Video Pirates: The Bane of Hollywood

60 Minutes' Lesley Stahl Investigates Multi-Billion Dollar Video Piracy

(CBS)  Where do you think organized crime is making its money these days? With drugs, gambling, and prostitution? Yes, but also - and this may surprise you - the movies.

Mobsters have moved into the movie piracy business and it is bleeding Hollywood to the tune of billions of dollars a year.

Movie pirates used to be small-time operators, selling VHS copies of films on the sidewalk for $5 or less.

But now, with the Internet and DVDs, the movie piracy business has exploded, and police departments across the country are struggling to keep up.

Every month, a special unit of the Los Angeles Police Department mounts two or three raids looking for pirates. Just last Thursday at a raid on a warehouse in downtown Los Angeles, they arrested two men who they say have been filling orders for counterfeit DVDs for years.

Detective Rick Ishitani found one of their order books. "These are movies titles that just came out. 'Angels and Demons,' they ordered 100 movies. And 'Terminator,'" the detective explained.

Police say the suspects were wholesalers who acted like mobsters. They would pick up customers in a van and drive them around blindfolded, before bringing them to the warehouse to fill their large orders.

In the last four years, the LAPD has confiscated nearly a million counterfeit DVDs.

The DVDs are made by pirates who often sit in the back row of theaters and record movies with tiny cameras.

Illinois police say Gerardo Arellano did just that. He was arrested at a multiplex outside Chicago and showed up at court with his family. They were also with him when he was recording in the theater, according to investigator Gary Kissinger.

"He was actually observed with the camera sitting on his right leg, along with his wife and small child," Kissinger told 60 Minutes correspondent Lesley Stahl.

"He brought a child with him to do this?" Stahl asked.

"Yes," Kissinger said. "We're finding that to be more commonplace because not only their child, but other family members or friends, because they act as lookouts and also they're less conspicuous. They blend in with the rest of the audience."

Kissinger works for the MPAA, the Motion Picture Association of America.

Stahl interviewed him at the AMC multiplex where Arellano was arrested.

"I actually heard once that one of these people brought a camera in in a baby carriage," Stahl remarked.

"Sometimes even in the diaper bag," Kissinger said. "Actually, we've seen it where they cut out the cup holder and they'll set the, cut out the bottom of the cup holder and actually set the camera in here."

"And then they control the camera with a remote control device and monitor it," he added.

Police say Arellano worked out of his home, where they found more than 13,000 DVDs he had made from his recordings, along with the computers he used to upload the movies onto the Internet.

"Rarely do you see an individual that's involved in all three major components of the piracy activities: in other words, camcording, Internet piracy activities and also selling the movies on the street as well," Kissinger said.

John Malcolm, a former Justice Department official specializing in intellectual property, says pirates like Arellano are linked to organized crime rings that are making a barrel of money selling DVDs.

In Mexico, the drug cartels are brazenly stamping their DVDs with their logos.

"Here, for instance, are pirated DVDs by the Zetas," Malcolm said, showing Stahl a DVD stamped with a gang logo.

"Here's a Leonardo DiCaprio film with the drug cartel. And they're advertising. It's just breathtaking," Stahl remarked. "Are they getting out of drugs and into movies?"

"No. They want to diversify," Malcolm explained. "They might be doing gambling on Monday, human trafficking on Tuesday, child prostitution on Wednesday, drug dealing on Thursday, and counterfeiting on Friday."

[Gimpeh]

Wow. What a joke. They blame piracy on the loss of so much money, I blame the crappy flicks coming out left and right. CBS in my book has lost any shred of credibility it had left. Your bias is propaganda to America.

[markatx]

This news piece was a complete rehash of 60 Minutes's 1978 piece on the VCR and how video piracy would destroy the movie industry. How can I trust the reporting on this show with such a one-sided account of a story?

[trutherCBS]

""He was actually observed with the camera sitting on his right leg, along with his wife and small child," Kissinger told 60 Minutes correspondent Lesley Stahl.

"He brought a child with him to do this?" Stahl asked.

"Yes," Kissinger said. "We're finding that to be more commonplace because not only their child, but other family members or friends, because they act as lookouts and also they're less conspicuous. They blend in with the rest of the audience." "

THINK OF THE CHILDREN. Are you guys serious?

[TXLady101]

I think 60 minutes time is up. There's nothing but a bunch of grand parents on the show. Were they writing this article for 4 yr olds? Calling Bit Torrent "gee whiz technology"...lol thats like saying the internet is a "gee whiz technology". I don't think anyone should decide how much money others should make. However the Capitalist system is set up so that when consumers feel they are being over charged or not getting what they pay for we consumers move on to the better cheaper product! People like to watch movies when and where they choose. With big screen t.v.'s and home theater's with better quality than the movies people would rather stay home. Parent's can't always afford a sitter plus $50 for a movie + concessions. Smokers want to enjoy their smoke without missing the movie in the comfort of their home. Hell, I would like the ability to pause the movie to use the restroom instead of missing the best part! Make live stream available through TV or Cable boxes when the movie is released. Charge $20 for a 24 hour access of the film. They'd make up the "6billion" in loses alone. Cable does it already with on demand for rental releases and Blockbuster is going out of business due to this. Should we penalize the cable industry for thinking of it first...NO. Hey movie industry I dare you to try it for one big movie and see what happens!

[FShoeFitzwearit]

I have no sympathy for overpaid Hollywood stars, directors, producers, et. al. whose video products are overpriced. And 60 Minutes "correspondents" who shill for the industry are also absurdly over-compensated. There are many much more serious problems in need of exposure. But this one is a no-brainer, hence the coverage.

[ladyraestewa]

Here's an idea about how the entertainment industry can stop losing money --- stop all the "let's keep patting ourselves on the back" shows and awards where you do nothing but praise yourselves for all the work you've done! Oh and make something decent and worth watching for a fair price!

[ConcernedViewer001]

60 minutes has provided the kind reporting matched by no other news show. I have never been more suprised to read the story on movie piracy. Check your sources CBS! Rather than performing an actual investigation, you are taking alleged facts from a most dubious source, the movie industry. Do your own investigation. Really find out the facts. There's huge story to be told and it will affect everyone's future. Bring back the reporting we have grown to respect.

[GlennStencell]

Some interesting facts that the public does not know.

I have known several processes to effectively stop movie piracy for many years now. I have a background in electronics, security, accounting, and the movie business (in the movie business as an exhibitor).

In May of 1997 I sent a business proposal to the major movie distributors (Universal, Disney, Warner Bros., etc.) regarding a new type of movie projector that would also have some abilities to stop movie pirates. Yet all of these proposals were sent back, since they do not accept outside proposals.

In May of 2009, I mailed/delivered approx 400 invitations to people in the movie industry. This invitation was to a meeting to inform them how movie piracy could be stoped. These people included distributors, producers, directors, the MPAA, the FBI, the Academy, and the various guilds (producers, directors, screen actors, and writers). Mr. Soderberg was actually sent two copies (one addressed to him at the Director's Guild of America, and one to him at his company "Anonymous Content").

The effect of this invititation was that many did not respond, or in most cases, the invitation was returned, with a generic type of letter to the effect that they do not accept outside proposals.

When I was in L.A. in May of 2009, I personally followed up with phone calls to various places (noteably the major distributors, the MPAA, the Academy, the FBI, and the various Guilds), to make sure that they did receive my invititation, and inform them that I was in the L.A. area in case they wanted to call to meet with me regarding questions about my qualifiations or the invitation in general. However not one of these organisations called me back. While most of the major movie distributors sent back the invitation with the generic letter stating that they don't accept unsolicited proposals, no response of any kind was received from the MPAA, the FBI, or any of the Guilds (including the Directors Guild of America, which Mr. Soderberg represents).

So, while a solution to movie piracy does exist, the industry does not seem to want to hear about it, unless they come up with it themselves - THEY DON'T ACCEPT OUTSIDE UNSOLICITED PROPOSALS. The bottom line is that if someone does not know how to solve something, and they close their mind to even entertaining ideas from outside, how do they ever expect to solve the problem.

In my opinion, Mr. Soderberg is an excellent Director. I have enjoyed many of the movies he has directed. However, his position as a leader in the industy should be questioned. He publicly states that he dosn't believe a solution to piracy exists, and he is closed to outside ideas.

In regards to Mr. Soderberg's proposal to Congress, to obtain the rights to monitor the internet, most people will probably agree that this would be too much power given to any one person or organisation.
Surely, the movie industry should remember McCarthy and the communist witch hunting. This is truely not an appropriate solution.

The solution which I know, would empower them with the knowledge and technology needed to solve their own problem, and return control of their products back to them.

The $6 Billion/year question really is - When are they prepared to listen?

If someone in authority in the movie industry really wants to discuss obtaining a solution to movie piracy, call me at [phone]. Note: identities will be verified.

[ladyraestewa]

I worked for an entertainment lawyer and this makes perfect sense. It is exactly how the recording industry handled this same situation in the early days of Napster -- they were presented with these "future" problems and potential solutations, plus alternative ways to start thinking about how they must do business in the electronic/internet age. But instead of listening, they decided they could do it themselves but failed miserably. Suddenly it's a cronic problem and they have on hand in their pants and the other scratching their foreheads saying, "when did this happen and how are we going to save ourselves."

[brianbwb-2009]

For anyone who has had the pleasure of reading "Farewell to the Masters", the movie remake of "The Day The Earth Stood Still" sucked pus from dead rats.

As did the remake of "Godzilla".

As did "Terminator 4"

I am glad I saw pirate versions on a friend's computer before I threw my hard earned money at that garbage.

And I hear they are going to destroy the "Robocop" franchise in yet another remake. Don't even think I'll watch the pirate version.

The RIAA, MPAA, and such real pirates complain about losing money, but when their products suck, do they refund our lost money?

[brianbwb-2009]

For anyone who has had the pleasure of reading "Farewell to the Masters", the movie remake of "The Day The Earth Stood Still" sucked pus from dead rats.

As did the remake of "Godzilla".

As did "Terminator 4"

I am glad I saw pirate versions on a friend's computer before I threw my hard earned money at that garbage.

And I hear they are going to destroy the "Robocop" franchise in yet another remake. Don't even think I'll watch the pirate version.

The RIAA, MPAA, and such real pirates complain about losing money, but when their products suck, do they refund our lost money?

[FRL_Touch]

It seems like the movie industry has figured out the real problem here, but just cant figure it out.

People want to see the movies first, now, immediately and dont even care about the quality. Imagine how much more money the movie industry could make if they eliminated the middle men and offered new to the theater movies streamed to computers for a fee. they could charge $20 and it would be mostly profit. Their margins would be much higher.

People that DO care about the quality/experience will go to the theaters. You have more than one target market here, figure it out of go out of business.

The movie industry is not meeting the needs of its customers and they are simply whining an looking for a government bailout here. They are not going to prosecute all the people that have illegally downloaded movies(the article confirms this) and the government is reluctant to punish the pirate (again the article confirms this). So go ahead push this propaganda to 60 minutes, waste your $6 billion a year lobbying the government only to see no results or you can use a couple of your creative minds to figure out a new business model. (Hint: New business model is better for EVERYONE)

[noelCARTER]

umm im 14 and iv watched over 100 movies on the internet, not downloaded just watched. what shocks me is that it is soooo easy! you can go on google now and just type in "watch (name of movie) online" and you'll be watching it in just a few minutes! i even recognized one of the pirate websites they showed in the video. the one with night at the museum2 was on a website called megavideo which has probably the best video quality. whats also sad is that iv mastered all the diffrent pirate websites, if theres a time limit iv overidden that, i know how to make it stop pausing and playing, etc. I remeber watching "Taken" 3 months before it was in theatres, but now i vow to never do it again. i thought that everyone was doing it and if it was so wrong something would have been done awhile ago. its like a type of drug! you do whatever it takes to get it and you become addicted! for now on ill stick with rentals!

[anonymous_321]

I cannot believe people are advocating stealing on here! Didn?t you guys watch ?Sesame Street? when you were kids? Stealing is wrong. No one taught you this? Just because something is available for free on the Internet doesn?t make it right or OK to thieve.

All of the excuses on here attempted to condone pirate behavior don?t add up. How would you like it if your livelihood depended on a product that folks think is acceptable to rip off?

Thank you 60 Minutes for exposing the piracy problem and choosing not to spout the nonsense of criminals in your interesting and well researched story.

[treetaxi]

ANOTHER thing that is ignored in this blatant hit-piece is the fact that BitTorrent is only effective when large numbers of people have the file available for download. The program needs to know who has the file available for download.
In the case of ILLEGAL files, the program needs to know WHO HAS THIS ILLEGAL FILE AVAILABLE FOR DOWNLOAD.

This is not a tool for movie pirates, it's a tool for the police.

Unless you can convince me that experienced journalists such as yourselves can really be this stupid, I am forced to believe that this was intentionally deceptive propaganda meant to sway the current debates regarding net neutrality.

[MPHgrad]

Unbelievable! Both the RIAA and the MPAA site pirating as a the cause of their members' declining sales. No examination on the outrageous cost of movie tickets or CDs.

I could not agree more. If they stopped producing garbage and charging more and more for someone to see such garbage then maybe they wouldn't be in this situation. I've also seen the so called public service announcements which depict the camera men and set construction crews as the major losers of pirating. The film industry accepts no responsibility in their role of underpaying these people in the first place so that some lead actor can be paid exorbitant amounts of money.

[filmguy107]

BS! Stealing is stealing. All of this rationalization is just...well....BS!

[brianbwb-2009]

Thr RIAA has sued "illegal" music file sharers for more than a half billion dollars, yet they haven't paid one red cent to the owners of the works that were the subject of the lawsuits, they are stealing far more than the file sharers.

I am a producer and coposer of music and videos, and the publishing rights agencies want to make me pay them to perform my own works, from which they take an "admin" fee, then pay me my own money "as and when they see fit".

This is nothing more tan a mafia shakedown, and one reason i register my songs with the library of congress, and not the publishing agencies.

Courtney Love has posted a surprisingly astute and elegant description of the real problems with the real pirate groups such as the RIAA, as has composer-producer George Duke. This should be required reading for any journalist before trying to report such stories.

And to filmguy107, stealing is taking possession of another's property, an act which deprives the original owner the possession and use of said property. This is not the case with file sharers, as the original owner still has the property in their possession.

If I build a copy of your car, that is not stealing your car.

If you say you have the right to limit my ability to do so, using the justification that you are losing money, that is a false argument, as there is no guarantee that I would have bought your car from you.

The arbitrary redefinition of the traditional meaning of "stealing" is the real BS.

[GWBas1c]

The movie industry's attitude towards BitTorrent merely shows their arrogance towards their most enthusiastic customers. The internet and BitTorrent both are significantly superior methods of motion picture distribution when compared to celluloid film; yet the movie industry chooses to demonize it instead of embracing it.

The irony is that the High Definition movies that I download with BitTorrent from the Pirate Bay are "better" then BluRay and some local theaters. I don't need to wait for a disk to load, nor do I need to put up with copy protection that makes me buy a new TV. (I used to illegally download MP3s, but I stopped once I could download music from Amazon and iTunes without copy protection, hint, hint, hint!)

What the movie industry seems to ignore is that our current "entertainment everywhere" culture is quickly diminishing movies' values. Going to the movies is no longer special. The real problem is boredom; not piracy.

I say give me cheap DRM-free movies over BitTorrent, and give me an experience in the theater that can't be reproduced on my giant flat-screen TV!

[DoubtingThomasJr]

A quick Google search shows that Lesley Stahl did the same story in 2004 (http://www.cbsnews.com/stories/2003/10/31/60minutes/main581153.shtml) only that time she blamed Kazaa for the movie industries problems.

BTW, isn't CBS owned by a company that also owns a movie studio? curious she didn't mention that...

[filmguy107]

So what....are you a thief. For your next car...just go steal one...heck, Ford just made a Billion Dollars! They won't miss one measly car! Give that a try!

[kickingant]

60 Minutes also did the same story thirty years ago. Only then it was the vcr that was going to bring about the doom of the movie industry. Of course, Hollywood eventually embraced the new technology and started milking out billions of dollars. Piracy is wrong, but the only way to stop it is to present the consumer with a viable alternative.

[Cyborg2k]

I have to say this piece was mostly propaganda. A dog that can sniff out DVDs? What about CDs? With that keen sense of smell, can he also bark out the movie title?
It was all one sided in favor of the movie companies. There were no interviews with any pirates (even the poor guy and his family who were arrested). Unlike the yakuza piece which had a real boss interviewed.
It was basically about poor movie companies losing against the bad bad pirates. There was not one mention of the fact that movie companies already have the technology to stream or download movies and charge for them. Netflicks and itunes already have the technology, but the movie companies refuse to offer there movies to the internet. People want the ability to download movies, not get in the car, drive 30 minutes to the video shop and then get charged for being a day late. They want movies to watch at there convience. It is a case of the consumer leading the wave, not being dictated by movie companies. Unfortunatly nothing about this was even talked about on this feature. Just a bunch about what software to get, how you should cut out the cup hole in the theater etc. lol

[aikanae]

Would you accept a trade organization's opinion (for example, vaccine manufacturer's) without checking out alternative opinions? That's what 60 minutes did with this story.

It was a video press release for MPAA - a TRADE organization for movie studios. Not actors, not writers, not directors. The major hollywood movie studios - ONLY.

And the report was confused as the studios would like the public to believe. Leslie Stahl was gullible enough to fall for it, hook line and sinker. It's bad enough that the public has to suffer with judges that are caught clueless about the internet or that most in Congress have no idea what www. means, but I thought CBS News would've had someone more informed in their office to fill some details. I don't know how 60 minutes is produced or gets on the air without that kind of information.

Bit torrent is not fast. It is not new and when anyone can be their own producer, director and star with commonly available equipment with some very professional results, bit torrent is not used for only illegal purposes.

There is more competition for entertainment than there ever has been. The major studios would like to eliminate some of that. Look at the ongoing copyright battles at You Tube and also notice there are well done regular shows, some with millions of hits. And there are business' like Veogh that use bit torrent legally.

And Ms. Stahl fell right into the trap of comparing personal downloading with thieves who are selling thousands of illegal movies for money - and yet the MPAA sounded as if the personal downloader was their number one concern.

What they failed to mention is that everyone has a legal right to make a copy of their movie. The MPAA has made that nearly impossible and technologically advanced to do - and it's not always possible with their DRM code.

They ban new technology if they didn't invent it. Usually the protections they develop are so rudimentary that most kids can figure out how to click "no" when their computer asks if they want to download a program they weren't aware of being on the dvd or cd. By law, that's "circumventing protections" and is a felony. That is how stupid they think the public should be and in Congress, on talk shows, the MPAA has met with success.

I paid for lp's, cassettes, VHS, cd's, dvd's, HD's and now blue-ray's. Three of those appeared within the last 5 years. Many of my favorite movies never made it to dvd and I doubt they will make it to blue ray - just like me. My video store tells me they are going to be stocking only blue-rays now and my electronics store has phased out most of the dvd players. Don't I get a choice?

Next time you do a story, I hope you dig further. Google the "sampling effect". Most non-industry supported studies and reports say that downloaders are sampling things they would have NEVER bought. The result is that they end up buying 30% more. Another new study was just published today saying the same thing.

The studios admit their target audience is age 13 and doesn't have to speak english (no plot). I'm tired of stereotype casting 20 year old, size 4 super models in action/horror comic books. Warner Brothers have stated "no more female leads" after another of their ridiculous movie flopped. That's not MY fault if I've turned to other media that's more entertaining. They made their own bed. I'm certainly not wasting my money on it.

Look at how hard they've tried to shut down sites like You Tube and tell me they don't realize there's plenty of competition. But I guess if they are rich enough and employ enough lobbyists, they can connivence anyone they should be the police of their own industry too.

I hope your producers got paid well for promoting MPAA's advertising.

PS - Whatever happened to the tax that I'm paying on every recordable media?

[debinok1]

Instead of trying to control the internet, why not give people options. I would love to be able to sit down at my computer when "I" have the time and watch the newest releases. I pay netflix for this option, even though most of the movies available for instant view are not exactly "new". Why? Because it is convenient and fits "my" schedule. The movie industry has options, they should use them or accept the fact that they will go the way of the dinosaurs.