Hollywood hates pirates, but can it use them?

Director Michael Moore's Sicko is coming off a glittering debut weekend at the box office. This despite the documentary's availability on the Web for the past two weeks--distributed widely over the Internet by file sharers who violate copyright law. Prager, a Washington, D.C.-based copyright attorney, was asked whether those who downloaded the movie could have helped ticket sales by spurring word-of-mouth sales.

"No, no, no, no," Prager seethed. "This is depressing. We're not seeing a rise in the peer-to-peer influence market. Anything positive they may bring is instantly canceled. These guys aren't just spreading their opinions. They're spreading the actual movies."

Ever since Sicko first appeared on the Web, CNET News.com has tracked the film's presence online and asked whether file sharing depresses ticket sales. Some in the file-sharing community hold that pirates often stir interest on the Web that migrates to the physical world in the form of ticket sales. The response from Hollywood studios is largely: we don't need thieves to help us market our films.

Online piracy is apparently becoming a priority to Hollywood, as the transferring of large digital files becomes less time-consuming and the quality of viewing improves. Already, billions of dollars are lost to illegal file sharing every year and the losses are certain to grow, according to the top U.S. movie studios.

So what can be learned from the Sicko controversy?

It is believed that tens of thousands of copies of Moore's documentary about the health care industry were downloaded without authorization during the past two weeks. The movie has also gone up on YouTube and Google Video, and was viewed by thousands before being removed. As the movie played on theater screens across the country this weekend, the film returned to Google Video and was watched more than 2,000 times.

Nonetheless, the movie opened in 441 theaters on Friday and earned an estimated $4.5 million for the weekend. That was good for ninth place at the box office. Pixar's Ratatouille was No. 1 with an estimated $47.2 million haul.

What is encouraging for Sicko's producers, the Weinstein Co., is that while the movie opened on relatively few screens, it averaged $10,204 per theater, according to a story in The Hollywood Reporter. The industry publication reported that only one other movie this weekend topped Sicko's per-theater average: Ratatouille, with $11,987.

If Moore's film has been harmed by file sharing, the damage is hard to find.

"File sharing has been going on for years now and yet the movie industry continues to see record profits and revenues," said Fred von Lohmann, an attorney with the Electronic Frontier Foundation, an advocacy group for Internet users. "Clearly file sharing is not killing the movie industry, far from it."

File-sharing buzz or buzz kill
After a slump in 2005, Hollywood saw revenue grow 11 percent to $25.8 billion last year, according to the Motion Picture Association of America, the trade group that represents the top movie studios.

Could file sharing have played any kind of role in the growth?

File sharers often argue that they are among the first to tell friends about a good movie. They say that this stimulates interest in people who don't share files. On the surface at least, this is the kind of buzz building that movie marketers are trying to ignite.

In a May 2005 report on movie marketing by The London School of Economics and Political Science, researcher David Lane found that the secret to stimulating ticket sales "is less about the film itself than about the success of pre-publicity and word-of-mouth recommendations."

Lane found that marketing techniques had changed in Hollywood in the past two decades and that what mattered most was "to get people talking about the film, creating prerelease interest and then to sell tickets--fast."

When Moore's documentary surfaced on the Web, it generated a host of news stories that served as free advertising. But there's no way to determine how many people learned about the movie from someone who downloaded a pirated copy.

What doesn't help support the premise that file sharing helped give Sicko a shot in the arm was that the movie drew mostly older audiences, according to published reports. Most file sharers are thought to be of college age.

"A Michael Moore film is going to be in the headlines no matter what it's about," said Gary Stein, an executive at Ammo Marketing, an advertising firm. "The news hounds were ready for a Sicko story and this one happened to be among the first to come out...You have to remember these aren't people that wake up in the morning and say to themselves, 'How am I going to get people to see this movie.' They get off on watching a movie for free."

And any measure of the effects that piracy has on a film must look at an entire theatrical run, said Prager, who represents independent music labels and has also negotiated movie deals. She points out that the financial performance of a documentary like Sicko may be particularly vulnerable to Internet piracy.

"This is not a big special-effects action movie that depends on the big screen," Prager said. "This is a film that people may be satisfied watching on their computers. That could really hurt the movie's sales."

In the end, nobody really knows what effects copyright infringement has on a movie's earning potential, said Jonathan Zittrain, professor of Internet Governance and Regulation at Oxford University. Zittrain does, however, see one benefit from the controversy.

"The real benefit of this kind of leakage," Zittrain said, "is that it pressures Hollywood to think outside of the box instead of hoping the Internet will just go away."