Fall 2013

Crime Fighter

As former NBCUniversal executive vice president and general counsel, now head of its worldwide anti-piracy unit, Rick Cotton has been an industry leader in battling Internet theft. He reports on the latest from the front.

1. You’ve been a longtime crusader against Internet theft. Why has this issue resonated for you?

Fundamentally, I think it’s about the future of the country’s economic health, and it’s hugely central to the vitality of the creative industries. The U.S. has a 21st century economy; it does not aspire to be a low-cost manufacturing center. Quite the contrary, we aspire to be a high value-added, high-wage economy. And the cornerstone of that is our creativity, our innovation, and our invention. The creative industries have been such a huge part of, not only economically, but who we are as a country and a culture. If we allow the economic heart to be cut out of that, we are seriously in trouble in terms of our long-term future. Within the entertainment industry, we have to put a very high priority on ensuring the value of what gets created, and the reward that deserves to come to the creators, without being hijacked and stolen by others who are simply feeding off the creativity and innovation of others.

2. What can directors do about the problem?

Directors are probably the preeminent example of creators, certainly within the film and television business. I think everyone who has a stake in the vitality of the business needs to both understand the severity of the threat, and that there really are steps to be taken that can reduce the currently escalating scale of piracy. As individuals, we can help move the perception of this issue up the scale of priorities by speaking out against it, and by being informed about it.

3. Is it possible to quantify Internet theft?

A study of infringing traffic on the Internet that came out two years ago quantified that 24 percent of the bandwidth of the global Internet was devoted to infringing traffic. And if you look at the trend lines in terms of page views and unique visitors going to pirate sites, they continue to skyrocket. We’re talking about sites that attract literally a billion or more page views a month. People need to understand that while the trend lines right now are moving in the wrong direction, there are clear steps that can be taken to turn those trend lines around. And that’s the question on the table today: Will our society embrace the steps that need to be taken?

4. What are some of those steps?

One major success story is the Copyright Alert System. This is a program that was put into effect nine months ago by the five major ISPs in the U.S., whereby they now forward on a high volume basis notices to subscribers who have been identified as illegally uploading or downloading digital content. For the first time, the ecosystem is speaking to Internet users and making clear that illegal sites are illegitimate and are violations of the terms of use of the ISP. But more importantly, it is the ecosystem having a feedback loop to the Internet user. Search engines need to be part of the solution, not part of the problem. Domain name registrars need to take steps to ensure that their capabilities are not easily accessible to Internet criminals. These intermediaries are now aware of the issues. They are, in many cases, coming to the table and starting to think about what steps can be taken. It’s cooperation with these sectors that, in my view, holds huge promise for the future.

5. Does legislation need to be part of the package?

That’s not on the front burner; it doesn’t need to be. At the moment there are enough positive signs that we can make progress through cooperation. The question is can we wind up with a broadband Internet that is safe and secure and that works for everybody.

6. Would shorter windows for content help?

Illegal websites are distributing music illegally, they’re distributing TV shows illegally, they’re distributing games illegally, they’re distributing office software illegally. Some of them are streaming sports content illegally. None of those sectors have windows. So the question we’re talking about here is a behavioral one—how do Internet users access content? Do they go to legitimate sites like iTunes, Hulu, Amazon, or do they choose to go to illegal websites? I think it’s true that all of the content sectors need to work hard to make content accessible in a manner the consumers want. The theatrical window probably needs to evolve. But I think in terms of the Internet behavior that we’re talking about, the question is broader than just the existence of the theatrical window.

7. Why does Internet theft affect independent films as much, if not more, than blockbusters?

You see that happening very dramatically in the decline in the number of films that are produced and distributed by the major studios over the last five years. There’s been much more focus on films that are perceived as less risky—big budget, tentpole sequels. The casualties of that are the smaller, riskier projects. I don’t think that’s in anybody’s interest. What you’d like to see is a digital ecosystem that supports those films. Yet many independent filmmakers find that the traffic of their creative product on illegitimate sites exceeds the distribution they achieve legitimately. The Hurt Locker is probably the most extreme example of where a film was actually viewed more times illegally than it sold legitimate box-office tickets. I’ve talked to independent filmmakers who made films intended not for theatrical distribution, where they hoped to recoup their investment through DVD sales, but the heart was cut out of their marketing efforts by virtue of overwhelming pirated distribution. So it’s very hard for people to experiment—whether you’re talking about big films, medium budget films, or small budget films—if the consumption patterns are going to tilt toward the illegitimate.

8. How have you worked with the DGA on this issue?

The entertainment guilds and unions have been extraordinarily far-sighted in recognizing the threat that stolen content poses to the future health of the industry. We have been able to work very strongly with the DGA and with several other guilds and unions, joining in an effort to ensure that the size of the pie continues to grow. We’ll wind up negotiating over how to cut the pie up, but the foundation for the cooperation has been the recognition that the pie growing, as opposed to shrinking, benefits everyone working in the creative industries. When organized Internet criminals cause the shrinkage, it is in everybody’s interest to work together to try to reduce that. And I would say that the cooperation with the DGA has been just spectacular on that front.

9. How important is it to educate the public to the threat of piracy?

I think it’s essential for the public, as well as the industry and policy makers, to recognize the fact that jobs in very large numbers are at stake. Illegal sites are not a couple of kids in their garage. These are organized criminals operating for profit and not contributing at all to the legitimate economy.

10. Are you optimistic about the future?

You can clearly see that if we take measures to reduce the traffic to pirated sites, it absolutely will have an impact. There’s not a single silver bullet, there’s not one single step that will reverse the trends. In January 2012, the Justice Department indicted and shut down Megaupload, which was then the leading cyberlocker dedicated to stolen digital content. Piracy will never disappear, but a combination of increased law enforcement like that combined with positive steps taken by the dozen sectors that manage the very complicated technology of the Internet, will, I’m certain, create an ecosystem that can reverse the trend to levels where new business models and new digital offerings can thrive.

10 Questions

Question and answer sessions with prominent figures outside the Guild about current creative and business issues.

More from this issue