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Studios Cut to the Chase

Illegal downloading of movies is rampant in Germany -- and socially acceptable. Hollywood and its allies are coming down hard on pirates.

June 18, 2004|Lorenza Munoz | Times Staff Writer

BERLIN — At 5 a.m. the police kicked in the front door of the modest apartment house near working-class Essen. Guns drawn, they ordered the family out of bed. A few minutes later, they hauled away a 22-year-old college student as his stunned parents looked on in silence.

This wasn't a scene from a big-screen police thriller. But it had Hollywood's fingerprints all over it.

The German Anti-Piracy Federation, a private investigating organization funded by U.S. studios, German independent film companies and electronics firms, worked with law enforcement in March to stage hundreds of raids across the country. In all, 12 people were arrested.

"This was our D-day," said Jochen Tielke, managing director of the federation.

His wartime metaphor is well chosen; Hollywood sees Germany as a crucial battleground in its assault on piracy.

Industry officials say the country is the Internet piracy capital of Western Europe. Although black-market street sales of pirated movies proliferate in Asia and Latin America, experts say, much of the problem in Germany involves widespread downloading and copying, with little social disapproval.

Bootleg DVDs are openly traded in schoolyards and shown in country clubs, bus depots and even by teachers in classrooms. In addition to the home-grown piracy, movies smuggled in from Russia, Poland and the Czech Republic feed a busy network of German flea markets.

U.S. studios maintain that the downloading problem in Germany hit a high point last year and caused a significant dip at the box office. German cinema admissions dropped 9.1% last year, the steepest decline in Europe, officials say. (By comparison, Britain saw a decline of 4.9%, Italy 5.6% and France 6.5%. In the U.S., admissions dropped 4%.) There may be other factors at work beyond piracy -- a surplus of new theaters, a shortage of crowd-pleasing films and an unusually hot summer that drove Germans outdoors are among the theories offered.

Still, Germany is the largest market for Hollywood films in continental Europe and the third-largest among foreign markets, behind Japan and Britain, so U.S. studios took notice of the decline.

Officials estimate that piracy resulted in the loss last year of about $980 million in German DVD and theatrical sales.

One of the reasons for the rampant piracy, officials say, is that the rate of broadband access in German households is among the highest in the world. Nearly 69% of German homes with Internet access have broadband, according to a Nielsen/Net Ratings report in January. (Broadband significantly speeds the downloading process. Among U.S. homes with Internet access, 43% have broadband, the Nielsen report says.)

As technology improves, Germany is a harbinger, the studios fear.

"Germany is only unique timewise," said Willi Geike, head of Warner Bros. in Germany. "Two years from now it will be the same in other territories. It's coming. We were just the first ones."

Although industry officials point to the box-office decline as an immediate concern, a larger issue ultimately may be the future of DVD sales -- a driving force in Hollywood economics these days. DVD sales jumped 43% to $14.9 billion last year, out of a record $41.6 billion in total revenue from all media streams worldwide.

The studios worry that Internet piracy will eventually decimate the movie business as it has the music industry, so they're hiring copyright lawyers, filing civil lawsuits and exerting political pressure on foreign governments through the U.S. government and the studios' trade organization, the Motion Picture Assn. of America.

The MPAA has helped bankroll 57 antipiracy organizations around the world, which are doing the investigative legwork most law enforcement agencies consider too low a priority to pursue. The group will not divulge the size of its investment in the groups.

In Germany, as in other countries, the campaign goes beyond bringing down high-tech pirates.

Undercover investigators from the German antipiracy unit visit flea markets nearly every weekend. At a bustling flea market in Essen one Saturday in May, scores of young men and women with briefcases full of illegal movies sold their wares for about $6 apiece. Next to the Polish sausages, magazines and jars of pickled vegetables were German-dubbed versions of "Kill Bill Vol. 2," "The Girl Next Door," "Runaway Jury" and "50 First Dates" -- none of which were officially out on DVD and some of which were not even in theaters.

It's become a cat-and-mouse game: Lookouts at the entrance to the market spot an investigator or cop, tip the vendors with a cellphone call, and the sellers pack up and disappear.

Ralf Heuken, an investigator with the German antipiracy unit, said the pirates -- most of them immigrants from Poland and Lebanon -- run a highly organized operation.

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