Zucker Weighs In on Cost of Piracy

WASHINGTON, October 4: Citing new research from the
Institute for Policy Innovation, Jeff Zucker, the president and CEO of NBC
Universal, said at a summit in Washington D.C. yesterday that intellectual
property owners are “losing the battle” against copyright infringement.

Speaking at the 4th Annual Anti-Counterfeiting and Piracy
Summit, sponsored by the U.S. Chamber of Commerce, Zucker said that the cost of
piracy to the U.S. economy is nearly $60 billion a year, according to the IPI
report The True Cost of Copyright Industry Piracy. The report also indicates that piracy has cost American workers
373,000 jobs, while the government has lost $2.6 billion in tax revenues.

At the Summit, Zucker stressed that intellectual property
protection is “absolutely critical to economic prosperity in the 21st
century—not only in the United States but also around the world, in both
developed and developing nations.”

In addition to noting the economic cost, through lost
revenues, taxes and jobs, Zucker said that IP theft “is a health and safety
issue that presents a clear danger to the public, from counterfeit toothpaste
laced with antifreeze to counterfeit medicines to exploding batteries and other
dangerous consumer goods.”

Zucker also cited the links between pirated goods and
organized crime and noted that piracy is getting worse. “The unfortunate truth
is that today we are losing the battle.”

He continued: “If we do not reverse our dangerous drift
toward a stream of commerce hopelessly polluted by counterfeit and pirated
goods, the future growth prospects for the U.S. economy and for our children’s
futures will be severely compromised.”

However, Zucker said, “We can reverse today’s trends. We know the way forward is through increased
and focused government enforcement efforts; through enhanced private sector
cooperation; through increased utilization of technology to authenticate
legitimate goods and to identify and block pirated and counterfeit products;
and through increased international cooperation.”

Zucker went on to note that at NBC Universal, the focus is
on expansion in two areas, digital and international: “We are ripping apart old
business models and pioneering radically new ways of reaching our audience. We
are investing big time in these growth areas and we plan to invest more. From
NBCU’s point of view, we are committed to delivering growth to the shareholders
of our parent company, General Electric. From a public policy perspective,
these investments will create jobs, drive upstream and downstream economic
growth, and generate increased tax revenues, both in the U.S. and in key
countries globally.”

Both areas, however, require copyright protections to be in
place in order for significant growth to be achieved, Zucker said.

Highlighting all the various ways in which consumers can
access NBC Universal content—streaming and downloads from NBC.com,
downloads from Amazon.com, on demand on cable and satellite platforms, mobile
phone viewing and, in a few weeks, streaming from Hulu.com—Zucker said: “What
incredible change! Our business models today are changing faster than a Saturday
Night Live skit gets posted on YouTube!
Free or fee-based, ad-supported or ad-free, on screens small, medium, or
large…we are there, wherever and however the consumer wants to consume
content. But all these new distribution capabilities and new business models
need to get critical mass, they need to get legs. Their future will depend
critically on our ability, as the copyright holder, to protect this content
from being stolen and to prevent our new distribution models from being
compromised at birth by pirates and counterfeiters.”

Moving on to international expansion, Zucker discussed the
recent Sparrowhawk Media acquisition, which bring the international Hallmark
channels to a stable that also includes the SCI FI Channel, Universal, 13th
Street, CNBC Europe and CNBC Asia brands. “We are expanding these channels into
30 more countries over the next three years. This augments our already robust
international film production and international TV production businesses, which
we are also expanding. NBCU’s ambitious plan to drive tremendous global growth
also depends on IP protection. Our channels and our content production drive
value, which in turn drives investment, job creation and increased tax payments
to government—but only if that value is not undercut and destroyed by
piracy and counterfeiting. Our global growth cannot succeed in countries where
piracy claims 50, 60 or 95 percent of the market. And today we face that
situation in far too many countries around the world.”

Solving the problem, Zucker says, involves making sure that
IP protection is a priority for authorities, and having dedicated policy-making
executives, prosecutors, investigators and customs agents, exclusively focused
on IP enforcement. The private sector should also be involved, Zucker said. “We
need universities, user-generated content hosting sites like YouTube, and the
Consumer Electronic and IT industries that manufacture home devices and future
home networking equipment to take strong technology-based action to prevent
their infrastructure from supporting distribution of pirated content. With
respect to financial intermediaries, we need advertisers, ad agencies, and
credit card companies to take steps to assure they do not provide financial
support for web sites that are overwhelmingly devoted to making available
pirated and counterfeit products.”

Outside of the U.S., Zucker continued, “We need not only to
keep the focus on the well-known IP protection issues in China and Russia, but
also to encourage more aggressive enforcement activities in all countries.”

Zucker highlighted the role to be played by new
technologies. “The conventional wisdom has been that technology is not up to
the task of protecting digital content from piracy. It’s a lost cause. Game
over. You can’t protect a digital file made of ones and zeroes that can be
endlessly replicated and distributed all over the world at the speed of light
and at virtually no cost. But that, to put it in a word, is baloney. Technology
is not just something that feeds the beast of piracy. It has both the promise
and increasingly the reality of a powerful engine that can be harnessed to
effectively combat it.”