How to curb digital piracy

During a business trip to southern China several years ago, I was surprised at the number of pirated movies littering the stalls of street vendors. After a series of conversations with friends in the entertainment industry, I am reminded of that scene. My peers describe the Internet not as a happy global village but as a borderless black market where stolen content flourishes and pirates lurk around every corner.

In a post-Napster world, it's no surprise that media companies feel such anxieties. The brief reappearance earlier this month of Film88.com, the pirate film site, upped the ante. These companies see a future in which rogue players will set up shop in far-off locales, steal their intellectual property and erode their industry.

Such hysteria has fed a flurry of activity in Washington, particularly the Consumer Broadband and Digital Television Promotion Act (CBDTPA) currently circulating on Capitol Hill. Consumer advocates have blasted CBDTPA as a heavy-handed move by the Hollywood lobby to stifle online expression.

Cyberactivist Gordon Mohr satirized such legislative efforts when he recently wrote that perhaps the time has come to fit all consumers with a "digital helmet." Such a device would prevent consumers from experiencing any unlicensed content. Imagine a steel trap on your head that would fog up when you attempted to watch an unauthorized RealVideo clip or that would block out sound when you downloaded an MP3 file via Morpheus.

Despite such doomsday scenarios, the film community is not faced with an immediate digital copyright crisis. First, file sizes are enormous, making large gobs of data that would plug up dial-up lines, precluding mass downloads via AOL. Broadband implementation remains more of a theory than a reality, and sustained broadband quality is highly elusive. Finally, even the geekiest college students undoubtedly will discover that watching "Attack of the Clones" from their dorm room on their laptops will never replace the THX-style theater experience.

To truly take advantage of this opportunity, the entertainment industry would be foolish to resort to legislation to control emerging technologies and exert draconian digital rights management. The Internet routes around closed systems, and there is little doubt that regulation will fail: It will be defied by innovation and derailed by entrepreneurship.

Quite the contrary, Hollywood needs to respond to the challenge of new media with a simple approach--it must reconsider its audience.

The entertainment industry would be foolish to resort to legislation to control emerging technologies and exert draconian digital rights management.

The entertainment industry must acknowledge that it is marketing its products to an empowered body of citizens who consider themselves users, not viewers. Viewers remain passive, receiving content broadcast to them via TV, film or radio. Their most pointed decision is whether to take butter with their popcorn.

Users remain an altogether different species, as Mike Godwin of the Center of Democracy and Technology has noted. These people are actively engaged in the process of selecting and modifying content to meet their needs. They rely on their own instincts to solve problems. Users lean toward technology-centric solutions that integrate viewing into a broader multimedia experience.

Finally, these are not hackers, but ordinary people that will pay reasonable prices for quality product.

Hollywood must embrace the challenge of user-centric marketing. It must reach out proactively to this class of consumers, and co-opt them, stealing the thunder of activists and placing itself in the camp of interested consumers.

User-centric marketing should turn the studios toward video on demand, a potential alternative to pirated films. Digital cable already is introducing video on demand to 10M subscribers across the United States. Content distribution deals with video-on-demand start-ups such as Intertainer.com and CinemaNow.com are steps in the right direction. MovieLink, the industry-sponsored video-on-demand venture, is a multi-studio, collaborative effort that could succeed.

The entertainment industry must acknowledge that it is marketing its products to an empowered body of citizens who consider themselves users, not viewers.

Along with such partnerships, studios should pursue new business models that optimize their content for time-shifting devices such as TiVo and ReplayTV as well as wireless media. Creative revenue flows such as sponsorships and targeted advertising could allow Hollywood to capitalize on new media in a nonintrusive, user-centric fashion.

The recent blockbuster Minority Report is noteworthy not only for its crackling storyline and sci-fi effects but also for its creative use of product placements integrated almost seamlessly into the storyline--it may provide an interesting glimpse into the future in more ways than one.

With some creative thinking, Hollywood should be able to win attention and market share in a user-oriented multimedia environment. However, if they fail to do that, the notion of digital helmets might not be such a remote reality after all.