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$1 films spook Hollywood

A Web site providing movies on demand that's comprehensive and easy to use raises the specter of a new round of international copyright battles.

A Taiwanese Web site is offering hundreds of videos on demand for just $1 each, trumping Hollywood's plans to deliver similar services and raising the specter of a new round of international copyright battles.

Despite claims that their Movie88 site is following all local copyright laws, the owners of this new venture are drawing scrutiny from a skeptical Hollywood. Meanwhile, Web surfers drawn by free or cut-rate movies are flocking to the site, overloading servers and clogging data pipes.

Like Napster before it, the site is more than just an everyday pirate Web site: It's a commercial video-on-demand service that's comprehensive and easy to use. And it works. With the studios' film services still in development, that's a dangerous combination of features.

"It's not a good sign," said Ken Jacobsen, the Motion Picture Association of America's director of worldwide piracy enforcement. "But we will deal with these sites rapidly."

Movie88 and a handful of other sites and services popping up around the world offer growing proof that the movie industry cannot count on immunity from the digital forces that burst in on an unprepared record industry barely two years ago. Film studios had been insulated partly by the enormous size of high-quality digital video files, which made it relatively difficult to trade movie files over the Internet. But that barrier has been progressively falling thanks to improvements in digital video formats and streaming technology.

Such sites are also a sign that many of the most critical copyright battles are shifting overseas. Legal fights in the United States have laid down preliminary ground rules, even if those lawsuits aren't over. That's not yet the case in regions with different laws and different court systems, where broadband data pipes and programming talent abound.

That makes life considerably harder for copyright holders.

"There's a law of diminishing returns in terms of pursuing and prosecuting these things overseas," said Aram Sinnreich, a Jupiter Media Metrix analyst. "It's a lamentable situation for studios, but I think the best thing they can do is develop their own legal alternative to draw people."

Crossing borders
Copyright battles overseas have been developing slowly but steadily, even as the most high-profile Internet copyright court cases have remained in the United States.

Some of the clearest signs have come from the names on the software used and distributed online: The author of the DeCSS program that allegedly can be used to make copies of DVDs was Norwegian. Many of the successors to that software program are distributed on German sites. Russian-language search engines provide a hub for people looking for copyrighted music, software and movies.

Only recently have overseas Net companies been targets in high-profile movie or record industry lawsuits, however. Kazaa, a Dutch company, and Bermuda-based Grokster were both sued by the entertainment trade associations last year for operating peer-to-peer file-swapping networks similar to Napster. But even in that case, the companies were sued in a Los Angeles court.

The problem is, international enforcement is tricky. Most developed nations are parties to international trade agreements that give copyright holders rights similar to what they have in the United States. But legal process, details of copyright registration or notification procedures, and even diplomatic pressures can make enforcement a thorny task.

Some of the groundwork for the new Internet battles has been laid. Several years ago, the MPAA conducted a legal survey predicting which 30 countries were most likely to be Net piracy problems, Jacobsen said. They then hired legal teams to start studying local copyright laws.

Now the MPAA and the record companies use search engines to track down Web sites and servers offering copyrighted materials; they use the legal channels they've developed to ask Internet service providers to take down the pirated material.

Kazaa and Grokster required taking this approach a step farther: into court. Movie88 may be the next test.

The next battleground
Taiwan's Movie88 appears to be the most ambitious commercial video service yet to hit the Net, with a huge catalog of English-language, Chinese and Japanese movies that can be streamed on demand at fairly high quality.

The site--whose owners declined to respond to e-mail questions, citing the advice of their lawyers--has jumped the gun on an idea already being pursued by the big movie studios. Movielink and Movies.com, each backed by a coalition of studio conglomerates, are preparing Internet-based video-on-demand services that would provide members with access to a large catalog of films for a relatively small fee.

Movie88's service looks much like a video rental store. It offers a huge range of films that have been released to video, although it appears to lack the first-run films that are often available online or on pirated DVDs hawked on street corners in some Asian cities. The site says it will charge $1 per movie but give each customer a $5 credit for signing up. At least in its English version, it doesn't yet appear to have the capability to accept credit cards and add more credit to an account.

The movies themselves are streamed in RealNetworks' RealVideo format and cannot easily be saved or downloaded to a computer's hard drive. Each movie is available for three days; afterward, it must be renewed with another $1 credit to be seen again.

Early use of the company's service did display some serious glitches. One attempt by CNET News.com to set up an account and watch the Universal Pictures film "12 Monkeys" worked perfectly. The next day, the same account's username appeared to be linked to a different account with more than $100 in credit.

The site claims it is operating legally under Taiwanese copyright law by allowing viewers access to the movies for just three days at a time.

"If you are a copyright owner of any materials, movies and films used in Movie88.com, and you feel that your copyright is protected in the Republic of China, kindly contact us," a note on the site reads. But "the submission...is without our admission to any infringement and/or liability whatsoever."

But copyright holders' groups say they haven't given their permission, and that means a fight is likely brewing. A spokesman for the International Intellectual Property Alliance (IIPA), whose membership list includes the MPAA, said Movie88.com was "clearly a pirate site."

The MPAA itself stops short of that language, but spokeswoman Emily Kutner says the group is "looking into the site so we can take appropriate steps to deal with it."

Taiwan has suffered considerable criticism from the United States and other Western countries for being a source of pirated CDs and videos, but it has changed its copyright laws several times in recent years to participate in international trade agreements. It now has essentially the same standards as the United States, and studios would gain full copyright protection there as soon as they release a movie in American theaters, copyright experts said.

Enforcement of copyright laws has been somewhat weaker on the street level, however. This issue goes to the heart of the difficulties copyright holders may see as they increasingly move overseas.

"You see an awful lot of problems, really on the level of local judges and prosecutors," said Laura Young, a partner at San Francisco law firm Wang & Wang, who has extensive experience in Taiwan. Often "they don't want to prosecute a local (citizen) for violating the rights of a multinational corporation."