Studios Cut to the Chase

At 5 a.m. the police kicked in the front door of the modest apartment house near working-class Essen. Guns drawn, they ordered the family out of bed. A few minutes later, they hauled away a 22-year-old college student as his stunned parents looked on in silence.

This wasn’t a scene from a big-screen police thriller. But it had Hollywood’s fingerprints all over it.

The German Anti-Piracy Federation, a private investigating organization funded by U.S. studios, German independent film companies and electronics firms, worked with law enforcement in March to stage hundreds of raids across the country. In all, 12 people were arrested.

“This was our D-day,” said Jochen Tielke, managing director of the federation.

His wartime metaphor is well chosen; Hollywood sees Germany as a crucial battleground in its assault on piracy.

Industry officials say the country is the Internet piracy capital of Western Europe. Although black-market street sales of pirated movies proliferate in Asia and Latin America, experts say, much of the problem in Germany involves widespread downloading and copying, with little social disapproval.

Bootleg DVDs are openly traded in schoolyards and shown in country clubs, bus depots and even by teachers in classrooms. In addition to the home-grown piracy, movies smuggled in from Russia, Poland and the Czech Republic feed a busy network of German flea markets.

U.S. studios maintain that the downloading problem in Germany hit a high point last year and caused a significant dip at the box office. German cinema admissions dropped 9.1% last year, the steepest decline in Europe, officials say. (By comparison, Britain saw a decline of 4.9%, Italy 5.6% and France 6.5%. In the U.S., admissions dropped 4%.) There may be other factors at work beyond piracy -- a surplus of new theaters, a shortage of crowd-pleasing films and an unusually hot summer that drove Germans outdoors are among the theories offered.

Still, Germany is the largest market for Hollywood films in continental Europe and the third-largest among foreign markets, behind Japan and Britain, so U.S. studios took notice of the decline.

Officials estimate that piracy resulted in the loss last year of about $980 million in German DVD and theatrical sales.

One of the reasons for the rampant piracy, officials say, is that the rate of broadband access in German households is among the highest in the world. Nearly 69% of German homes with Internet access have broadband, according to a Nielsen/Net Ratings report in January. (Broadband significantly speeds the downloading process. Among U.S. homes with Internet access, 43% have broadband, the Nielsen report says.)

As technology improves, Germany is a harbinger, the studios fear.

“Germany is only unique timewise,” said Willi Geike, head of Warner Bros. in Germany. “Two years from now it will be the same in other territories. It’s coming. We were just the first ones.”

Although industry officials point to the box-office decline as an immediate concern, a larger issue ultimately may be the future of DVD sales -- a driving force in Hollywood economics these days. DVD sales jumped 43% to $14.9 billion last year, out of a record $41.6 billion in total revenue from all media streams worldwide.

The studios worry that Internet piracy will eventually decimate the movie business as it has the music industry, so they’re hiring copyright lawyers, filing civil lawsuits and exerting political pressure on foreign governments through the U.S. government and the studios’ trade organization, the Motion Picture Assn. of America.

The MPAA has helped bankroll 57 antipiracy organizations around the world, which are doing the investigative legwork most law enforcement agencies consider too low a priority to pursue. The group will not divulge the size of its investment in the groups.

In Germany, as in other countries, the campaign goes beyond bringing down high-tech pirates.

Undercover investigators from the German antipiracy unit visit flea markets nearly every weekend. At a bustling flea market in Essen one Saturday in May, scores of young men and women with briefcases full of illegal movies sold their wares for about $6 apiece. Next to the Polish sausages, magazines and jars of pickled vegetables were German-dubbed versions of “Kill Bill Vol. 2,” “The Girl Next Door,” “Runaway Jury” and “50 First Dates” -- none of which were officially out on DVD and some of which were not even in theaters.

It’s become a cat-and-mouse game: Lookouts at the entrance to the market spot an investigator or cop, tip the vendors with a cellphone call, and the sellers pack up and disappear.

Ralf Heuken, an investigator with the German antipiracy unit, said the pirates -- most of them immigrants from Poland and Lebanon -- run a highly organized operation.

Some of the Polish groups drive across the border in trucks loaded with legal goods mixed in with illegal DVDs, CDs and cigarettes, Heuken said. The beefy former police detective is such a regular presence at the Essen flea market that, on a recent visit, a group of vendors scattered as soon as he walked by.

At the markets, the pirates tend to traffic in Hollywood fare. But German independent filmmakers say piracy is affecting their business even more profoundly.

“It’s a disaster,” said Stefan Arndt, producer of “Goodbye Lenin,” the country’s biggest hit last year. Officials estimate that at least 770,000 illegal copies of the movie were made -- a loss of about $1.7 million for Arndt’s production company, X Filme Creative Pool.

“That number means we cannot make three new films this year,” he said. “What is going to happen is that independent films like this will disappear, and in the end all you are going to get are more ‘Harry Potters’ and more ‘Lord of the Rings.’ ”

Arndt said movie piracy was so common and socially acceptable that it had reached into his own household. “I told my stepson, ‘No more swimming pool, no more car, nothing, because we live from film,’ ” he said, noting that the boy frequently used to bring home pirated films. “Our culture is in real danger. Every pirated print of music or film means that new ideas, younger talent and difficult themes will be harder to make.”

Meanwhile, the Germans are trying another tack as well, playing to a cultural affinity for following the rules.

“People would say to me, ‘It’s not illegal, we got it from our sons,’ ” said Andreas Dustmann, a copyright lawyer hired by Warner Bros. to work on piracy issues in Germany. “Germans like rules. If they become familiar with the rules, they follow.” So last year the German film industry launched a major public awareness campaign.

In nearly every German theater, an antipiracy commercial is shown before the film. In one, an attractive woman wearing a lacy black bra urges her hacker boyfriend to come to bed. But he ignores her because he is too busy downloading. She then threatens him: “Come to bed or I’ll call the police.”

Another ad features two pirates walking into prison. They make their way past two hardened criminals who size them up with sly looks. The commercials make it clear that raubkopierer -- “copy robbers” -- face substantial fines and a maximum five-year prison sentence.

But for the 22-year-old arrested in Essen, the commercials are “a joke.”

“People laugh about the trailers,” said the self-described computer geek, who asked that his name not be used.

Which is not to say the current crackdown has lacked educational value.

The accused pirate, who is awaiting trial, said he had “retired” from the business. Downloading was not good for his lifestyle or complexion: His girlfriend broke up with him because he spent so much time in front of the computer, and his face is a nearly translucent white from never seeing the sun.

Even more important, “no one wants trouble with the police,” he said, lamenting the thousands of dollars he has had to pay in lawyer’s fees. “Only the raids work.”

Times staff writer Jon Healey contributed to this report.