Spiraling Piracy Threatens TV

Feb 21, 2005  •  Post A Comment

“Seinfeld” fans with access to the Internet could have bought all nine seasons of the hit series on DVD last week from at least three Web sites, despite only the first three seasons having been released by distributor Sony Pictures Home Entertainment.

That’s also despite the efforts of the series’ rights holder Warner Bros. and the Motion Picture Association of America to shut down such sites.

Hollywood’s fight against the multibillion-dollar film piracy problem has been well documented. But as DVD releases of TV series become an increasingly valuable component in studios’ economic models, piracy of TV shows also is quietly becoming a significant problem.

Statistics on TV show piracy remain sketchy, but last week the Internet-monitoring company Envisional reported that TV show piracy increased 150 percent just in the past year.

Downloading of TV shows is still new, but the tools to do it are getting better and easier to use, said Eric Garland, CEO of Los Angeles-based Big Champagne, which tracks online media consumption, including unauthorized consumption of music, films and TV. “So what used to be exclusively relegated to the domain of lunatic fringe hardcore geeks is now something that is approaching one-click simplicity,” Mr. Garland said. “And we are rapidly approaching that critical juncture where it is as easy to get a movie or a TV show for free on the Internet or on-demand as it is to buy it.”

Easy to Spot

Spotting an illegitimate DVD is simple. For example, pirated “Seinfeld” episodes sold on tvseriestodvd.com and obtained by TelevisionWeek apparently were recorded from Tribune-owned Fox affiliate WXMI-TV in Grand Rapids, Mich. When played, the station’s call letters, or “bug,” appeared in the lower right-hand corner of the screen. The surface of the bootlegged discs is white, whereas shots of the “Seinfeld” characters appear on the authorized silver discs that Sony distributes. The bootlegged set also includes a “bloopers” DVD, which is actually a compilation of various popular scenes-not outtakes.

WXMI General Manager Patricia Hamilton said she became aware of the pirated copies of “Seinfeld” a few weeks ago. She said she doesn’t think they were recorded by an employee. “Somebody is taping it on-air and sending it out,” she said.The Web sites peddling the apparently unauthorized “Seinfeld” discs did not return calls requesting comment.

Piracy is a punishable offense. Civil penalties can range from $30,000 to $150,000 per film or TV episode. Criminal convictions can result in as much as five years in prison. Yet enforcement of television copyrights remains largely elusive, mainly due to a set of challenges that are unique to TV content rights holders.

For one thing, it’s not always clear who’s responsible for copyright enforcement of TV series. Split rights and distribution deals made for series long ago when they first were sold into syndication can contribute to confusion over who exactly is responsible for policing the copyright-the content rights holder or the distributor.

In the case of “Seinfeld,” Warner Bros. owns the rights to the show because it acquired the show’s producer, Castle Rock Entertainment. Under a deal made before Warner Bros. was involved, the DVD distribution rights to “Seinfeld” belong to Sony Pictures Home Entertainment. (Sony Pictures Television distributes the show in syndication.) Through the course of reporting this story, representatives of both Sony and Warner Bros. deferred to each other multiple times before determining that while fighting “Seinfeld” piracy is a joint effort, Warner Bros. is primarily responsible for online policing.

Fueling the rise in TV piracy are advancements in technology that make it increasingly easy to do. Bootleggers record broadcasts from local TV stations and begin selling long before the legitimate DVD release. Because TV series typically are smaller in file size than feature films, they can be shared online more easily.

The MPAA, which has led the film piracy fight, does not yet have estimates on TV piracy. But the potential losses are staggering. The MPAA estimates that the film industry loses more than $3.5 billion in potential worldwide revenue from pirated hard goods. That doesn’t include Internet piracy losses. Informa Media Group estimated online losses from illegal sales of movies to be nearly $860 million.

The TV DVD business has been growing rapidly and in 2003 raked in more than $1.5 billion, or about 15 percent of all DVD sales, according to Adams Media Research in Carmel, Calif. That was up from just $130 million in 2000.

This year is stacking up to be even bigger. Time Warner said earlier this month that revenue from DVD sales of Warner Bros. shows alone should top $1 billion in 2005, including sales of “Seinfeld,” “The Sopranos” and “Sex and the City.”

Some 4 million copies of the legitimate “Seinfeld” DVD have been sold since its Nov. 23 release, making it the best-selling TV show on DVD to date. Warner Bros. said it has not yet estimated how much money it stands to lose through illegal distribution of its product.

“Seinfeld,” which concluded its original run in 1998 but has enduring appeal, is a prime target for pirates. In addition to its DVD sales, the show remains one of the top properties in syndication. “Seinfeld” has generated more than $2 billion in syndication license fees and advertising revenue, including what it will earn in its next five-year cycle starting in 2006, sources said.

When Sony released the DVD set late last year, a black market sprouted simultaneously, and limited spam campaigns cropped up promoting the pirated copies. Internet chat rooms with postings from fans who bought the bootleg sets date to Nov. 24-the day after Sony’s release of the legitimate DVD set.

At least three Web sites currently offer what appear to be pirated TV DVDs. While legal copies sell for $65 to $100, the unauthorized DVDs offering all nine seasons cost between $50 and $140.

Marc Brandon, director of Internet antipiracy operations at Warner Bros. Entertainment, said he has been tracking online auction sites for “Seinfeld” DVDs for about five years. He noted all 180 episodes have been offered for auction on eBay from time to time. In each case, Warner Bros. requests their removal and eBay takes them off.

Web sites with offers to sell pirated “Seinfeld” copies have been based in Asia, North America and elsewhere, Mr. Brandon said. “A lot of these people are just kids or college kids or whatever they may be, and they have a master set, whether TiVo-ing them and burning them to a DVD,” he said. In many cases, a small operator will simply burn a new set when an order arrives, he said.

The MPAA declined to comment on ongoing investigations. But John Malcolm, the MPAA’s senior VP and director of worldwide anti-piracy operations, said, “We are aware of these sites and we will take appropriate action.” He added, “It is safe to say anyone who is engaging in the theft of film or TV product does so at their own peril.”

The MPAA said it investigates more than 600 cases of suspected piracy each year. In November, the MPAA filed a lawsuit in federal court in New York against an organization called Click Enterprises that was selling bootleg film and TV product online. Earlier this month, it filed four more civil complaints against Web sites selling pirated licensed merchandise, films and TV shows, Mr. Malcolm said. In addition, the MPAA has referred Web sites trafficking in stolen goods to the Federal Trade Commission.

Dean Garfield, VP and director of worldwide anti-piracy legal affairs at the MPAA, added that the organization makes its best effort to stay on top of the latest developments in piracy. “As they evolve, we intend to evolve,” he said.

Piracy Rampant Abroad

As bad as the problem of TV piracy is in the United States, it is far worse overseas. Ashish Ghadiali, an analyst at Screen Digest, a research firm in the United Kingdom, estimated that 20 percent to 30 percent of videos sold there are pirated. The United Kingdom has Western Europe’s worst rate of piracy and Europe’s largest TV DVD indu
stry, he added, with 5.6 million units sold legitimately in 2004.

As broadband usage grows, sharing large video files is easier, said Darcy Antonellis, senior VP of worldwide anti-piracy operations at Warner Bros. She said popular shows such as “The O.C.” and “Smallville” quickly appear illegally in Europe and Asia after they air in the United States. Next-generation peer-to-peer programs such as BitTorrent and eDonkey make it easy to distribute digitized copies of TV shows worldwide.

“We’ve certainly seen a lot more activity and we are trying to collect a lot more data in terms of television piracy,” Ms. Antonellis said.

But Warner Bros. executives say they are seeing some results from their efforts to protect their property.

Warner Bros. regularly searches for illegal copies of its content on the Internet. The company seeks out peer-to-peer shared content and virtual storefronts using an automated search process and through manual Web site searches, said David Kaplan, VP and intellectual property counsel.

The legal recourse varies depending on who holds the rights, he said. If the content is exclusively Warner Bros.-owned, Warner Bros. will usually send a cease-and-desist order. If a site is peddling product from more than one studio, or there are multiple rights holders, the studios involved work with the MPAA.

“Depending on what they do, we would send a letter and demand that they stop and tell us what their sales have been. And if they don’t comply, we consider bringing a lawsuit,” he said. “For other targets, it might be more appropriate to develop a criminal investigation and turn over evidence to the authorities.” Criminal investigations can involve undercover buys.

Mr. Brandon said Warner Bros. found an average of about five “Seinfeld” sites each week during the past year, but that number has since dropped to about two a week. Predictably, the most popular shows are impacted the most. “If something is a hit, it will be more heavily traded online [through file sharing] and more units sold of pirated discs,” Mr. Brandon said.

For the week ended Feb. 13, the most popular shows traded online were “The Simpsons,” “The O.C.,” “Family Guy,” “American Idol,” “Desperate Housewives,” “Friends,” “SpongeBob SquarePants,” “CSI,” “Futurama” and “Survivor,” Mr. Garland said. Animated shows rank high because their file sizes are small. He does not track pirated hard goods. “Seinfeld” was ranked No. 18, with 299,222 transactions.

A phone number listed on the tvseriestodvd.com Web site reached a payment processing company called CW Marketing, located in St. Kitt’s in the Caribbean, according to the customer service representative who answered the phone. She declined to reveal the owner of the site. However, consumers who wish to return their “Seinfeld” DVDs were given an address in Ontario, Canada.