Alarm sounds on piracy

'Ray' helmer discusses illegal discs at D.C. hearing

WASHINGON — The film industry will be destroyed if rampant piracy goes unchecked, “Ray” helmer Taylor Hackford told a Senate subcommittee hearing Wednesday.

In particular, pirated DVDs threaten the livelihood of thousands of behind-the-camera workers as well as the future prospects of securing financing, which is already extremely difficult, he said.

The Senate Judiciary Subcommittee on Intellectual Property hearing focused on piracy in general, though problems in China and Russia dominated the discussion. Several witnesses who testified reiterated points they made in a similar hearing last week before a House subcommittee — that piracy in those countries is widespread and rapidly becoming institutionalized.

But while House subcommittee members unsuccessfully pressed an official from the White House Office of the U.S. Trade Representative to specify when the Bush administration would take concrete actions against China and Russia, Senate subcommittee chairman Orrin Hatch (R-Utah) warned the administration that it must do more or it would lose his unqualified support on free trade.

Hatch described the testimony of the six witnesses who spoke as “stark,” with some of the most graphic coming from Hackford.

The majority of film industry jobs are not onscreen and many artists and technicians “are freelance,” he said. “We do not get a steady check.” That’s why residual payments — monies from markets following theatrical release, such as television broadcast of a movie, or a DVD version — are crucial to industry workers. “These go toward our health and pension plans,” Hackford said.

DVD sales and rentals far exceed domestic theatrical box office and account for more than 60% of studio revenues. “DVDs are the main source of revenue for the future,” Hackford said. Moreover, 55% of film revenues come from overseas, he continued, and most DVD piracy is occurring overseas. Hence, piracy erodes the major source of residuals and the most bankable assurance for investors.

“Fewer films will get made” because investors will be less willing to take a chance on a movie, Hackford told Daily Variety after testifying. “Piracy will mean a loss of jobs and it will be devastating to the economy.”

China’s import limitations effectively promote a market for pirated movies, USTR general counsel James Mendenhall testified. “China puts a cap on the number of movies it allows in every year,” creating a huge demand for the movies that don’t get in, he said.

Hatch, a longtime champion of intellectual property rights and a staunch supporter of free trade, said he would seek trade sanctions against Russia and China if the administration didn’t start getting tough with the two countries on intellectual property.

“I might as well warn the administration now,” he said. “Unless it demands that China and Russia start abiding by international (intellectual property) norms, it’s going to lose a very strong free trade advocate in me.”

Mendenhall said the administration is closely watching developments and will pursue “possible (World Trade Organization) measures” if China and Russia don’t show significant improvement in intellectual property protection.