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Illustration by Emilio Rivera III.

Net Pirates' Next Target
Freeloading downloaders take on Hollywood

Not Everyone is Amused:
A gossipy Hong Kong website irks the bigwigs
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Walk into any one of dozens of Hong Kong shops today and for about $2.50, you can buy a picture-perfect digital video disk featuring Kevin Spacey losing his dignity and more in American Beauty. It is an illegal copy, of course, but if you can bear the moral price, buying the movie is as cheap as renting it. Much to the chagrin of the film industry, pirated flicks proliferate in Asia. But if film-makers think they have a problem now, they haven't seen anything yet. Movie piracy is set to explode, thanks to the Internet. Using file-sharing programs that allow users to swap data, just about anyone can nab blockbusters like The Matrix and Gladiator for free - anyone, that is, with enough patience and bandwidth to download the 600-megabyte files.

Movie trading today is the growing underground trend that music trading was a year ago or so. Napster, the controversial application that allows users to swap music files, went into business in May 1999 and became an overnight sensation with college kids and other hipsters. Today, it has more than 20 million users — enough to scare the recording industry into trying to get the courts to shut down Napster (a decision is expected in October). The phenomenon looks set to repeat itself in the video realm, enabled by new technologies. In the past few months hackers have come up with programs that make copying movies easier. And Napster cousins like Gnutella, Hotline and Scour, which allow any kind of file to be shared - not just music - have opened the doors for widespread video distribution. Asia, with its entrenched piracy tradition, will have a field day. "It's going to be huge in Asia, once broadband penetration increases and it gets to the point where downloading a movie file is as easy as downloading a music file," says Matthew McGarvey, an analyst with International Data Corp.

Mind you, it's certainly not that easy yet. You can queue for days for a top movie on a file-sharing network. Saving the flick to your PC will take several hours more — assuming your connection isn't broken.

The fact that movie files can be traded at all is due in part to a program called DeCSS, which was developed by a Norwegian teenager so he could play DVD movies on a computer running the Linux operating system. The program also just happens to unscramble a disk's embedded encryption code so that the file can be copied to a computer hard-drive. The other breakthrough for pirates was DivX, Microsoft's compression software that was hacked by a French programmer who posted it on the Internet. DivX can squeeze 5 GB movie files down to 600 MB - small enough to fit on a CD. There are some 300 copies of the program on the Net.

Hollywood, understandably, is sweating. The Motion Picture Association of America has won a suit forcing, a hacker site that had posted the DeCSS program, to remove it. The MPAA, along with the recording industry, is also suing Scour. Investors have run scared and Scour has had to lay off two-thirds of its staff. But those victories are small. DeCSS is still available all over the Internet. And plenty of other file-sharing networks remain. They will be nearly impossible to police because they use no centralized servers and in some cases, never even identify the users.

"The record and movie companies will have to work really hard on coming up with encryption codes that can't be cracked," says McGarvey. Current codes only last about a year before hackers crack them. In the long run, however, the industry will have to come up with a way to make money while embracing the technological changes that have taken place.

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