Piracy crackdown yields results

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Hong Kong's battle with piracy rivals the fierce onscreen clashes of hit boxoffice epics. And the good guys seem, for the moment at least, to be winning. Pirate retailers are down to about 40 at any one time from a 1999 high of more than 1,000, and record judgments are being handed down by Hong Kong courts.

Financial penalties imposed might not be large, but lawmakers are sending "a very clear message that piracy is viewed seriously in Hong Kong," says Mike Ellis, the MPA's Asia-Pacific senior vp and regional director.

At the same time, no one is ignoring the major challenge looming. "The big cloud on the horizon in Hong Kong -- indeed a lot of places -- is Internet piracy," Ellis says. "It's difficult to measure the extent exactly, but ... Internet connections are becoming faster, technology is being upgraded, and as that happens, illegal downloads are going to be more of a threat to our member companies' interests."

Legislative relief is probably two or more years away. Hong Kong's Commerce and Economic Development Bureau is preparing a digital review of copyright legislation. A draft bill may be submitted to the Hong Kong Legislative Council toward the end of this year or in early 2009, but the government has not specified a timeline on the issue.

Ellis describes the process as "crucial." "If the (Hong Kong) government gets the balance right and legislates to protect digital content and provide mechanisms that will allow rights holders to protect their own rights, it could have a profound positive effect on online piracy over the next few years."

North of Hong Kong's borders, hard goods piracy is down slightly because of official cleanup efforts ahead of the Beijing Olympics. A second reason is that the threshold for criminal prosecution was cut from 1,000 discs to 500 discs in April last year. However, Internet piracy is way up and rising as the local IT industry develops.

MPA member company revenue losses in China in 2005 were $244 million, according to a study undertaken by independent research firm LEK Consulting on behalf of the MPA. Losses in Hong Kong for the same year were

$4 million. Of the estimated $6.1 billion in lost revenue to the studios in 2005, about $1.2 billion came from piracy across the Asia-Pacific region, the MPA says.

"While they have not made an enormous amount of progress last year, there has been some improvement. We hope more will be done this year," Ellis says.

New regulations and a reorganization of ministries under China's State Council later this year are likely to make the largest impact on eroding piracy over the next year or so. Best-case scenarios include a structure that encourages criminal action against pirates.

Ellis's expectations are, however, moderate. "Piracy levels across China remain very high and will continue to be a major source of losses for the MPA member companies for some time to come," he says.
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