Film piracy exercises a profound psychological as well as financial effect on the development of digital platforms. It is the elephant in the room in all discussions. A frequently quoted MPAA study of the 2005 market, suggests US studios are losing about $6.1bn to piracy - and $2.3bn from online piracy.

Film piracy exercises a profound psychological as well as financial effect on the development of digital platforms. It is the elephant in the room in all discussions.

An MPAA study of the 2005 market suggests US studios are losing about $6.1bn to piracy - and $2.3bn from online piracy.

But big numbers can be counter-productive. Firstly, they are open to considerable debate; while the $6.1bn is now frequently quoted, it was subject to long argument about its methodology at the time.

Secondly, counting the cost of piracy in vast sums of money arguably accentuates the idea that one individual criminal act is just a drop in the ocean - perhaps even a victimless crime.

The estimated costs are also limited to the studios, which can give the impression that theft has little effect on the independent business.

For the day-to-day distribution of the average small arthouse title, that's probably the case.

Piracy is a mass media business preying on success, not looking for new or niche talent.

But the increasing prevalence of both high-quality camcorders, the easy means to distribute online and the growing popularity of file-sharing means it is unlikely that independents can depend on a hiding place.

Piracy also penalises success by making any film that breaks into a broader market, a bigger target.

Answering the challenge of piracy, however, is far from simple.

Physical piracy - the backstreet sale of DVDs - in some ways was more straightforward than online crime.

There are a clear set of bad guys, leading at the top to organised crime. What's more, it is relatively difficult to avoid the knowledge that buying a pirate DVD is wrong: it at least requires one person to have direct interaction with a low-level criminal selling it.

Making the link between the street-seller and the major criminal enterprises has been one of the big aims of industry publicity campaigns.

Most piracy remains in physical goods, particularly DVD. The UK, for example, is second only to the US in black market distribution of discs, according to the Federation Against Copyright Theft (FACT)


But illegal downloads are catching up fast: the Motion Picture Association (MPA) estimates that member film companies lost $2.4bn in 2005 to bootlegging, compared to $2.3bn lost through file sharing.

Research from marketeer IPSOS in 2006 showed physical piracy was decreasing in the UK. However, between 2005 and 2006 there was a marked rise in the average number of illegal downloads that consumers own, increasing from 8 to 14.8 per person.

Peer-to-peer file sharing (P2P) is the technology that has allowed online piracy to flourish and it has been an increasing problem for music and fi lm industries since the late 1990s.

It works by connecting people who download files directly from each other.

Someone probably paid for the initial file which means for many such behaviour is a moral grey area, another step removed from crime.


Stamping out piracy is one of those grand ideas that falls apart as soon as the issue is examined.

Like the so-called wars on drugs and terrorism, victory is a remote possibility and even a less ambitious policy of containment is a tall order.

Closing down one gang, often leads a gap in the black market for another enterprising criminal.

DVD piracy though may well decrease over the coming years anyway simply because crime follows the market and the consumer for demand for DVD is itself slowing down as new media such as video on demand take hold.

And online piracy, theoretically, has some advantages for those combating crime. Most obviously, the consumer access goes through a gatekeeper service in an internet service provider (ISP).

Make the ISP responsible for the behaviour of customers and there is a real chance of taking out a significant proportion of the criminal activity.


The idea however fell early on a Europe-wide basis when in January 2008 the European Court of Justice (ECJ) ruled that ISPs could not be obliged to release customers' personal data during civil legal claims raised by copyright owners.

The point was settled in a legal action taken by Promusicae, a Spanish musical and audiovisual producers' organisation, against the Spanish Telecoms giant, Telefonica. Click here for more.

Promusicae went to court on the basis that Telefonica customers were breaching copyright rules by illegally downloading audiovisual files using the peer-to-peer programme, KaZaA.

Promusicae applied to the Spanish courts to force Telefonica to disclose the identities and contact details of its internet customers where the IP address, date and time of connection were known. The Spanish Court then approached the ECJ to clarify the position.

The ECJ ruling in favour of Telefonica states that current EU rules on intellectual property and the protection of personal data 'do not require the member states to lay down an obligation to communicate personal data in order to ensure effective protection of copyright in the context of civil proceedings.'

However, the Court did acknowledge that the ruling raised the issue of reconciling different fundamental rights - in this case, the right to respect for private life and the right to protection of property.

Consequently, the ECJ has concluded that EU Member States should strive to strike 'a fair balance' between the two when applying the relevant EU Directives.

The confl ict between these two basic principles is only relevant to civil proceedings. Under criminal law, privacy protection is clearly less guaranteed.

The ruling sits uneasily with current EU proposals to promote the distribution of film and other creative content online.

Commissioner Viviane Reding of DG Information Society and Media has stated that she sees the protection of copyright as the 'cornerstone' of the European Commission's approach in this area.

Individual countries may pursue their own legal approach to ISPs but given the international nature of the business, it is likely that the main result will be further fragmentation of an already confused legal map in Europe.


What piracy does do is put pressure on the industry to find legitimate alternatives and that's not just a technology issue.

It is important to get this in perspective - piracy remains a hugely dominant influence in music which legal services can only dent.

What can be done - as Apple's iTunes has shown - is to ensure that those willing to pay can do so easily and at an accceptable level of pricing.

Apple hasn't remotely stamped out piracy but it has found a pressure point where x% of customers feel a disincentive to crime.

Even in the enforcement world, there is frustration at the lack of progress in providing legal services.

But the potential for online commerce soon comes crashing into vested interests in the existing business.

Though most exibitors deny a clear link, the most obvious way to reduce the financial damage is to close the window between theatrical release (when criminals most frequently copy the film) and DVD release.

It is in the three-to-four months that is the standard window between theatrical and DVD release, that pirates make their killing.

In 2007, cast members of Bond film Casino Royale were stunned to be offered pirate copies of the film at the Chinese premiere - but speed to market has become the pirate's chief competence.

The problem is that closing the windows is fiercely opposed by exhibitors.

In 2006, the dispute went so far as the boycott of a film, when Fox clashed with exhibitors over the release of Night At The Museum over when the DVD could be released.

The hypothesis that closing the window does have an effect on box office was tested in a piece of UK Film Council-commissioned analysis, though inconclusive. The study suggested that the three-month window was not having an effect but reserved judgement on what would happen if the gap was closed still further.

Given that the only way VOD channels are likely to be able to charge very high premiums is through close to day-and-date release with theatres, and given that pirates aren't going away, a windows clash seems inevitable.