AFM: Avi Lerner Warns Piracy Could Cripple Indie Film Business in Five Years

Avi Lerner & Sylvester Stallone
Anne Marie Fox

Stallone and Lerner take in the Mississippi from Lerner's hotel room, just seven weeks before "Expendables 2" begins.

He believes what happened to his 'Expendables 3' is a lesson that must not be repeated

Expendables 3 may not have won over critics but producer Avi Lerner is convinced that is not why the movie starring Sylvester Stallone and a dozen other stars underperformed at the box office — and he is still angry about what happened.

Lerner, the CEO of Nu Image,  believes rampant piracy drained the theatrical audience because Expendables 3 was available online for illegal downloading three weeks before it hit theaters. It was downloaded about 10 million times before its August release.

Now he is on a crusade to make sure everyone knows what happened in hopes of preventing similar acts of piracy in the future.

“Everyone wants to hide what happened on Expendables 3,” says Lerner, “especially the domestic distributors. ‘Don’t talk about it!’ But I’ll tell you there is about $250 million in box office we lost.”

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Lerner believes not nearly enough is being done to address the problem and it is only going to get worse, with dire consequences for those who make movies, especially independent filmmakers who don’t have deep pockets.

“The whole film business is going to be the same as the music business,” warns Lerner. “Within five years, we’re not going to have a business.”

The impact has already begun. He blames much of the decline in DVD sales on piracy; as well as lower salaries for stars; tighter movie production budgets; and fewer movies being made.

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“Why should people pay $10 or $12 to see a movie when they can get it for free?” asks Lerner. “I’m talking about hundreds of millions of people that saw a movie before it opened in a cinema. This is terrible. Piracy is the worst situation that ever happened.”

Lerner estimates half the losses in DVD sales are due to piracy.

The impact is going being felt at the AFM, says Lerner.

“If you don’t get money from your movie in Russia or Spain or Italy, where there is no business because there is no money being made [in theaters or home video], there won’t be as many movies made," he says.

Even worse, Lerner doesn’t see anything being done that will stop piracy. “It’s sad because if we had a good president that cared about the film industry he would pass a very simple law, an anti-piracy law, but they don’t want to stop it because they are scared of Google, and he’s scared of all the ISPs.”

He points to the 2012 failures to pass of two bills before Congress – known as PIPA and SOPA – as proof there is no will to really stop piracy.

“They don’t understand in the long run this will mean there will be less movies happening,” adds Lerner. “But Google works for Google, and that’s why they’re such a powerful business and everyone is scared of them, especially the President of the United States and Congress. They have so much money you cant go anything against them.“

A spokesperson for Google declined to comment on the record, but pointed to a report that came out in mid-October as proof Google is actively working to stop piracy in many ways.

In a section called “Google’s Anti-Piracy Principles,” the company explains what it is doing. That includes working to cut off funding for pirate websites; creating legitimate alternative ways to get copyrighted content; streamlining the process of removing content that infringes a copyright; guarding against false infringement claims; and providing a transparent system for requests to remove content.

Lerner isn’t buying it. “Google has no interest to stop it because the more people download the movie the more traffic they get;” charges Lerner, “and without traffic they don’t get revenue from advertising. So they’re happy there’s piracy in the world.”

Ruth Vitale, executive director of CreativeFuture, an industry funded organization dedicated to fighting piracy (of which Lerner is a member), says, “Avi is completely right that after SOPA and PIPA’s defeat the industry kind of went into shell shock and in D.C. they just said, ‘Oh my goodness.’”

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Vitale says at present industry efforts like CreativeFuture, and efforts by private companies, as well as new tougher rules against pirate sites by broadband operators, are being done; but the problem remains huge on a worldwide basis.  

Lisa Wilson of the Solution Entertainment Group says piracy has been a problem for a long time. “We saw recently with November Man quite extensive piracy. But most of the companies now have 24/7 monitoring of the torrent sites. It goes up, it goes down. Another one goes up and again it goes down. If movies are big enough, people still want to see it on the big screen.”

There has been some progress. Last month Spain finally passed an intellectual Property Law that places fines on pirate sites.

Vitale hopes that will help business there rebound. She says for companies doing pre-sales, Spain used to cover about eight percent of a movies budget, but in recent years that has fallen to zero because, she says, “piracy is so rampant there.”

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Vitale says the system of delisting pirate sites is helping but “there are so many pirate sites that new ones constantly bubble up.”

“I don’t see a future for this business unless we find a way to stop the piracy,” concludes Lerner. “What I can’t understand is why the U.S. doesn’t care they lose so much revenue.”

Vitale sees some hope. She points out in August, President Obama appointed Washington, D.C. attorney Danny Marti as his “I.P. Czar,” which she takes as a sign for hope the government will become more active.

“Avi’s situation shows the damage has been done,” adds Vitale, “but it also shows the need for a remedy that is a mixture of true enforcement and tools to lock down the situation in an incident like what happened to him.”

9:15 am, Nov. 7 Updated quote to reflect that Ruth Vitale said "Avi is completely right" and not "Avi is complexly right"