(Hollywood’s revenues are now dominated by DVD sales and continue to march smartly upward.) Piracy, by encouraging lower prices and faster DVD releases, may have helped prompt movie studios to respond more quickly to viewers’ demands. The development of VHS and DVD markets-which was initially feared and resisted by movie studios concerned about both piracy and shrinking box-office receipts-has in fact expanded the movie market. So while piracy markets unquestionably harm the film industry, they can also signal untapped opportunities. Many casual illegal downloaders have said that they would be happy to pay if a cheap and easy alternative existed. Those in Iran want to skirt morals police, in China to flout quotas on foreign films, and in Britain to watch TV shows that aren’t immediately available through legitimate channels. Downloaders in the United States don’t want to wait months for a DVD. Yet is online piracy really a mortal danger to Hollywood? Often, piracy fills a gap where legitimate markets have failed. But Hollywood actually loses more money because of piracy in North America and Western Europe (Europe leads the world in Internet piracy), and downloads are a major reason why. About 90 percent of DVDs sold in China are bootlegs, according to Dan Glickman, the head of the Motion Picture Association of America, and they are everywhere.

(Hollywood’s total annual revenue for 2004 was estimated to be just under $45 billion.)Ĭhina is consistently portrayed as the Wild East of movie piracy, and rightly so in terms of the sheer number of counterfeit DVDs available there. movie industry lost $2.3 billion in revenue to Internet piracy in 2005, and $3.8 billion to bootlegged DVDs and other “hard goods” piracy that same year. For now, demand is limited by the fact that most Internet users still need an hour or more to download a full-length movie.

File-sharing of all sorts has grown from less than 10 percent of total Internet traffic in 1999 to nearly 60 percent today, as broadband has spread along with new technologies enabling the rapid sharing of huge files. The burst of illegal file-sharing that follows the release of nearly every popular film is perceived as a potent threat to Hollywood. Dozens of other illegal versions of the movie, posted to other file-sharing networks, likely found their way onto the hard drives of many thousands more. Within weeks, that one file had been downloaded by 30,408 people on six continents (you can see the download locations on the map).

On November 19, 2006, someone at a computer in Wharton, New Jersey, put a high-quality copy of a newly released holiday family film, recorded directly from the film reels, onto eDonkey, a person-to-person file-sharing network.

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