Use Existing Technology to Protect Our Content, NBCU Tells Holdouts

“The unfortunate truth is that today we are losing the battle” against piracy, Zucker said, citing “stunning new evidence” from a study by the Institute for Policy Innovation released Wednesday. U.S. copyright-dependent industries lose $58 billion, jobs decline 373,000, and governments lose $2.6 billion in tax revenue yearly from piracy, the study said. IPI’s survey last year, which examined just the film industry, found $6 billion in direct losses and $20 billion lost to the larger economy. The losses are a “tightening choke hold on economic growth,” Zucker said. “These numbers are not abstractions. They're real.”

NBCU is “ripping apart old business models,” Zucker said, echoing Viacom President Philippe Dauman’s comments the day before on its new-media efforts (WID Oct 3 p1). Zucker plugged the season premiere of 30 Rock, which can be viewed this week as scheduled on TV but also streamed free on NBC.com or downloaded for viewing for a week, bought permanently on Amazon.com, viewed on-demand on several cable and satellite systems, and even streamed on cellphones from certain carriers. “In a few weeks” NBCU’s joint venture with News Corp., video streaming site Hulu.com, goes live, also including Yahoo, MySpace and AOL as partners, Zucker said. The effort will be “compromised at birth” if they aren’t technologically protected by distributors.

Content owners should press for high-level intellectual- property enforcement not only in the White House and Justice Department, but also “escalate these efforts” among mayors and governors, Zucker said. Every dollar spent on IP enforcement yields $4 to $5 in government revenue from growth in lawful economic activity, he said. “They will more than pay for themselves.” The Canadian government, which endures frequent criticism for failing to follow through on the World Intellectual Property Organization Internet treaties (WID Oct 3 p2), is quickly bolstering IP enforcement, he said, and French President Nicholas Sarkozy has named a blue-ribbon commission with a two-month timetable for drawing up plans to deal with online piracy.

Companies can’t argue that technological solutions for piracy don’t exist, Zucker said. Theft of car radios is a thing of the past because of technology that cripples stolen radios, as is cable theft because of expanded use of encryption, he said: “These technologies will never be perfect,” and bank robberies are still pulled off. But to call digital piracy a “lost cause” is “baloney,” because protection technology is a “powerful engine that can be harnessed” for content owners, he said.

More ISPs are sending warnings to end users known to be downloading illicitly and threatening to disconnect them, because ISPs now realize that such activity harms video on demand sales and robs customers of scarce bandwidth, Zucker said. But he called that a “stopgap measure” that should be replaced by full-blown filtering of the kind that AT&T is researching. NBCU wants to see the “vast majority, if not all the eight largest U.S. ISPs, embrace this approach” in the next few months. Microsoft, its YouTube competitor Soapbox, and MySpace are using identification tools to block pirated content. “It works. It will work even better in the future and soon should become the industry standard,” Zucker said.

Eighty universities are using antipiracy technology with “great success” to block students’ file-sharing, which accounts for 44 percent of piracy losses, Zucker said. Antipiracy technology can be built into home networking devices, such as code readers for hardware, and the industry’s success on high-definition DVD security should be expanded, he said.

The content industries are working with search engines and auction sites on policies and algorithms that “don’t disrupt their legitimate business,” Zucker said. The Coalition Against Counterfeiting and Piracy, which NBCU belongs to, is working on best practices and has talked extensively with intermediaries, and the group hopes “these private conversations become public commitments.” -- Greg Piper

Piracy Summit Notebook…

The copyright industries could be considered the public face of intellectual property theft, but their plight was largely downplayed, in favor of pharmaceutical and automotive industries, by lawmakers at the conference. “Just because it’s on the Internet doesn’t make it free,” said Senator Orrin Hatch, R-Utah, who once suggested that rightsholders should be allowed to fry, by remote control, computers traced to piracy. The line earned heavy applause from TV attendees at the front of the audience. But piracy isn’t just about illicitly downloaded music and counterfeit software -- public safety is at risk from counterfeit drugs and car parts, he said. Hatch later made a cryptic remark suggesting he would support a mandatory fee for Internet service providers to compensate for copyright infringement. His staff couldn’t explain what Hatch meant, and the line isn’t in his prepared remarks. It appears that any legal protections for digital music, movies, software and games will sneak in with protections for industrial goods and medications, owing to lawmakers’ concern for public safety. Rep. Mike Rogers, R- Mich., called himself a skeptic of Hollywood’s pleas about piracy when he arrived in Congress. “Most people kind of went, ‘So?’… One less person on the red carpet, what does that do?” Rogers, a former FBI agent, said he helped break up a crime ring involving child porn by tracing copyright infringement of mainstream porn, which made him appreciate IP “in a way that probably most won’t.” The public-safety argument against counterfeiting, especially goods coming from China, is empowering anti-trade lawmakers, “who are capitalizing on all these issues to say, ‘See, free trade is bad,'” free-trade supporter Rogers warned the audience. Hatch urged the crowd to back his patent reform bill, because “it’s time to get into the real, high-tech world.” He cited “underutilized resources” in the government for IP enforcement, such as an interagency group led by the State Department, and asked business to take a renewed interest in filing lawsuits. Any effective IP strategy requires educational, judicial and enforcement efforts in the U.S. and internationally, Hatch said. “Coordinating things may take extra time but doing nothing is not an option.” At a recent ASCAP meeting, Hatch said he got a standing ovation when he told the crowd he got his first royalty check as a songwriter for a whopping $57. He was told most songwriters there will probably never see a royalty check and were happy for him. -- GP

----

Prosecuting small fries in intellectual property theft is essential to prevent a cultural slide, Craig Morford, Justice Department acting deputy attorney general, told the conference. One man selling pirated CDs -- and duplicating them -- from his car, and a small seller of satellite TV decryption technology, both got prison sentences. It “demonstrates the importance of not just going after the kingpin,” but the “retail-level crook,” the former Nashville U.S. attorney said. Just because Britney Spears is viewed as a bad mother, that doesn’t mean piracy of her music is legitimate, he said. On a recent New York trip, Morford said, his children wanted to buy cheap DVDs from a street seller. When he told them it was illegal, they said it couldn’t be, since the seller was working in broad daylight and police officers were just down the street. “That’s what happens when these things go by and we don’t take them because it’s not enough money… It threatens to define the ‘normal,'” Morford said. Justice won convictions of 56 percent more criminal copyright offenders in 2006 than 2005, and prison terms grew 130 percent, he added. Prosecuting illicit Internet pharmacies is a top priority, he said, noting a prosecution by Justice of an Atlanta-based company selling fake meds through spam. Five people have been convicted and $2 million in assets forfeited, he said. Computer hacking and intellectual property, or CHIP, units in U.S. Attorney’s Offices, with two to eight specialized attorneys each, have increased from 13 in 2005 to 25, Morford said. They cooperate heavily on cross-jurisdictional cases. “I'm not interested in interoffice disputes over where the case should be tried,” he said. Morford noted Justice’s legislative package for stiffening penalties for criminal infringement and seizing assets tied to infringement, but asked businesses to increase their civil litigation. “We cannot simply prosecute ourselves our of this problem.”