Our industry doesn’t get it at all. And I am talking about top executives down to secretaries.  I am talking about directors to craft service people.  Unfortunately, this is our (DGA) No 1 priority…But within our own members, they just don’t quite understand how serious this is…Hollywood is filled with very famous and successful people…And, we are really famous for our causes.  We care about things.  We step out, and we have our pet causes…The point is when we care about things, we back it with our money and we speak out.  The problem is nobody in this community speaks out about the threat that is actually happening in our community.  And, if we let this threat continue, they will not have the money to contribute to these causes.

The remainder of the article is mostly dedicated to the proposition that the problem stems mostly from the internet.  Mr. Johnson states that government should control the internet to protect the business models of the content providers.  He feels that the bill passed in the Judiciary Committee giving the Justice Department new powers to shut down “rogue” web sites is a good thing.

I beg to differ.  Controlling the internet is not the answer.  The internet should be used for the free expression of ideas and for the free sale of goods and services.  It should not be used for the illegal spread of copyrighted material.  Everyone agrees with this.  But, shutting down sites without due process of law is a bad thing.  It is one more step towards government control of the media and the creating of a de facto communist state.

What should actually be done is what was done to turn Napster into a legal entity.  The court system should be used in the manner for which it was created.  Criminal actions should be brought against illegal web sites.  Civil actions should be brought against those that sell and those that buy copyrighted material illegally.  It worked against Napster in the past and it has worked against numerous other web sites as well.

Under no circumstances should anyone’s property be taken whether it be a web site or more traditional forms of property upon the whims of the Justice Department; especially one under the control of the leftist Eric Holder.  (I wouldn’t even want someone on the right to have that power either.)  The 14th Amendment to the Constitution guarantees everyone due process of the law.  This is not archaic law.  This is law that makes sense.  Let’s not chip away at our Constitutional right just because a problem exists.

And, to emphasize piracy is definitely a problem.  According to the International Motion Picture Association, $6.1 billion was lost by the major motion picture companies to piracy in 2005.  If you include the worldwide motion picture industry which includes independents, the number rises to $18.2 billion.  Mr. Hackford is correct about one thing: if this is not stopped, there will be no motion picture industry left and no more rich Hollywood elites to support their various causes.

However, according to the same study, only 38 percent of that piracy, although a big number, is from Internet sales.  The remainder is from the sale of hard items such as DVDs.  The biggest offenders are:  China where 90%, Russia where 79%, and Thailand where 79% of all estimated sales are lost because of piracy.  I can confirm this about Thailand personally as any movie can be bought on Thanon Sukhumvit, a main street in Bangkok, usually one week or more before it is theatrically released in the United States.  And, to make matters worse, the quality of these pirated DVDs, is not bad.  In some cases, it is as good as commercially available legal DVDs.

But, that’s not the whole problem.  It is not limited to developing nations.  Twenty percent of all piracy according to the above study was directly from the United States.  Again, it is not difficult to find pirated DVDs in downtown Los Angeles or on Canal Street in Manhattan.  And, again, the quality is usually pretty good.  The days of the video being captured by some pirate in a movie theatre with a handheld camera appear to be gone.  The piracy is going on in the labs.  And, I’m sure, for the most part, it is the labs in the United States and probably Los Angeles; the same labs that we entrust with our intellectual property.

And, let’s even take it one step further; here are some additional facts according to the same study:

• $5.5 billion in lost annual earnings among U.S workers
• 141,030 jobs lost
• $837 million in lost annual tax revenue
• $20.5 billion in lost annual output to all U.S. industries

And, this was all in 2005 when Facebook was merely a year old and most of us had not even heard of it.  If Facebook now has over 500 million members, imagine how these numbers may have grown in five years.  Please note that I am not stating that Facebook has anything to do with piracy.  I am only stating that if Facebook has grown by the numbers it has, imagine how much the potential reach of piracy, both internet and otherwise has grown during the same period.

I can state for a fact that it has affected the way we do business in the independent world.  Watermarking delivery items to specific buyers is now common place.  Screeners are not sent out to the media without careful protections in place.  Day and date releases worldwide are now commonplace not only for the major studios but for the independents as well.  This alone increases costs geometrically as you can no longer ship used prints overseas when the American release is finished.  You must now make prints for delivery all over the world even to the smallest countries.  In return, licensing fees have gone down in smaller countries because more of the capital expenditures must go to the cost of making prints than to the copyright holder.

So, in conclusion, the problem is very prevalent.  It may eventually lead to the end of the motion picture industry as we know it.  Mr. Hackford, the director of many great films, may have become a soothsayer.  But, regardless, more government control is not the answer.  Due process and the Constitution must not be ignored.  Let the court system handle the problem.  Keep our freedoms as the Founders intended.

That’s not to say that we’ve all stopped believing in creators’ rights or that we no longer think piracy is a real problem.  On the contrary: the creative economy depends on creative rights.

We all understand the demand for easy access to inexpensive content, and the people who produce that content – artists, movie makers, journalists, musicians, songwriters and more – are eager to deliver it. But, as it turns out, they want their rights to be respected.

Unfortunately, some consumers get confused about the difference between demand and entitlement. A recent TechDirt screed illustrates this entitlement mentality.  Writing about Joel Tenenbaum, who was sued for pirating and distributing songs online (a jury found that he had willfully infringed copyrights and awarded a judgment far larger than had been asked), Mike Masnick wrote:

“Tenenbaum’s actions robbed no one. No one has a “right to be paid for their work.” You have a right to try to convince people to buy, and the RIAA and its labels FAILED in convincing Tenenbaum to do that. But that’s the market at work. Today for lunch I may pick the deli rather than the pizza shop next door. Based on the RIAA’s logic here, I have just “robbed” the pizza place of its “right to be paid” for its work. There is no right to be paid. Only a right to try to convince people to buy.”

Of course, Tenenbaum did choose not to buy the music.  But that didn’t seem to stop him from taking it anyway.  He just chose to take it without paying for it.  And then he let other people take it, too. To most of us, a marketplace gives the consumer the chance to buy a product or not.   But, apparently, in the pirate’s world, the way the “market” works is that you get a choice between buying and stealing, as if the two are equally valid options.

Let’s cut the nonsense out of his analogy: Tenenbaum didn’t choose the “deli.”  He wasn’t even interested in the free samples that the “pizza shop” offers.  He wanted a bunch of full slices of pizza, and when he thought no one was looking, he took them.  The way Masnick tells it, if you don’t create something that people want to buy more than they want to take for free, it’s your own fault:

“Deserving to be paid for your work and a nickel gets you five damn cents. You earn money by offering something in the marketplace that people want to buy. You didn’t do that.”

So, apparently, Joel Tenenbaum is simultaneously a “consumer” and somebody who rejected what the music industry offered.  And yet…

“You made the conscious decision to declare war on your best customers.”

I’m not sure in what regard Tenenbaum could be considered one of their “best customers.”  It was my understanding that customers paid for things.  That puts a fat asterisk on statements like this:

“The idea that not giving money to the RIAA somehow means less music will be brought to the public is laughable. It’s not a fact, it’s pure propaganda. Thanks to these same new technologies that the RIAA has tried to kill off, it’s easier than ever for bands to create, promote and distribute music. And because of that, there’s more new music out there than ever before.”

It’s true, now that the technological barriers have dropped so far, musicians are giving away tons of songs for free!  And yet, Joel Tenenbaum didn’t choose to download one of those songs.  He wanted something that was more valuable to him… though, apparently, not so valuable that he would pay for it.

Musicians often give away their content for free, most of them with the expectation that they’ll be repaid in other ways.  Some of those models – for instance, giving the music away for free and making it up with concerts or merchandise – do well for some artists (though, it’s hard to see how a songwriter makes money in that model).  That’s their right, and creators should be free to choose their business model.

But for those creators who don’t want to give tracks away for free, it’s high time for pirates and their enablers to stop rationalizing theft by imagining that they’re somehow doing their victims a favor.

Creators have a right to be paid in exchange for their work, if they make it a condition of using their work, just as pizza makers can require you to pay them before they give you their pizza, and just as car rental agencies can require you to only use their cars in specific ways while in your care.

Lawsuits may not be the solution to getting broader respect for these intellectual property rights. That solution really is going to be found in new technologies and new business models.

But let’s be honest in the meantime: Piracy is not just another consumer choice.  It is theft.