Copyright, digitization and the movie industry

The digital age is an age with a lot of changes in the way we live our daily
lives. We read papers online, make phone calls from our cars, and watch movies
from our couch whenever we feel like it. The processes of digitalization affects
all parts of the cultural industries some parts more than others (Towse, 2011)
In this essay I will take a closer look at the movie industry with a review of
relevant literature written about the effects of digitalisation on the movie industry
and the accessory struggle the industry has with the laws and regulations.
Almost no one of my age will know how it was that you werent able to
watch a movie whenever you wanted. It all started off with cinemas. People
needed to make an effort to watch a movie. With the upcoming of the television,
the cinemas had to compete with the home theatres. From that point on, our
home theatres became more and more similar the real cinemas. The screen of
the televisions progressively became more lifelike and the sound did to. After
that, the screens became wider much as the screens in movie theatres. Today we
can, for example, open Netflix on our televisions, pick a movie we like, dim the
lights, microwave some popcorn, and voil, you have your own movie theatre
without even leaving your house. So we the music industry has come a long way,
from movie theatres, to television, VCR, DVD, and now movies on demand with
programs such as Netflix.
It all sounds very easy and as if no problems ever occurred during all those
changes due to technological innovations, but that is most certainly not the case.
As Kng et al. (2008) stated: technological change is exciting, destructive and
changes the status quo. So it is not very surprising that all those changes
brought along some problems with the existing laws of copyright. The first
industry that got to deal with the upcoming of the internet and the copyright
infringements that came alongside the internet was the music industry. But
today, the movie industry also has a problem on their hands. Within two hours,
everyone with an internet connection can download (illegally) a movie in HD
quality. There simply is no need any more to buy the DVD/Blu-ray or pay money
for a legal download. The laws and regulations did not yet came up to speed with
all the changes in de digital world and therefor the movie makers are left on their
own. But lets back up a bit and I will explain what copyright actually is.

In the book of Towse (2011), William Landes describes copyright as the following:
Copyright protects original works of authorship that are fixed in a tangible form.
A copyright covers not just unauthorized copying but also rights over the
distribution of copies, derivative works and public performances and displays.
Next to this argument there are a few more things to take in consideration
when looking at copyright. Something that needs protection from the copyright
laws will cost a lot to make, also known as the cost of expression, but very little
or nothing to reproduce. Lets take Harry Potter the movie as an example (as I am
currently writing my thesis about Harry Potter). The second to last Harry Potter
movie had a budget of 250 million dollars. But when the movie is done, you can
just copy it onto a disc or a USB and that transaction of the work will have cost
you nothing. Furthermore, there is no difference in price if it gets copied one or
one million times. Here we have the biggest problem that the movie industry
faces today. If one person in this whole world buys an official DVD, hypothetically,
no one will ever have to buy it afterward if that person is able to offer the movie
on the internet for free. People do not necessarily need to go to the movie
theatre, because they can just wait until someone decides to put their DVD on
the internet. Therefore, movies are becoming a public good, because ()
digitalisation has increased the public goods aspect of copyright works because
once works have been released digitally on the Internet, they are nonexcludable. (Towse, Handke, Stepan 2008)
But copyright is not just about copying original works as shown in the
definition of Towse (2011). Towse, Handke, and Stepan (2008) describe copyright
as the following: Copyright law consists of a bundle of different right dealing
with a range of circumstances in which works embodying them may be made
available; the same work may be used in several markets and different right
have different values in these market, and different values to different rights
holders. So to put this in somewhat simpler words, copyright is not just one law
that you can find in a law book. Copyright is a collection of several different
traditional laws that are applicable on original works such as book, music, movies
etc. etc.. Bates lays out the basics of copyright as: Authors of such works have
exclusive rights related to those works. These rights include the right to (1)
reproduce the work; (2) prepare a derivative work; (3) distribute copies of the
work; (4) perform the work publicly; (5) display the copyrighted work publicly;
and (6) to perform a copyrighted sound recording publicly by means of a digital

audio transmission. (Bates, 2005). Anyone who violates these rules and
regulations in called an infringer and the rightful holder of the rights may follow
up with legal actions. There are two ways someone could be found guilty of
infringement, and the second one is quite important when looking at the movie
industry in the current digital era. 1) Direct infringement and 2) infringement by
a third party. () a party may be a third party infringer liable for the acts of
another who is a direct infringer via the doctrines of contributory infringement
and vicarious liability (Bates, 2005)
As I stated earlier, the digital and technological innovations, mainly the
internet, has made it very hard for the movie industry to protect their products.
But why is it so hard? Let me explain.
As shown above there are two types of copyright infringements, the first
being direct en the second being indirect. When you directly ignore the rules and
regulations of copyright, the person or party is quite easy to hold liable for the
infringement. If I buy the Harry Potter movie and copy the movie on Youtube for
instance, I am considerably easy to find and I would probably have to take my
channel down. Next to that, I should most likely have to pay for the costs of it
going to trial and that is that. But then, there are much more complicated cases.
Bates (2005) writes the following: In cases where the internet is used as a
conduit for infringement, plaintiffs have had to rely upon the principles of
contributory and vicarious copyright infringement to hold the infringers liable.
Vicarious copyright infringement means: A person may be held liable for the
infringing acts committed by another if he or she had the right and ability to
control the infringing activities and had a direct financial interest in such
activities (www.law.cornell.edu). Contributory copyright infringement means: a
form of liability on the part of someone who is not directly infringing but
nevertheless is making contributions to the infringing acts of others
(www.law.cornell.edu). Most of the infringements we see in our current society
are indirect infringements. A very well-known example of this is the website The
Pirate Bay. The Pirate Bay is a website that offers a wide range of games, movies,
music, and software to be downloaded. Although the products they provide are
not put on the website by themselves, they do host a website which gives the
opportunity to people to infringe the laws at hand for copyright.
In The Netherlands there has been a law suit between Stichting Brein and
internet providers to get The Pirate Bay out of the air.

In The Netherlands there are on-going law suits to get The Pirate Bay out of
the air. Since 2010, Stichting Brein is trying to do something against the
copyright infringements which are being enabled by the The Pirate Bay. But
instead of suing The Pirate Bay, they sued internet providers to force them to
block The Pirate Bay. Although they succeeded in the first place, later on the
blockage was retracted after some research has been done about the amount of
downloads that were still being done. It seemed that the downloading in the
Netherlands did not go down significantly, so the Higher Court decided to
withdraw their first statement.
So here we have our first big problem with enforcing copyright on the
internet. When one website is blocked or is taken out of the air, people will simply
find another website which offers the same product. There are many thousands
of websites of which you can download illegaly, so it is fighting a losing battle so
to speak.
Secondly, a big problem with holding someone liable directly is that most
of the transactions online are being done anonymously. Rights holders simply
cannot track down who is responsible for an infringement. Consequently, they
will try to hold the website accountable, but history shows that most of the time,
there is no use really.
A third very large economical problem arises. Because what happens to
the movie industry when more people decide to download movies online for free?
The prices of the movie theatre tickets, DVDs and Blu-rays go up to compensate
for all the lost revenues of the free downloads. Consequently it will end up in a
vicious circle of prices going up, which will lead to lesser people buying the
original DVD, Blu-ray, and theatre tickets. Then, the prices need to go up etc. etc.
Eventually, movie makers will stop making movies, because their costs will at the
same price they always were, but they wont earn as much money they used to.
This is also called market failure. The market simply cannot find the point where
supply meets demand because the possibilities the internet has provided for the
consumer has made it impossible. According to Towse, Handke, and Stepan
(2008) Copyright is the second best solution to overcome market failure but as
I have shown above, copyright is not (yet) sufficient (enough) to tackle the
problems technological innovations has provided in the last decade or two.

As you can see, there are a lot of difficulties when it comes to copyright
laws and regulations in combination with the movie industry. I have shown three
of them, but there are of course many more. But how is the movie industry
handling it at this moment and how can the movie industry deal with all these
problems in the future?
If you cant beat them, join them. This has presumably been the motto of
the movie industry as a whole. As every other industry, the movie industry needs
to keep up with all the technological innovations and the digitization of the world.
The world asks for more convenience at a lower price. When they want to watch
a movie, they dont want to leave their house to buy a DVD at a high price, they
just want to click a few buttons out of the comfort of their chair. The movie
industry has tried to come up with ways to make downloading legal with at a
small cost. A very well-known example of this is the website www.netflix.com. You
can become a member for a small monthly fee and watch as many movies and
television series as you like. Many more websites like Netflix exist nowadays
which gives the consumer the opportunity to watch or download movies legally
and only pay a small amount of money for it. Of course, there is still a lot to
innovate for the movie industry, because we, the customers, are not quickly
satisfied. We want everything even easier and cheaper, but still, websites as
Netflix are a very good start to attack the market failure at hand and building a
bridge between the producers needs and the needs of the consumers.

Conclusion.
Copyright laws will always need to adjust to the changing technology in the
area of sharing movies online. As shown in my essay, the world of copyright an
absolute maze which is hard to completely understand in combination with all the
possibilities the internet has provided for the consumers. There are numerous law
suits, much like the one between Stichting Brein and internet providers, to stop or
diminish the amount of illegal downloading. Unfortunately for the movie industry,
it is fighting a losing battle. Even if they are able to take a website down like The
Pirate Bay, another thousand of them still exist and the consumer will just go to
another website. Still, even though it all sounds a bit pessimistic, innovations
such as Netflix might very well be the future where the equilibrium can be found

between the needs and wants of the producers and the consumers. Sites as
Netflix still need to innovate much more, before this equilibrium can actually take
place but it certainly a good start to diminish the amount of illegal downloads and
persuade consumers to watch movies legally without buying a DVD for example.