FSC Digital Symposium: The Morning Panels

Bob Preston
UNIVERSAL CITY, Calif. — Getting along in a world of piracy was the chief theme during the morning panel discussions at the Free Speech Coalition's symposium, "How To Survive and Thrive In The Digital Environment."

"We live in a world where people believe that everything they see on their computers and TVs is free for the taking," said FSC Executive Director Diane Duke during her opening remarks. Duke went on to say that in order to curtail content piracy in this new era, producers and businesses must "dig deep into their innovation and creativity."

Kelly Truelove of Truelove Research led the morning's first panel, "Technology Show and Tell – Copyrighted Content's Best Friend or Worst Enemy?" A longtime consultant for plaintiffs in piracy cases, Truelove emphasized the layered nature of online piracy, guiding the audience through the many websites, applications, files and search engines that make possible the current world of online piracy.

For example, Truelove noted how the first generation of online piracy was simple – typically, one site housed a selection of pirated content – but then Napster marked the second generation of piracy, which brought other users into the fold of sharing pirated content.

The current generation of online piracy – the torrenting generation – involves no fewer than five different layers of websites and applications that work in tandem to give consumers the power to download as much potentially copyrighted content as they want. When video-sharing sites are added to the mix, the result is a web of piracy that involves all kinds of computers – and people.

Katherine A. Fallow, a lawyer with the firm Jenner & Block, noted the difficulty in proving guilt in a case against any one of the websites or entities involved in the current world of peer-to-peer file sharing. She and other panel members said that plaintiffs have to show that the offending websites are in some way encouraging consumers to pirate content – an idea she referred to as "inducement."

"Inducement can be as obvious as an invitation sent out by a website that offers pirated content, but you don't always have that smoking gun," she said, later adding that if a site organizes its content into categories like "Hollywood movies," that can be a sign of inducement.

All of this poses a big problem for adult – and mainstream – entertainment professionals who want to make money from their content. All Media Play President Jeff Mullen has called content piracy, which he simply calls "theft," the biggest problem facing the adult industry today – bigger than 2257 regulations.

What's an adult producer to do? Truelove said that companies are taking plenty of steps to enforce anti-piracy, including something called "digital fingerprinting," which adds a tell-tale bit of code to a media file that can then be matched against a central database of copyrighted content to identify movies or songs that have been pirated illegally.

Truelove said that two of the first companies that offer digital fingerprinting services are VobileInc.com and Auditude.com.

The morning's second panel continued the anti-piracy theme in a discussion titled "To Sue Or Not To Sue, Or What's To Gain?" Jenner & Block Lawyer Steven B. Fabrizio led a discussion that stressed the importance of pursuing legal action against piracy even in the face of the layered, ever-expanding network of pirating sites described in the morning's first panel.

EMI Music's Alasdair McMullan agreed that litigation is necessary, even when it's not popular.

"[Anti-piracy litigation] is bad for the consumer, but we've got our backs against the wall," said McMullan, who acts as EMI's executive VP of legal affairs. "We have no choice." McMullan elaborated on the idea that anti-piracy lawsuits are bad for the consumer, explaining that they simply make some content more difficult to acquire.

As for who to sue, the panel mostly agreed that producers and content providers should sue soon and sue small.

"Usually we'll go after sites that are on the smaller side to cut off the piracy at the source," said Harvey W. Geller, deputy general counsel and senior vice president of business and legal affairs for Universal Music Group. McMullan agreed, noting that sometimes large companies have to file lawsuits against aggregators, distributors and sometimes even people who invest in sites that traffic in illegal content.

Titan Media General Counsel Gill Sperlin continued the theme of going after even small sites, arguing that content pirates often start with small sites, loading their fledgling sites with free porn to draw in web surfers.

According to the panelists, the silver lining in all this is the possibility for reform. Sperlin noted that his company has sued three user-generated video-sharing sites, and that in the aftermath, the sites have changed their business models and started monitoring what content gets uploaded to their servers.

The panelists also argued that when it comes to how the operators of video-sharing sites monitor their content, it's an all or nothing game. The panelists cited various video-sharing sites as examples of the legal problems that arise when site-runners filter out some "bad" content – like porn – but not all – like copyrighted movies.

"Filtering a little doesn't protect you," McMullan said. "Either you filter a little or you filter a lot." XBIZ noted this legal conundrum in a previous article.

But more than vigorous litigation, the panelists argued that the consumer attitude toward piracy has to change from the bottom up.

"It's important to marginalize sites that handle pirated content," Fabrizio said. "That way it'll feel like you're trafficking in stolen property."

That sentiment carried over to the morning's final panel, which asked "Is Mainstream Entertainment Making Any Money In This New Environment?" Michael B. DeSanctis, also of the Jenner & Block law firm, led this discussion, which centered on the need for reform on the business side of the equation.

For example, David Ring of Universal Music Group said that the best way to stop consumers from pirating content was to "be everywhere where our consumers are." That means offering more ways for consumers to get high-quality content quickly and in whatever format they want. This solution isn't perfect, the panelists conceded.

"The growth of digital media isn't yet offsetting the overall drop-off in physical sales," said Lawrence A. Kanusher, senior vice president of legal and business affairs for Sony BMG Music Entertainment.

But despite that disparity, the panelists pointed toward the success of video-sharing sites like Hulu.com, which offers nothing but licensed content that's delivered alongside modest amounts of unintrusive advertising.

The panelists later touched on this idea again, emphasizing the importance of aggressively licensing content while simultaneously educating consumers on the value of buying non-pirated content.

"Make sure consumers know where to get this content," Kanusher said, while Dean C. Garfield, executive vice president and chief strategy officer for the Motion Picture Association of America, suggested a place to provide the content.

"Portals and aggregation points are the next step for content delivery, especially on the movie side," Garfield said.

The panelists proposed other solutions as well, with an emphasis on the need to be able to monetize content at any level of participation and at any time. Ring noted the importance of making one-click purchases available to consumers at all times.

But Ring also noted the hazards of teasing consumers with actual content samples, a problem that plagues the music industry more than the film industry. With movies, people can download individual scenes or trailers for movies, whereas in music, entire songs are sometimes given away as promotional enticements.

"Don't give away the product you're trying to sell," Ring said. "It's not like giving away a sample of fruit juice, where someone will try a glass and then go and buy more juice. You can't sell the same content to the same person again and again. We should ban the word 'promotion' from the building."