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Article # 3
Online film
piracy cuts into industry profit (Subscription based news)
BOOTLEG COPIES BEING TRADED AT INTERNET SPEED
By Dawn Chmielewski
Mercury News
The release of the summer's first blockbuster movies has sparked an
unprecedented frenzy of film piracy, sending nearly 10 million people
online to download bootleg copies of ``Spider-Man'' or ``Star Wars:
Episode II -- Attack of the Clones.''
Even as box-office sales soar -- with the top 12 movies grossing a record
$193 million over the four-day Memorial Day weekend -- Internet film
piracy is growing even faster, according to a new report from Viant,
a Boston-based researcher specializing in digital entertainment. As
many as 400,000 to 600,000 illicit copies of films are downloaded every
day -- a 20 percent increase over a year ago.
``It's getting clear -- alarmingly clear, I might add -- that we are
in the midst of the possibility of Armageddon,'' said Jack Valenti,
president and chief executive of the Motion Picture Association of America.
The film industry has kept a wary eye on online piracy since Napster
popularized file-swapping three years ago -- and made it possible for
millions of strangers to freely exchange billions of bootleg songs.
A new generation of file-swapping services -- including Morpheus, Kazaa,
Limewire and iMesh -- has allowed computer users to find and trade movie
files with similar ease.
But the brisk trading of big-budget, high-adrenaline films like ``Spider-Man''
and ``Star Wars'' represents a new high-water mark in film piracy, Viant
says.
The twin blockbusters appeal to ``the right demographic'' -- primarily
adolescent and 20-something males -- and come at the right time -- the
end of the school year -- to ignite a powder keg of online piracy, said
Andrew Frank, Viant's chief technical officer.
Much of the activity is on Internet Relay Chat -- a sophisticated network
of servers that requires users to know pass codes and basic code language
and offer something to barter as the price of admission. Traffic on
IRC swelled to 2.5 million users, about five times the norm, Frank said.
IRC is considered a place where hard-core pirates hang out and swap
wares.
The vast majority of the bootleg activity, however, is occurring on
well-known file-swapping sites.
At its peak, Viant estimates nearly 10 million computer users scoured
IRC, Morpheus, Kazaa and other online services for pirated copies of
``Star Wars'' and ``Spider-Man.'' Indeed, traffic spiked 300 percent
during the weekend of May 11, when trading of grainy, jerky illicit
``cam'' versions of the films -- captured by a video camera at pre-release
screenings -- became widespread.
That doesn't take into account file trading done directly over instant-messaging
services provided by America Online, Yahoo and Microsoft; or on college
campuses, where a single bootleg copy sitting on the campus network
could potentially serve thousands of students.
Valenti worries that digitally pilfered film copies -- packaged into
file sizes that can fit on and be burned to a standard CD or DVD, then
traded, shared or sold -- will not only undercut box-office sales, but
erode the lucrative rental market.
``Only two out of 10 movies ever get their money back from theatrical
exhibition,'' Valenti said. ``Eight out of 10 have to go to airlines,
to hotels, to Blockbuster, to HBO, then to basic cable -- to get their
money back. If you are ambushed in the early days of your theatrical
exhibition, the chances of you recouping in a world that is mostly broadband
would be very, very different.''
Frank estimates only one in four people who attempted to download illicit
copies of these movies were successful. ``Star Wars,'' for instance,
comes in four separate files -- ranging in size from 70 million to 180
million bytes of information each -- requiring more than six hours to
download over a high-speed Internet connection.
And in the case of Morpheus, where a user simply enters a search term
such as ``Spider-Man,'' one doesn't always get what was expected --
the movie can be mislabeled, blank or missing audio.
It would be easier, and less painful, to stand in line and buy a ticket
at the theater, Frank said.
``The fact that people are doing this, despite how challenging and frustrating
it is, really does indicate there's a whole lot of demand,'' Frank said.
``We hope this will encourage Hollywood not only to try to take combative
measures to shut it down, which is certainly a worthwhile pursuit of
theirs, but to try to address demand by accelerating their licensing
of content for online distribution.''
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