MPAA at crossroads

Org faces challenges of digital and divided agendas

There will never be another Jack Valenti at the MPAA. Everyone agrees about that.

But whoever the six major studios choose to lead Hollywood’s chief lobbying group, that person will face dramatic challenges in defining the org’s role in the Internet era.

Still one of the highest-paid lobbying gigs in Washington — and certainly one of the more glamorous — the job is ever more wonkish as the org pursues an agenda of fighting digital piracy and curbing copyright theft via complicated trade pacts.

The MPAA finds itself pulled in all sorts of directions on issues like net neutrality — caught between competing sentiments even within the parent media congloms themselves — as well as competing voices among increasingly powerful lobbying arms in the tech sector. And as studios test the boundaries of digital delivery of movies into homes, they run the risk of alienating other trade groups like the National Assn. of Theater Owners.

“We’ll miss Dan,” says Warner Bros. chairman and CEO Barry Meyer, referring to Dan Glickman, who recently left the post as MPAA chairman after six years as Valenti’s successor. “But this is an opportunity for all of us, as we are searching for his successor, to get refocused on our mission.”

The org already runs differently than it did during Valenti’s heyday: Member studios instituted more traditional governance during Glickman’s tenure in contrast to the looser oversight Valenti enjoyed, and they’re using this transition period to further re-examine the way the org runs.

The mission has always been to preserve and protect content production. But the member studios have a lot more on their plate than they did when Valenti took the helm. They’re all part of large congloms with diverse interests around the globe.

“The world has gotten a lot more complicated,” says Bob Pisano, who is serving as interim CEO of the MPAA. “That makes our job more complicated.”

An example: Recent months have seen the MPAA rapidly mobilizing its lobbying strength on members of the Senate and House agriculture committees, of all places. The issue: the trading of futures contracts, or derivatives, tied to box office performance. The agriculture committees oversee the Commodity Futures Trading Commission, which will decide whether to allow such derivatives to be bought and sold. The studios’ are dead set against it.

But even though two firms, Media Derivatives and Cantor Fitzgerald, had been planning the exchanges for some time, the issue had not even been on the studios’ radar until the trading firms started publicizing the ventures in March. Now, even as the two exchanges cry foul over the studios’ late-innings lobbying push, the MPAA may succeed in getting them blocked, as a short provision in the Senate’s financial reform package prohibits box office trading.

The dustup, though, may help bolster sentiments that the MPAA needs a well-connected Washington personality — or at the very least a stronger army of lobbyists — to make its case.

Much more complicated, however, is digital piracy.

Under Glickman, the org made strides in at least getting the issue on lawmakers’ agenda. With a number of copyright-centered industries pushing for it, a new law was passed mandating the creation of a White House “copyright czar,” and the post was filled late last year. In December, Vice President Joseph Biden gathered an array of media types for a “piracy summit.” In February, the Justice Dept. established an Intellectual Property Task Force.

While antipiracy laws have been strengthened in countries like France, by all accounts it is still an uphill battle. The worry is ever-present that the movie business will suffer the same fate as the music biz, particularly as technology advances make Internet speeds ever faster.

The MPAA has cast content theft as a loss-of-jobs issue, touting that message with a biannual gathering of lawmakers, stars and studio chiefs designed to highlight the role of Hollywood in America’s economic strength. However, it’s a tough sell in the face of red-carpet perceptions of the biz. Despite public service announcements at multiplexes and elsewhere, it’s not entirely clear that public sentiment, particularly among the teen moviegoing audience, really has shifted to see online piracy a form of theft.

“In the early days of VHS, we had garage operations where people would duplicate tapes, but nothing approaching the disrespect and level of theft we see today,” says Pisano, who joined the MPAA as its president in 2005 after stints as a lawyer, studio exec and former national executive director of the Screen Actors Guild. “It’s not just the movie business. It’s the music business, it’s the newspaper business, it’s books and pharmaceuticals.”

“Because it’s so pervasive,” Pisano adds, “there’s no silver bullet.”

He believes children should be taught to respect creativity in elementary school. “We don’t walk into a store and shoplift,” he says. “Somehow the moral code broke down online. The wire got loose.”

That P.R. campaign isn’t just a matter of perception but politics. When it comes to fighting piracy, the MPAA has found itself in the crosshairs of an army of interest groups.

Orgs like Public Knowledge and the Electronic Frontier Foundation have been critical of industry motives on efforts like a proposed Anti-Counterfeiting Trade Agreement — an international effort to boost enforcement of intellectual property laws as a backdoor way to dramatically change copyright infringement penalties. Among other things, such interest groups raise worries that the industry is seeking a requirement that Internet providers turn off customers’ accounts when they are found to be illegally trading or viewing movies, but MPAA officials say that what they are pursuing is greater cooperation among providers.

As such, they’ve tried to get cable and telecom companies to adopt what has been called “graduated response,” or in layman’s terms, “three strikes”: When a customer begins illegally trading or viewing movies, they receive a real-time notice. If they persist, Internet providers would then throttle back the customer’s bandwidth to deter improper viewing or trading, or restrict such subscribers to a walled garden of Internet usage, wherein they might view email and little else.

“It’s technologically do-able,” Pisano says, noting that it’s easy for software to detect contraband movies through tags embedded in content files.

The good news, Pisano says, is that recidivism goes down with each subsequent notice to those engaged in this casual theft of intellectual property.

But the new leader of the MPAA also will have to find consensus among the studio chiefs — to act quickly in a business where conventions shift quickly then shift again — and then try to navigate the glacial pace of D.C. policymaking.

Studios recently won a waiver from the FCC that allows them to beam movies into homes with a greater degree of copy protections, but they submitted their request two years ago. The org also is smaller than it once was, following layoffs at the behest of member companies. And according to the MPAA’s 2008 tax return, its expenses were $66.9 million, compared with $93.2 million the prior year. Meyer says he doesn’t expect any more wholesale cutbacks, but rather a constant pruning and reallocation of resources as would occur at any large company.

Whether it’s a star, an industry type or a tech-savvy wonk, the new person at the top of the MPAA will quickly discover the job is more than a walk-on at the Academy Awards. Even Valenti, who made it look so easily, was known to express frustration.

The studios’ effort to ban award-season screeners divided the business and ended in an MPAA loss in court, even as Valenti insisted all along it was about fighting piracy. In his memoir, he called the whole affair, which played out in the final months of his tenure, “a sad piece of business.”

“The only good news was that I was damn glad it was over,” he wrote. “It was a bitch.”

Ted Johnson contributed to this report.

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