New pirates of the Spanish main


MADRID -- The man wandering through the tables at the cramped tapas bar smiles at everyone. He arrived in Madrid four years ago and speaks Spanish with a heavy Chinese accent. A familiar sight throughout Spain, everyone knows what is in his black backpack, the one he points to as he smiles. He's offering pirated DVDs of the latest titles available from films just opened in theaters this weekend.

The backpack vendor is the tip of the iceberg in Spain's pirating problem.

"We are worried about theft. It sounds too romantic and light to call it pirating. It's the same as mugging, an attack on our property," says Jose Maria Irisarri, president of content powerhouse Vertice 360.

Spain is not only the European country with the most vibrant black market, but it also was responsible for 18% of the illegal downloads worldwide of the top 10 most popular films in 2007, according to Spanish Producers' Rights Management entity EGEDA.

A series of factors makes Spain ripe for pirates: lax laws and enforcement, consumers programmed to expect the ability to see new releases instantaneously, telephone operators that market broadband capacity by undervaluing content and widespread black market vendors that flourish in good weather.

Spain clocked more than 150 million illegal downloads in 2007, worth more than 800 million euros ($1.2 billion) to the audiovisual sector. Street vendors added another 20 million-30 million illegal film sales in 2007, according to experts.

A newly imposed canon on digital products instituted Jan. 1 further complicates the situation. The tax, designed to compensate authors for the private copy of digital content on mobile phones, hard drives and MP3s, is paid by the manufacturer, though it is generally understood that it will be absorbed by a rise in cost for the consumer.

But for many consumers, the canon is seen as license to download. And for producers, it doesn't stem the losses.

"Private copy for personal use should never be confused with permission to pirate," explains Jose Miguel Tarodo, general manager of Spanish Producers' Rights Management entity EGEDA. "Downloading 50 films or even one film is still illegal if you don't pay the owner."

Of Spain's 17.6 million Internet users, 83% use a broadband connection, with 58% saying they download music and 52% admitting to downloading films without specifying if those downloads are legal or illegal.

"Pirating is a huge problem, and it's causing damage for many companies. But it is the tip of the iceberg of a radical change in business model. When there are changes in business models it causes abnormalities like theft over the Internet," explained Vertice 360 film chief Adolfo Blanco. "We need to find the solution."

With that in mind, EGEDA launched, an international Web site that facilitates the legal, controlled quality download of Spanish films. EGEDA has spent the first year since Filmotech's March 2007 launch digitalizing features from all genres, shorts, documentaries and other audiovisual material.

EGEDA reports some 5 million visits, amounting to more than 30,000 downloads of its 750 titles thus far.

"All the legal options like Filmotech are positive," says Barbara Navarro, policy counsel specializing in Intellectual Property for NBC Universal in Spain. "The owners need a framework to help us because fighting against 'everything for free' is very difficult."

Filmotech introduced the original promotion of offering a free movie download with the Sunday edition of Spain's leading newspaper. According to Sanchez, the portal will increase its promotional activities in 2008 and offer more than 1,000 digitalized works on its site.

But despite the legal models, industry insiders are looking to Spanish authorities to implement measures to track pirates and punish them.

"All this talk of private copying has confused not only the public but the judicial system as well," says Jose Manuel Tourne, GM of Spain's anti-pirating body FAP. Tourne decried a recent decision by prosecutors to define piracy as a download made for profit, rather than establishing that the download is a violation of property rights in and of itself.

"It is hard enough to compete," Tourne says. "It's too risky to enter the market when you don't know what is going to happen to your product."