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mpaa-riaa

mpaa-riaa

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11/05/2012

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1August 10, 2012The Honorable Victoria A. EspinelUnited States Intellectual Property Enforcement CoordinatorU.S. Office of Management and Budgetintellectualproperty@omb.eop.govDear Ms. Espinel:The Motion Picture Association of America (MPAA), the National Music Publishers’Association (NMPA), and the Recording Industry Association of America (RIAA) (the “creativeindustries”) appreciate this opportunity to respond to the request for written submissions issuedby the office of the Intellectual Property Enforcement Coordinator (IPEC).
See
77 Fed. Reg.38,088 (June 26, 2012).The MPAA is a trade association representing some of the world’s largest producers anddistributors of motion pictures and other audiovisual entertainment material for viewing intheaters, on prerecorded media, over broadcast TV, cable and satellite services, and on theinternet. MPAA members include Paramount Pictures Corp., Sony Pictures Entertainment Inc.,Twentieth Century Fox Film Corp., Universal City Studios LLC, Walt Disney Studios MotionPictures, and Warner Bros. Entertainment Inc.The NMPA is the largest U.S. music publishing trade association with over 2,500members. Its mission is to protect, promote, and advance the interests of music’s creators. TheNMPA is the voice of both small and large music publishers, the leading advocate for publishersand their songwriter partners in the nation’s capital and in every area where publishers dobusiness. The goal of NMPA is to protect its members’ property rights on the legislative,litigation, and regulatory fronts.The RIAA is the trade organization that supports and promotes the creative and financialvitality of the major music companies. Its members are the music labels that comprise the mostvibrant record industry in the world. RIAA members create, manufacture and/or distributeapproximately 85% of all legitimate recorded music produced and sold in the United States.The MPAA, NMPA and RIAA represent the companies and people who make anddisseminate American motion pictures, television programs, music, and other copyrighted works.The livelihoods of millions of Americans, as well as the cultural health and progress of ourcountry, depend on the continued growth and vitality of these creative industries.I.
 
IntroductionMuch has changed in the digital marketplace for creative works in the two years since theIPEC released the first Joint Strategic Plan on Intellectual Property Enforcement. At the sametime, however, many of the problems of copyright theft remain.One of the most striking recent developments is the accelerating proliferation of newdigital services for the authorized dissemination of recorded music, motion pictures, and
 
 
2television programming. Today, the creative industries are making far more content availablethrough far more authorized digital services than ever before, including through a variety of offerings with diverse price points for broad access.The past two years have also been a period of important industry (and in some cases,inter-industry) agreements regarding best practices, as discussed below. We greatly appreciatethe significant contribution of the Office of the IPEC in encouraging parties to reach theseagreements. In addition, a number of large-scale sites and services dedicated to onlineinfringement have been shut down in the past two years.The IPEC and other U.S. government agencies have been instrumental in a number of these achievements. The creative industries would like to take this opportunity to thank theIPEC for her role in shining a spotlight on the problems of copyright theft and counterfeiting.These achievements are especially notable because they were accomplished under toughbudgetary constraints and without direct appropriation.However, considerable online infringement continues. This infringement undercutslegitimate services, thereby harming investors in content production, and, cheats law-abidingconsumers. Despite the marketplace efforts made by the creative industries to meet andanticipate consumer demand for digital services, and the vigorous efforts of the creativeindustries and the U.S. government to take legal action against copyright theft, many avenuesremain that enable profiteering from infringement. As long as these avenues are open,America’s economy and culture will be harmed. These avenues will not be closed without thecommitment and cooperation of all responsible players in the online ecosystem.If all of the relevant players combine their efforts to combat the scourge of onlineinfringement, we are confident that the legitimate marketplace for cultural products will thrive.Consumers will increasingly have access to exciting and innovative new methods of enjoyingmovies, television shows, and recorded music. But if anything less than full cooperation remainsthe norm, our country risks a steady decline in investment in the cultural products for which it iscelebrated throughout the world, and irreparable harm to the livelihoods of millions of Americans who work to produce, perfect, and disseminate these creative works.The U.S. government has a critical role to play in facilitating and encouraging the inter-industry cooperation and commitment needed to ensure a brighter future, rather than a scenarioof continued threat to a dynamic business sector and to the cherished and unique entertainmentofferings it has produced. While it is the industries involved that must actually collaborate, theactions and messaging of the federal government can make a significant contribution to creatingand fostering the environment in which such cooperation develops.This submission addresses the issues raised in the IPEC’s request for comments. First,the submission describes the current marketplace for cultural products, which are now widelyavailable through digital means. Second, the submission details the existing, emerging andfuture threats facing the creative industries and the U.S. economy. Third, the submissionprovides information regarding the costs of copyright infringement and the costs of fightingdigital theft. In connection with that information, the submission explains that much of theonline theft that drains the resources of the creative industries and injures the U.S. economy
 
 
3could be averted if reasonable investments in cooperation were made by internet-industryplayers. Finally, the submission makes policy recommendations to help the IPEC update itsstrategy for increasing enforcement of, and compliance with, the intellectual property laws thatmake productive investment in creative products possible.II.
 
Current Trends in the Creative IndustriesA.
 
Strong Public Demand for Recorded Music, Television Shows, and MotionPictures Fuels the Success of the Internet and the Consumer Electronics Industry.Professionally produced entertainment content is at the core of many of the most popularonline activities. Indeed, the explosive growth of many internet businesses is directly dependentupon copyrighted materials. Netflix – a leading internet distributor of licensed professionallyproduced film and television content – makes up over 24% of all North American traffic on fixedaccess networks.
1
Pandora Radio – wholly engaged in disseminating the creative output of songwriters, composers, and musical performers – makes up 6.4% of all traffic on NorthAmerican mobile networks.
2
15 of the top 20 most followed people on Twitter are from themusic or movie business.
3
18 of the top 20 all time videos on YouTube are professionallyproduced music videos.
4
 Consumer electronics sales, which are at an all-time high,
5
are also dependent on high-quality content. For example, sales of smart televisions are surging, due in large part to theavailability of on-demand or personalized access to motion picture and music content.
6
Sales of 3D televisions are also rising dramatically, driven by the increasing availability of 3Dprogramming.
7
Even gadgets in automobiles are selling at a rapid pace because consumersdemand music and movies in their vehicles.
8
 
1
Sandvine,
Global Internet Phenomena Report 
2 (2012).
2
 
 Id.
at 21.
3
The Twitter rankings are available here:http://twittercounter.com/pages/100(last visited July24, 2012).
4
The YouTube rankings are available here:http://www.youtube.com/charts/videos_views?t=a (last visited August 8, 2012).
5
Chris Tribbey,
CEA: All-Time High for Consumer Electronics Revenue
, H
OME
M
EDIA
M
AGAZINE
, July 24, 2012,http://www.homemediamagazine.com/consumer-electronics/cea-all-time-high-consumer-electronics-revenue-27894.
6
Carl Marcucci,
 Netflix, YouTube Must-Have Apps for Smart TV Owners
, R
ADIO AND
T
ELEVISION
B
USINESS
R
EPORT
, July 20, 2012 (Four of the top five smart tv apps are Netflix,YouTube, Amazon Instant Video, and Pandora.),http://rbr.com/netflix-youtube-must-have-apps-for-smart-tv-owners/ .
7
Tribbey,
supra
note 5 (“3DTV unit sales are projected at 5.6 million, a 104% increase.”).
8
Mike Snyder,
Smartphones, Tablets Boost Sales of Consumer Electronics
, D
ETROIT
F
REE
P
RESS
, July 24, 2012 (“Spending on gadgetry included in vehicles is expected to account for $7.9

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