by selling illegal DVDs to
fund a whole host of other illicit but profitable activities,
such as drug dealing, gun running, and human trafficking.
Which are the biggest problem regions?
Although movie piracy is a problem around the world, Russia
and China still stand out not only because of the total saturation
of the local markets in those countries with pirated product,
but also because they are large manufacturing and exporting
countries that adversely affect other markets such as the
United Kingdom. Hard goods piracy, however, is still
a huge problem in other major markets such as Mexico and
Spain. And, since the Internet is borderless and
seamless, online piracy is a serious and growing problem
in many countries, particularly those with high broadband
penetration and lax laws.
Some, I know, have wondered how
the MPAA calculates losses to bootlegging. Do they consider
every download a lost ticket/DVD
sale? How does one apply the formula to DVD street
sales?
We do not consider every download or pirate hard goods sale
as a lost ticket sale, but there are respected economists,
researchers, and statisticians who conduct extensive market
surveys and make reasonable extrapolations from available
data to come up with such figures for lost sales attributable
to illegal downloading, the purchase of bootleg DVDs, and
the use of ripper products and the like to make illegal copies
of legitimately rented or purchased DVDs (the so-called rent-rip-and-return
phenomenon).
Some argue that the people who download
movies are the first in line when those same movies debut. Your
thoughts?
Perhaps that may be the case with a few people who use downloading
as a form of “sampling,” but the overwhelming
amount of existing evidence suggests to the contrary. It
seems pretty clear that far more people use illegal
downloads and street purchases of pirated discs as a substitute
for seeing filmed entertainment through legitimate venues
such as going to the theatre, legitimate purchases and rentals
in established facilities, or enjoying filmed entertainment
online through legitimate VOD services. These are lost
sales that cannot be recaptured, and every illegal download
or illegal sale threatens to “legitimize” this
harmful conduct and to threaten the livelihoods of creative
and hardworking people.
Do you believe releases that hit
foreign and U.S. cinemas on the same date substantially reduce
the impact of piracy?
Yes, I do, although by how much is difficult to quantify. There
is no question though that there is an extraordinary demand
throughout the world for American movies, and movie thieves seek
to profit by satisfying that demand when legitimate alternatives
do not exist. By opening in foreign markets at the
same time that films open in the United States, more people
can satisfy their desire to see the latest releases by going
to the theatre without resorting to downloading illegally-camcorded
copies or to buying inferior pirated DVDs. I do
note, however, that there is a flip side to this in that
widespread day-and-date release in theatres throughout the
world does present some difficulties because of increased
opportunities for criminals to steal a movie by recording
it off the screen with a camcorder.
Do you think digital cinema, by perhaps making simultaneous
release more manageable, will be a great boon in the fight
against movie theft?
Yes, I am looking forward to the coming transformation to
digital cinema, which should allow patrons to enjoy
a high-quality viewing experience in a more secure environment. Because of
improvements in technology, digital cinema should make it
far more difficult for a would-be thief to penetrate new
copy protection and digital rights management protocols that
will protect the electronic delivery and exhibition of motion
pictures to theatres. Nonetheless, knowing how profitable
this illegal activity is and how determined and tech-savvy
some of these criminals can be, we will need to remain vigilant.
Which revenue streams
are most threatened by movie theft? Do
you believe piracy to be a huge concern among U.S. cinema
owners?
Movie theft is a threat to every step of the distribution
chain, including in-theatre admissions. However, it
probably poses a greater threat to legitimate DVD outlets
and to legitimate VOD purveyors than to theatre owners. Nonetheless,
some camcorded copies can be of a surprisingly good quality,
and a person who is able to view such a copy on, say, a large
screen TV or an in-home theatre within hours or days of its
theatrical release may well opt not to go to the theatre
to see that movie.
How important is the new Family Entertainment and Copyright
Act law to your efforts?
That remains to be seen, but I consider it an important and
appropriate piece of legislation. It sends an important signal
that camcording a movie off of the screen and posting illegally-obtained
copies of in-theatre movies on the Web is a serious offense
worthy of federal law enforcement attention. Such conduct
stifles creativity, threatens the livelihoods of the thousands
of hardworking, law-abiding citizens, and harms an industry
that is a vital cog in our economic engine. We look forward
to working with federal law enforcement authorities so that
they can apprehend and prosecute the perpetrators of these
crimes under this new law.
Do you expect all 50 states to eventually
have anti-camcording measures on the books?
Yes, eventually.
Are some legislatures
expressing reticence?
No state has been reluctant thus far to address this issue,
although some of the penalties in some states are not as
high as I believe they should be given the serious nature
of this offense.
When our magazine
visited downtown Los Angeles early last year, there seemed
to be bootleg DVDs
sold on every corner. Do
you think there’s less of that going on now? Is
combating this kind of traffic a priority for the MPAA?
It’s a tough, tough problem, but we have investigators
on the streets every day working with local police officers
trying to address it, and in some states we are making some
progress. For instance, in Los Angeles, we worked very closely
with investigators with the Recording Industry Association
of America to conduct a coordinated “holiday blitz” last
December in a notorious pirate marketplace named Santee Alley.
As a result of these efforts, pirated movies and music were
a lot tougher to find during the holiday season, and many
people were arrested for selling pirated goods.
We are also working closely with local authorities,
including the Central Division Unit which covers Santee Alley,
by providing them training and some surveillance
equipment to help them in the fight against street vendor piracy. These officers
know that the people providing the bootleg DVDs and CDs to these vendors
are often gang members, and that some of these arrests have
led to valuable information
about other criminal activity going on in their communities. Again, this
is not a victimless crime, and it is highly likely that every
dollar paid to a
pirate vendor is going into the hands of bad person who will use that money
to perpetrate other illegal activities and to spread violence and misery.
To date, how many MPAA lawsuits have been filed
against individuals who engaged in the unauthorized sharing of movies online? Have any yet gone to trial? Has
money been exchanged?
In addition to other enforcement actions we’ve taken against online
pirates such as pirate website operators, we have filed quite a few lawsuits
on behalf
of our member companies against individuals engaging in unauthorized trading
of movies online, and many of those cases have settled (none has gone to
trial yet). This is not something that we particularly like to do, since
we much
prefer that people spend their money enjoying movies in theatres and through
legitimate rentals, downloads, and purchases, rather than spending their
money hiring lawyers and fighting or settling lawsuits. Nonetheless, our
members
believe that they cannot afford to sit idly by while tens of thousands of
people steal and distribute movies that cost significant amounts of time,
effort,
and money to make.
In addition to filing lawsuits, our members
have engaged in, and are continuing to engage in, an extensive
public outreach campaign to demonstrate to the
public, particularly young people, that this is not a victimless crime
and that property
rights are important and worth respecting. While we would hope that public
outreach alone would persuade people that stealing is wrong, even if it
is easy to do and is considered “cool” by some people, we are not
naive enough to believe that outreach alone will be sufficient to adequately
convey that message.
How effective has been the MPAA program that offers cinema
employees cash rewards for foiling movie thieves?
The program has been very effective, and I hope that its
effectiveness will increase as theatre employees and patrons
are sensitized to this problem and become even more vigilant
to the possibility of illegal conduct occurring once the
lights are turned out and the movie starts. We deeply
appreciate the cooperation that we have gotten from NATO
and its members, who recognize that it is their personnel
who are present in all of their theatres and who best know
their theatres and their customers. We also appreciate the
fact that NATO recognizes, as do we, that the safety of their
customers is the most important thing when trying to stop
a criminal from stealing a movie off of the screen.
Fortunately, with a reasonable degree
of awareness and vigilance, it is possible to catch somebody
camcording a movie. After
all, a camcording is nothing more than a slow motion robbery
in that the person operating the camera has to keep it
steady and on throughout the entire movie. We expect to
continue
providing training to NATO members and to other theatre
security managers, and are happy to reward a theatre employee
who
is on the ball and who catches a criminal in the act and
reports that person to law enforcement authorities.
Can you quantify in dollars (or any other terms) any reduction
in movie theft since the MPAA initiated its anti-piracy
efforts?
It is often difficult to quantify, particularly in dollar
terms, the benefits of our enforcement efforts, but they
are real. In some countries, we have seen revenues pick
up dramatically as our enforcement efforts and those of
local
authorities rise and pirated product is replaced in the
marketplace with legitimate product.
In our efforts against online piracy, we have taken aggressive
actions against server operators running illegal sites
using popular peer-to-peer protocols such as BitTorrent, eDonkey,
DirectConnect and Ares. For instance, 90 percent of the
server operators that we have sued have come down, and others who
were engaging in illegal activity and whom we did not sue
have also come down. We have entered into some significant
settlements against some of these targets who, in addition
to paying money, have also provided us valuable information
about people engaged in online piracy through those sites.
We have also worked with federal law enforcement authorities
in successful investigations such as Operation Digital
Gridlock and Operation D-Elite, and with state and local authorities
such as the California High Tech Task Force to combat rampant
online piracy, and I applaud and thank those officers for
their dedication and for their public service.
Another benefit to our enforcement efforts has been our ability
to increase awareness about the serious consequences of
this misconduct. This, in turn, has helped us persuade federal
and state legislators to pass legislation such as the new
federal and state anti-camcorder laws, and has helped us
persuade law enforcement authorities to vigorously enforce
those laws. While, obviously, more needs to be done, these
are positive developments. 
