Black market - The studios are crying theft, but their pleas of poverty don't add up. Boyd Farrow investigates
With the passing of the Family Entertainment and Copyright Act this month, the Motion Picture Association of America is celebrating "another valuable tool to fight movie theft". In sound-bitten America, the lobbying body for the Hollywood studios considers the word "theft" more emotive than "piracy", even though its members shamelessly compare film pirates to terrorists and copyright infringement to rape. Crying theft casts Hollywood as a victim of crime, whereas demonising pirates suggests merely that it is engaged in a cut-throat retail battle.
Hollywood claims it is being robbed of roughly $3.5bn a year - almost all of it down to counterfeit DVDs overseas - and that its very future is under threat. But the powerful studio system's pleas of piracy-induced poverty do not add up. While its lobbyists refuse to reveal how much Hollywood makes on DVD sales overseas, the industry privately admits that they represent the fastest-growing part of its business. According to the British analyst Screen Digest, the home entertainment arms of Hollywood studios last year raked in $11.4bn of the $24.6bn spent outside the United States on buying and renting DVDs and videos. The studios might be indignant about plundering counterfeiters, but when they are making money this quickly, they cannot claim to be hurting.
In any case, the riches that Hollywood squeals it is losing to pirates are as mythical as Blackbeard's buried treasure. For one thing, the studios wrongly assume that all those who buy a dodgy DVD for a couple of quid would be prepared to pay four times that amount to see the film at a cinema. For another, the evidence suggests that illegal DVD sales do not damage cinema revenues. Take, for example, Disney's 2003 hit film Finding Nemo. It grossed more than $300m at cinemas outside the US in the ten weeks following its DVD release Stateside. With eight million copies of the DVD bought on the day of release alone, any number of cut-price knock-offs could have been distributed around the world. Even though DVD sales trumped the US box office for the first time in 2003, cinema revenues are still rising. If legitimate DVD sales do not dent box-office takings, why should illegitimate ones?
Hollywood claims that if the black market were wiped out, the theoretical billions in saved losses could be ploughed back into making better films. This is an even crazier notion: if a movie takes an extra £200m at the box office, the already inflated salaries of its stars would simply rise proportionally, and the studio's head of marketing might get a bigger muffin basket come the holiday season. All the evidence suggests that increased revenues would not trickle down very far. In 1996, before homes had DVD players, US consumers spent $6bn buying videos and $9.2bn renting them, with the studios taking in 75 per cent of sales and 20 per cent of rentals. Last year, consumers spent almost $15bn on buying DVDs. Despite this huge windfall, the studios have refused to change a 23-year-old arrangement by which most actors, writers and directors receive only a fraction of a penny from each DVD sale. The threat of piracy is a mightily convenient smokescreen, but Hollywood accountancy has always baffled, infuriated and, occasionally, impoverished artists, a situation hardly helped by most film studios shoving fiscal results for their movie and home entertainment divisions into one opaque category called "filmed entertainment".
Even the moral arguments against buying counterfeit DVDs backfire when confronted with the realities of Hollywood. The dizzying salaries and perks given to the star performers, for example. Or the $100m marketing campaigns for bad films already bloated with tie-ins and product placement. Or the film budgets falsified to fleece distributors. Or the billions spent on developing regional DVD systems that customers do not want. Or the amount that Disney was willing to pay its president Michael Ovitz for terminating his contract: a thousand dollars for every failed minute of his 14 months in the job.
There is some irony in the stance that the studios are taking towards piracy. After all, Hollywood is in California rather than New York because pioneer movie-makers outran Thomas Edison and his motion-picture camera patents. In a way, those downloading films from the internet - a growing practice that Hollywood claims costs it another $850m a year - offer a similar defence. The college kids whom the Motion Picture Association of America is clobbering with lawsuits point out that if it hadn't been for Napster, we might not have the iPod; without online "sampling", fewer people might visit cinemas.
Hollywood is less a victim of crime than a victim of its own short-termism. It would do better to invest more in delivery systems that consumers do want than in developing a second-generation DVD they don't want. But then, as one Hollywood executive cheerfully explains, "there's no point. We can rip the arse out of DVD for another three years."
As Colin Brown, editor-in-chief of the UK film trade paper Screen International, says: "Hollywood should be tackling the chief cause of piracy - high pricing - as urgently as the profiteers. People who buy illegal movies are bargain-hunters, not shoplifters. Downloaders are willing to buy songs for the right price, if they can play them wherever and whenever they want.
"There is a lot to learn from the pirates' business model, but Hollywood needs to get its own business in order first."
Post this article to
We want to encourage people to comment on our content and to exchange views with other readers and hope this will be done on a courteous basis. However, if you encounter posts which are offensive please let us know by emailing comments@newstatesman.co.uk and we will take swift action where necessary.
