IP//dp1st/mark2nd
By SARA FISHER
Staff Reporter
Jim Moloshok, president of Warner Bros. Online, sat down at his computer recently and did an online search of GeoCities’ 35 million Web pages. Among them, he found 428,000 sites featuring images from Warner Bros. properties such as Batman and Bugs Bunny.
He also discovered 227,000 sites that included images from Paramount Pictures productions like “Star Trek,” and 424,000 with intellectual property owned by Twentieth Century Fox.
The findings are a brutal wakeup call to slumbering Hollywood studios that the brand images they normally protect so fiercely are slipping far beyond their control.
And as new-media companies like Yahoo! Inc. (which is acquiring GeoCities) grow explosively and become direct competitors to the film industry, the time for the studios to play nice may be coming to an end.
Moloshok has issued a call to arms aimed at stopping those rapidly growing companies from using the intellectual property of studios without compensation. And Hollywood is listening.
“The Internet has been an untamed environment for a long time, and whole companies have grown up, gone public and been sold using other people’s property,” said Moloshok. “It’s time for studios to circle the wagons and protect their content. We have to run fast because now we’re playing catch-up.”
Indeed, fan sites dedicated to everything from “Buffy the Vampire Slayer” to “The X-Files” crowd the Internet. Many are put up by rabid devotees through Web-page hosting companies such as Marina del Rey-based GeoCities and Williamstown, Mass.-based Tripod. Most of the sites use bootleg images.
In addition, online broadcasting companies like RealNetworks Inc. of Longview, Wash., and Dallas-based Broadcast.com run trailers and clips from popular films and television shows, with permission from the studios.
The online companies sell banner ads across these Web pages, meaning they effectively make money off the images without any compensation to the studios.
That’s a major loss of potential income for Hollywood.
“The studios have valuable intellectual property and they should be concerned about it being appropriated online,” said Lisa Allen, an analyst at Forrester Research Inc. “But to a certain extent, they’re crying about spilled milk that can’t be mopped up.”
Allen notes that existing intellectual property law is unclear on how much protection the studios have in such situations. But Moloshok argues that if Warner Bros.’ intellectual property appears on roughly 4 percent of GeoCities’ 35 million Web pages, then the studio is responsible for creating a matching percentage of GeoCities’ $3.9 billion market value.
Not surprisingly, GeoCities has cried foul. The company disputes Moloshok’s calculations, saying his figures include simple mentions of a studio property rather than an actual branded image.
Furthermore, GeoCities spokesman Bruce Zanca said the firm is a Web hosting company, meaning that its customers are responsible for content. Zanca also says GeoCities has worked diligently at the request of the studios to police client Web sites for bootleg or defamation problems.
“The people (the studios) accuse of appropriating intellectual property rights are also their biggest fans, which means (the studios) are talking about monetizing that great fan loyalty and possibly disenfranchising their biggest supporters,” said Zanca.
Moreover, officials with Broadcast.com, which also is being acquired by Yahoo!, say most studios voluntarily provide video clips and images from popular movie and television shows for promotional reasons.
John Matra, director of business affairs at Columbia TriStar Interactive, speaking on behalf of Sony Pictures Entertainment, expressed mixed feelings about the issue.
“We share the concern about not protecting our brand value, but at the same time, there is an interest in the studio to get the widest distribution of content possible to promote and publicize Sony Pictures’ television programs and films,” he said.
Almost every other major studio echoes this delicate balancing act. Some, such as Walt Disney Co., have given royalty-free licenses to fan sites, and concentrate instead on protecting the Disney name from online profiteers and porno sites.
Even Moloshok acknowledged that Warner Bros. gives away substantial material in the name of publicity, and says the studio won’t take any actions that would harm its fan base.
So what can the studios to do to start sharing in the wealth?
Thus far, no industry-wide effort to recapture brand value has emerged, although executives with at least six studios said they support the essence of Moloshok’s message.
The biggest concern will come when broadband Internet access is commonplace and entire movies can be easily downloaded and pirated digitally. “It’s one thing to have a static picture being displayed in a non-threatening way,” said a Disney source. “It’s another entirely when someone is streaming your television show or movie.”
None of the studios want restitution for the current appropriation of intellectual property online, primarily because it’s not feasible. Instead, they’re looking for fair compensation in the future.
The most likely solutions will come from new technologies, according to Jupiter Communications analyst Anya Sacharow. Tech companies are developing sophisticated watermark systems through which studios could track down and identify bootleg properties.
Companies also are developing means to prevent images from being lifted from a studio site and pasted elsewhere, and a way in which any image copied elsewhere on the Web will propel a viewer back to the studio’s Web page via an embedded hyperlink when the image is accessed.
Another approach is simple one-upmanship. In January, Warner Bros. launched ACMEcity, which lets fans create home pages based on the studio’s TV shows and movies. After just 10 weeks in operation, ACMEcity has attracted 200,000 home-page builders and is in discussions with studios, sports leagues and other third parties interested in participating in the Web community company so they can finally see advertising revenue generated by their own brands.
“If we can’t beat them, we can better them,” Moloshok said.
