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Media execs fret over high-tech piracy

5/24/2002

By Bernhard Warner, European Internet Correspondent

LONDON, May 23 (Reuters) - On the streets of Cannes and inthe recording studios of Southern California, weary media bossesthis week were once again asking themselves how to protect majormovie and record releases from piracy.

For the music industry, sophisticated anti-piracy measures,such as the expensive deployment of copy-proof technology forcompact discs, have proved a fiasco.

Pirates literally delved into their pockets to foil one ofthe latest defences. They found that scribbling over the edge ofa copy-proof disc with a magic marker de-activates Sony Music's<6758.T> proprietary technology.

And efforts by music labels to clamp down on promotionaladvanced copies for major recording artists have also beenineffective with highly touted releases -- including those forbadboy rapper Eminem and UK rockband Oasis -- leaking into themarket to the consternation of record executives.

Movie studios have not fared any better. For years, inferiorquality bootleg VHS and, more recently, DVD copies have beenpeddled on street corners of major cities around the globewithin days, or even hours, of a box office debut.

With the rise of online file-sharing sites like MorpheusMusicCity and LimeWire, the gap has closed. Fans can downloadmajor releases from the Internet before they hit the streets, ashappened with this month's blockbuster "Star Wars Episode II:Attack of the Clones".

"If this is going to happen as it happened with Eminem, itwill have implications for everyone because of the scale andspeed of it. The Internet facilitates piracy on a scale not yetseen before," a label official lamented.

RE-ASSESSING RELEASE STRATEGY

Piracy is nothing new for the entertainment industry. Butwith the uptake of high-speed Internet connections, the stakeshave been raised. In the wrong hands, a new movie or album cannow be distributed to untold numbers in a blink.

Music executives, for example, are scratching their heads asto how to limit the impact of piracy for a major release, which,if pervasive, could hurt the crucial initial sales period.The formula around major album releases has changed littleover the past few decades. Labels give preview copies to themedia to generate buzz while retailers get advanced shipments tofill their shelves in time for the launch date.

Labels are increasingly viewing these outlets as potentialleaks though, realising that just one copy of an album in thewrong hands could torpedo an entire record launch. One musicexecutive suggested artists may start recording by themselves orwith a few trusted producers to protect their work from Netpirates.

"Culturally, it's become acceptable to download music and Ifear the same thing will happen to movies," Rick Sands, chairmanof world-wide distribution for Disney-owned Miramax FilmCorp., told Reuters.

SLIM SHADY PIRATES

The problem came to the fore this week when InterscopeRecords, a division of French media conglomerate VivendiUniversal , made an unprecedented move.

It pushed up by a week the release of The Eminem Show,expected to be a top-seller this year, citing "an unprecedentedlevel of Internet piracy" and "illegal bootlegging".

Universal officials said inferior quality bootlegs werespotted on the streets of New York. And the whole album isfreely available on Morpheus and LimeWire, along with bogustracks from the album that loop continuously. "In today's digital universe, where piracy and bootleggingare occurring in every city in the world, we had no choice butto respond to an enormously frustrating problem," Steve Berman,Interscope's head of sales and marketing, said in a statementexplaining the new May 28 release date for Eminem.

THE DIGITAL DIVIDE

Movie studios face a similar challenge, particularly as theindustry migrates to digital film-making. The benefits arenumerous, including the ability to add details after the filmhas been shot.

Movies in digital format can also be shipped to theatresaround the world with relative ease, in the same way as a largecomputer file is sent over an Internet connection.

But that distribution freedom is also seen as a huge gamblegiven the ability of pirates to intercept and circulate digitalfiles.

In many cases, the movie industry will stick with its policyof staggering movie releases to allow for the stars to visit thecity and schmooze with the media first, Sands said.

But piracy has forced the hand of studio executives in somemarkets, he added. "You really do have to go out early in partsof Asia because of piracy," Sands said, noting that persistentproblem spots continue to be China and the Philippines.

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