This past Thursday's decision by the European Court of Human Rights to reject the application of The Pirate Bay founders Frederik Neij and Peter Sunde clearly draws a line in the sand and demonstrates that criminal conduct should result in appropriate and proportionate punishment.  Last year, Mr. Sunde and Mr. Neij filed a complaint with the EU Court of Human Rights on the basis that their criminal conviction (for operating TPB) violated their rights of freedom of expression under the Article 10 of the Convention.  The EU Court of Human Rights did not see it that way and concluded that the application was “manifestly ill-founded”.
 
What we have seen in the past is that the term “freedom of expression” has been hijacked by those who operate and provide Internet access to illegal sites under the pretext of doing so for the greater good of society.  And the entertainment industry has too often been accused of oppressing freedom of speech because it is trying to protect the artists and creators who have invested time, their creative talent and money in developing films and shows.
 
It is gratifying to see that the EU Court of Human Rights was not receptive to such an argument and rather focused on the fact that the activity both Sunde and Neij had been convicted for – the distribution of materials most of which protected by copyright – could actually not be equaled to “political expression and debate”.
 
The concept of “freedom of expression” and what it stands for is far too important to be bantered around and used as a smoke-screen for irresponsible and sometimes even illegal activity on the Internet.  And it is certainly not the case that the entertainment industry is seeking to censor the Internet or to stifle free speech.  Free expression is the cornerstone of our industry and we would not exist without it.
 
The Internet is a central part of our lives.  Citizens across the world, particularly young people, care about it passionately.  So do we.  We just want to ensure the Internet works for everyone.  We want an Internet where the creative property of artists and creators is protected along with the privacy and security of all users.  An Internet where the values society holds dear in the offline world, shape how we interact online.  And yes, these include freedom of expression, freedom of information and the freedom to protect the things we create and own.
 
Today, we are one step closer to achieving such an Internet.
 

Earlier today, Gov. Andrew Cuomo announced that “The Amazing Spider-Man 2” will be filmed entirely in New York. With scenes shot both upstate and downstate, it is expected to result in 3,500 jobs and the casting of 11,000 extras and will be the largest production filmed in New York to date. Major projects like this with a large economic footprint are the result of a strong production incentive program, which makes New York an attractive place to shoot.  In the words of Governor Cuomo, “This production will also help generate new jobs and economic activity both upstate and downstate which is great news for our local communities and fans of the franchise.”

The economic boon to the state is not just limited to the set itself.  According to the Governor’s office, the production will require 6,000 hotel room nights in New York State, and will use a number of Long Island-based businesses to supply food and equipment. The estimates on spending range from approximately $279,000 in container rentals to $130,000 in crane rentals to $19,000 for auto parts and more. Put simply, “The Amazing Spider-Man 2” will mean money for local communities in New York.

Started in 2004, the production tax incentive program has meant estimated $12.1 billion worth of direct spending for New York and become a significant job generator. In 2012 alone, 134 productions have applied for New York’s production incentive. Gov. Cuomo has now proposed a 5-year extension of the program in this year’s budget.

Gov. Cuomo’s release can be read in its entirety here.

In his final meeting of the President’s Export Council as the United States Trade Representative yesterday, Ambassador Ron Kirk made a very compelling argument that protecting intellectual property rights both at home and abroad is essential to the continued economic success of our country.

Speaking briefly at the beginning of the meeting, Ambassador Kirk stated that here in the United States “we have a knowledge-based economy and we have to be able to protect that.”  As the U.S. Trade Representative the past four years, Ambassador Kirk has been a strong advocate for enforcing the protection of intellectual property rights with our nation’s trading partners. Throughout negotiations on international and trade agreements like the Trans-Pacific Partnership (TPP), Kirk and the Obama Administration have been adamant about ensuring “the strongest intellectual property protection that we can possibly seek in these agreements.”

Pointing out that all of the members of the President’s Export Council seated around the table yesterday “as different as [their] businesses are, are all linked by the ability to protect [their] work product,” Amb. Kirk asked for the thoughts and help of the other members of the council to help convey the crucial message to the American public that “if we give away our work product, we just don’t have a future.”

As representatives of an American industry that thrives on innovation and the distribution of content to audiences around the globe, we couldn’t agree more with Ambassador Kirk’s assessment.  You can watch the full video of the meeting, including Ambassador Kirk’s remarks, HERE.

Last night public policy experts and mental health professionals gathered at the National Cable and Telecommunications Association for an educational presentation and screening of Silver Linings Playbook, hosted by the MPAA and The Weinstein Company. They were joined by MPAA Chairman and CEO Senator Chris Dodd, the film’s director/screenwriter David O. Russell, lead actor Bradley Cooper and former Member of the House of Representatives and mental health advocate Patrick Kennedy.
 
The remarks focused on creating awareness for mental health issues and the role that film and popular culture play in elevating these topics on a national scale. The film Silver Linings Playbook helps to promote awareness by taking an important look at mental illness, and how it affects so many lives – both directly and indirectly. David O. Russell explained how he was drawn to the story of a family struggling to cope with the effects of mental illness because of his own son’s struggles with the disease.  

Senator Dodd and Patrick Kennedy discussed their roles in passing laws to help those suffering from mental illness have more opportunities to receive treatment, through the Mental Health Parity Act and the Combating Autism Act.
 
Dodd: “It takes popular culture, through films like Silver Linings Playbook, to show us not just the struggles but also the joy that can be found in life by those living with these illnesses, and to change the stigma around them.”
 
Kennedy spoke about the need for films like this in today’s society: “The timing of this is so crucial. The power of this film is so valuable right now.”
 
Cooper discussed screening the film with soldiers at Walter Reed Medical Center the week before and talked about the response the film received from the military and veterans communities. 
 
Russell is best known as the director of many critically acclaimed films, including Three Kings and more recently, The Fighter. Bradley Cooper, most popularly known for his work in The Hangover series, has also appeared in Wedding Crashers, The A-Team and Limitless.

from left to right: David O. Russell,Patrick Kennedy,Bradley Cooper, NCTA President and CEO Michael Powell, MPAA Chairman and CEO Senator Chris Dodd

Senator Dodd

Bradley Cooper

Photo credit: Joy Asico

Three, shiny gold Oscar® statues made their way into the MPAA last night for an evening honoring a giant in the film industry, George Stevens, Jr. Stevens recently received an Honorary Oscar® for his over 50 years of work as a writer, director, producer, and founder of the American Film Institute. Stevens is the son of George Stevens, who won the Academy Award for Best Director for both A Place in the Sun (1951) and Giant (1956). All three Oscar awards were on hand for an evening that featured Stevens discussing his career with current AFI President and CEO Bob Gazelle. 

Stevens began his career working with his father on the classic motion pictures Shane, Giant, and The Diary of Anne Frank. In 1962, he was named the head of the U.S. Information Agency’s motion picture division by Edward R. Murrow and more recently, has served as President Obama’s co-chairman of the President Committee on the Arts and Humanities. His most significant contribution to the film industry, however, is arguably his role as the founding director of the American Film Institute, an organization established by President Lyndon Johnson in 1967 to “enrich and nature the art of film in America.” Stevens spoke of the organization’s beginnings last night:

“I never hesitated, never questioned whether this was a good idea or possible. (It had) that energy. Ask not, do it. It was a wonderful adventure, and a tremendous collaboration.”

Gazelle described AFI’s founding in the Rose Garden as an “idyllic moment when the President said we will invest in the arts.” MPAA Chairman and CEO Senator Chris Dodd was also in attendance, and described Stevens as a uniquely humble individual who could bridge the gap between Hollywood and Washington. “He was the Democratic Party’s Ronald Reagan,” said Senator Dodd.

Bob Gazelle (left), George Stevens (middle), Senator Chris Dodd (right) 

photo credit: Joy Asico

In the country of Israel, the Israeli Secret Service, known as the Shin Bet, lies at the center of a highly visible and often dangerous clash of cultures. Through groundbreaking interviews with six former heads of Shin Bet, filmmaker Dror Moreh explores the conflict through their unique eyes in The Gatekeepers, focusing in on key decisions and actions that have shaped history. The film has already won Best Documentary from the Los Angeles Film Critics Association, was an official selection at the Toronto Film Festival and Sundance Film Festival, and is an Academy Award® nominee for Best Documentary Feature. Moreh shared his thoughts last night with moderator Ambassador Edward W. Gnehm, who is a George Washington University professor with over 30 years of experience as a foreign service officer:

“With this film, I wanted to put a mirror in front of Israeli society. Then they’d have two options. If they didn’t like the mirror, they could just put it away. Or if it was telling them something they didn’t like, they’d be forced to change something fundamental about themselves. I hope people chose the second.”

Moreh is one of Israel’s leading cinematographers, having shot several other feature films including Urban Feel and Desperado Square, which won the Best Film Award at the Montpelier Film Festival. The Gatekeepers, a Sony Pictures Classics film, is set for a limited U.S. release on February 1st.

Gnehm (left) and Moreh (right)

photo credit: Michael Kandel

This week, Google announced that it will make the data it publishes on the number of DMCA takedown requests it receives downloadable, making it easier for everyone to analyze the information.  While we are pleased to see Google take another important step toward meaningful transparency, Google’s reading of the data in the blog post accompanying the announcement is missing some critical perspective: if the process is cumbersome for Google, it is even more cumbersome for the creators and makers who must constantly be on the lookout to protect their work from theft.

There is a staggering amount of copyright infringement taking place every day online and much of it is facilitated by Google, as their own data shows.  According to Google, they receive 2.5 million takedown requests per week – and that data does not even include YouTube, where an enormous amount of infringement takes place.  That means that by Google’s own accounting, millions of times each week creators are forced to raise a complaint with Google that the company is facilitating the theft of their work and ask that the infringing work or the link to that work be removed.  Often, even when the links are removed, they pop right back up a few hours later.  That’s not a reasonable -- or sustainable -- system for anyone.  

One thing that’s important to make clear in any serious discussion about tackling online theft: absolutely no one is advocating for the restriction of speech on the Internet.  Freedom of expression is a cornerstone of the Internet, and a cornerstone of the film community, which has spent the last century advocating for artists to be able to express themselves freely on the screen.  Removing infringing works online isn’t limiting access to information or ideas, it’s ensuring that the creativity and hard work that went into making a film is encouraged to flourish.

We couldn’t agree more with Google that this data shows that our current system is not working – for creators, or for Google.  But we can’t lose sight of the fact that it also confirms the important role that Google has to play in helping curb the theft of creative works while protecting an Internet that works for everyone.  We look forward to continuing to work with them to tackle this urgent challenge.

An abstract released recently by researchers in Europe has gotten some blogger attention for suggesting that box office revenue for some films may be down since Megaupload shut down in January.  Today, Julia Jenks, head of research here at the MPAA, is breaking down some of the serious methodological gaps in the abstract and notes that its flimsy findings raise far more questions than they answer. 

Assessing the Evidence: “Piracy and Movie Revenues: Evidence from Megaupload”

Researchers at the Munich School of Management and the Copenhagen Business School¹ recently posted a two page summary abstract on the Social Science Research Network entitled “Piracy and Movie Revenues: Evidence from Megaupload” that has caught the attention of some bloggers.  While independent review of the academic literature has shown that the vast majority of it, particularly the literature published in the top peer reviewed journals, finds evidence that piracy harms media sales (for more on that literature, see: “Assessing the Academic Literature Regarding the Impact of Media Piracy on Sales”),²  some bloggers have focused on a seemingly contrary conclusion from this new abstract, regarding box office revenue in time periods before and after the Megaupload website shutdown in January 2012. 

The reality is that it is impossible to evaluate the validity of the approach or the reliability of the conclusions based solely on the abstract, which does not fully present the methodology or results of the study. In fact, in its present form, this summary abstract raises more questions than it answers, including:

Are the conclusions being presented and interpreted correctly? From the two page abstract it is unclear, for example, which results are or are not statistically significant, what are the definitions for the variables in the statistical tables, and whether and how the results differ for the films that showed on more than 500 screens, which the authors suggest experienced a positive box office effect post the shutdown.  Specifically, the regression tables seem to indicate that the Megaupload shutdown caused an increase in box office revenue for movies that were shown on more than 500 screens (which is a large number of films), but the tables are unclear and could also be interpreted as also showing an increase in sales for all films after the Megaupload shutdown.³  

Which system was used for “matching” like movies? The abstract’s conclusions rest on the assumption that it is possible to create a “matched” control group of movies from the time period prior to January 2012 (pre shutdown), which accurately predict the potential box office performance of similar movies in the post January 2012 time period (post shut down) had the Megaupload shutdown not happened.  This is an extremely difficult proposition, even with the most sophisticated econometric techniques, particularly for specialty films⁴ – or there would be no box office surprises.  In this case, it’s impossible to assess the validity of the control group without information about the matching technique and methodology, and the actual matching factors.  The only potential factor visible, genre, is very weak.  In fact, it is well known in both the industry and peer-reviewed academic literature that box office revenue is affected by a myriad of both observable and unobservable characteristics (e.g. audience taste).

How does the research account for box office trends independent of the Megaupload shutdown? The “matching movies” approach taken seems to assume that the only thing that changed in terms of box office for films in the time period, covering the last five years, was the Megaupload shutdown. The authors do state that they did some testing of alternative shutdown dates, but they provide no information on how this was performed or whether this adequately accounted for other changes in box office revenue over the last five years that are unrelated to the Megaupload shutdown.  Box office trends not accounted for in the estimation and independent of Megaupload being shut down would lead to a different set of conclusions.

As currently presented, the conclusions in this abstract are not clear or compelling.  We hope that when the final paper is released, these and other related questions are addressed, and a detailed methodological description provided, so that it will be possible to interpret the conclusions presented, and evaluate their reliability.  

____________________________________________________

¹Christian Peukert, a Ph.D. student at Ludwig-Maximilians-University Munich, Institute for Strategy, Technology and Organization, and Jörg Claussen, a post-doctoral researcher at Copenhagen Business School - Department of Innovation and Organizational Economics.

²The abstract erroneously cites the academic paper “Assessing the Academic Literature Regarding the Impact of Media Piracy on Sales,” as stating that “privacy [sic] negatively impacts sales.” 

³Films that are shown on more than 500 screens are a large and important universe.  According to Box Office Mojo, the data source used, all 100 of the top 100 films, and more than 150 films in total, released in the U.S. in 2011 were shown on more than 500 screens.* Given that the total sample of movies in the study (1,344) works out to about 270 films per year, this suggests that in certain years films that were shown in more than 500 screens may actually be a majority of the sample, more than 50% of the total.  *Box Office Mojo actually presents “theaters” not “screens,” but since the Munich paper uses Box Office Mojo and presents the information as “screens” we’re using the same nomenclature. 

⁴e.g. Films showing on 500 or fewer screens.