Standards officers on course to sink pirates of booming DVD business
Legislation kicks in this weekend that gives car boot counterfeiters a run for their money
It's more lucrative than drug trafficking with efficient business models the envy of the most miserly chief executive. Bootleg DVD and CD sellers have enjoyed booming business in recent years with some pirate factories raking in profits of £5m a month.
As the car boot sale season kicks off this bank holiday weekend, counterfeiters will be laying out their £4 films on stalls nationwide. But bootleggers have never been more likely to be caught as trading standards powers have been boosted by legislation. Officers now have more clout to raid counterfeiters' factories and seize their goods. Until now they could only tackle counterfeiters who illegally used trademarked images or logos on a pirated film or album's sleeve. DVDs and CDs of illegally copied music and films were off limits if the disks were unmarked.
"Car boot sales and markets tend to really ramp up from the Easter weekend for the summer so you are going to see a lot more activity in counterfeit goods in general from now onwards," says Eddy Leviten at the Federation Against Copyright Theft (Fact). "Having this legislation in place this time of year sends an important message out because all the people who are looking to maximise their criminal profits are going to be looking to this weekend."
Intellectual property crimes such as making and selling bootleg DVDs carry a maximum 10-year prison term. But sellers have appeared at markets, on street corners and in pubs as cheaper DVD burners fuel increasingly efficient production.
Bryan Lewin, an intellectual property specialist at the Trading Standards Institute, says many people he has raided have been involved in other types of crime and saw a move to piracy as a "softer option". "The people we are dealing with consistently see this as a low risk of detection and a really high profit opportunity area of crime," he says.
Anti-piracy experts reckon some producers can make profits of more than £1m a week by running hundreds of burners around the clock.
Counterfeiters jailed last week in County Durham were thought to be earning tens of thousands of pounds a week from bootleg DVDs and CDs made in ad hoc factories in a home and a caravan. Fact says the machines in a major factory can pay for themselves within a day. Mr Leviten says: "They are operating a very good illegal business model. They will come to you and you can find them relatively easily and it's at a reasonable price."
He believes the biggest challenge for Fact is the organised crime involved in counterfeiting. Gangs of people smugglers make illegal immigrants sell bootlegs until they have paid off their debt for being brought into Britain.
The annual gain from film piracy is put at £278m while music copies are thought to make as much as £99m for counterfeiters. Trading Standards believes much of that helps fund other crimes such as people trafficking and weapons trading. "When people ask me about this element of serious and organised crime, I point to one instance: Morecambe Bay," says Mr Lewin.
After the deaths of at least 21 Chinese cockle-pickers police found that two of the main gangmasters had links with counterfeiting. "It doesn't take you long to realise that the people behind this aren't Del Boy characters, loveable rogues. They are not," says Mr Lewin.
Malcolm Wicks, minister for science and innovation, estimates bootleg film, music and game dealers cost creative industries up to £9bn a year and deprive the government of millions of pounds of VAT. This weekend's changes will add "4,500 pairs of Trading Standards eyes watching counterfeiters", he warns.
"This will mean more surprise raids at markets and boot sales, more intelligence, more prosecutions and more criminals locked up," he said in a recent speech announcing the new powers.
Laws on enforcing copyright and trademark rights have been toughened following the recent intellectual property review by Andrew Gowers. The former Financial Times editor urged the government to take the offence more seriously. The chancellor, Gordon Brown, responded by allocating Trading Standards an extra £5m.
Official statistics show the creative industries contributed 8.8% to the UK economy's output in 2004. Susie Winter, director general of the Alliance against Intellectual Property Theft, says ministers are starting to understand the importance of protecting film-makers and record labels.
"The government really seems to have got a handle on it now," she says. "In terms of where the future drivers for the UK lie, it's in things like these intellectual property-rich industries."
Business leaders echo her view that the British government takes copyright abuses more seriously than most. The UK came second behind the US in a list of countries leading the way on fighting intellectual property theft in a recent International Chamber of Commerce report. The survey of 48 major companies, including drugmakers, software groups and film studios, showed China was perceived to be the worst at intellectual property protection, followed by Russia, India, Brazil and Indonesia.
Joseph Lampel from London's Cass Business School led the study. He says Britain got its favourable reputation thanks mainly to high public awareness of piracy and respect for the creative industries. "Most people don't see intellectual property rights theft as being as egregious as identity theft or shoplifting. But it's relative, as in some countries that we looked at it's almost regarded as a sport," he said.
Despite the UK's strong position, industry groups are barely optimistic about tackling piracy. Shoppers love a bargain and almost 40m pirated CDs and 78m DVDs are bought annually. DVD burners are cheap and a whole new area of film piracy is quickly picking up momentum: illegal digital downloads.
"Being blunt, the counterfeiters and people involved in this are usually ahead of the game and whatever the resources we put into this it does seem to be an increasing problem," says Trading Standards' Mr Lewin.
Codenames and infrared goggles
Film and TV show piracy is worth up to $20bn (£10bn) a year, according to the Motion Picture Association of America. The studios lose out on box office taking and DVD sales but also have to pour money into fighting increasingly slick worldwide networks of pirates.
Piracy used to involve laboriously copying videos back to back in real time. Now a new film can be copied on a camcorder, uploaded to the internet, burnt on to DVDs by gangs around the world and then hit the market - all within 24 hours. Police raids have uncovered dens with hundreds of DVD burners working around the clock.
The industry has retaliated with so-called day-and-date release: simultaneously launching in all key territories. Before it was introduced, with films such as Star Wars: Episode II in 2002, pirates took advantage of earlier US release dates to record films there and sell them to impatient customers in other countries.
The strategy protects those first few days after release when a film makes a large percentage of its box office takings. Simultaneous releases can safeguard sales but mean studios work to a tighter schedule to finish overseas versions and they often leave no time for press previews that are a central part of marketing. It also means distributors can't pick the best local date, for example, to coincide with a school break. To stop leaks of films sent to judges of awards such as the Oscars, encrypted discs are sent out which work only on an accompanying machine. Last year, one studio sent out films on one-play-only discs.
Leaks do happen, as with the last Star Wars film, but 90% of UK new pirate DVDs are from camcorder recordings in cinemas. All prints going to cinemas are marked so investigators can detect where a camcorder-recorded DVD was filmed. At film festivals security workers often sit wearing infrared goggles to spot anyone using recording equipment.
Cost of copies
£719m
Annual loss to British film industry from piracy, according to Ipsos
£165m
Annual lost sales, as estimated by UK music companies
77.5m
Fake DVDs bought in Britain in 2005, producing a criminal gain of £278m
27%
Proportion of software in Britain that is pirated, according to IDC
227
Convictions achieved by Federation Against Copyright Theft in 2006
Katie Allen, media business correspondent
Saturday April 7, 2007
Guardian Unlimited
© Guardian News and Media Limited 2007
Legislation kicks in this weekend that gives car boot counterfeiters a run for their money
It's more lucrative than drug trafficking with efficient business models the envy of the most miserly chief executive. Bootleg DVD and CD sellers have enjoyed booming business in recent years with some pirate factories raking in profits of £5m a month.
As the car boot sale season kicks off this bank holiday weekend, counterfeiters will be laying out their £4 films on stalls nationwide. But bootleggers have never been more likely to be caught as trading standards powers have been boosted by legislation. Officers now have more clout to raid counterfeiters' factories and seize their goods. Until now they could only tackle counterfeiters who illegally used trademarked images or logos on a pirated film or album's sleeve. DVDs and CDs of illegally copied music and films were off limits if the disks were unmarked.
"Car boot sales and markets tend to really ramp up from the Easter weekend for the summer so you are going to see a lot more activity in counterfeit goods in general from now onwards," says Eddy Leviten at the Federation Against Copyright Theft (Fact). "Having this legislation in place this time of year sends an important message out because all the people who are looking to maximise their criminal profits are going to be looking to this weekend."
Intellectual property crimes such as making and selling bootleg DVDs carry a maximum 10-year prison term. But sellers have appeared at markets, on street corners and in pubs as cheaper DVD burners fuel increasingly efficient production.
Bryan Lewin, an intellectual property specialist at the Trading Standards Institute, says many people he has raided have been involved in other types of crime and saw a move to piracy as a "softer option". "The people we are dealing with consistently see this as a low risk of detection and a really high profit opportunity area of crime," he says.
Anti-piracy experts reckon some producers can make profits of more than £1m a week by running hundreds of burners around the clock.
Counterfeiters jailed last week in County Durham were thought to be earning tens of thousands of pounds a week from bootleg DVDs and CDs made in ad hoc factories in a home and a caravan. Fact says the machines in a major factory can pay for themselves within a day. Mr Leviten says: "They are operating a very good illegal business model. They will come to you and you can find them relatively easily and it's at a reasonable price."
He believes the biggest challenge for Fact is the organised crime involved in counterfeiting. Gangs of people smugglers make illegal immigrants sell bootlegs until they have paid off their debt for being brought into Britain.
The annual gain from film piracy is put at £278m while music copies are thought to make as much as £99m for counterfeiters. Trading Standards believes much of that helps fund other crimes such as people trafficking and weapons trading. "When people ask me about this element of serious and organised crime, I point to one instance: Morecambe Bay," says Mr Lewin.
After the deaths of at least 21 Chinese cockle-pickers police found that two of the main gangmasters had links with counterfeiting. "It doesn't take you long to realise that the people behind this aren't Del Boy characters, loveable rogues. They are not," says Mr Lewin.
Malcolm Wicks, minister for science and innovation, estimates bootleg film, music and game dealers cost creative industries up to £9bn a year and deprive the government of millions of pounds of VAT. This weekend's changes will add "4,500 pairs of Trading Standards eyes watching counterfeiters", he warns.
"This will mean more surprise raids at markets and boot sales, more intelligence, more prosecutions and more criminals locked up," he said in a recent speech announcing the new powers.
Laws on enforcing copyright and trademark rights have been toughened following the recent intellectual property review by Andrew Gowers. The former Financial Times editor urged the government to take the offence more seriously. The chancellor, Gordon Brown, responded by allocating Trading Standards an extra £5m.
Official statistics show the creative industries contributed 8.8% to the UK economy's output in 2004. Susie Winter, director general of the Alliance against Intellectual Property Theft, says ministers are starting to understand the importance of protecting film-makers and record labels.
"The government really seems to have got a handle on it now," she says. "In terms of where the future drivers for the UK lie, it's in things like these intellectual property-rich industries."
Business leaders echo her view that the British government takes copyright abuses more seriously than most. The UK came second behind the US in a list of countries leading the way on fighting intellectual property theft in a recent International Chamber of Commerce report. The survey of 48 major companies, including drugmakers, software groups and film studios, showed China was perceived to be the worst at intellectual property protection, followed by Russia, India, Brazil and Indonesia.
Joseph Lampel from London's Cass Business School led the study. He says Britain got its favourable reputation thanks mainly to high public awareness of piracy and respect for the creative industries. "Most people don't see intellectual property rights theft as being as egregious as identity theft or shoplifting. But it's relative, as in some countries that we looked at it's almost regarded as a sport," he said.
Despite the UK's strong position, industry groups are barely optimistic about tackling piracy. Shoppers love a bargain and almost 40m pirated CDs and 78m DVDs are bought annually. DVD burners are cheap and a whole new area of film piracy is quickly picking up momentum: illegal digital downloads.
"Being blunt, the counterfeiters and people involved in this are usually ahead of the game and whatever the resources we put into this it does seem to be an increasing problem," says Trading Standards' Mr Lewin.
Codenames and infrared goggles
Film and TV show piracy is worth up to $20bn (£10bn) a year, according to the Motion Picture Association of America. The studios lose out on box office taking and DVD sales but also have to pour money into fighting increasingly slick worldwide networks of pirates.
Piracy used to involve laboriously copying videos back to back in real time. Now a new film can be copied on a camcorder, uploaded to the internet, burnt on to DVDs by gangs around the world and then hit the market - all within 24 hours. Police raids have uncovered dens with hundreds of DVD burners working around the clock.
The industry has retaliated with so-called day-and-date release: simultaneously launching in all key territories. Before it was introduced, with films such as Star Wars: Episode II in 2002, pirates took advantage of earlier US release dates to record films there and sell them to impatient customers in other countries.
The strategy protects those first few days after release when a film makes a large percentage of its box office takings. Simultaneous releases can safeguard sales but mean studios work to a tighter schedule to finish overseas versions and they often leave no time for press previews that are a central part of marketing. It also means distributors can't pick the best local date, for example, to coincide with a school break. To stop leaks of films sent to judges of awards such as the Oscars, encrypted discs are sent out which work only on an accompanying machine. Last year, one studio sent out films on one-play-only discs.
Leaks do happen, as with the last Star Wars film, but 90% of UK new pirate DVDs are from camcorder recordings in cinemas. All prints going to cinemas are marked so investigators can detect where a camcorder-recorded DVD was filmed. At film festivals security workers often sit wearing infrared goggles to spot anyone using recording equipment.
Cost of copies
£719m
Annual loss to British film industry from piracy, according to Ipsos
£165m
Annual lost sales, as estimated by UK music companies
77.5m
Fake DVDs bought in Britain in 2005, producing a criminal gain of £278m
27%
Proportion of software in Britain that is pirated, according to IDC
227
Convictions achieved by Federation Against Copyright Theft in 2006
Katie Allen, media business correspondent
Saturday April 7, 2007
Guardian Unlimited
© Guardian News and Media Limited 2007
