Video Pirates: The Bane of Hollywood

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

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But even more than organized crime, it's the Internet that has Hollywood's hair on fire.

John Malcolm says pirated movies are being uploaded onto the Internet in a matter of hours and then downloaded very quickly using computer technology called "BitTorrent."

"And what it does is it takes a movie file, which is a very large file, and it breaks it up into very small pieces so that it is easier to trade back and forth via a swarm," Malcolm explained.

He showed Stahl what a BitTorrent program looks like on his computer. The programs are perfectly legal. But, every day, we're told, up to 50 million people around the world are using programs like this to illegally download pirated movies.

Malcolm showed Stahl how it works. Tiny "bits" moving toward a blue column in the middle of Malcolm's screen are pieces of the movie we were getting from people all around the world. The bits moving away from the column are pieces we have and are sharing with someone else.

"And when we get that complete movie, the technology will rearrange all those little pieces into one complete film that is watchable," he explained.

"There's a technology that automatically puts it in the right order?" Stahl asked.

"Sure does," Malcolm said.

The piracy has movie director Steven Soderbergh in despair. "Well, Lesley, I'll tell ya, there are days when I really wish Al Gore hadn't invented the Internet," he joked.

Soderbergh, one of Hollywood's A-listers, is vice president of the Directors Guild of America and the director of "Traffic," "Ocean's Eleven" and "Erin Brockovich."

He says piracy is costing Hollywood $6 billion a year at the box office. "As the margins of profit shrink, fewer projects get made, which means fewer people go to work," Soderbergh told Stahl.

"There is a feeling out there that, 'Boy, I got this and I'm not hurting anybody but some fancy, overpaid movie star who can well afford it,'" Stahl remarked.

"Well, in fact, you know, the wealthy movie star isn't hurt by it. It's just everyone else. Most of the people in this industry are not the A-list talent that you see in a magazine or interviewed on 60 Minutes," Soderbergh said.

"You're talking about all the people behind the camera," Stahl said.

"Supporting cast and all the crew," the director replied.