Studios Fume as Pirates Flood Internet With Films


The most notorious film pirate on the Internet today goes by just one letter--Z.

The FBI is looking for him, the movie studios are furious with him and his fans adore him.

No one can find this mysterious Z, who uses computers to make copies of first-run movies and helps post the electronic files onto the Internet. Drawing on the stories of Zorro, his brand is a small Z that floats in a corner of the screen as the bootleg film is playing on a computer monitor.


But Z is just one of the scores of people who are flooding the Internet with pirated copies of new films. “The Blair Witch Project” was online months before it hit theaters. Days before studios released blockbusters “The Matrix” and “American Pie,” consumers could grab the movies off the Net. All free for the taking, for people with a computer and a fast connection.

“The party’s over,” said Dan Lavin, an entertainment technology analyst and research director for the investment firm International Venture Associates. “People are tired of paying $8.50 to subsidize a $250-million budget for a story that--at its most basic level--is not told very well.”

Unless the film industry curbs such Internet bootlegging now, possibly by the studios selling film online, it may well follow the path of the $40-billion recording industry. The music business so far is losing the fight against rampant online music piracy brought about by the popularity of MP3 technology.

The battle over the future of film distribution begins this fall when a generation of young consumers, many of whom believe electronic entertainment should be free, return to colleges that provide lightning-fast Internet access.

Music “piracy is still big, don’t get me wrong,” said “Space Rogue,” who runs the Hacker News Network, a CNN-like Web site that tracks news in the underground Internet community. “But all the ‘cool’ people are doing movies these days.”

Skepticism Among Studio Executives

Publicly, many studio executives dismiss the trend as an underground fetish, and not an immediate financial threat. After all, they say, the quality of the bootlegs is terrible. And the digital files are often enormous: It might take three days to download a high-quality, full-length version of “Star Wars: Episode One, The Phantom Menace” using an average-speed telephone modem.

“Right now, [movie] piracy on the Internet has not really reared its head,” said Jack Valenti, president of the Motion Picture Assn. of America. “I’m sure, down the road, it will give us some Maalox moments.”

But some film insiders are far more alarmed and propose embracing the Internet and distributing movies online.

So far, none of the major studios has been willing to take the leap. Technology experts suggest the industry must act now, noting that new computer tools have emerged, specifically ones from Microsoft Corp., that shrink the size of motion picture files--making the movies look and sound better, and vastly easier to pull off the Net.

“Microsoft’s [multimedia software player] is to movies what MP3 is to music,” said Scott Sander, chief executive of “It’s already huge [and] the studios know it.”

Online film piracy grabbed attention earlier this year after a bootleg of George Lucas’ “Phantom Menace” began circulating on the Net the day of the film’s theatrical release. Lucasfilm attorneys have sent cease-and-desist letters to several suspected pirates and Lucas’ staff is working with the FBI on the issue.

No one knows how many movies are being swapped on the Net. While the trend is likely to have little immediate financial impact on theatrical releases, it could eat into video rentals, pay television and free television markets for film.

Generally, illicit movies are not being exchanged on the World Wide Web, where copyright enforcement is easier. Instead, bootleg fans are flocking to the Internet’s underground: Usenet newsgroups such as alt.mpeg, and the thousands of chat “channels” on the Internet known collectively as IRC, or Internet Relay Chat.

People gather in these channels to anonymously talk and trade goods--music, movies, software, games. Many mainstream adult consumers don’t even know this part of the Internet exists. But for computer experts, and the boom of teens and twentysomethings who grew up in the Information Age, IRC is just another virtual place to hang out.

“There are cases ongoing, but we haven’t made any arrests yet,” said FBI Special Agent George Grotz. “We know people are doing this online and elsewhere.”

At an underground computer game party in San Francisco recently, cigarette smoke hangs in air that smells like a T-shirt worn at one too many bars. Shocking-pink and orange cables snake through the warehouse, connecting 250 computers and the people who are playing on the machines. Over these wires, the young partygoers swap bootleg software and stolen movies.

The digital offerings read like the marquee at a local mall. “American Pie.” “Eyes Wide Shut.” The director’s cut of “The Matrix.”

Keanu Reeves stares out of the computer screen and straight at “Karl,” a 23-year-old computer systems technician who says he works for Lucent Technologies. The film sounds a bit flat. The picture looks a little dark.

But it’s free. And Karl won’t have to see it in the theaters, or buy it when it comes out on DVD.

Made Possible by MPEG

What makes all this possible is MPEG, a series of digital formats that compresses video and audio files. Scores of companies have created software players that let people watch videos saved in this format, or listen to MP3 music. And online pirates--many of whom do this for bragging rights, not profit--use MPEG tools to bootleg films.

This is how it works. A “ripper”--such as the sought-after Z--gets a copy of a movie.

Some films are grabbed from industry screening tapes or stolen in the production process: One version of “American Pie” available on the Net has the studio’s identifying tag “Property of Universal P.O. 2494” stripped across the bottom of the screen. Others, such as “Eyes Wide Shut,” are duped by smuggling a video camera into a movie theater.

The ripper uses software to convert the film into a digital, MPEG file. He then hands the file off to “couriers,” or groups of people who anonymously distribute the file on the Internet.

The pirated films can then be played on any computer with MPEG-player software--such as Apple Computer Corp.’s Quicktime or Microsoft’s Windows Media Player--or copied onto a recordable disk.

The key to all this is size and speed: The smaller the file, the faster the Internet connection, the shorter the wait.

Using software built into the latest Microsoft Media Player, a two-hour movie can be squeezed down to about a 270-megabyte file, say company officials.

With a telephone modem with a rated speed of 56 kilobytes per second, that file may take 19 to 24 hours to download.

“I know this seems like an insane amount of time to spend downloading,” said Lance Trebesch, general manager of the Los Angeles office of Viant Inc., an Internet services firm. “But think about it this way. You start downloading as you go to bed. You go to work. By the time you get home, it’s done.”

Anyone with a cable modem could grab a copy in about three hours. For a college student with a higher-speed connection to the Internet, it will take about 30 minutes.

Files Can’t Be Played on DVD

The downside of that technology: Copies can’t be made on a compact disk, so it can’t be played on a DVD player. But it is possible to hook a computer up to a television set, and watch a pirated movie that way.

Microsoft officials insist they cannot be held responsible for such film piracy.

“We make technology, and people use it in different ways,” said David Britton, lead product manager of Microsoft’s Windows Media division. “We can’t control what everyone does with our software.”

It’s a relatively inexpensive process, notes Trebesch. Anyone can be a digital film pirate as long as they have a VCR or DVD player and a computer with an MPEG encoder card, which cost less than $300. The software needed to do it is often free.’s Sander says he demonstrated how easy it is to make a digital bootleg off a DVD movie at a recent meeting with one of the major film studios.

“Half the people insisted that an 8-year-old could do it. The other half insisted a kid would have to be in eighth grade to do this,” Sander said. “No one got the irony that [either way] this is simple enough that even a child can do it.”

Many movie industry executives still believe it may take five years or more to solve the legal and technical barriers to providing video on demand over the Internet.

But the public’s growing access to fast online connections makes movie downloading a more immediate prospect for many consumers.

In a speech at a recent technology seminar, Columbia TriStar Home Video president Ben Feingold proposed that the entertainment industry prepare for movies being delivered digitally--and at the same time--to homes, theaters and video rental shops.

Dozens of companies pushing digital distribution have emerged, such as Pennsylvania-based cutting a deal with Artisan Entertainment to show the low-budget thriller “Pi.” And “new media” studios such as WireBreak Entertainment and AtomFilms are broadcasting short films by young directors on the Web.

But the problem of piracy is starting to bleed into the mainstream.

After the Littleton, Colo., school massacre, the WB network decided to delay airing May’s season finale of “Buffy the Vampire Slayer.” Fans of the show, however, obtained copies of the episode from a Canadian broadcast and digitized the hourlong program.

On May 25, when the finale had been scheduled to run, computer users found a rash of digital bootlegs of the show on Internet newsgroups and Web sites.

For some of the people who took part in the piracy, this wasn’t about making money. Instead, they say, it was about consumers empowering themselves and using technology to defy faceless corporations.

“It’s like MP3s,” said one fan, who spoke on condition of anonymity because, he admits, he’s breaking federal copyright laws by downloading and distributing such files. “If we want it, we want it for free. If we like it, we’ll buy it.”

Industry experts note that people consume music and movies in different ways. Songs are often heard multiple times and in many different settings. But most people see a film only once.

“Look, people are not going to watch a ‘Phantom Menace’ only on their computer, because the sound and the special effects aren’t going to come through,” said Bill Shields, chairman of the American Film Market Assn. “But you may watch a ‘Runaway Bride’ or an ‘American Pie’ this way, because these are films that don’t rely on the size and scope of a theater experience.

“Besides, who goes to see these kind of movies twice?” he asked.


Digital Blackbeards

No one knows how many pirated movies are being swapped on the Internet, but sources say that tens of thousands of bootleg video files--pornography, television and films--are downloaded each day. What makes it possible is MPEG, a series of digital formats that compresses video and audio files to make them small enough to send to someone across the Internet.

How They Do It

1. Filming movie in theater

A “ripper” gets a copy of a movie: grabbed from industry screening tapes, stolen in the production process or videotaped by someone in a theater.

2. Video camera-computer

The ripper takes the film and converts it into a digital file. Using software, the file is compressed into MPEG format, and copied onto a disk.

3. Disk-Courier

The ripper gives the file to “couriers,” who anonymously distribute them.

4. Computer-To Internet

The file pops up in large computer service sites on the Internet or is discreetly swapped between friends in Internet relay chat “channels.”

Source: Los Angeles Times