Hollywood Comes to Brooklyn

Catchy title, no?

Today, Al Perry, Vice President of Worldwide Content Protection and Outreach at Paramount Pictures, came to BLS to talk about movies, piracy, and the Internet. He spoke for about 40 minutes, and then Jason Mazzone offered comments. Next, we had about 30 minutes of spirited discussion with BLS students. I’m writing up my notes about the experience here:

Perry opened by noting that one has to articulate a problem before seeking to solve it, and he refers to the problem as “content theft.” He pointed out that copyright law gives creators the right to monetize their creations, and that even if people like Louis C.K. decide not to do so, that’s a choice and not a requirement. Perry contrasted the focus in France with HADOPI, and here with SOPA and PROTECT IP, on peer-to-peer applications with Paramount’s greater worries regarding cyberlockers. P2P, he said, is simply harder to use. (Paramount, however, measured 68 million P2P downloads of its content in 2011.) Not all cyberlockers are problematic, he said, but the ease of use and seeming legitimacy of the “rogue” ones is worrisome. He stated that a number of cyberlockers altered their functionality after the MegaUpload indictment and arrests, including reductions in payments to users who post content that is popular to download.

Unlawful sites, such as Novamov, often display ads from legitimate companies such as Google (Chrome) and GlaxoSmithKline (Nicorette). Perry said that Paramount tries to work with advertisers to refine insertion rules (which define where ads can be placed, and under what circumstances), and suggests firms that can help them verify ad placement. He noted that some rogue sites prominently display banners stating they’re certified by McAfee, although some merely use screen shots of the certification logo. McAfee, though, screens for malware, not unlawful content. Microsoft, though, has apparently taken down Pirate Bay links due to malware infections. For Paramount, malware and consumer safety is a significant concern, because their business models depend on Internet delivery. (During discussion, Perry was pressed on this point, and conceded that SOPA / PROTECT IP didn’t reflect this concern in their drafting.)

While he said he didn’t want to get into copyright math, Perry noted that the number of films released by the six major motion picture studios has dropped from 204 in 2006 to 134 in 2011. (I’m fascinated by this – in my Grey Album article, I found no effect from revenues on films produced, but my data only went from 1973-1993. See pages 384-86.) He suggested that online infringement affects ancillary (post-box office) revenues, which isn’t captured in rosy reports of ticket sales. Perry said he doesn’t believe that infringement will wipe out content – rather, it will shift it. We’ll see more small-budget or amateur films, and fewer major studio films. These movies, he suggested, are the iconic ones that people remember and reference, so piracy may have an important cultural impact.

Moreover, he pointed out, film production generates revenues for local economies. “Transformers 3” (nominated for 3 Oscars!) spent $126 million on-site, including $1.7M for Gary, Indiana (presumably no film employees were murdered during that time), $13.3M for Detroit (I wouldn’t even suggest zero murders there), and $4.3M for Cape Canaveral, Florida. Infringement affects other industries, too, from software (Rosetta Stone) to pharmaceuticals to counterfeit auto parts and military equipment.

The response to infringement from Paramount has a number of facets (parentheticals are my observations):

  • Business models: Paramount seeks to put content on as many platforms as possible – his slide listed over 200. These include the new lovefilm.com, along with CinemaNow, Vudu, and UltraViolet. UV in particular represents a new approach – Paramount is going directly to the consumer, and allowing buyers to lawfully share content with others in their household.
  • Technology: Perry listed DRM, filtering, watermarking, search and takedown under the DMCA, and the cool-sounding Pirate-eye night vision goggles.
  • Education: 35 states have a curricular requirement to each copyright ethics (including Arizona, California, and Massachusetts), although not all of them require that it be tested. He noted the role of the Copyright Alliance in providing educational materials (the Brooklyn Law Incubator & Policy Clinic is working up its own set), and pointed to the role of public service announcement campaigns that try to educate consumers about the effects of piracy on them — for Paramount, the primary concern is cyber-safety.
  • Outreach: this is the Al Perry road show. He’s going to law schools, film schools, technology firms, and (eventually) venture capital firms. (It is not clear that he can scale without cloning, but we’ll see.)
  • Legal: in 2011, Paramount served 40 million DMCA notices, and saw 9.7M takedowns. It’s clear the studio is frustrated by the lack of effect they perceive from takedowns. The MPAA (not including Paramount) sued Hotfile, alleging Grokster-style secondary liability – in part, because Hotfile failed to filter uploads. (In discussion, it was pointed out that 17 U.S.C. 512(m)(1) specifically provides that service providers don’t need to filter.) The Obama Administration’s IP czar, Victoria Espinel, has been responsive to the IP industries’ concerns (there’s an understatement – she’s Hollywood’s poodle), and Obama’s State of the Union Address mentioned piracy by China.

Perry finally discussed SOPA and PROTECT IP. From Paramount’s perspective, these were proportionate measures targeting foreign sites and providing for a measure of due process, although he acknowledged the shortcomings of the bills in the latter area. He views the OPEN Act as unworkable: it is impractical for content owners of limited means; the ITC lacks the copyright expertise of the federal courts; the ITC is slower; it often requires consultation with government officials; and it fails to address the ease of finding content via search engines (it’s not clear why 512(d) isn’t enough here).

Jason Mazzone delivered a concise and insightful set of comments. He began by noting that words matter: Perry used “content theft,” but Jason uses (and I use) “infringement,” which is not only the term from the Copyright Act, but acknowledges critically that IP rights are not absolute. He pointed out that Perry had not discussed fair use, or other limits on copyright. Jason suggested that educational materials represented a potential area for collaboration, and pointed to an example in Copyfraud where in MPAA educational materials, Lucky and Flo, the DVD-sniffing dogs, state that unauthorized acquisition of copyrighted materials is “piracy.” (It’s bad enough that the MPAA is tone-deaf, but lying to kids seems really indefensible.) Better-balanced educational materials (like BLIP’s) could helpfully address infringement by younger users.

Jason pointed out that Perry hadn’t delivered a justification for giving content industries new enforcement tools: there was no adequate documentation of social harms or costs from infringement. If malware is the worry, noted Jason, we can probably find ways to deal with that without enrolling content owners or adding to the Copyright Act. He also pointed to the worrisome trend, first under the DMCA and then under SOPA, to move to private adjudication, where decisions about legality of material are made by private (and interested) parties, rather than through the judicial system. As Jason discussed, even where judicial review is available, it is the exception and not the norm. Moreover, such systems may slight important First Amendment interests.

Finally, Jason described the trend of shifting costs of enforcement onto intermediaries, and asked why we should move the burden from content owners to search engines or ISPs. (In discussion, Perry stated that intermediaries are part of an “ecosystem” that supports infringement, and suggested they profit from it. This was one of his weaker moments.) And, who guards the guardians? Who keeps a check on copyright owners, to keep them from squashing fair use – in particular, given that content industries feel so aggrieved about the current state of affairs?

Perry responded briefly. He noted that Paramount wants to give fair use “a wide berth,” and that their core concerns are about commercial-scale violations of the reproduction right – full downloads of their films, not uses of clips and such. He conceded that SOPA and PROTECT IP aren’t drafted that way. And, he said he hears about Lucky and Flo a lot.

The discussion was impressively thoughtful and civil. The students evinced skepticism about the movie industry’s good faith and bona fides, particularly given the drafting of SOPA / PROTECT IP, and also given the recording industry’s history of suing its users. Perry pointed out that Paramount is trying hard to make content available widely, cheaply, and easily, and that the only other way of altering the reward calculus to users is to engage in enforcement against end consumers, which no one likes. He was repeatedly puzzled by the attitude of law students that infringement isn’t a big deal (since it’s unlawful), particularly when this attitude is justified by reference to movie industry profits. He kindly stuck around afterwards to talk with students individually.

I’m grateful to Perry for coming to talk with us. Dialogue on this topic is always good, and it’s important to hold it in lower-stakes and lower-volume arenas than Congressional hearings. Also, it’s hard to walk into a room knowing that you are facing a highly skeptical audience. Perry struck me as thoughtful and reasonable. He’s obviously more focused on enforcement, and sees the risk to the industry as greater, than I am. The industry plainly has to get beyond seeing infringement as theft, even if it feels that way for Hollywood – that tack is simply not availing them. We haven’t seen the last of SOPA and PROTECT IP, but if negotiations involve people like Al Perry rather than the standard MPAA hacks, I feel much more confident of a sensible resolution.

6 Responses to “Hollywood Comes to Brooklyn”

  1. […] Info/Law » Hollywood Comes to Brooklyn – […]

  2. […] remarks had completely ignored limitations on copyright such as fair use. According to an account by Mazzone’s colleague Derek Bambauer, Perry responded by saying that Paramount “wants […]

  3. […] remarks had completely ignored limitations on copyright such as fair use. According to an account by Mazzone’s colleague Derek Bambauer, Perry responded by saying that Paramount “wants […]

  4. […] few weeks, he’s been to the University of Michigan, the University of North Carolina, Yale, Brooklyn Law School, the University of Virginia (UVA).  Next month, at least, he will be able to stick close to […]

  5. […] few weeks, he’s been to the University of Michigan, the University of North Carolina, Yale, Brooklyn Law School and the University of Virginia (UVA).  Next month, at least, he will be able to stick close to […]

  6. […] Brooklyn Law School to discuss online piracy, copyright and the future of the movie industry. See Professor Derek Bambauer’s post on Infolaw.com for a detailed recap. Perry is touring law schools and other institutions as a part of a campaign by the major movie […]