Hollywood Lacks ‘Conviction’ to Compete with Piracy, P2P Chief Says

Download stores have a marketing problem, Navin said. Millions download movies daily and have “no other option than to do this illegally,” he said. Sony Pictures CTO Mitch Singer challenged him, asking why users can’t go to a theater or use existing download stores like Movielink and CinemaNow. Who’s heard of them? Navin asked: “There’s no broadly known viable distribution channel” like iTunes for a large movie selection. Download store pricing is out of line with consumer expectations and the industry seems unwilling to experiment, unlike ABC and its free Web streaming, he added.

Industry should admit that “those with more time than money will always get our content for free,” Singer said. But companies should spend more time convincing mainstream audiences “as opposed to spending all our efforts” on the 5% he estimates are downloading illicitly. It’s far more than 5% and it’s mainstream, Navin retorted. Whatever the percentage, let’s stop calling it “piracy” and give it a factual label of “movie theft,” said John Fithian, National Assn. of Theater Owns pres., to strong applause.

Why can’t BitTorrent simply block the “tracker” sites that coordinate file-sharing activities, such as Sweden’s infamous Pirate Bay, director Steven Soderbergh asked Navin. There’s “nothing technically we can do to stamp out Pirate Bay,” Navin said, prompting Netflix CEO Reed Hastings to challenge Navin to reconcile that logic with China’s efficient filtering of any Web page containing the word “Tiananmen.” Internet censorship eventually fails, Navin said. Soderbergh suggested the studios coopt the hackers that are complicating their format and DRM efforts, specifically the AACS hacker: “Everybody’s freaking out. I'm saying, ‘Hire him!'”

Consumer confusion over what it’s legal to do with purchased content is “simply an artifact of rapid evolution,” Hastings said. As with standardization of phone networks and motor fuel, within 20 years Internet video standards will create conditions for “a million TV channels to choose from” and a slick user interface, Hastings said. He said the “personal copy” of any content -- not the VHS format -- was the real “Boston Strangler” for the industry, an allusion to legendary MPAA chief Jack Valenti’s early term for videotape recorders. “You as a consumer lose your bearings” when the technology provides so many options with so little guidance for proper usage, Hastings said.

That spurred a heated exchange with Singer over the Supreme Court’s Betamax ruling’s legacy. “The only thing that consumers can do legally [under Betamax] was just to time-shift” recorded programming for later viewing, and that was when blank VHS tapes cost $20 each, Singer said. Hollywood understands “cultural disruption” and is working “diligently” to release the technology to make managed copies of DVDs, he said. That would match consumers’ expectations for copying CDs without opening up mass redistribution. But “people would think we were nuts” if studios originally had released DVDs as quickly as they've offered movies for licensed download -- not waiting for platform interoperability among multiple hardware makers and application providers like Apple. “I don’t think we have 20 years to sort out what’s happening in the industry,” he said.

The debate address the impact on piracy of the theatrical window -- the period during which films run exclusively in theaters. Navin called studios a “victim of their own success” in provoking demand with no supply outside theaters. Fithian said eliminating the window would be “destroying the cinematic art.” Going to the movies creates a “national conversation” that builds buzz not only on major releases but independent darlings, he said: “What would have happened to Little Miss Sunshine” if it had been released theatrically, on DVD and for download simultaneously? Consumers presume films shown in movie houses are of higher quality than those made for TV or straight-to-DVD, Fithian said. Soderbergh said the most-pirated films are major releases, making it logical to weigh abandoning the window case by case. Navin skewered theaters for failure to “innovate” to the point where their strongest draw for consumers is “popcorn.” -- Greg Piper

MPAA Notebook…

Senate Judiciary Chmn. Leahy (D-Vt.) said he plans to “redouble” intellectual property efforts in the committee. People must understand “we can no more trespass on a copyright than we can… take their car without their permission,” he said: Both should be “held as illegal” in the U.S. IP protection is “high on my agenda,” Leahy said, naming his PIRATE Act (WID Nov 14/05 p1) -- presumably to be reintroduced this Congress. International prosecution needs to rise, as does federal assistance to local police and prosecutors without a piracy background, Leahy added. Stiffer penalties need to be enacted, including jail time: “Somehow [jail] focuses people’s attention more profoundly than all the philosophical discussion you might make.” Leahy said he has started “discussions” with DoJ, State and Commerce departments. on putting more “enforcers” abroad and no longer ignoring govt.-backed piracy, “whether they may be allies or not.” In diplomatic efforts, this subject “tends to drop down on the agenda… It’s going to be raised back up,” he said. -- GP

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Walmart.com Tues. unveiled the beta version of its video download store, powered by HP Video Merchant Services, also launched Tues. Customers can download to PCs or portable players, or buy DVDs for mail delivery. Day one the video store failed to render properly in Mozilla Firefox browsers but seemed to be in working order on Internet Explorer. Video Merchant Services, a new HP business, powers online video Web stores and handles fulfillment for retailers. It can fulfill requests for video content via digital download, DVDs burned on demand, and packaged standard definition, HD DVD and Blu-ray discs, HP said.