Indonesia: Using Data To Combat Film Piracy

[Len]

One of the biggest challenges facing the Indonesian movie industry is content protection and piracy. A recent study by the University of Indonesia suggests that in one year, the Indonesian economy loses Rp1.4 trillion because of film piracy.

Anti-piracy does not only involve the government, but also players in the creative industry. Making content more available and accessible on platforms like mobile phone apps can also move people from illegal to legal platforms.

AmCham Indonesia sat down with Brett Danaher, a data scientist and economist pioneering the use of data analytics in the entertainment industry and Assistant Professor of Economics and Management Science at Chapman University in Los Angeles; and Frank Rittman, a lawyer with vast experience in the entertainment industry who is the Asia-Pacific Managing Director of the Motion Picture Licensing Corporation (MPLC), the world’s largest provider of non-theatrical exhibition services for film and television producers, to discuss the importance of intellectual property protection in the creative economy.

AmCham Indonesia: Can you explain your method of data analysis for the creative industry?

Brett Danaher: In my method of data analysis, of course there’s a whole set of tools that can be used. So the methodology that I use depends on what question I am asking, what data is available, and what events might help me to study the question. But when it comes to copyright policy, it is quite difficult to study the impact of different copyright policies or enforcement strategies, or even a firm’s strategy to make the content more attractive. It is very difficult to isolate the causal effect of one policy or strategy on media consumption. This is why somebody like me and my co-workers come in to contribute. We are trained in tools that we call causal inference, the ability to not only take data and report correlations, but to actually use various methodologies to isolate the true causal effects of some variables like legal consumption, piracy and so on.

How does data analysis in the creative industry differ from data analysis in other industries?

Brett Danaher: In some ways, data analysis in the creative industry is similar to other industries, because in data science we use the same tools. But the way that it is different is that the entertainment industry recently went through a shock, and that’s digitalisation. What was once a physical product becoming digital and what was once delivered physically is now being delivered digitally. And this ultimately led to the change in the amount of data

that we have, the way the data is collected, and who has the data. It used to be that perhaps movie studios had the best available data about their own content. Now, Netflix and Iflix have better data about the content owned by Warner Bros, for example. That creates a challenge for the firms that made the content, but it also creates an opportunity for people like me to come in and get data from different sources as a neutral party.

You did research on how companies and the government can work hand in hand to protect intellectual property. How was your data analysis method applied to the research?

Brett Danaher: We have just done work on the effectiveness of government anti-piracy enforcement. We’ve also looked at various strategies that firms can take in order to encourage people to buy their content legally. In short, we see the interaction between enticement, or luring people to buy legally, and enforcement. We look a lot at those strategies and try to isolate the variables with the tool of causal inference with various methodologies. And our conclusion is that it is not about companies’ efforts to make legal content more alluring and available, but the enforcement that makes piracy less appealing.

What is the role of companies and the private sector in protecting IP and battling piracy?

Brett Danaher: The term “companies” is kind of a generic term. Let me answer this in two ways. First, the role of the content owners is to make content available in more convenient platforms. This attempt definitely reduces piracy and increases sales. Next, the role of third parties like technology companies is also important. For example, a tech company like Google can also contribute in helping the content owners to promote their legal platforms and kill illegal platforms. If Google, or other search engines, manage to prioritise the legal platforms on the search results, it is going to discourage people from pirating the content, according to research done by my co-worker. So, my point is these two kinds of private companies really contribute to the whole scheme of anti-piracy.

How can we improve the movie industry so that it contributes more to the economy and GDP in particular?

Brett Danaher: We have talked about protecting content and luring people to buy from legal platforms. But one thing for me that is important is to pour investment into the movie industry. Two accomplished economists did a study on Bollywood from the 1970s to present day. They found that there were two major shocks that happened in Bollywood. In 1985, the spread of the Video Home System [VHS] led to widespread movie piracy and movie revenues went down. In 2000, the world started to get interested in Bollywood films, and that led to huge amounts of cash being poured into Bollywood. Following 2000, the number and quality of Bollywood movies jumped. From this research, I see the importance of investment in the movie industry, combined with the protection of intellectual property.

MPLC has been a beacon of motion picture copyright compliance. As its managing director for Asia-Pacific, how much progress has your organisation made so far in addressing copyright compliance in Asia?

Frank Rittman: MPLC launched its agent headquarter operations in Hong Kong just four months ago. So far MPLC has operated in Singapore through a joint venture since 2010. My mandate now is to open about eight or nine more markets in the next four to five years. So, we are just getting started in Asia.

What is the problem with developing countries and piracy? Do you think it is a lack of awareness in society or a lack of law enforcement?

Frank Rittman: I think the main problem is the combination of the two and they cannot be separated because they correlate with each other. I have travelled a lot in Asia for the last 15 years and talked a lot with governments and IP agencies in various countries. I must say that the laws are catching up and the availability of legal content is increasing. So, there’s progress in battling piracy in developing countries.

How does the American government differ from most Asian governments in dealing with the movie industry? Are there common problems or are they completely different?

Frank Rittman: My observation would be that the American government tends to be less involved in the actual process of producing and distributing films. The main role of the American government is to create a strong legal infrastructure for these businesses to thrive. Most of the players in the industry don’t want to be told they have to do something and they don’t want be told they can’t do something. They want the government to leave them alone. That’s the American government, they don’t want to mess too much. But sometimes issues can get politicised.

The Indonesian movie industry is on the rise with more films achieving recognition and greater access to theatre. What are the biggest challenges to sustain this growth?

Frank Rittman: Your government should be prepared to have incentives for the private sector. The movie studios, producers, and others are the main players in the industry and there should be more and more players to increase competitiveness and content.

There is a problem with the legal ownership of Indonesian culture and traditions that turn out to have economic value. What do you think about the conflicting aspects of IP law and the ownership of traditional culture? Are there similar issues in the United States?

Frank Rittman: I think I’m not the appropriate one to answer this question, but I am aware of this issue of folklore and IPR. I have a good friend in the World Intellectual Property Organisation who came over to Indonesia and held a lot of meetings ten years ago to try to address this issue. What I understand is that there is a process of legal protection for this folklore. But I have never seen these kinds of cases in other countries, not even in the US.

Brett Danaher: The issue of copyright protection is often posed in the interests of copyright holders versus the interests of consumers who want to get everything for free. I think this kind of thinking is short-sighted because there is evidence that reduction in piracy through the protection of copyright actually increases the supply of content. So, bear in mind that if there are different cultures in Indonesia, people have to think long term and utilise the tools of IPR in this area.

If you could picture the issue of IPR in Indonesia and the rest of the world for the next five years, what would it look like?

Frank Rittman: Your current government’s efforts in battling piracy are quite significant with your site-blocking policy. Also, your current administration backs good governance. So right now, Indonesia is a strong can-do country. Everything is a lot better now. I might be wrong, but I think your country is going in the right direction.

Brett Danaher: I can’t speak of Indonesia in particular, because it’s not my expertise. But I think worldwide, we are very slowly on the right path. We are seeing governments do a bit more all around the world. We’ve seen site blocking in 43 different countries and other laws being passed, and at the same time, the content industry is pushing for more convenient legal distribution with lower prices. And the people now prefer subscription channels, and we’re seeing those channels get bigger, better and more appealing. Bottom line, yes we are going in the right direction, but we’re moving slowly.