US movie studios take fight to Germany, a hub of piracy
BERLIN -- At 5 a.m. the police kicked in the front door of the modest apartment house in working-class Essen. Guns drawn, they ordered an unsuspecting 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 US studios, German independent film companies, and electronics firms worked with law enforcement to stage the March raid on 800 locations across Germany. 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. While 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 homegrown piracy, movies smuggled in from Russia, Poland, and the Czech Republic feed a busy network of German flea markets.
US studios say downloading in Germany hit a new peak last year and resulted in a big dip at the box office. German admissions dropped 9.1 percent last year -- the steepest decline in Europe, officials say. (By comparison, in Britain that number was 4.9 percent, Italy 5.6 percent and France 6.5 percent. In the United States, admissions dropped 4 percent.) There may be other factors beyond piracy -- a surplus of newly built theaters, a shortage of crowd-pleasing films, and an unusually warm summer that kept Germans outdoors are among the theories offered. Still, Germany is the largest market for Hollywood films in mainland Europe and the third-largest among foreign markets behind Japan and Britain, so the drop was a wake-up call for US studios.
Officials estimate piracy resulted in the loss of 800 million euros -- about $980 million -- in German DVD and theatrical sales last year.
One of the reasons for the rampant piracy, officials say, is that broadband access in German households is among the highest in the world. Nearly 69 percent of German homes with online access have broadband, according to a Nielsen/Net Ratings January report. Broadband significantly speeds up the downloading process. (Among US homes with online access, 43 percent have broadband, according to the Nielsen report.) As technology improves, Germany is a harbinger, the studios fear.
"Germany is only unique time-wise," said Willi Geike, head of Warner Bros. in Germany. "Two years from now, it will be the same in other [European] territories. It's coming. We were just the first ones." Although industry officials point to the drop in box office as an immediate concern, a larger issue ultimately may be the future of DVD sales -- a driving force in Hollywood economics these days. Last year, DVD sales jumped 43 percent to $14.9 billion, out of a record total of $41.6 billion in revenues from all media streams worldwide.
The studios worry that as technology improves, Internet piracy will decimate the movie business as it has the music industry. And so they are aggressively combating piracy worldwide by hiring copyright lawyers, filing civil lawsuits, and exerting political pressure on foreign governments through the US government and the studios' trade organization, the Motion Picture Association of America.
In all, the MPAA has helped bankroll 57 antipiracy organizations around the world that are doing the investigative legwork most law-enforcement agencies consider too low a priority to pursue on their own. The MPAA 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 local flea markets nearly every weekend. On a Saturday in May at a bustling flea market in Essen, scores of young men and women with briefcases full of illegal movies sold their wares for about $6. It's become a cat-and-mouse game: Lookouts at the flea-market entrance spot an investigator or cop, tip the vendors with a cellphone call, and the sellers pack up their booty and disappear.
At the flea markets, the pirates tend to traffic in Hollywood fare. But German independent filmmakers say piracy is affecting their business even more profoundly.
"It's a disaster," said Stefan Arndt, producer of "Goodbye Lenin," the country's biggest hit last year. "What is going to happen is that independent films like this will disappear, and in the end all you are going to get are more 'Harry Potters' and more 'Lord of the Rings.' "
