(the Hollywood Reporter)
Sep. 30, 2006
Wright: Economy under attack
By Brooks Boliek
WASHINGTON -- In a call to arms for American industry, NBC Universal chairman and CEO Bob Wright urged the nation's political and business leaders to attack piracy and counterfeiting with a vigor nearing that of the war on terror.
In a speech Friday titled "A Time of Reckoning" before the U.S. Chamber of Commerce, Wright said the threat piracy poses to the country's economic security was nearly equivalent to the threat terrorism poses to the nation's physical security.
"Five years ago we learned, tragically, that our physical security is under attack," he told the audience at the chamber's symposium on counterfeiting and piracy. "Since then, we've been a nation at war, with immense resources mobilized to fight a difficult struggle against an elusive enemy. Today, I want to suggest that the second pillar, our economic security, is also being challenged."
Wright warned that the problems the entertainment industry faces because of piracy will soon hit other economic sectors.
"At risk is every sector of the economy where creativity, innovation and invention drive the creation of economic value and high-wage jobs," Wright said. "If we do not step up our efforts to protect the foundation of future economic growth, our nation and our children have a bleak future. This issue needs to be moved up on the agenda of every business leader, every trade organization and every congressional office."
To prove his point, Wright released a study claiming that motion picture piracy has a broader impact on the nation's economy than previously thought.
The study by the Institute for Policy Innovation claims that economic costs of motion picture piracy alone are $20.5 billion when the ripple effect of the problem is calculated. Steven Siwek, the study's author, said related costs go beyond paying the actors, producers and grips to include the salaries for ticket-takers at the movie theater, attorneys fees paid by the studios and catering costs. The study didn't include things like the salaries of trade journalists who cover the industry.
Piracy not only takes money out of the economy but increases the federal deficit as it costs $837 billion in lost tax dollars, $5.5 billion in lost wages and costs 141,030 jobs.
Wright appealed to the assembled business leaders, which ranged from auto-parts manufacturers to pharmaceutical makers, and politicians for their help in battling the bootleg scourge.
He also pushed Internet service providers and consumer electronics makers to enlist in the anti-piracy crusade, arguing that they have as much to lose as the copyright industries.
"The conventional wisdom is that many people on that side say that technology has outgrown copyright protection," he said in answer to a reporter's question. "That is just ridiculous. It is just as ridiculous when it happened when they had the development of the telephone. It is just as ridiculous when they had development of wireless technology 150 years ago. It was ridiculous when radio and television came along. Article 8 in the Constitution covers copyright protection. It's in the Constitution. It's not as if someone thought it up in 1880."
Wright pushed ISPs to take on a more proactive role in the war on piracy, saying that they need to begin actively filtering content for copyrighted works that were being illegally transported on their networks.
ISPs have traditionally resisted that idea. In the fight that led up to passage of the Digital Millennium Copyright Act in 1998, the ISPs won a critical legislative victory that holds them blameless for copyright infringement when they act as a "pure conduit." Because big network companies like Verizon are getting into the content business, making deals with companies like Wright's to transmit high-value programming and are beginning own content themselves, they may be more willing to take an active role, Wright suggested.
"The reality is, they're going to have to accept some level of responsibility for that," he told reporters. "They will not just say they are pipes. They are clean pipes. It's going again to the issue of: What did you know? When did you know it? What could you have done? Why didn't you do it? That will evolve, as to what that means, over time. It will evolve more quickly if it was, as I said, if it was the engineering drawings of a B-1 bomber."
Wright said services like YouTube were flirting with copyright infringement, but he hoped that would get worked out, too.
"There's a lot of pirated material on that. It will catch up with them, and we'll catch up with them," he said. "It has a little bit of the Grokster kind of an appearance and feel. They know it, and we know it. Sooner or later, it'll all get ironed out, and at some point people will take action to prevent it."
NBC Universal executives said the company and YouTube were in negotiations over ways to prevent copyrighted material from being abused on the service and said the company has been responsive in taking down infringing material when discovered.