Thieves Like Us

Music piracy is rampant and virtually unstoppable on the internet and when broadband services come, movies may become just as easily available for free. How can the film industry protect its interests and who will be the winners if it fails, asks Danny Birchall

It's three years from now. Walking through your local shopping centre, it seems that the internet home-shopping revolution has failed to take hold: the mall is packed, and even Marks & Spencer is having something of a renaissance. Except for one thing - you can't seem to find anywhere to buy or rent a video. No Blockbuster, no Virgin, no HMV. When you return home, you turn on your computer-cum-home-entertainment system, connect to the internet and download something to watch for the evening. It costs you nothing. The network of friends you used to swap videotapes and DVDs with has been replaced by a much larger community of people with whom you anonymously trade bootlegged digital films.

Today the above scenario is merely science fiction. The online trading of pirated digital movies is far from easy or commonplace. Crawling along the internet with a standard 56k modem makes it a nightmare hunt through illicit websites where pornography and illegally hacked copies of Windows and Word swim alongside that elusive copy of Mission Impossible 2 split into several sections, each to be downloaded separately. It's a community of geeks, and the websites have that boyish feel of testosterone and boasting. But with the coming of broadband internet access to the home market (typically up to 10 times faster than the best previously available) and the invention of easier tools for sharing files, within two years downloading pirated copies of your favourite films, long before they appear on VHS or DVD in the UK, could be a reality for the casually interested internet surfer.

Musical shares

Recent events in the music industry indicate where the future for film might lie. A piece of software released last year, called Napster, has been phenomenally successful. Napster allows users to trade digital music files called MP3s, which have been extracted from compact discs, anonymously online. You can download tracks directly to your own computer's hard disk while other users online at the same time can upload directly from your library of files. An entire music collection can be compiled for nothing. The jury is still out on the ultimate effects of this on recorded music sales: initial reports suggested that sales in US campus areas were plummeting, as students with access to fast university networks acquired their music for free, while more recent research indicates that Napster users are in fact more likely to buy CDs than anyone. Regardless, both individual recording artists and the recording industry, under the aegis of the Recording Industry Association of America (RIAA), have launched anti-piracy lawsuits against Napster, and the fate of the company (in its own right a capital-hungry dotcom) hangs in the balance. But already pundits are predicting that the era of the overpriced CD is at an end and that the music industry will have to find new ways to make money from its artists, perhaps through performance. Some artists such as Limp Bizkit have signed promotional deals with Napster itself, 'giving back' free concerts to their fans. Courtney Love railed against the music industry at a Digital Hollywood conference in May, arguing that record companies steal more from artists than Napster users ever can. "Since I've been basically giving away my music free under the old system," she said, "I'm not afraid of wireless, MP3 files or any other threats to my copyrights."

Before too many parallels between recorded music and the moving image are drawn, it's worth remembering that the film industry is a very different beast. Even films with a large initial cinema exhibition are dependent on video sales and rental to recoup their huge marketing costs: the UK video retail and rental market combined was worth £1.38 billion in 1998, compared to a total box office of £515 million. Distributors can't afford to rely on exhibition alone for profits. And film-makers have even less control over their product than musicians: without the studio, the film doesn't happen. Nevertheless, it looks like widespread internet piracy of movies is definitely on the cards. "The genie is very firmly out of the bottle for the music industry," says David Lowe, director of the UK's rights-enforcement agency the Federation Against Copyright Theft (FACT). "[It] is in the neck of the bottle for the film industry and it's going to require a very determined effort to keep it in."

Digital piracy: a step-by-step guide

Ironically, it's the film industry's own move into digital technology which has made digital motion-picture piracy possible. Digitally encoding from a videotape is a messy and expensive business. A DVD, on the other hand, is already digital so you need only to extract and reformat the video and audio from it to make it available to as many people as can access it. Using no more than a powerful desktop PC, a video hacker will insert a DVD and using a simple utility called DeCSS 'rip' it, stripping the video file of the codes that normally ensure the disc can be played only on an authorised DVD player. Using a number of different tools s/he then isolates the video and audio before recombining them into a highly compressed format known as a DivX file, based on the MPEG-4 video compression method. Finally, many hackers add their own extra title screen before the movie itself, indicating who cracked and encoded it.

The result is a video file that is of VHS quality but takes up a fraction of the space a film does on a DVD. After checking that the file plays, the hacker then places it on his/her hard disk where it can be accessed by others using the Napster-like file-sharing systems Scour and Gnutella or hides it somewhere on a website where it will have a short life before the owner of the system discovers it and deletes it. Those who download the file will place it on their own hard drives or websites so that others in turn may copy it. Encoding the file takes time, but sharing it can be done without thinking, and it's in this way that a pirated piece of video, like a knocked-off Britney Spears MP3, can spread through the internet like a virus. "DivX has a lot going for it to become the number-one medium for pirates," says Lowe.

Internet video hackers are unlike the traditional VHS cassette-distributing pirates FACT describes in its publicity as "often involved in drug peddling, pornography, forged currency, theft and even terrorism." Like Napster users, they trade for the pleasure of trading and collecting; unlike Napster users, the community is still small enough to be personal, and 'leeches' who download without uploading will find themselves excluded. "The only personal gain one gets from doing this is access to others' movies. A person who never shares any movies doesn't make other people want to share their movies with him," says video hacker MaCaBrE, who's ripped and converted about 25 movies and distributed them "throughout the community". Another hacker, ascully, who converts "porn, blockbusters, etc.", says, "There's no personal gain, just people come to respect you for your sharing ways." (Tracking down and speaking to video hackers wasn't hard - leaving a couple of messages on the bulletin boards where they swap details of freshly uploaded films enabled me to make contact with people who were prepared to answer questions about hacking. It was more difficult to get the technology itself working, to install all the pieces of software necessary to watch the first shaky frames of John Singleton's new Shaft.)

To infinity and beyond

You may well ask, haven't we been here before? While the film and television industries panicked over the introduction of the home video recorder in the 80s, it proved eventually to be a financial boon in providing a platform for video rental and sell-through. Taping films from the television hasn't damaged the video-rental market: surely digital piracy will have a similarly limited effect?

Two things make digital piracy crucially different. The first is that digital copies are themselves perfectly copiable. A third-generation VHS tape is practically unwatchable: each time a copy is made some of the information is lost and the picture and sound become degraded. By contrast a digital file can be copied an infinite number of times and each copy remains indistinguishable from the original. While home-based tape-to-tape copying takes as long as it takes to watch the tape, new digital copies can be spawned and transmitted instantly. Lowe thinks that as such it constitutes "a very, very significant threat to the film industry... the second-generation product is just as good as the first-generation product - it's identical."

The second difference is that the internet creates new social networks. Video cassettes and other similar media have to be physically exchanged between friends, usually in a social context. The circle of friends with whom you can swap pirated tapes is only as large as your social life. But the internet opens up connections between anyone online at the same time. As the ferocious popularity of Napster proves, people get online to get something they want, and in the process form communities of shared interest regardless of geography. Digital movie piracy is in its infancy and has the excitement of a frontier - its participants are pioneers. Being the first to convert and make available a new film brings kudos. And there's also a sense of camaraderie and shared adventure. "Most of the people who make up the scene are incredibly generous and friendly," says MaCaBrE.

The industry fights back

The global film industry is preparing for war against such generosity. That digital piracy is a threat is no longer in doubt. The question is how to fight it on a battlefield where new technologies are emerging faster than distributors are accustomed to; the hope is that while it might be too late for the music industry to avoid the consequences of Napster, the film industry can defeat the spectre of piracy before a sufficient number of homes have broadband internet access to make it a serious problem. A three-pronged strategy is emerging.

The first prong is legal. Led by the US industry body the Motion Picture Association of America (MPAA), lawsuits have been launched against companies and organisations alleged to be providing the tools that facilitate piracy. Scour, a company that produces a Napster-like interface which allows the sharing of DivX and other multimedia files as well as MP3s, was named in an MPAA lawsuit in July. A longer-running lawsuit against websites making available the DeCSS program (and even the makers of a t-shirt displaying the code) was decided in August in favour of the MPAA, to the outrage of free-speech advocates who argued that computer code counted as personal expression and therefore qualified for First Amendment protection. The defence has appealed, and like the Napster case, in which the company was ordered to shut down its servers and then won a reprieve from the injunction on appeal, the suits look as if they'll go on for a while. But the industry is staking a considerable amount on them. It's also clear that, in taking on the people who make piracy possible rather than the pirates themselves, the MPAA recognises that digital pirates are untargettable.

The second prong is technological: if distributors can come up with reliable ways of protecting their output against piracy, then the internet will be transformed from an amorphous threat to a vast new market for moving-image product. While DVD protection proved laughably easy to crack, far more complex encryption technologies are available. Jack Valenti, president and CEO of the MPAA, predicts that within nine months motion-picture companies will be able to put their product safely out on the internet; if it can't be cracked in the first place, it can't be traded. Others are not so sanguine. "Hackers are just too good to be beat," says MaCaBrE, with the kind of bravado you'd expect. But even Lowe is forced to admit that, "I don't think we will be able to defeat piracy by technology."

The third prong is structural: the move to the simultaneous global release of movies. As the internet breaks down national barriers, the segmentation of markets embodied in the regional encoding system for DVDs is becoming increasingly anachronistic. Global release takes the thrill and profit out of having a movie available on video in Asia in the week of its US theatrical release. The ability to purchase online the always preferable Region 1 DVDs from US-based internet shops is also making a nonsense of regionalisation. Globalisation may not, however, save regional markets already beset by traditional piracy. In April Hong Kong cinemas closed their doors for a day in protest at the burgeoning piracy of local features which has caused box-office receipts to more than halve during the 90s.

Together, these three strategies might just win the day for the industry. The elite hackers will doubtless survive, swapping movies through private channels, while Napster and Scour are silenced and pay-per-stream technology is made easy and cheap enough for pirated films to be irrelevant to the ordinary punter. MaCaBrE himself says that in the arena of DivX trading, "Most people are just too stupid to figure out where to find the movies, or are too closed-minded to try." As with traditional piracy, the distributors' ultimate aim is to make piracy just hard enough to deter most people from attempting it: to keep the honest guy honest.

Honesty is not a policy

The trouble is that, given the chance, the honest guy isn't very honest at all. The shock that Napster brought to the music industry was that if it costs nothing, people will take it. The outrage Madonna and Metallica displayed when they realised their fans would quite happily continue to be fans without paying for their CDs is salutary. It's likely that film fans, alienated as much as they are attracted by the circus of publicity and cash that surrounds the launch of every major movie, will feel the same way about the stars they nominally worship.

If any feeling lingers that this is a marginal debate, something of interest only to geeks who are prepared to watch a two-hour film on a computer monitor, you have only to recall that from BSkyB's interactive initiatives to BT's broadband home connections, we are constantly being sold the seductive idea of 'convergence'. Networks of all kinds, we are told, from cable television to the internet, are going to become part of one integrated moving-image experience. If the companies who currently own and control the films we want to see are going to rein in the apparent anarchy of the internet and make it part of the global media marketplace, then they are going to have to work hard to ensure that the right customers pay for the right products. The stakes are very high indeed.