Paramount Exec: We 'Can't Compete with Free-by-theft'

16 Dec, 2010 By: Chris Tribbey

Phil Lelyveld, program manager for the Consumer 3D Experience Lab; Robert Speiser, CBS Films; and Jo

LOS ANGELES — There are millions of websites out there, and very few can lay claim to nearly the same amount of traffic MegaUpload.com enjoys.

The file-sharing site ranks at No. 73 among the most popular websites in the world, according to online tracking firm comScore, and it’s sites like these that really get under the skin of studio executives, including Chris Carey, EVP of worldwide technical operations for Paramount Pictures.

“We estimate $27 million to $238 million a year [in profit], and that’s just one site,” he said Dec. 16, speaking at the Digital Media Summit at the University of California, Los Angeles. “Because there’s real money behind it, we’re certain there’s organized crime behind it.”

One out of five visitors to the site pays a subscription fee, Carey said, and with bandwidth the only major expense for the site, the site’s owners walk away with easy millions, made off of content they neither own nor license.

The studios’ solution is multi-pronged, Carey said. First, they’re working with payment processors, such as Paypal, to stop the facilitation of transactions, and with legitimate advertisers, such AT&T, CVS and Netflix, to stop paying for space on illegal sites.

“We wrote to [Netflix co-founder and CEO] Reed Hastings and said ‘Have you seen this?’” Carey said after pointing to a Netflix ad on a pirate peer-to-peer site. “’Oh my God, I had no idea. How do I fix this?’” was the response.

It was “a legitimate movie distributor with ads on an illegitimate site,” Carey said.

Secondly, the studios are learning from the mistakes of the past, and are tackling the pirates at the source, instead of suing the people who download the content.

“Suing your customers isn’t a winning strategy,” Carey said. “You’ve got to stop it at the source.”

Current legislation allowing the federal government to more easily shut down pirate sites is a good sign, he said.

And necessary if the studios are to protect their interests, Cary said. Industry estimates show 10% of all American Internet users access peer-to-peer sites, he said.

“I can’t compete with free-by-theft,” he said.

Part of appealing to consumers’ better nature — and their wallets — can be done on the front end through legitimate channels, according to John Griffin, senior marketing manager for Dolby Laboratories' consumer electronics division.

“Consumers really do care about a genuine experience,” he said.

A free, shaky camcorder recording with crap for sound will lose out to a well-priced, clear-quality, legitimate version of the same content, he said.

“Two words: On-demand,” said Robert Speiser, director of interactive marketing and promotions for CBS Films, about the best way for studios to get paid for legitimate content.