House of Representatives Stands Up for Creative Community Jobs with New Rogue Sites Bill

by Alex Swartsel 10/26/2011 15:25 (UTC-08:00) Pacific Time (US & Canada)

Today marks a major step forward in the fight against rogue websites with introduction of the Stop Online Piracy Act (H.R. 3261) in the House of Representatives.  Sponsored by Representatives Lamar Smith (R-TX), John Conyers (D-MI), Bob Goodlatte (R-VA), and Howard Berman (D-CA), this counterpart to the Senate’s PROTECT IP bill asks all member of the Internet ecosystem to do their part to prevent online content theft, preventing “rogue” websites from exploiting U.S. registrars, registries, Internet service providers, payment processors, search engines and ad placement services to sustain their illicit online businesses.
We joined with the Independent Film & Television Alliance® (IFTA®), the National Association of Theatre Owners (NATO), and Deluxe Entertainment Services Group Inc. in applauding the House for standing up for creative community jobs.  Here’s what our Michael O’Leary said about the bill:

“Over 2 million Americans across all 50 states earn a living and support their families in jobs connected to the making of motion pictures and television shows.  They deserve better than to see their work stolen out from under them by criminals out to make a profit.  This legislation hits rogue sites where it hurts: their access to American consumers and to the financial services they use to make money.  We want to thank Chairman Smith, Chairman Goodlatte and the other co-sponsors for standing up for good American jobs.”

Read the full press release here.

Correcting the Record on the Financial Impact of Content Theft

by Alex Swartsel 09/08/2011 15:21 (UTC-08:00) Pacific Time (US & Canada)

A recent post on Pajiba, picked up by Techdirt, Afterdawn and others, has misconstrued data on the financial impact of content theft.  We wanted to take a minute to correct the record. 

A 2007 study conducted by economist Stephen Siwek and published by the Institute for Policy Innovation (IPI), “The True Cost of Copyright Industry Piracy to the U.S. Economy,” found that “copyright piracy from motion pictures, sound recordings, business and entertainment software and video games costs the U.S. economy $58.0 billion in total output,” among other harms including hundreds of thousands of foregone jobs and billions lost in earnings and tax revenues. 

It’s incorrect to assert, as Pajiba does, that “according to the MPAA, piracy cost them $58 billion last year, making movie piracy a bigger industry than the GDPs of 10 American states.”  The IPI study, conducted in 2007, covers the copyright industry, which is not only to the film industry but a number of industries that rely on intellectual property protection, including music, packaged software and video games.  To ensure this is crystal clear, we’ve revised our fact sheet to define the copyright industry covered by Siwek’s study; the fact sheet now reads “$58 billion in economic output is lost to the U.S. economy annually due to copyright theft of movies, music, packaged software and video games.”  See here for the updated version, also linked from our rogue sites webpage.

For the same reason, it’s also incorrect to claim that “[a]t $10 per DVD, every household in the United States would be buying an additional 50 DVDs per year if they weren’t so busy downloading,” and then to extrapolate that because our research has found that 13% of American adults have ever downloaded or watched movies or TV shows illegally, this means we assume every person who engages in content theft would otherwise have purchased 200 DVDs each year. 

This line of reasoning is inaccurate in several additional respects.  First, Siwek’s research for IPI covers the cost of copyright theft to the US economy as a result of content theft occurring around the world, not solely by users in the United States.  Second, the IPI study covers both the cost of online theft and “hard goods piracy,” such as bootleg DVDs and CDs.  Third, the IPI study focuses not on lost sales due to content theft, which is the analogy Pajiba makes, but on output loss, which is the full impact of such theft, including on retailers and industry suppliers elsewhere in the economy.  

Tech Execs Should Read the PROTECT IP Act Before Attacking It

by Alex Swartsel 09/08/2011 14:24 (UTC-08:00) Pacific Time (US & Canada)

There’s a theme in the series of letters that we’ve seen so far from collections of people opposed to the PROTECT IP Act, including today’s message from tech executives: they convey sweeping, generic concerns that, compared with the actual language of the bill, seem completely unfounded. 

Today’s letter announces: “[W]e fear that if PIPA is allowed to become law in its present form, it will hurt economic growth and chill innovation in legitimate services that help people create, communicate, and make money online. … the bill will create uncertainty for many legitimate businesses and in turn undermine innovation and creativity on those services.” 

Yet as we outline below, PROTECT IP “in its present form” is actually very carefully and narrowly written to make clear that the last thing it is intended to do, or will do, is harm legitimate businesses operating in good faith.   

PROTECT IP’s Definition of Infringing Sites is Anything But “Vague”
Asserting, without proof, that the bill’s definition of infringing sites is “vague” doesn’t make it so.  This letter gets it wrong right off the bat by beginning its argument with “Legitimate sites with legitimate uses can also in many cases be used for piracy” – while that’s unfortunately true, the PROTECT IP Act simply does not apply to legitimate sites. 

In fact, the PROTECT IP Act is, intentionally, so narrowly focused that it covers only websites whose sole purpose is to provide or point to stolen content.  The bill’s definition of an “Internet site dedicated to infringing activities” states:

“the term `Internet site dedicated to infringing activities' means an Internet site that has no significant use other than engaging in, enabling, or facilitating the reproduction, distribution, or public performance of copyrighted works, in complete or substantially complete form, in a manner that constitutes copyright infringement … or is designed, operated, or marketed by its operator or persons operating in concert with the operator, and facts or circumstances suggest is used, primarily as a means for engaging in, enabling, or facilitating” infringement (see Section 2(7), emphasis ours).

It’s clear that this definition is meant to apply to the Pirate Bays of the world, not the Twitters or the LinkedIns or the FourSquares.  And it’s difficult to see how such a definition will be “ripe for abuse” when any entity pursuing an action under this bill, whether it’s the Department of Justice or a private creator – will have to prove to a federal court that a given website meets that description before anything else happens. 

“Burdens for Smaller Tech Companies” Are Largely Imaginary
 The letter claims that PROTECT IP would require its signatories to make “costly changes to their infrastructure, including how we remain in compliance with blocking orders on an ever-changing Internet.”  But this overlooks protections set out in the PROTECT IP Act precisely to mitigate such costs, including language requiring information location tools to take only “technically feasible and reasonable measures” to comply with the Act. 

Further, a read through the text of the bill shows that fears of “possible liability” are almost surely baseless.  The letter totally overlooks PROTECT IP’s very, very strong legal protections for service providers and other entities in the Internet ecosystem that are called upon to take action under this bill.  There are three worth pointing out (all emphasis ours): 

  1. Internet entities and their employees who take steps “reasonably designed to comply with [the bill] or reasonably arising from [a court] order” are granted immunity from suit and from liability. 
  2. Entities cannot be held liable for “any actions taken by customers of such entity to circumvent any restriction on access to the Internet domain instituted pursuant to this subsection.” 
  3. Entities cannot be held liable for “any act, failure, or inability to restrict access to an Internet domain that is the subject of a court order issued pursuant to this subsection despite good faith efforts to do so by such entity.”

The bill permits plaintiffs to ask the court for injunctive relief only if an entity “knowingly and willfully fails to comply” with a court order, not in instances of good faith efforts to comply.  This is a high, high bar for plaintiffs to meet.

This sentence from the letter is telling: “Legitimate services already do their part by following the notice-and-takedown system of the DMCA.”  One way to think of the PROTECT IP Act is as a badly-needed companion to the DMCA – because so many rogue sites are based overseas, and do not comply with DMCA.  The two measures are in much the same spirit.

More of the Same Discredited Arguments on Internet Security
The letter also repeats arguments we’ve heard before suggesting that the bill would somehow undermine the architecture of the Internet – many of which have been debunked here and here, and to which we’ve responded here.  It’s clear that this bill would have no negative impact on the Internet.

Clearly this letter got its facts badly wrong.  But in the end, what’s even more troubling is its blithe assertion that “[t]here are certainly challenges to succeeding as a content creator online, but the opportunities are far greater than the challenges, and the best way to address the latter is to create more of the former.”  Tell that to a filmmaker like Jason Stall or Ellen Seidler, who fight for every dollar they raise to finance their films and then have to fight again to try to stop content thieves from draining their earnings away. 

Certainly the opportunities created by new platforms are immense – but those new platforms and services will never reach their full potential, nor serve creators as they should, if they are forced to compete with thieves.  Legislation like PROTECT IP is the right approach to protect content online.

Don Henley on Content Theft in USA Today

by Alex Swartsel 08/22/2011 07:36 (UTC-08:00) Pacific Time (US & Canada)

Songwriter and Grammy-award winner Don Henley is speaking out in support of the PROTECT IP Act with an op-ed in USA Today, posted online yesterday.  In particular, Henley expresses concern at a push to exempt search engines from the bill:

"Search engines, including Google, already make filtering tools that block references and links to websites featuring pornographic and other content considered unsuitable or offensive. The technology is there, but the will of some companies is not. It seems that their real agenda is to avoid the loss of advertising, 'pay per click' and other revenue if these sites were shut down. After all, Google is reportedly bracing for a $500 million fine for doing just that ?— accepting untold advertising dollars from illegal online pharmacies.

"Proposed solutions aren't radical; they are common-sense extensions of current legal powers. As with other federal crimes, authorities have the ability to seize ill-gotten gains along with the tools used to commit the crimes. But most criminals register their domain names overseas, forcing U.S. law enforcement officials to play a frustrating online cat-and-mouse game. In order to take down these illegal sites, they need cooperation from U.S. Internet service providers and search engines. American firms can and should block these criminal sites, and U.S. ad networks and credit card companies should cut off money going to them. The 'Protect IP Act' would give law enforcement the tools to accomplish this goal."

Read the rest of Henley’s column here.

Stealing Isn’t Saving II

by Alex Swartsel 08/16/2011 06:57 (UTC-08:00) Pacific Time (US & Canada)

My post from the end of last week responding to a GigaOm NewTeeVee piece suggesting that economic instability would trigger a rise in online content theft, which GigaOm generously asked to republish, generated interesting follow-ups on both TorrentFreak and Techdirt.  I had a couple of thoughts I wanted to share in response.

Both enigmax’s post for TorrentFreak and Mike Masnick’s for Techdirt argue that I misunderstood the original post, written by NewTeeVee co-editor Janko Roettgers, which was “simply reporting a simple fact” (as Masnick put it) that “people who have the ability may choose to reduce their TV and movie bills in times of hardship” (as enigmax euphemistically put it).

In other words: movie and TV theft is inevitable.  Why?  Because it’s easy to steal something that, in physical form, exists only as data, and easy to justify stealing it as a result?  Because information wants to be free, no matter the cost it took to produce or its creators’ judgments about how best to disseminate it?  Because anything is fair game once it’s on the Internet?   Because if I rip a movie file off of a DVD or camcord a showing at a theater, I have created that movie with my own labor and can do whatever I want with the file, including posting it online and making money from ad sales or subscription fees?  Because by stealing films and TV, or watching stolen films and TV, I’m just exercising my First Amendment rights to freedom of speech?  All those are arguments we’ve heard before.

Mike Masnick wrote that we need to “adapt and deal with reality,” and actually, I think he’s right – depending on which reality we’re talking about.  Is it the reality that the Internet and the explosion of mobile technology have opened up vast new ways for us to communicate with one another and for film and TV-makers to offer their work to people who want to watch it?  Because as Julia blogged last month, there are “more options than ever before to get movies and TV shows online safely and legitimately” – we have a list on here, and the creative minds in our industry are working on even more as we speak. 

Is it the reality that some people do steal content online?  Unfortunately, it’s clear that’s true – otherwise we probably wouldn’t be having this conversation.  But do “many, many people” really intend to engage in theft just to watch a movie or TV show cheaply or for free?  We doubt it, particularly if legitimate, better alternatives are available; if they know it’s wrong; and if they understand it’s not a victimless crime. 

Efforts are underway on all of those fronts, both here at MPAA and across the country.  One major reason we published that list of authorized online sources is to make it very clear which sites are okay, because some rogue sites that seem to go out of their way to appear legitimate could surely confuse people who aren’t as familiar with where to go for movies and TV online.  A major benefit of our new agreement with Internet Service Providers is that it will help consumers get more information about why copyright is important and the impact of content theft.  And new organizations like Creative America are bringing together the people whose work goes into making films, TV, and other creative works to help make sure they have the opportunity to speak out about how content theft affects them – check out this post by Jessica last week with a video offering just a few examples.

But if what Masnick means is that we need to throw up our hands and look the other way while people who had nothing to do with making a movie or a TV show steal and profit from it, that is a reality to which we do not care to adapt, period. 

We Correct the Record on the PROTECT IP Act

by Alex Swartsel 08/16/2011 06:38 (UTC-08:00) Pacific Time (US & Canada)

Check out Michael O'Leary's column in Monday's The Epoch Times, responding to errors in a story last week on the PROTECT IP Act.  Contrary to suggestions in the article, Michael pointed out that the bill is very narrowly-tailored and includes strong due process protections.

Michael also argued that the Times missed the larger point:

The simple fact is that any business whose products are stolen is less able to invest in new products, new innovations, and new jobs. If film theft leads to fewer productions, that has a real effect on the economy and on employment for many, many people who work in the creative industries. And it also means fewer movies and TV shows for all of us to enjoy.

In the end, the purpose of the PROTECT IP Act and other efforts around the world to fight film and TV theft is to preserve our ability to make those films and TV shows in the first place. Losing that is too high a price to pay.

Click here to read the full piece.

“The Information that Wants to Be Free Always Belongs to Someone Else”

by Alex Swartsel 08/15/2011 09:51 (UTC-08:00) Pacific Time (US & Canada)

Robert Levine, the author and former Billboard executive editor, had two insightful articles published over the weekend, in The Guardian and Wired, exploring the interdependencies between the creators who produce information, art, and other content, and the people and platforms that distribute it online – and what that means for copyright. 

His bottom line is that generally, everybody who produces things of value – whether it’s the creators who make movies or music or TV shows or the engineers who write software and build technology that makes that content available more quickly – needs to be able to earn some kind of return on their work in order to keep doing it.  That’s finally the problem with the “information wants to be free” argument, about which Levine comments in both articles; in his words in Wired, “[t]he problem is that the cost of distributing information has very little to do with the cost of creating it.”

The labels and studios that invest millions in music and movies want to maintain a market for their products. But ISPs and technology companies know their own products will have more value if they can offer that content at a lower price, by tolerating piracy or using it as a bargaining chip to negotiate deals. On the internet, the information that wants to be free always belongs to someone else.

More along the same lines, from Levine’s piece in The Guardian:

It seems obvious, but an information economy needs a functioning market for information. Traditionally, that market was created by copyright, but those laws haven't been enforced effectively online. This helps companies such as YouTube build businesses on the backs of creative professionals.

Certainly, copyright laws need to be updated for the digital age. Many reformers say they favour protection, but view any attempt to enforce it as unacceptable. This doesn't make sense: a market can't be based on voluntary payments, and laws don't work if they can't be enforced. There needs to be some penalty for illegal downloading, although slowing the access speed of a lawbreaker makes more sense than cutting their account entirely. By the same token, why should internet users be allowed to access sites that clearly – and that last word is important – violate UK law? If the UK simply declines to enforce its laws online, it will leave many of its businesses vulnerable as the internet becomes more important to commerce in the years ahead.

As pressure builds to enforce copyright law online, technology companies and the activists they support have started to argue that any attempt to block pirate sites will "break the internet", as though it were an iPhone teetering on the edge of a table. The truth is that the internet is broken already: it's simply too chaotic to provide the infrastructure for a 21st-century economy. This has to change, before newspapers and film suffer declines like that of the music industry. Technology companies have long lectured creators on the need to adapt to a changing digital world. It would be a shame if they couldn't heed their own advice.

Both of Levine’s columns (online in The Guardian and Wired) are worth reading in full.

Stealing Isn’t Saving

by Alex Swartsel 08/12/2011 10:47 (UTC-08:00) Pacific Time (US & Canada)

The disappointing thing about Janko Roettgers’s post for GigaOm’s New TeeVee section yesterday is its casual promotion of the idea that stealing movies, TV shows and music is a perfectly acceptable way to save money. 

Roettgers writes at length about recent changes in online video offerings, but his real point is this:

“The U.S. credit ratings downgrade, tumbling stocks and international instability have made not just financial analysts nervous this week.  Consumers are also starting to wonder whether we’re about to enter another recession. Whenever that happens, people start to tighten their belts and cut unnecessary expenses — like paying for movies and TV shows. … With memories of the housing slump still fresh, many people could simply return to BitTorrent and download movies for free instead of going to the movies or paying for VOD.” (emphasis ours)

There’s no question that when people aren’t certain about their finances – because they’re worried they or someone in their family will lose their job, or the prices of gas or other essentials will rise significantly – they change how they think about expenses and spend money.  But if Roettgers had written that financially insecure families will shoplift clothes from a department store this fall to save on back-to-school costs for their children, he would be laughed out of the proverbial building, right?

T-shirts and jeans aren’t made out of zeroes and ones, at least not yet.  But just because movies and TV shows and songs can now be packaged and distributed as data, not just as film reels or vinyl records or DVDs, and can be acquired or distributed with a few clicks of a mouse, doesn’t mean that the labor and time and money that went into making them is any less meaningful. 

We doubt many people will subscribe to the kind of intellectual dishonesty that suggests that it’s fine – or really, that it’s inevitable – to steal as a way of saving.  But it’s troubling that by suggesting that stolen content available on rogue sites and elsewhere is just another substitute good, Roettgers is tacitly arguing that content theft is legitimate and socially acceptable.  Truth is, it’s neither. 

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