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Movie biz obsesses about pirates even as it plunders box office booty

While the movie industry obsesses about fair use and so-called piracy, it …

Despite concerns about the extent of piracy, the movie business has pulled in record revenues this summer, earning more than $4 billion in box revenues in the US alone.

Media by Numbers, which tracks such things, estimates that the industry will rake in $4.15 billion (PDF) by the end of Labor Day. That's despite record-high average ticket prices of $6.85, up $0.30 from a year ago. That's even despite claims that piracy is on the rise, and it's harming the industry.

As you may recall, the movie business has been publicly obsessed with piracy since 2005, when US box office revenues dropped 5.7 percent in a single year. To hear Hollywood tell it, piracy sapped that revenue straight out of the industry, and the industry has focused on little since. The extent of the studios' concern is easy to gauge: just look at the MPAA homepage. Nearly every featured item on the home page (apart from a box allowing visitors to type in their favorite movie) concerns piracy. The three stories currently showing under "news and issues"? They're all about piracy. The four boxes beneath the "Magic of the Movies" picture? They're all about piracy. Parental resources? It's about... oh, never mind.

Even two of the three most prominent links at the bottom of the page point to and The MPAA clearly spends a lot of time thinking about piracy.

But since the 2005 slump, the industry is doing fine... perhaps great. US box office revenues in 2006 jumped 5.5 percent to $9.49 billion (just a couple bucks short of 2002's record high), and the 2007 summer season has just set a revenue record. These are the sorts of problems most businesses would love.

None of this is to say that piracy isn't a legitimate concern for the group; of course it is. Their own press releases repeatedly detail the schemes of commercial pirates with DVD stampers, camcording rings that race to put out the first copy of a new hit, and entire countries where it's difficult even to find a legitimate film for sale.

"Paranoia... profit destroya"

It's just that the level of concern is out of proportion to how well the industry is actually doing. And that concern has led the industry as a whole (moving beyond the MPAA itself) to something approaching paranoia. Business paranoia is bad; it paralyzes innovating thinking, discouraging it from innovating.

Why else would studios make it so difficult to burn legally-purchased films to DVD? Why else would it feel compelled to argue that DRM helps honest users when it makes "honest uses" more difficult? Why else would theater owners resort to draconian zero-tolerance policies instead of applying a bit of human judgment?

The movie business has yet to step in the PR bear trap that currently has the RIAA's leg clutched between its teeth—a good sign. Dean Garfield, the MPAA's head of legal affairs, is a thoughtful, soft-spoken guy who recognizes that the industry has to be impatient to solve the issues that vex consumers. That attitude seems like the best approach to curb noncommercial file-sharing; make it easy for users to buy and use the legitimate product (CSS and AACS, I'm looking at the two of you!). Commercial (for-profit) piracy, of course, needs to be actively pursued and shut down. But we can't help but wonder how much money has been left on the table by the industry's reluctance to compete with piracy, and instead try to stamp it out.

While the industry continues to struggle with getting its collective head around the Internet, it can at least take comfort from the fact that piracy isn't stopping the studios from earning Blackbeard-style revenues. Think of how much more they could earn by adopting smarter business models to combat piracy in the marketplace, rather than the courts.

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