A real victim of online piracy is Australian indie cinema

The Sapphires (2012), starring Jessica Mauboy, had attracted 123,030 illegal downloads worldwide by October 2013. APP/Dan Himbrechts

Game of Thrones downloaders need not fear data retention plans, said Communications Minister Malcolm Turnbull last Friday.

Perhaps there is nothing for pirates to fear from Turnbull, but the Attorney-General George Brandis, is a dreadnought of a different disposition. Data retention will go a long way to facilitate his crusade to crack down on internet piracy.

But who is the biggest loser in this modern epidemic of online piracy?

Speaking at the Australian Digital Alliance forum on February 14 this year, Brandis said that he stood on the side of content creators in the copyright debate.

Perhaps he should have said “rights holders” because content creators are not necessarily the owners of copyright. Ask any wage slave in an animation film factory.

Brandis told the forum:

I firmly believe the fundamental principles of copyright law, the protection of rights of creators and owners did not change with the advent of the internet and they will not change with the invention of new technologies.

Last week, the commissioner of the Australian Federal Police, Andrew Colvin, confirmed “absolutely” that the legislation could be used in the war on illicit downloading of copyright content.

Movie poster for Dallas Buyers Club. Truth Entertainment

Knowing the data is there will aid fishing expeditions by interests such as the Dallas Buyers Club LLC, the rights owner of the Oscar-winning film Dallas Buyers Club (2013). They have been pursuing online pirates through the courts in Australia, represented by Antonelli Law.

Dallas Buyers Club LLC use the powers of preliminary discovery, hoping to force internet service providers (ISPs), such as iiNet, its subsidiaries Adam Internet and Internode, Dodo and Amnet Broadband, to reveal the identity of owners of IP addresses that have illegally downloaded copies of Dallas Buyers Club.

If the court action succeeds, identified individuals will receive letters demanding substantial cash licence fees in lieu of further court action. Dallas Buyers Club LLC has followed this practice in several overseas jurisdictions with some success, but the practice has been outlawed in the UK.

Back to the biggest loser … Certainly, the rights holders of big successes in cinema or television suffer losses.

The Australian Content Industry Group (ACIG), relying on work by public policy researchers Sphere Analysis that was published in 2011, has made some claims.

ACIG say the annual value of loss of retail sales to Australian content industries was A$900 million in 2010, and the impact of internet piracy to Commonwealth Government revenues was A$190 million. In addition, some 8,000 jobs were lost in the content industries sector as a result of Internet piracy.

However, the methodology that reached these conclusions was not revealed in detail and so, for many, this was an ambit claim from a partisan player. Nevertheless, while some will claim piracy as a victimless crime, it does have an economic impact, however hard it is to quantify.

According to a survey by US data-protection company CEG TEK, in the 30 days leading up to the opening of the American Film Market in November last year, Elysium (2013) was downloaded a massive 162,000 times a day. That amounted to more than 4.8 million times over the sample period.

How directly the downloads convert to lost ticket sales is unclear.

At a conversion rate of 50% at a ticket price of US$15, that is US$36 million lost. Elysium, with a production budget of US$115 million still grossed US$286,140,700 worldwide so the producers didn’t go broke. But after the exhibitors and distributor took their sizable cuts, the net revenue for the film would be small.

Movie poster for 100 Bloody Acres. Cyan Films

But the biggest losers, the rights holders who are really feeling it in their back pocket, are the independent producers, the rights holders to Australian films such as The Sapphires (2012) or 100 Bloody Acres (2012).

The same survey by CEG TEK, based on sampling peer-to-peer torrent services, discovered that little Aussie gem The Sapphires, at 46th out of the 100 most downloaded shows of the 2013 sample and 100 Bloody Acres at 95.

The Sapphires was the top grossing Australian film at the Australian box office in 2012, taking A$14.5 million. In October 2013, it was still attracting a lot of illegal downloads – 123,030 worldwide and 18,720 in the USA. That’s forgone revenue of just under A$1 million.

But coming in at 95, with 1,929 downloads a day or 57,870 for the month was 100 Bloody Acres. It was released on 12 screens in the US in June 2013 but took only US$6,388. In Australia, it made A$18,356 at the box office corresponding to a paying cinema audience of around 1,300 all up.

In the CEG TEK sample, about 50% more people illegally down loaded 100 Bloody Acres every single day, than saw it in the cinema. And compared to gross Australian and US revenues of A$24,744, the illegal downloads were worth perhaps A$434,000 in box office sales. Viewed in this way, the impact of piracy is devastating to small producers and genre films.

So in the Australian case at least, the ones really suffering from piracy are the small independent producers such as Cyan Films, not so much the big players like Village Roadshow.

Piracy such as that suffered by The Sapphires and 100 Bloody Acres has the potential to kill the Australian film industry. And while it is said that patriotism is the last refuge of the scoundrel, it might be the best hope for Australian film-makers.