How Hollywood Lost the SOPA War
Chris Dodd's frantic call to Katzenberg; a high-level summit aborted. THR goes inside the piracy battle as the industry wonders what went wrong and how to fix its battered image.
In the desperate hours of early January, with chatter spreading that the White House was poised to make a devastating statement opposing parts of proposed anti-piracy legislation that Hollywood studios considered key to the industry's very survival, MPAA president Christopher Dodd made a phone call to DreamWorks Animation CEO Jeffrey Katzenberg.
Katzenberg's company is not an MPAA member, but a list of the top 10 fund-raisers bundling money for President Obama would include not only Katzenberg but also his political adviser, Andy Spahn. It would not include any of the chiefs whose studios belong to the MPAA. So the former U.S. senator reached out, he says, to find out about the thinking inside the White House.
"The rumors were running rampant," says Dodd. "I was trying to use all the information points I could to find out what was going on."
Dodd says that at the time of his call, he had been assured no major actions were imminent. Then, on Jan. 14, the administration said it would not support legislation "that reduces freedom of expression, increases cybersecurity risk or undermines the dynamic, innovative global Internet."
"They just made up their mind to do it," says Dodd. "I raised issues about it, but they were going to march ahead."
So it was that Silicon Valley trampled Hollywood with a simple -- and, to the studios, absurd -- argument: that the anti-piracy bills would somehow "break the Internet." Seemingly overnight, the country had made up its mind -- the mere mention of "Hollywood" elicited boos from the audience during a debate among GOP candidates. MPAA members, who believed they had carefully laid the groundwork with the White House and Congress and that they had already made major concessions to placate their adversaries in the tech community, felt bitterly betrayed.
The legislation is in limbo now, though a source says there is movement -- however incremental -- toward a compromise. The MPAA says it's in the midst of a major reset on how to approach the issue. And the blame game has begun, with many wondering how Hollywood allowed itself to be beaten so decisively.
In the days after the controversial House version of the bill, the Stop Online Piracy Act, was derailed, Dodd belittled those who opposed it and threatened Democrats who had fled when the bill became radioactive. Perhaps his worst post-defeat move came Jan. 19 when he told Fox News that "those who count on, quote, 'Hollywood' for support need to understand this industry is watching very carefully who's going to stand up for them when their job is at stake." There was an instant outcry, including a petition on the White House website calling on the administration to investigate Dodd for "bribery." (In less than a week, it had attracted more than 21,000 signatures.)
Dodd, who says he was simply stating facts on Fox News, seemed to have done a thorough job making himself the face of those who would, according to critics, trample Internet freedom. Within days, however, he altered his tone. At a Jan. 23 Sundance panel, he acknowledged the defeat as "a watershed event." But even as Dodd dialed back his message, certain studio chiefs are continuing to rattle their sabres, letting it be known that their support for Obama has cooled because of the administration's opposition to elements of the bill.
Such threats seem to be part of the disconnect that doomed the SOPA legislation. "They didn't understand the politics of the Internet, the power of the Internet, the perception people had of the things they were proposing," says an aide to a congressman who opposed the legislation. "The MPAA and the different lobbying organizations are trying to do it old-school and by the book. They ran into new technologies, new strategies, new techniques. I imagine they're sitting around discussing how they got beat."
Not so long ago, says Andrew Schwartzman, senior vp of the D.C. public-interest organization Media Access Project, such a defeat would have seemed impossible. For years, the MPAA used a combination of "sophisticated effort and a lot of money" to win battles over issues like copyright protection. It used to be that the industry's bill "passed with huge margins and the opposition just got crushed." For a time, it looked like that would happen with the anti-piracy legislation, too. And the studios went for the gold, not so much in the Senate but in the House with the broader SOPA. "They teed up what many people thought were needlessly draconian measures, going for the best possible version of what they wanted," says Schwartzman.
Michael O'Leary, the MPAA's senior executive vp global policy and external affairs, acknowledges that some of the House bill's "sharp edges finally could have been softened" but adds, "That assumes the opposition wanted to make some kind of accommodation." And the MPAA says the enemy (aka Google) wasn't interested in that. Instead, the studios believe Google's real agenda was protecting revenue from advertising on illegal sites.
But there was little effort to make it appear, at least, that the studios and their supporters tried to negotiate with Google. When the House Judiciary Committee held a Nov. 16 hearing on SOPA, there was only one witness on the list testifying in opposition: Google's policy counsel, Katherine Oyama. "It was a stacked hearing," says Sherwin Siy of the Washington nonprofit Public Knowledge. (The committee chairman, Republican Lamar Smith of Texas, declined comment.)
By the time the committee met Dec. 15-16 to mark up the bill, the battle was no longer so one-sided. Various opponents tried to amend the bill and were voted down. The markup turned into something of a circus, with some members conceding that they didn't fully understand provisions of the bill, says Siy, who adds, "I was incredulously tweeting a lot of it." The mark-up "really drove home a lot of the problem to the broader grassroots," he says.
With SOPA stuck in committee, Congress went on recess until Jan. 17, allowing more time for the bill's enemies to rally the troops. By early January, the MPAA had started to pick up signals that the Obama administration was unhappy with certain elements. Of course, the White House had little interest in antagonizing its wealthy Hollywood supporters in an election year -- but it had even less interest in upsetting young Internet users or big tech companies, employees of which have given $52 million to the Democratic party since 2007, up $12 million from the 2001-06 period, according to the Center for Responsive Politics.
A few days after the White House posted its Jan. 14 statement, protest blackouts by popular websites such as Wikipedia sealed the deal. Support for the legislation collapsed -- most strikingly on the Senate side, where four of the bill's original backers withdrew, including longtime industry friend Orrin Hatch, R-Utah. Schwartzman says he can't remember when so many co-sponsors bailed on a bill.
The MPAA's O'Leary concedes that the industry was outmanned and outgunned in cyberspace. He says the MPAA "is [undergoing] a process of education, a process of getting a much, much greater presence in the online environment. This was a fight on a platform we're not at this point comfortable with, and we were going up against an opponent that controls that platform."
Sen. Dianne Feinstein, D-Calif., had tried to broker a high-level meeting of the antagonists as recently as the week of Jan. 9, but Disney CEO Bob Iger -- contacted because Feinstein is unable to talk to Dodd due to lobbying restrictions -- declined the invitation. Dodd says he doubts the issue will be addressed again in the heat of an election year.
It now may be hard to win grassroots support for even a compromise bill, given the general distrust aroused by any attempt to legislate around the Internet. As for the industry's relationship with Obama, Schwartzman figures that will improve with time because Hollywood has no place else to go.
And what about Dodd? Given the degree to which he's been demonized during this fight, it's unclear how effective he can be in seeking a solution. "I can't figure out how such a seasoned and prestigious legislator blew it," says one Hollywood political operative. But the studios say they aren't blaming him. "He didn't design this legislation," says one high-level insider. "He played the cards he was dealt."
A FRESH SELL FOR HOLLYWOOD
To help change the public's perception of protecting intellectual property, THR solicited the input of Sara Arnell, CEO of brand strategy and marketing firm Arnell Group, whose clients have included Mercedes-Benz and McDonald's. She says Hollywood must broaden its messaging in the piracy debate and suggests a campaign that puts the focus on the people who make and enjoy the product. "Our cultural and political landscape is being challenged and defined by populist sentiments," she says. "It's strategically imperative to establish an argument with populist appeal. Be universal and inclusive. This isn't just about Hollywood. Make the dialogue about everyone who works or plays creatively." Arnell offers two examples:
DTCs (Digitally Transmitted Content): Killing Creativity
- Slogan: Protect Your Creativity
- Ideas: Keep ideas safe. Piracy is not sharing. Respect the singer of your new favorite song.
- Focus: "Break through the clutter of uninformed opinion by leveraging the visual shorthand and familiar language of the fight against STDs," says Arnell. "Everybody knows smart people always take the necessary precautions to protect themselves against DTCs."
- Slogan: We Are the 30%
- Idea: A campaign to generate respect for the creative class.
- Focus: "The argument must focus on protecting the rights of people as a way of neutralizing the position that these bills are simply for the benefit of studios," says Arnell. "The creative class represents about 30 percent of the working population, and they need PIPA and SOPA to ensure their economic viability. Creative thinking is a key driver of new businesses and economic growth."