Ethics @ Work: Movie studios vs the Internet

The courts and lawmakers are going to have to choose between two unpalatable options.

May 13, 2010 23:05
3 minute read.

business ethics 63. (photo credit: Courtesy)

At least since the Lumiere brothers in the late 19th century, movie studios have been investing huge sums to hire the best writers, producers, directors and actors in the hope of having a hit movie. So many were successful that today a typical video rental service stocks close to 100,000 titles. Will this industry continue to thrive or will it wither? It all may depend on the outcome of a lawsuit brought a few days ago by Voltage Pictures.

For generations it was easy to make money from a good movie. The only way you could see one was to go to a movie theater, and it was easy to monitor them and make sure that only authorized theaters showed your film. Recently making money from movies has become much more difficult. The prevalence of video machines was the first chink in the armor, followed by DVD. High-speed Internet has the potential to make it virtually impossible for movie studios to make money.

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Thousands of people have direct access to good digital versions of major motion pictures, either through affiliation with the studio or through authorized DVDs. Through the proliferation of sharing services it has become easy for someone who has such a version to make it accessible to hundreds of millions of others.

Voltage Pictures sees itself as a major victim of this phenomenon. Their film The Hurt Locker was so admired that it won six Academy Awards including best picture, yet the picture grossed only $40 million – a relatively small sum for such a popular film. The studio believes the explanation is the ready availability of pirated copies on sharing services.

Past lawsuits have mainly focused on the services themselves. But Voltage, in cooperation with the antipiracy US Copyright Group, is now suing tens of thousands of individual end users who downloaded the film.

The actual process is tortuous. First the studio had to target a particular sharing service – in this case Bit Torrent. They have to convince a court that the users of the service were engaged in illegal activity, so that they can obtain the intellectual property (IP) addresses of those who downloaded the movie. Then they have to go to the Internet service providers (ISP) and ask for the individuals who were surfing from those addresses.

Finally they have to physically locate the individuals and offer them a “carrot and stick”: The carrot is the agreement to settle for a comparatively small amount; the stick is to face a messy and expensive lawsuit. According to news reports, about 40 percent of located users have already agreed to a settlement.

The ethical issues involved are weighty. Copying copyrighted materials is definitely illegal; that’s why it’s called a “copy right.” But given legal procedure, there still is a long way between showing that a particular IP was at the receiving end of a file and showing that an individual engaged in copyright violation. As a result, the “carrot and stick” approach has the potential to harass innocent individuals.

The ISPs may feel they are betraying their users by revealing their identities with only weak evidence they committed crimes. And then there is the slippery slope problem: If disclosing IP users becomes widespread, then even protected anonymity may become easier to disclose.

Against this is the immense economic cost borne by the producers of intellectual property. Lack of firm legal sanctions would almost certainly result in a massive blow to every kind of expensive recorded entertainment. There would be virtually nothing to differentiate between live performances and YouTube clips that can be inexpensively produced.

I believe one factor at work in the Voltage Pictures case is that it is a small studio. The larger studios have been reluctant to launch large lawsuits because they are afraid it might affect their public image, while a small and relatively unknown studio has less to lose.

The courts and lawmakers are going to have to choose between two unpalatable options: an increasingly intrusive and less anonymous Internet, or the withering of large-scale recorded entertainment of all kinds. I favor the first, but the choice is undoubtedly wrenching.

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Asher Meir is research director at the Business Ethics Center of Jerusalem, an independent institute in the Jerusalem College of Technology (Machon Lev)

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