July 29, 1999

Online Piracy: From Music to Film

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Illegal Copies of `The Phantom Menace' and Other Films Are Gaining a Wider Audience Online

By STEVE WILSON

ne recent Friday evening, an employee in a small New York new-media company enjoyed his own private screening of "Austin Powers: The Spy Who Shagged Me." The film's sound fell somewhere between hollow and muffled. The picture, washed out and slightly murky, looked like a videotape copy of a public access television show.

	Norman Y. Lono for The New York Times
	A pirated copy of "Star Wars Episode I - The Phantom Menace" plays on a home PC. Online piracy has attracted the attention of movie studios.

But the one-man audience wasn't too disappointed, considering that he didn't pay to see the film in a theater; he had downloaded and played a pirate version on his desktop.

"I'm not going to see this in the theater -- it's funny, but not that funny," said the employee, who asked that his name not be used because, by downloading an illegal copy of the "Austin Powers" sequel, he is breaking copyright laws and he does not want to incur the wrath of the film's producers.

What made his private screenings possible was MPEG, a digital file format for compressing and playing video and audio that could be to the movie industry was the MP3 format was to the recording industry. MPEG (named for the Motion Picture Experts Group, which developed it) also makes it possible to swap video files, including illegally copied versions of current films, over the Internet. MPEG's of pirated films are created from illegally obtained copies; the digitized files can then be played on a computer with MPEG-player software like Quicktime or Windows Media Player and "burned" on a recordable disk called a VCD.

Movies like "Summer of Sam," "Eyes Wide Shut" and "American Pie" have been made available online within days and sometimes hours of their release. (Pirates also swap online copies of films that have been released on video or DVD, although they are less popular than first-run films.) Some films, like "The Blair Witch Project," appeared illegally on the Internet before being released in theaters.

MPEG technology is obviously of great interest to Hollywood. The Internet aside, movie pirating costs the seven major American movie studios about $250 million domestically and $2 billion to $3 billion internationally. The Net could add a lot to the tally as cable modems and other high-speed connections become more plentiful, making the proliferation of illegal video copies easier.

"The fact that movies can be disseminated digitally on the Internet, illegally, is a serious concern," said Gordon Radley, president of Lucasfilm, producers of "Star Wars: Episode I -- The Phantom Menace," perhaps the most widely pirated film to date. "Our copyright laws have been there since the time of the Constitution.

Just because there's a new technological advancement doesn't change things in any way."

Taking a lesson from the music industry's initial caught-in-the-headlights approach to MP3, the Motion Picture Association of America plans to move quickly to stop the illicit trading. For the most part, MPEG pirates are not making money from putting films on the Internet. They do it for one-upmanship and bragging rights. Web sites like ISO News (http://www.nytimes.com/library/tech/99/07/circuits/articles/#1) and Dupecheck ( www.dupecheck.com) review the pirates' releases and gossip about their exploits as if they were celebrities (the sites do not offer pirated material for downloading).

No hard figures exist on the number of pirated films or the pirates who make them. According to the founder of Dupecheck (who goes by the on-screen name Werner & Tardy), there are 2,000 to 2,500 "elite" traders -- pirates who regularly upload and trade films. But the Dupecheck site itself is now receiving as many as 30,000 hits a day, which could be a sign that interest in online film copies is set to explode.

As with MP3, video piracy could expand from a geek hobby to a real business. Anyone with a VCR, a computer and an MPEG encoder card or external adapter, which can cost as little as $250, can become a mogul in the counter-Hollywood of pirating.

Already, a Web site called VCD-Import, based in Britain, sells VCD copies of current films like "The General's Daughter" and "Wild, Wild West" for $5 apiece. The founder of VCD-Import, who would identify himself only as Paul, wrote via e-mail that he gets 750 to 1,000 orders a day.

"I am well aware it is illegal in the U.K. to sell such items," Paul wrote. "But it is simply business and keeping up with the demand for VCD's." He said British authorities have pressured his payment provider to turn over customer information.

The MPEG digital format poses another threat to the movie studios.

Digital pirate versions of films first appeared on covert IRC (Internet Relay Chat) channels and private FTP networks in early 1997. Typically, they were produced from copies of the original film, either made with camcorders smuggled into theaters or the more prized "screener" tapes intended for movie executives and reviewers. Many are simply filmed by someone with a digital videocamera smuggled into the theater. Video pirates then convert these duplicates into MPEG-1 files of 500 to 600 megabytes apiece, which are compressed and chopped into 15- to 20-megabyte morsels with archiving software to ease the download.

Even then, downloading a movie can still take from two hours to two days depending on the file size and bandwidth constraints on either end. The employee who viewed the new "Austin Powers" movie first had to retrieve it: even with a T-1 line, the film, which weighed in at 876 megabytes when reassembled, took seven hours to download.

There are 15 to 20 groups, with names like Eviliso and VCD-Europe, that are regularly found on pirate Web sites. (Eviliso digitally brands its copies with a letter Z that appears in the corner of the screen.) The groups tend to distribute their goods through "couriers" who often have little direct contact with them. From their large FTP sites, these middlemen pass the data along to friends and carefully screened acquaintances who move them further down the trough. Like the pirates, the couriers do this largely for bragging rights, not money.

"It requires a tremendous amount of time online and lots of dedication," a courier said by e-mail. He estimates that he spends 6 to 10 hours a day at it, "but at the moment, I don't have anything better to do."

After a few days, the files make their way to IRC, the chaotic collection of chat channels where VCD aficionados loiter to see who has a movie, game or other software they are willing to trade. Pirated "warez" of all sorts are the currency of this virtual economy, and there is lots of business for the person who has the latest and best copy of the "South Park" movie or any other downloadable flavor of the moment. Eventually some of these files make their way to Web sites, although that makes the distribution easier to trace, so the links don't generally last too long.

What brought online pirate films to wider attention was a digital bootleg of George Lucas's "Phantom Menace" that began circulating soon after the film's theatrical release.

A lawyer from Lucasfilm sent cease-and-desist e-mail letters to several suspected pirates.

Digital Skulduggery Pirated copies of films are harder to make than pirated music files. And because of their large size, they are harder to download from the Internet. But the arrival of faster Internet connections could increase the traffic in illegal film copies. •  The film is copied by smuggling video cameras into theaters or illegally obtaining industry tapes. •  The duplicate is then converted by a computer into MPEG-1 files of up to 600 megabytes, which are compressed and broken up into smaller files of 15 to 20 megabytes and made available on the Net. Some copies are also made on video disks called VCD’s. • The pirated film can then be downloaded and played on any computer with MPEG player software, although the downloading times can be very long. VCD copies are also traded and sold through Web sites and computer fairs.

"Society as a whole must accept and agree that online piracy is not going to be allowed, and it will be punished," Radley said.

According to the co-founder of ISO News, who goes by the online name Krazy8, the e-mail from Lucasfilm scared away some pirates and couriers. Those who still operate are keeping a lower profile: access to their IRC channels and FTP servers is by invitation only and requires passwords.

But the publicity surrounding Lucasfilm's action also brought in a horde of new people interested in downloading the film. "Since Lucasfilm made such a stink about it, I would bet there is at least a 50 percent increase in the amount of people who are trying to and may have downloaded a pirated version of 'The Phantom Menace,' " Krazy8 wrote in an e-mail interview. "He brought huge light into something only a few knew about."

The fact that most movie pirates are not making money from their activities means little where copyright is concerned. Paul Goldstein, a professor at Stanford University Law School who specializes in copyright law, said that anyone guilty of copyright infringement could face criminal charges as well as civil action.

"We're talking about it being a felony," Professor Goldstein said, adding that first offenses are punishable with up to five years in jail and financial restitution. "You can imagine how something like 'The Phantom Menace' being distributed over the Internet can pose huges losses to the distributor."

The Motion Picture Association of America's Internet piracy division has asked Internet service providers to shut down a handful of pirates and is working with the Federal Bureau of Investigation to take further action against others. Richard Taylor, vice president of public affairs for the association, conceded that pirates would eventually overcome any technological safeguards built into movies to prevent pirating. But by pursuing the traders, he said, the organization intends to "change forever the perception that piracy is a low-risk and high-reward proposition."

"I think those who would choose the illegal route would hopefully think twice before doing so," Taylor continued, "because of our attempts to find you and take every action at our disposal to discourage you from continuing that activity."

The viewer of "Austin Powers" mused that Hollywood would be better off capitalizing on the success of pirated MPEG versions. After watching that film, he loaded an MPEG of the new independent film "The Blair Witch Project" from his hard drive.

"I can't wait to go see it in the theater," he said after watching a few scenes.

The pirated version of "The Blair Witch Project" has generated a tremendous buzz in trading circles. The viewer wondered whether the filmmakers themselves put a copy online. "Do you really think this has never happened?" he said. "Small-budget independent filmmakers couldn't buy the hype that 'Blair Witch' has been enjoying from word of mouth on the Internet. Is it out of the question for a studio to 'misplace' a reviewer copy and it magically appears as the copy floats all around the VCD pirate scene? Makes you wonder."

Mark Curcio, chief executive of Artisan Entertainment, which distributed "The Blair Witch Project," said that while the company marketed the film extensively on the Internet, it did not intentionally leak a copy. He said that he suspected that the pirated version was made from a screener copy that made its way around Hollywood and that Artisan has sent out warnings to suspected copyright infringers.

But Curcio added that he could see the day, once encryption and other protection is in place, when studios would use MPEG's to transmit their products legally, much as the music industry has taken to online music in answer to the challenge of MP3. Last April, Artisan used streaming video to show its film "Pi" in a pay-per-view window through Sightsound.com, a site that offers streaming music and authorized movies.

"It was an interesting experiment," he said. "We didn't get a lot of people buying it, but I think we learned a lot. The fact that the technology is there to do it and the marketplace -- albeit from an economic standpoint, still very, very small -- that, in the future, it can certainly be a viable business."

Taylor of the M.P.A.A. said that before Hollywood can effectively use the Internet to distribute films, it must first educate its audience. "We want people to realize that just because it's on the Internet, it's not all right for people to steal."

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Related Sites
These sites are not part of The New York Times on the Web, and The Times has no control over their content or availability.

• ISO News

• Dupecheck