Cover Image: September 2012 Scientific American Magazine See Inside

How Hollywood Is Encouraging Online Piracy

The death of the DVD is pushing users to piracy















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Image: Jude Buffum

Face it, movie fans: the DVD is destined to be dead as a doornail.

Only a few Blockbuster stores are still open. Netflix's CEO says, “We expect DVD subscribers to decline steadily every quarter, forever.” The latest laptops don't even come with DVD slots. So where are film enthusiasts suppose to rent their flicks? Online, of course.

There are still some downsides to streaming movies—you need a fast Internet connection, for example, and beware the limited-data plan—but overall, this should be a delightful development.

Streaming movies offers instant gratification: no waiting, no driving—plus great portability: you can watch on gadgets too small for a DVD drive, like phones, tablets and superthin laptops.

Hollywood movie studios should benefit, too. The easier it is to rent a movie, the more people will do it. And the more folks rent, the more money the studios make.

Well, apparently, none of that has occurred to the movie industry. It seems intent on leaving money on the table.

For all of the apparent convenience of renting a movie via the Web, there are a surprising number of drawbacks. For example, when you rent the digital version, you often have only 24 hours to finish watching it, which makes no sense. Do these companies really expect us to rent the same movie again tomorrow night if we can't finish it tonight? In the DVD days, a Blockbuster rental was three days. Why should online rentals be any different?

When you rent online, you don't get any of the DVD extras—deleted scenes, alternative endings, subtitles—even though you're paying as much as you would have paid to rent a DVD.

Yet perhaps most important, there's the availability problem. New movies aren't available online until months after they are finished in the theaters, thanks to the “windowing” system—a long-established obligation that makes each movie available, say, first to hotels, then to pay-per-view systems, then to HBO and, only after that, to you for online rental.

Worse, some movies never become available. Star Wars, Raiders of the Lost Ark, Jurassic Park, A Beautiful Mind, Bridget Jones's Diary, Saving Private Ryan, Meet the Fockers, and so on, are not available to rent from the major online distributors.

None of the movie studios would talk to me on the record about this subject, so I can't tell you why so many major movies are missing. Obviously somebody, somewhere, objects to releasing the rights—a lawyer, a director, a studio executive. (Disney's Web site answers the question this way: “Unfortunately, it is not possible to release or have all our titles in the market at once.” Oh, okay. So they're not available because they're not available.)

The people want movies. None of Hollywood's baffling legal constructs will stop the demand. The studios are trying to prevent a dam from bursting by putting up a picket fence.

And if you don't make your product available legally, guess what? The people will get it illegally. Traffic to illegal download sites has more than sextupled since 2009, and file downloading is expected to grow about 23 percent annually until 2015. Why? Of the 10 most pirated movies of 2011, guess how many of them are available to rent online, as I write this in midsummer 2012? Zero. That's right: Hollywood is actually encouraging the very practice they claim to be fighting (with new laws, for example).

Yes, times are changing. Yes, uncertainty is scary. But Hollywood has case studies to learn from. The music industry and the television industry used to fight the Internet the same way—with brute force: copy protection, complexity, legal challenges.

Eventually all of them found roads to recoup some of their lost profit not by fighting the Internet but by working with it. The music industry dropped copy protection and made almost every song available for about $1 each. The TV industry made its shows available for free at sites such as Hulu, paid for by ads.



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  1. 1. Owl905 12:29 AM 8/21/12

    The first thing Sciam writers and industry execs need to do is get out to a local flea market on any given weekend. The tables with bootleg movies are swamped with customers. The idea that e-viewing has replaced platters might take a step back if they look at the feeding frenzy. The software industry has taken innovative steps with added-value (Steam), and low-cost unprotected licences (Gog).

    Instead of fretting over supposed business denied, get active and treat those tables like the competition. People still like to 'own' things.

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  2. 2. AFriendlyNerd 12:38 AM 8/21/12

    "When you rent online, you don't get any of the DVD extras—deleted scenes, alternative endings, subtitles—even though you're paying as much as you would have paid to rent a DVD."

    According a DVD distributor I know, "extras" don't do anything for sale of discs, and therefore there is not much interest in them anymore.

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  3. 3. Monki 02:14 AM 8/21/12

    Unlike the author Hollywood takes a World view of it's market and not just the provincial US market. Countries and continents like South America, large areas of South East Asia, India, large parts of China just don't have the internet structure that will support extensive streaming or downloading of movies in high quality. Certainly Japan and South Korea are exceptions as will Australia when the National Broadband Network optical fibre to every house project is completed. In the meantime DVD and Bluray discs are the cheapest distribution mode and Hollywood knows this.

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  4. 4. Dan Dare 04:46 AM 8/21/12

    Possibly the big studios know something we dont, the world is ending? are they archiving them underground in big vaults, knowing all the people who have watched their films and TV programs will be incinerated on December 21st? lol I doubt it but with the internet the way it is they need to change or die....

    I have seen copies of films floating around up to 2 years before a films release (Hellboy was one example) and with websites like watchmovie.tv that has been running for 5 years plus, anyone anywhere can stream the latest films direct to whichever device they want. The quality is always shocking and best suited to a handheld device with extreme brightness options, but convenience is what the lazy generation wants.

    A friend recently tried legitimately to purchase a copy of Breaking Bad season 4 in the UK - without success, and ended up watching it for free online (he eventually found a copy from Germany).

    Why cant all films and TV programs be released at the same time worldwide in all formats (not Cinema first) and available to watch online, on DVD, in the cinema etc etc

    Many people now have large plasma's, lcd's and home cinema's in their own homes, I for one like to have a cigarette, a beer or a snack of my choosing whilst having enough leg room (I'm 6' 4") to not get deep vein thrombosis during my 3 hour departure.

    So I hope one day the studios wake up and realize what their audiences want off screen...

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  5. 5. bunnielovekins 07:33 AM 8/21/12

    I must say, it's much easier to justify piracy to oneself while sitting through the half hour of unskippable trailers on a movie you just bought. Perhaps if they had just got straight to the film the thought never would have entered my head.

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  6. 6. gkolanowski in reply to Monki 08:15 AM 8/21/12

    Why do you assume this has to be an either/or situation? Just because some countries don't have access to streaming does not stop the studio from being able to provide it in countries that do.

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  7. 7. grifter1337 in reply to Monki 08:55 AM 8/21/12

    So wait a minute monki. You are saying that since some countries dont have good net movies shouldn't be rented online?

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  8. 8. Derick in TO 09:30 AM 8/21/12

    "The moral? Make your wares available legally, cleanly and at a fair price"

    What are you, a socialist? If the consumer isn't getting gouged, the industry isn't making enough money. :P

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  9. 9. quagmire0 10:38 AM 8/21/12

    It's pretty hopeless to ever believe that all the studios/directors/etc. would ever come to an agreement that would lead to their products being sold in any type of open market.

    We've seen this issue between the cable and satellite companies and the channels that they have agreements with. How many times have we seen their conflicts boil over into actual media blitz campaigns. "Dish Network wants you to never watch Breaking Bad ever again - call them and tell them they are stupid!" It's all about them jockeying for more money. So to expect a day when, say, a movie would come out right after its theater run and be available on Netflix, Hulu, and Amazon for a reasonable price? It's a pipedream. Time to fire up uTorrent.

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  10. 10. silirat 11:04 AM 8/21/12

    The reason that the studios aren't moving over to a more modern business model is pretty straight forward.

    Most of the decisions makers are employees, who work for the shareholders. If a significant period passes (i.e. 6-12 months) where there is little profit, or even worse, a loss, then those decision makers will be out on their asses.

    Now, to convert over to a new busines models igoing to take time... 12-24 months. During that time, not only will profit be impacted, but there is also the significant chance of loss. In the end it will even out and go back to normal, but by then, the decision makers will have long since been fired and replaced by the shareholders.

    So, simply enough, the decision makers are unwilling to risk their jobs in the name of progress. The industry and the company would survive the transition, but they won't, so they'd prefer to keep s in the stone age.

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  11. 11. ohdannyboy227 02:44 PM 8/21/12

    David, as a movie lover, and a Netflix subscriber, your point regarding availability is well taken. However, your post, well intentioned as it might be, fails to identify the other half of the problem; the pirates themselves. What you, and many others like yourself, are doing is rationalizing theft as the fault of the victim. Theft is always the fault of the perpetrator. Several other comments point out that the issue of internet availability of titles is a problem largely confined to high-tech markets where items like the iPad and MacBook Air have some significant market presence. However, across large areas of even high-tech countries broadband internet use is not universal and “old school” DVDs and Blue Ray disks remain standard. We must understand that we are lucky enough to be on the cutting edge of technological development and responses are necessarily going to lag because the vast majorities of consumers are not. In the meantime what does it say about our segment of society that rather than purchase a DVD (and for the vast majority of us, we are not wholly unable to do so) we elect for the instant gratification of theft? Patience might not be the most popular word on the nerd street, but surely instant gratification shouldn’t be favored at the expense of the right of a content producer to profit from their work?

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  12. 12. Breakdecks 02:54 PM 8/21/12

    "The latest laptops don't even come with DVD slots."

    I can already tell you are an Apple user... Please understand that your preferred brand does not constitute "all of the latest laptops"... Most laptops on the market today contain no less than a DVD burner. Your proprietary soldered-together Macbook is an outlier here.

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  13. 13. plswinford 03:41 PM 8/21/12

    We have pretty much killed the music industry by our continuous theft. Good job, people.

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  14. 14. jason hunter 04:12 PM 8/21/12

    Simple premise: As well as demonstrating a failure of the industry to meet the needs of its consumers, the increasing rate of piracy indicates an over-valuation by the seller of their ware(z). Discuss.

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  15. 15. jason hunter 04:26 PM 8/21/12

    @plswinford As far as i can tell, the music industry is still crankin' out the tunes. Record stores are gone, but there are more musicians than ever, who can record studio level tracks in their own home for an investment of several hundred dollars, and they can connect with fans via YouTube and Facebook now, so what's really been eliminated are jobs connected to the no-longer-necessary-in-many-cases physical object model of consumerism, and in the glad-handing realm of networking and who-you-know positions. i know it must be sad for the suits to see the creatives taking over the asylum, but the truth is that the record industry in the second half of the 20th century was a bloated model of top-down revenue distribution, just like the movie industry today. The internet has created a more democratic form of interconnection, one which has the potential to connect creators with consumers in a near-direct manner. We are in the early stages of a major philosophical transition where production companies no longer need to rely on the gluttonous mass media tactics of Old Mass Media. The big secret is that the execs are the real anachronism here. And maybe that's the biggest challenge for the stumbling studio culture: how to remain relevant in an environment that is rejecting their control and needs less and less of their investment capital. :/

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  16. 16. davidhill222 06:01 PM 8/21/12

    I love piracy. It is the way to go... I have no morals any longer. How come a brain dead dim-witted actor makes zillions of dollars and my professor at college can barely pay his mortgage?

    Copyright laws must be changed. Enough of this information slavery...Those Hollywood's CEOs are worse than hyenas.

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  17. 17. marlonwallace 07:32 PM 8/21/12

    "a Blockbuster rental was three days. Why should online rentals be any different?"

    -It's different because the business model is different. Blockbuster bought a boatload of DVDs and then gave a cut of its rental income to the studios. Amazon Instant Video, for example, doesn't need to buy DVDs from the studios in order to stream the movie, so a big chunk of the money the studios used to make is gone.

    "Of the 10 most pirated movies of 2011, guess how many of them are available to rent online, as I write this in midsummer 2012? Zero."

    -Of the 10 most pirated movies of 2011, most of them were some of the worst films from a critical standpoint. Why do people pirate bad movies like I AM NUMBER FOUR, HANGOVER II, and SUCKER PUNCH? Why isn't THE ARTIST or CITIZEN KANE the most pirated?

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  18. 18. acemannw 08:06 PM 8/21/12

    I have a 2 young boys both with Tablets. My wife and I have invested around $750 in DVDs that they enjoy watching. The problem is now they don't watch traditional TV as much as they used to. We are a very busy family that is always on the go so they usually are hauling their tablets around with them to stay entertained. I spent an evening trying to rip just one DVD so they could watch it on their tablets. It took me 4 hours of frustration and I had finally ripped Finding Nemo!!! Thinking the first one would be the hardest I moved on to the next title and it had some other type of protection! I could not get it to rip at all.

    I gave up, they beat me, I could not utilize a movie that I had paid $16.95 for!!! I finally turned to a torrent site and had the entire movie downloaded in HD in 25 mins! I have filled up their tablets with movies that I have bought and paid for but am unable to rip from my physical discs.

    So my question is why not just make it easier for me a legal owner to have a digital copy. I have purchased some digital copies of discs and they are some stupid streaming service from Flixster that is more hassle then it is worth. My wife and I have sworn of DVD or Bluray discs. I will never spend another penny of my money buying a disc that I am unable to fully utilize for my family.

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  19. 19. scientific earthling 08:43 PM 8/21/12

    Who cares I don't watch movies anyway, most are third rate any way. Compulsory sex scene, a bit of nudity, some macho big-mouth idiot. If I want nudity and sex, the Dutch porn industry satisfies a lot more, at least till you reach climax.
    Documentaries are what my mind enjoys.

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  20. 20. heimer82j 02:05 AM 8/22/12

    I believe the industry just has to learn to adapt to more of a niche market that has emerged where people have a wide variety of ways to enjoy their movies. For instance, for all the talk of sagging theater sales, it will never go away. They learned to adapt as the world was introduced to vhs and the same should be true of future forms of home video sales. Now, I personally don't have a lot of use for the theater most of the time because I don't feel like dropping $40 so I can watch the latest film with my girlfriend while enjoying a snack. That said, IMAX is pretty cool and so they'll get my money on a few of those films. Conversely, I'd rather watch paint dry than try and watch anything of substance on my cell phone. So, my niche is blu-ray the quality is generally outrageous and I get all the special features to pour over. But there is something for everybody and we can finally have our preferred viewing experience.

    If anything the television and cable industry encourages the most piracy. And it's the age old question of why am I paying for 200 channels when I only watch 5 of them? I certainly won't pay per episode on itunes or amazon when I'll inevitably want the box set at the end of the season and hulu's quality hasn't been all that impressive. So, really not a lot of latitude there. Oh and why in the world would I watch hbo on my xbox if I need a cable subscription in which case I could probably already get those in-demand shows through my cable box? Lastly, how about those olympics? Don't get me wrong I think NBC did a fantastic job of coverage through their various networks. However, in order to watch the videos online, again you needed a cable subscription, videos I might add that weren't narrated or the same broadcast as what was on tv. Sooo, what exactly was the fuss about since we clearly weren't getting free cable video?

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  21. 21. Midnightbrewer 02:29 AM 8/22/12

    Disney's policy is no secret; they teach it to college students on their summer college program. They like to maintain rolling demand of their properties so as to sustain long-term demand. The typical time frame for their biggest works is about twenty years; it ties into the nostalgia factor and the idea of passing things on to your children. The ultimate customer lock-in.

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  22. 22. Midnightbrewer in reply to Monki 02:50 AM 8/22/12

    Although international Internet is more developed than you give it credit for, piracy through DVDs and video CDs is still the most common way to steal movies overseas.

    The Internet piracy issue is actually created by the entrenched distribution interests (cable, etc.) and their Byzantine business practices interfering with any attempt Hollywood might have in delving into digital distribution. Then there is the legal encumberment of tech-ignorant rights holders who are mortally afraid of people stealing their stuff; it only takes one person to say no.

    International licensing is also a big headache, as it's handled on a country-by-country basis. Foreign distributors don't make any money off of US advertising deals, so all-new deals have to be negotiated with local sponsors. Finally, rights can often be sold in bundles, where a licensee pays to get the digital distribution rights along with the physical rights, then never bothers to take advantage of digital distribution - and since they paid for it, nobody else can, either.

    David Pogue rails against Hollywood as a convenient singular entity, but this isn't a problem of an imaginary boardroom of a handful of studio bigwigs who have decided they don't want to change. This is dozens of companies worldwide who are playing a jealous turf war with each other, and fighting the customers is only a staying action until a victor emerges.

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  23. 23. machisuji in reply to AFriendlyNerd 05:06 AM 8/22/12

    For me personally the extras are the main reason to buy DVDs.
    If there are no extras on the DVD I won't buy it, period.

    So if I can't rent the movie online, well ...

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  24. 24. Razza 04:03 PM 8/22/12

    They also screwed up with the Zone system for DVD's, because they forced people who travel to buy pirated copies without Zone restrictions when they travel, instead of being able to buy a legitimate copy which they could play without using one of their 5 zone changes. Guess what, Hollywood, people travel a lot these days.

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  25. 25. Brazilian in reply to Monki 12:09 PM 8/23/12

    Brazil is the country where people spends more time at the internet in the world. Our broadband isn't the best but we do a lot of streaming.
    Even with 80 million people with internet access (out of a 200 million population), the streaming, on-line renting and series and movies buying possibilities are almost non existent.
    Some movies are screened months later than the us. For series is the same (if they are aired at all). For instance, there's no legal way to watch Breaking Bad here. You can't watch it in any channel or buy it in dvd.
    Netflix only has older movies and series, hulu doesn't work (except with the use of a vpn - not something that the average joe will do) and the Brazilian sites who does have streaming, have to wait between 6 months to 1 year to make the content available.
    The pirate dvd market is enormous, they can be found at almost every corner or traffic light, but the pirate downloads are growing.
    I think that in all the countries the situation is like here, in their own degree and I don't see another way for that to change other than worldwide airings, in all formats at the same time, but that is still going to take a looong time to happen.
    Until there, pirates are will continue to win.

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  26. 26. blocatelli 07:16 PM 8/23/12

    The author is absolutely right on every point. I am Italian, and the thought of downloading a pirate movie never crossed my mind until Easter. I had just finished reading the Hunger Games Trilogy and was curious to watch the movie. It was already out in the US and we had to wait 3 months to have it available in Italy. Why that? Are we a kind of third-world country that gets crumbles from the King's table, or second-hand dresses for older sisters? Why can't I watch a movie the same week as my US friends and comment with them on FB? I felt so angry with distributors that I spent 2 days trying to work that out (I'm way too old to be a native digital - yes and possibly to watch the Hunger Games, I admit), but it had become a question of principle. I then discovered a whole torrent world and not only on the blockbuster side. My partner had been looking for the Rosi movie "Le mani sulla città" for 15 years! Impossible to find it in DVD, Blockbuster of course did not even list it, and there it was on the torrent search engine...and I don't think that streaming is a problem. In countries like Italy where Internet connection are generally poor outside the 4 big cities we have, majors could offer download for rent. Same as I tunes. I pay for songs on I-tunes because they are available and the price is fair. If Apple movie catalogue wasn't so...let's say...so utterly useless, I would happily pay up to 2/3 $ a movies as I sometimes pay on cable TV. I also believe that country borders are meaningless, customers are more technologically advanced than companies (yes, even stupid me) and majors should really sit down quickly and decide if they want to sell thousands DVD at 30 Euros per country or millions of streams at 1 $ worldwide. And if collectors want the DVD with all the nice pictures and papers...well, let them pay for it. If it is a choice, you don't feel ripped off.

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  27. 27. carstereos 09:52 AM 8/24/12

    If I could easily get a 30min show for a quarter, an hour show for fifty cents, and a two hour show/movie for a dollar, producers and distributors would be raking in the money.

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  28. 28. mickj16 in reply to ohdannyboy227 01:46 AM 8/25/12

    "In the meantime what does it say about our segment of society that rather than purchase a DVD(and for the vast majority of us, we are not wholly unable to do so) we elect for the instant gratification of theft?". This is quite a US centric statement. Try living in a Region 4 area and so how easy just buying a season DVD of TV show within 2 years of it finishing up. Your point about theft being the fault of the perpetrator is solid up to a point, however when the entertainment industry leaves the metphorical front door wide open and leaves the house for several years, then theft becomes almost inevitable. For the same reason I lock up before I go out, if the entertainment industry delivered product world wide in a swift manner, then piracy would most definitely decrease.

    As for the inevitability of online streaming, we will be long in our graves before the infrastructure for that becomes ubiquitous outide of the 5 major cities most US people seem to think make up the entire world.

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  29. 29. Anne Ominous 12:45 PM 8/26/12

    You are playing Hollywood's game by mis-identifying simple copyright infringement (downloading) with "piracy"!

    Piracy is a LEGAL term, and generally speaking it means mass copying and distribution of copyrighted works FOR PROFIT. Few (very nearly zero) of the people engaged in filesharing are "pirates". That would defeat the whole purpose of piracy.

    Piracy is a CRIME, and can even be a felony in some circumstances. Downloading is not; it is a civil infraction. So it's not an innocent mistake. Calling filesharing "piracy" is a grievous error... and as it turns out, it's also something that Hollywood has actively encouraged. They WANT you to conflate downloading with crime.

    Unless you want to do Hollywood's dirty work for it, stop calling downloading "piracy". It isn't. Copyright piracy has had a specific legal meaning for 100 years or more, and downloading isn't it.

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  30. 30. fgoodwin 07:11 PM 8/28/12

    This sounds a lot like blaming the victim. Only in the world of intellectual property rights would such a ridiculous argument not be shouted down as idiotic.

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  31. 31. marclevesque in reply to fgoodwin 10:47 AM 12/24/12

    I disagree, I think it is generally a good argument, and I think it is also a good argument applied to many fields outside of Intellectual Property Rights.

    And of course it is not always a good argument, and sometimes even a bad argument, but still in the context of corporate behavior it is often a good one.

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