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Piracy Bill OpponentsWilling to Talk

Antipiracy legislation-with bipartisan support and apparent momentum-has been put on the backburner after pushback from Silicon Valley succeeded in tabling the bills.

Markham Erickson, executive director of NetCoalition, which has been battling the PROTECT IP Act (PIPA) and the Stop Online Protection Act (SOPA) on behalf of members that include Google and Yahoo!, says he is ready to talk directly with the studios, but he adds that they need to make the first move.

For its part, the Motion Picture Association of America (MPAA), which supported the anti-piracy bills, says it is willing to talk with anyone that offers constructive suggestions, and has a willingness to address what they say is a serious problem.

Michael O'Leary, senior executive VP, global policy and external affairs for the MPAA took the lead for the studios on the push for antipiracy legislation, a push he suggests remains key to protecting present and future digital content.

In separate interviews, those key players in the PIPA/SOPA opera that has played out over nearly two years talked with B&C and Multichannel News last week about what happened, what's next and why it still matters. (MPAA spokesman Howard Gantman also participated in the MPAA call.)

Is there any hope for PIPA or SOPA, or do you have to start over?
Michael O'Leary: We want to find a resolution and are not necessarily wedded to any specific form of that resolution, but we would like to come up with something that helps us deal with this problem because it is a very real one. That may not be a great answer, but it is the truth of the matter.

Whichever way you go, what are the must-have's in an antipiracy bill?
O'Leary: I am not going to negotiate specifics of anything in the press. I think we are in a process right now where we are evaluating the situation and reaching out to people who are interested in getting something done and I am not sure it serves anybody's purpose to start issuing ultimatums through the press.

We talked to Markham Erickson of NetCoalition and he said he is ready to talk with your side if you guys make the first call. So, are you willing to reach out?
O'Leary: I think we have been very clear since the middle of last summer that we are more than willing to sit down and talk to people who have legitimate concerns and constructive solutions for addressing those concerns but still addressing the underlying problem of content theft. So, yes.

Have you launched an ad campaign to continue to push for antipiracy legislation?
Howard Gantman: We haven't. Creative America launched a campaign, but we don't have a campaign right now. [Creative America is a group created last fall to drum up rank-and-file support for the bills. Its members number both creative unions and many of the MPAA member studios, including NBCU, Sony, Fox, Warner Bros., Viacom and Disney.]

Given the success of the Web "blackout" protest, did the studios underestimate the power of the Web?
O'Leary: I think it was certainly successful in achieving their underlying goal, which was to not do anything about this problem.

Do you think the talk of the bills destroying the open Internet was a red herring, or were there some legitimate issues like the lack of due process?
O'Leary: Specifically, since you raise it, I don't think there is a due process beef. The due process provisions in this bill are the same ones that apply in existing law today. I think what you saw here was a very effective campaign that motivated people through misrepresentation and distortion. I think if you throw around loaded words like censorship-there is no one that can point to any part of this bill that equates with censorship. Due process is a part of the bill. The problem is that it became about the rhetoric and not about the substance.

Our hope as we move forward is that we can set that aside. If people have legitimate concerns that they can articulate, then we are more than happy to discuss that. Simply stepping back and saying something is going to quote-unquote break the Internet is not a substantive discussion that is going to lead to any type of cogent policy.

A number of legislators reversed position and withdrew their support for the bill. MPAA President Chris Dodd suggested to Fox News that those legislators should not expect campaign contributions from the association.
Gantman: Senator Dodd was merely making the obvious point that people support politicians whose views coincide with their own. When politicians take positions that people disagree with, those people tend not to support those politicians.

Opponents of the bill say the issue may only boil down to a couple dozens sites and they are not sure how big the issue is. How big do you think the piracy threat is?
O'Leary: It seems that argument presumes that, as an industry, we just have to accept the fact that a certain number of people are going to steal from us. They always say the job loss isn't as big as we say it is. Well, at what point does it become big enough? Do we have to lose any jobs because people are stealing from us? I don't know any other industry in the United States that when they go to the government and ask them to enforce the laws to stop people from stealing from them, they're faced with this type of response. I think it is nonsensical to say you have to absorb a certain amount of loss. That is not the way our system works.

And obviously you don't feel there is not enough protection in current law or enforcement.
O'Leary: No, and by stopping these bills dead in their tracks rather than debating them it is furthering a safe haven overseas. Criminals are smart; they adapt. When you enforce against them in one area they move into another where enforcement isn't as strong. This is clearly a very profitable business because you look at the gentleman running megaupload who was indicted last week. He was living a life of affluence that most people in the U.S. can't comprehend, and it was built specifically on the back of criminal activity and piracy. So, the notion that there is not harm or it's not worthy of attention is just not borne out by the facts.

And if the SOPA and PIPA legislation had been in place?
O'Leary: His access to the U.S. would have been cut off years ago. What is happening to him now is a criminal investigation, which frankly based on his conduct that probably was warranted. But criminal investigations take a long time to build a case and an enormous amount of resources. So, over the pendency of that investigation which probably took 3 or 4 years, he continued to steal and profit from it.

What we were trying to do is create a new tool that would basically say to criminals around the world, 'You can go ahead and be a criminal, but you are not going to tap the U.S. market.' It would have been an effective tool that could have cut him off three or four years ago.

So, what is the impact of not having passed these bills on industry and the consumer?
O'Leary: I think a couple of things will happen. One is that consumers will continue to be exposed to fraudulent goods, not just movies and music, but fraudulent consumer products, like drugs and medicine that impact safety. So, the consumer will continue to be exposed to these. A black market overseas will be perpetuated. And the U.S. will have taken a step back in terms of being a world leader in protecting intellectual property, which is the lifeblood of most economies. And this is at a time with unemployment at an all-time high and a global recession. Inaction on protecting intellectual property sends a very strong signal to the rest of the world that for the first time, the United States has not stepped up and met a very serious challenge, and that hurts our overall ability to have strong intellectual property protections.

Talking specifically about TV and video, as content goes over the top, doesn't that make piracy protection that much more crucial?
O'Leary: Absolutely. Our industries are moving into that space rapidly. They are developing business models to get into that space. But if that space is built on a foundation that it is OK to steal, it is never going to reach the true promise that it holds. Historically, the U.S. has always favored legitimacy over theft. What you run the risk of happening here if you don't put certain safeguards in place is that you are creating an environment where theft is on the same playing field as a legitimate endeavor, and that can't possibly work.

But companies are putting their TV everywhere even without that legislation. Was this in anticipation of getting these bills, or do they feel they have to get it out there now, regardless?
O'Leary: I think what you are seeing is they are responding to consumer demand. At the same time, I don't think it is too much to ask the government to make sure that this new platform isn't overrun by criminal activity. So, they are continuing to respond, but at the same time we are sending a very strong message to people that will steal [content] that it is OK. At some point, those two things will converge and start to have direct impact on our ability to produce and explore new platforms.

But why wouldn't Google be just as interested in preserving content since it clearly has TV aspirations beyond homemade kitten videos?
That is better asked for them, but I think they profit an awful lot from the current environment with advertising money and people who pay to move up in the search rankings. They certainly have a business model that they profit from. In terms of why they don't want to deal with content theft, that is a question you will have to ask them.

What is MPAA's next move on piracy legislation?
O'Leary: We are reevaluating the situation and trying to assess who in this current environment is interested in trying to get something done. And based on all those factors, we hope we will be able to move forward and start to build a consensus. There seems to be a widespread agreement that this is a legitimate problem that needs to be addressed. We want to build on that, find the parties interested in dealing with that, and find a solution. If you step back, it is obviously a setback for American creativity and jobs, but looking at the positive, you are getting recognition that this problem is broad and needs to be addressed.

Are you ready to declare victory over SOPA and PIPA?
Markham Erickson: We have read in the papers today that the [Motion Picture Association of America] has launched a $3 million national ad campaign [the MPAA says the campaign is not their but Creative America's, a group that includes MPAA's major studio members plus unions] to promote SOPA and PIPA. So, I don't believe that the other side is ready for us to declare victory but is going to continue to push. And I think that is unfortunate because we remain willing to talk to the other side as partners in how we try to deal with the issue of illegal content on the Internet.

The other side appears to want to double down and take a run at this, and that will keep the issue going and we will have to continue to work to educate members about why we think the proposals as currently drafted go way too far.

MPAA President Chris Dodd has suggested he wanted to get together with your side. 
Erickson: He said he wanted the White House to convene a summit and the White House has said they are not interested in doing that. We have already provided MPAA and members our position and we are ready to engage with [them] if they are willing to engage to talk about that, and hopefully they are willing to do that. I think we would be very willing to sit down and try to get a handle on what is at stake, defining the scope of the problem and how many Websites we're talking about, where the theft is occurring, and discussing whether there are private sector solutions as well as the possibility of federal legislative activity.

And if Chris Dodd calls you are willing to talk?
Erickson: Absolutely.

Are you willing to make the first move?
The other side is the one seeking to push legislation. We're happy to meet with them and they know where to reach us, so hopefully we will be in discussions before too long.

You talk about defining the scope of the problem. Don't you agree that piracy is a huge problem?
Erickson: Well, piracy is obviously a problem; how big the problem is has never been defined by an independent body. The government accounting office, which investigates issues for the Congress, put out a report about a year and a half ago saying that the MPAA's piracy numbers were overblown and unverifiable.

The MPAA's Website says nine out of 10 instances of movies that are pirated and put on the Internet are being stolen out of movie theaters from people who are camcording them and that there are only 19 sites that they are concerned about. It depends on what you define as a huge problem. Nineteen sites is a fairly small part of the World Wide Web. And if nine out of 10 instances of piracy are happening in the movie theaters, maybe there [are] solutions in terms of putting more responsibility on theaters to be proactive that could stop the piracy from happening in the first place.

We ought to have a data-driven process to look at how big a problem piracy is and how we work as partners with the content industry to tackle that issue.

So, would your argument be that there should be no new legislation until you can define the scope of the problem?
Erickson: I think that is an argument that policymakers might want to make. Whether you are talking about clean air legislation or clean water legislation, ideally in Washington you would want no dirty air and no dirty water and pristine rivers and no illegal activity. You have to make determinations about the scope of the problem to understand that regulation that you impose that is going to cost companies and may deprive some people of some civil liberties and have some impact on the First Amendment and free speech. Those sort of collateral hits might be worth it if the problem is significantly large enough. But if you don't have the discussion in the first place, how would anyone expect a policymaker to make an informed choice about how far to go on remedies?

Do you back the OPEN (Online Protection and Enforcement of Digital Trade) Act?
Erickson: We are supportive because it is a follow-the-money approach. But even that should be subject to careful review, be the subject of hearings, have input from all stakeholders and consumers and look for unintentional consequences and ways to improve it. The sponsors of the bill-lead sponsor is Darrell Issa (R-Calif.)-have said the same thing. That is really not how SOPA and PIPA were handled.

Why shouldn't cable operators support this bill? Why is it not in their interests?
Erickson: Some of them have. Comcast, one of the biggest ISPs, which is also one of the biggest content providers with the merger with NBCU, has been supportive. I represent edge-based Internet companies and technologies companies and the calculation that [cable companies] make is hard to calibrate because they have a different business model. But I know that in speaking to many of the people within ISPs, they thought PIPA and SOPA proposals were not workable and would cause more harm than good. That is not what the Washington people ended up saying. But I think it gives those companies a chance to step back, if we are indeed hitting a pause button, and see if there is a better way forward.

Did the rhetoric get a little too heated during this process?
Erickson: Probably, but at the same time this was being driven, there was a vote that was going to happen in the Senate tomorrow [on Jan. 24], and both sides wanted to get the attention of Senators and that artificial timing was really unfortunate because it did cause people to be very vigorous in how they spoke about these issues. We are glad [Majority Leader] Senator Harry Reid [D-Nev.] has withdrawn the motion to proceed to a vote and I think that gives us a chance to have more productive conversations with the other side about what works and doesn't work.

I know some supporters of the bills in Congress took umbrage to being characterized as Internet killers. Do you really think that is what these bills would do?
Erickson: Both proposals would have fundamentally changed the way the Internet works and how they experience it. How you want to characterize that I will leave to others. Our organization never said they were Internet killers. But we did say that both bills would impose a significant drag on innovation, be a dramatic reversal of federal policy in terms of regulating the Internet and harm free speech. Those issues we thought were very serious. But the "bumper sticker" piece to that is better left to other people.

If ISPs had to get a court order, why did you have such a big problem with domain name filtering?
Erickson: They didn't have to get a court order. Having a court order is fundamental and should be in any bill. But the domain name blocking in SOPA and PIPA was most vigorously argued against by security experts who have no affiliation with our organization, and who said those proposals would impose significant cybersecurity concerns on our critical infrastructure. Ultimately, even the sponsors of the bill agreed to drop those provisions because of the cybersecurity implications.

Were you involved in the Web blackout protest?
Erickson: Each company made their own decision to participate.

Are you surprised at how successful it was?
Erickson: I am. I've never seen anything like it. Chris Dodd said he thought it was an unfortunate day in Washington and how things will be discussed going forward. I thought exactly the opposite. I thought this was a terrific day for citizen Democracy and that exactly what you want to see is people contacting members of Congress if they think something is going to hurt them.

Why were so many unions supportive of SOPA and PIPA?
Erickson: I don't know, but about a week ago the authors of Freakonomics said that they believed that the correlation between piracy and jobs is likely not accurate. It becomes classic Washington rhetoric to try to talk about jobs or the person who is the key grip or sweeping the floors. If that were what was mainly motivating the content community then Viacom's CEO would not have made $78 million last year. I'm not saying he shouldn't make whatever salary his board is willing to pay him. But this is about improving the bottom lines of the companies, and Congress has to figure out whether the public policy goals are in synch with the private sector goals of each company offering their different approaches.

What about the argument that Google and Yahoo! are just trying to protect profits from ads on pirate sites?
Erickson: It is absolutely ridiculous. There is just no amount of money that is even a blip in terms of revenue that the companies care about where they are making money off illegal content. They don't want to make money from illegal advertisements. They all have policies that reflect that. That is one of the most cynical and ridiculous arguments in this whole business.

But Google has also defended itself as showing the Internet as it is, pirate warts and all, and not as some would wish it to be. Is that an argument for displaying pirate sites?
Erickson: There is almost no way to answer that kind of question. Google takes down illegal content every day. They are not interested in showing pirates or piracy. The question is whether a solution that requires them to disappear an entire domain name, including both lawful content and unlawful content, is a reasonable approach, and Google and others have argued that it is not. You can't "disappear" an entire domain name and claim that you are being representative of what's on the World Wide Web.

There are more solutions that would allow you to take off the illegal content while preserving the lawful content. In fact, that is what the Digital Millennium Copyright Act does today. There are more effective, narrowly tailored ways to get out the unlawful content without disturbing the lawful content.

So, do you think that piracy is already taken care of by current legislation?
Erickson: We all want to encourage a world with more and more lawful choices for consumers and less and less unlawful ones. I'm not sure we ever get to a world where there is zero unlawful content. But I think to improve the situation requires both content creators to make a better product available to consumers in ways that make sense to them. For instance, we have seen the recording industry shift in that space in ways that now allow them to make money from individual song downloads. It may be the case that the movie industry is going to have to look at different policies. Today they say rent a video and it expires after 24 hours and maybe that is not the most consumer-friendly way to approach that issue.

They are going to have to look at their issues. But we are going to have to look at addressing some illegal content on the Internet. And that may require both legislative action and private sector partnership. I don't think there is one solution.

I think the biggest issue from my perspective is if you look historically, the MPAA and its members have always acted toward new technologies by first trying to outlaw them. They tried to outlaw cable TV, home video players and the iPod. Ironically, those three platforms are responsible for a major portion of the content industry's revenue. This is a bit of an overstatement, but instead of trying to outlaw the Internet, look at it as a potential means of worldwide distribution to larger and larger audiences that enable them to boost the bottom line and regenerate some of the old catalog. It is a win-win for everybody. And it is inevitable that they won't be able to ban the technology but, working with the tech companies, can exploit it in a way that is positive for everybody.

I think we are moving away from a passive, one-way experience to interactive content that will provide incredible opportunities for the content community. There are so many positive ways to look at what is happening. That should be the primary focus. And in terms of dealing with the unlawful content, we want to work with them to deal with that, too.

We would think that with video moving online, and Google having aspirations in that space beyond home videos, Web companies should be interested in fighting online video piracy.
Erickson: Absolutely. We struggled to get licenses from the content creators and hopefully we will get to a point where they have a better ability to cut deals to distribute their content.

What is the takeaway from all that has happened with SOPA and PIPA in the past few months?
Last week marks the end of a backroom deal that gets jammed through Congress without people paying attention. That is where we were headed. If you remember, even in the Senate Judiciary Committee, Chairman Patrick Leahy (D-Vt.) held the markup in private off the Senate floor where the public was not allowed to view that process. I think there was some sense on their side that if they promoted it in this way they could sort of sneak it by. Maybe, I don't know, but that is how it was viewed by many who were watching the process. I think the end of that era is probably highlighted by what happened two weeks ago.

We were an industry being asked to take up a significant regulatory burden, but we were not being invited as partners to discuss what is workable, what is effective and what's not.

You had this amazing process where one industry was saying, let's impose regulations on another industry without bringing the other industry in to meet as true partners. We thought that was curious. We wanted to be partners in trying to figure out how to deal with the problem of illegal activity and I think this process gives us a chance to do that.

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