Digital Pirates Winning Battle With Studios

By BRIAN STELTER and BRAD STONE
Published: February 4, 2009

On the day last July when “The Dark Knight” arrived in theaters, Warner Brothers was ready with an ambitious antipiracy campaign that involved months of planning and steps to monitor each physical copy of the film.

The campaign failed miserably. By the end of the year, illegal copies of the Batman movie had been downloaded more than seven million times around the world, according to the media measurement firm BigChampagne, turning it into a visible symbol of Hollywood’s helplessness against the growing problem of online video piracy.

The culprits, in this case, are the anonymous pirates who put the film online and enabled millions of Internet users to view it. Because of widely available broadband access and a new wave of streaming sites, it has become surprisingly easy to watch pirated video online — a troubling development for entertainment executives and copyright lawyers.

Hollywood may at last be having its Napster moment — struggling against the video version of the digital looting that capsized the music business. Media companies say that piracy — some prefer to call it “digital theft” to emphasize the criminal nature of the act — is an increasingly mainstream pursuit. At the same time, DVD sales, a huge source of revenue for film studios, are sagging. In 2008, DVD shipments dropped to their lowest levels in five years. Executives worry that the economic downturn will persuade more users to watch stolen shows and movies.

“Young people, in particular, conclude that if it’s so easy, it can’t be wrong,” said Richard Cotton, the general counsel for NBC Universal.

People have swapped illegal copies of songs, television shows and movies on the Internet for years. The slow download process, often using a peer-to-peer technology called BitTorrent, required patience and a modicum of sophistication by users. Now, users do not even have to download. Using a search engine, anyone can find free copies of movies, still in theaters, in a matter of minutes. Classic TV, like every “Seinfeld” episode ever produced, is also free for the streaming. Some of these digital copies are derived from bootlegs, while others are replicas of the advance review videos that studios send out before a release.

TorrentFreak.com, a Web site based in Germany that tracks which shows are most downloaded, estimates that each episode of “Heroes,” a series on NBC, is downloaded five million times, representing a substantial loss for the network. (On TV, “Heroes” averages 10 million American viewers each week).

A wave of streaming sites, which allow people to start watching video immediately without transferring a full copy of the movie or show to their hard drive, are making it easier than ever to watch free Hollywood content online. Many of these sites are located in countries with lackluster piracy enforcement efforts, like China, and are hard to monitor, so media companies do not have a clear sense of how much content is being stolen.

But many industry experts say the practice is becoming much more prevalent. “Streaming has gotten efficient and cheap enough and it gives users more control than downloads do. This is where piracy is headed,” said James L. McQuivey, an analyst at Forrester Research. “Consumers are under the impression that everything they want to watch should be easily streamable.”

Some of the first fights over video piracy on the Internet involved YouTube, the Google-owned Web site that introduced many people to streaming. Some legal disputes between YouTube and copyright owners remain, most notably a $1 billion lawsuit filed by Viacom, but the landscape “has improved markedly,” Mr. Cotton said. YouTube uses filters and digital flags to weed out illegal content.

But if media companies are winning the battle against illegal video clips, they are losing the battle over illicit copies of full-length TV episodes and films. The Motion Picture Association of America says that illegal downloads and streams are now responsible for about 40 percent of the revenue the industry loses annually as a result of piracy.

“It is becoming, among some demographics, a very mainstream behavior,” said Eric Garland, the chief executive of BigChampagne.

The files are surprisingly easy to find, partly because of efforts by people like Mohy Mir, the 23-year-old founder of the Toronto based video streaming site SuperNova Tube. The site, run by Mr. Mir and one other employee, allows anyone to post a video clip of any length. As the site has grown more popular, SuperNova Tube has become a repository for copyrighted content. On a recent day, the new movies “Paul Blart: Mall Cop” and “Taken” could easily be found on the site by following links from other sites, called “link farms,” which guide users to secret stashes of copyrighted content spread around the Web.