Interview: Jack Valenti

People are taking fair use and changing it to unfair use and claiming that it’s fair use. — Jack Valenti

Jack Valenti was CEO and president of the Motion Picture Association of America for 38 years. He stepped down in September 2004, but his legacy lives on. This interview with J.D. Lasica is perhaps his most wide-ranging on the subjects of piracy, DRM, fair use and technological innovation.

Let’s start with the big question. How important is the issue of movie piracy, and what will happen to movies and entertainment if real piracy is left unchecked?

Well, what we know is that in analog piracy, hard good — that is hard-good DVDs and analog VHS — we lose about $3.5 billion a year in lost revenues worldwide. Now, we don’t have a number on digital piracy yet, but know that digital piracy will be far worse than analog piracy if left unchecked. A VHS tape has to go into a manufacturing plant, it has to be packaged, stamped, it has to have slave machines. But with digital piracy, you can have an eminently watchable thing you bring down from the Internet, you burn it on a DVD, and copy it 10,000 times, and each copy is as pristine and pure as the original. Now I’ve seen camcorded movies that are uploaded to the Net and they are very, very watchable. A lot of camcording going on is taking advantage of the fact you can go into a theater and plug in to one of those sound systems you have in the armchair for hard-of-hearing people. And the sound comes over crystal clear — beautiful sound. These camcorders are small, they’re digital, and they do a remarkable job of duplicating the film.

Do you think there’s a copyright crisis in this country?

I have been to eight universities — Harvard, Yale, NYU, Stanford and Duke — I’ve talked to about 3,500 students. I believe there is a disengagement by young people about who owns what and why. I think there’s a few out there who say, because I have the technological power to do so, I’ll take down anything that’s up there and I don’t care who owns it. They have rationalized, how can it hurt a big movie company if you bring down one movie, but they don’t realize that 10 million people are swapping these things. We only have about 17 million homes today with broadband, but two, three, four years from now you’ll have 30, 40, 50 million homes on broadband. Every university in the country has state of the art, large-pipe, high velocity broadband. So when you put that all together, the possibilities for movie theft begin to grow exponentially, and as the technology becomes faster, you can deliver it faster.

Days ago I delivered the DuBridge Lecture at Caltech. I visited their labs, and they have an experiment called FAST where they have brought down a DVD quality movie in five seconds. That’s 4.6 gigabytes. And Internet2, a consortium of European and American scientists have sent 6.7 gigabytes 12,500 miles — halfway around the diameter of the earth — in one minute. I asked Dr. Newman at Caltech, how soon can this be in production in the marketplace, three or four years? He said, no, if a company wants to come and put in money, it could probably be operative in the market in 18 months. Well, my face blanched.

That’s what we’re facing. I’m trying to put baffle plates in place now. I want to baffle piracy. We’re trying to do it looking two or three years out. If everything stopped right now, if everything stayed just as it is, we could probably survive it, because even with broadband it takes at least an hour to bring down a movie. You can bring down a song in 90 seconds. So I’m trying to put in place technological magic that can combat the technological magic that allows thievery. I hope that within a year the finest brains in the IT community will come up with this stuff. A lot of people are working on it — IBM, Microsoft and maybe 10 other companies, plus the universities of Caltech and MIT, to try to find the kind of security clothing that we need to put around our movies. It may be possible to so infect a movie with some kind of circuitry that allows people to copy to their heart’s content, but the copied result would come out with decayed fidelity with respect to sound and color. Another would be to have some kind of design in a movie that would react with some kind of design in a movie that would say, copy never, copy once. Some new business model may want to put a movie out on the Internet just after it leaves theatrical exhibition. We can’t afford to let that be copied at that juncture because it’s the aftermarket where you make your profits. Forty percent of all the revenues that comes to the major studios comes from home video. So if you allow a movie to be abducted early in its journey and everyone has it before it goes to home video, why do you want to buy home video when you already have it in pristine form?

I know you’ve taken to college campuses to talk about the morality of file sharing and piracy. How has that message been received by young people?

When I ask, how many of you believe that what you’re doing is wrong, morally and legally, most of their hands go up. But they rationalize it by saying, yes, it is a kind of stealing, but everybody else is doing it, and it costs too much to go to a movie. There’s a rationalization that goes on, but I am convinced if we keep putting this moral imperative before them and if the professors follow through on this, it will make an effect.

Let me tell you what we’re doing. We've been meeting for about a year with the representatives of universities: Dr. Graham Spanier, the president of Penn State; Dr. Charles Phelps, the provost of the University of Rochester; Rick Levine, the president of Yale; John Hennessy, the president of Stanford, and Dr. Molly Broad, the president of the University of North Carolina. We’ve been working with them to try to establish codes of conduct so that, at many universities now, they are instructing students when they return to campus that copyright must be observed. Some of the codes say, if we catch you the first time you will be admonished, if we catch you a second time, you can probably lose your computer privileges; third time could be a severe penalty. More and more universities are putting that in, and the word is getting through.

In a strange way, the lawsuits filed by the music industry have had an interesting effect. Some of the heads of the universities laud it because the word has gotten out, hey, you can really be injured with heavy fines. I think that message is getting through. The record people tell me that in their surveys, the number of people who think it’s illegal to do that has gone up from 20 percent to 50 or 60 percent. I think movies will be the beneficiary of that kind of gradual change in attitude.

I hear from a lot of students that they don’t consider it theft or stealing because you’re merely making a perfect copy. What do you say to a student with that view?

Well, if you can make a perfect copy of a silver plate in front of your home, why would you want to go to Tiffany's to buy one? Any time you make a perfect copy, why would you want to go to a Blockbuster store and rent or buy that DVD? So if you have 50 million perfect copies and subtract 50 million sales from the Blockbuster-type stores, that’s a serious decay.

Last week I interviewed two movie pirates, young men who are members of organized movie encoding groups. What would you say to them?

I’d do what the attorney Joe Welch said to Joe McCarthy, ‘Sir, have you no shame?’ I’d ask the young man, would you go into a Blockbuster store and furtively put a DVD under your jacket and walk out with it? Of course you wouldn’t. But you see no harm about putting a movie in your digital hard drive jacket and walk off with that. The reason you’re doing the latter is you think it’s risk-free and high-reward. But don’t you know it’s wrong? Don’t you know it’s stealing? They’ll rationalize it but they know it’s stealing. Everybody does it so what’s the big deal.

A lot of file traders on the Internet, especially those who live abroad, are unhappy with the studios’ region coding system, or windowing system. Do you think that system will ultimately have to change, perhaps to allow simultaneous worldwide releases of films?

That’s to stop parallel importing. If you didn’t have that, you’d have people stealing it here and then transporting it all over the world in analog form. That’s what you’re talking about, analog form. And parallel importing can kill sales within a particular country. You’re bringing it in from somewhere else. Now, if you’re stolen something that’s region coded for America, you couldn’t sell it in Europe. This is a contagion we’re fighting here now. Particularly abroad, organized crime is in it. I had the FBI tell me that if a criminal invested $50,000 in heroin and crack cocaine he could make a lot more money with 100% less risk by getting into the movie stealing business. Your profit goes up. It’s difficult to go to jail if you steal a movie.

I had the occasion a few weeks ago to interview Les Vadasz of Intel, and I know you’ve had some public exchanges with him over the years, at last year’s Aspen summit, for example. What should the tech sector be doing to help in fighting piracy, and are they doing enough? [Valenti told Vadasz, "It is easy to tell a man to go to hell, but much harder to get him to do that."]

We’re very good friends now. We’ve been meeting with the IT community for about five years, including the chip manufacturers and the consumer electronics people. Right now the IT people are fairly rigid in their belief that they don’t want to do anything in their computers, they want to keep the computer just the way it is without any kind of responsive circuitry in there that could stop piracy. We’ve been working with them, because I’ve said to the heads of some of these computer people, I tell them it’s in your long-term interest because one of the reasons why broadband is lagging in this country is because in a survey I saw done by the consumer electronics industry, about 68 percent of computer owners said that everything that was available on the Net they could bring down with a 56K modem. They didn’t need broadband and $50 a month. But if movies were on the Internet, and available for a fair and reasonable price, broadband would be something they’d consider.

Do the technology companies need to reengineer the PC to make it a trusted appliance for watching copyrighted entertainment? I attended Digital Hollywood last year and MPAA vice president Brad Hunt said the challenge facing the entertainment and computing industries was "How do you make the PC a trusted entertainment appliance?"

Right now, I don’t know exactly. But in time, the technology innovation is moving with such celarity that Gordon Moore’s old deal, that every 18 months a chip doubles in capacity and power, is being brought down to about 12 or 8 months. When I look at what Caltech and Internet2 are doing, it’s there. I think in time I believe that technological innovation is the best way to go. All of our companies are working very closely with the best brains in the information technology industry right now to try to see if there’s some way that we can deal with this. We’re trying to set up an independent research financing group where they put in millions of dollars and then outsource it to the best brains in the IT industry, with mandating certain objectives to reach.

Let me ask you about Moore’s Law. The storage capacity of hard drives and media centers is doubling every year, and in 5-10 years people will be able to store vast amounts of television and movie programming on those boxes.

I don’t think there’s any question about it. And with compression techniques you can pretty much do it now.

Is that a concern?

Well, it is, but I have said, technology is what causes the problem and technology will be the salvation of the problem. I really do believe we can stuff enough algorithms in a movie that only the dedicated hackers can spend the time and effort to try to plumb through that 1,000 algorithms to try to find a way to beat it. In time we’ll be able to do this, I really believe this, because I have great faith in the technological genius that’s out there.

But all it takes is one hacker to release the movie and then millions of people can access it.

That may be.

It doesn’t bother Hollywood if people will be able to store hundreds of movies on their hard drives?

Well, it doesn’t bother us if those movies were all purchased at a fair and reasonable price — and that’s a definition to be defined by the consumers, not by the studios.

What about free movies on TV — should people be allowed to store those indefinitely?

Well, free movies on TV have already been through Blockbuster and pay per view and Showtime and the airlines. By the time they get to networks and individual stations, they’ve been out there for quite a while, and they should be copied at will, free over the air.

We just won a victory at the FCC with the broadcast flag, and the broadcast flag says copy to your heart’s content, but if you attempt to redigitize that movie — the digital movie comes into an analog set, then it’s transferred into analog, and all of its encryption is stripped away, so you can take that, redigitize it and, through what’s known as the analog hole, you can redistribute that back onto the Internet. All the broadcast flag does is keep you from redistributing it back onto the Internet, but the customer will never know there’s a flag because he’s copying to his heart’s content.

Now that you’ve won the broadcast flag, where do you go from here? Are there other government mandates you’re pursuing?

Well, the big problem is the analog hole, and that’s a technological aberration that can only be solved through technology.

In layman’s terms, what do you want done?

By the way, this broadcast flag only applies to digital television sets, so we’re preparing for the future. There’s nothing you can do about the 100 million analog television sets out there. But they will gradually disappear in the next years. Maybe in the next 10 years most people will have digital television sets. In this interim period of the next two years, we need to have the technological magic available to us, and I don’t know what it is, to protect our movies.

Would you like to sunset those analog sets?

Well, no. I’ve got analog television, and I want to use them till they wear out and then I’ll get a new one.

Let me ask you about these software programs and TV tuner cards that let you watch, record and retransmit television programming and movies on a computer.

You mean like TiVo?

No, like Snapstream or El Gato’s EyeTV.

The PVRs.

Well, OK, let’s talk about those. Do you have any concerns there?

I have a TiVo set. The movies I get on TiVo come from television, HBO or pay per view. We do not yet have video on demand. When you have video on demand, you’ve got to be able to protect those movies, because they’re streaming down. You say, I want to watch Gladiator or Lord of the Rings and instantaneously you’ve got the movie coming over your television set — we’ve got to be able to protect that. Right now, there’s no video on demand, there’s semi-video on demand, things like CinemaNow and Movielink. But the technology is moving with such speed that video on demand will be here shortly.

What about movies appearing on television that you can watch and record on a computer. I have EyeTV on my Mac in the next room.

That’s right. But you’re not seeing Lord of the Rings or Matrix Revolutions, unless you bring it down from the Internet in an outlaw form.

So there are no restrictions that Hollywood wants to place on what people can do with media on their computers?

Well, I can’t tell you that. We have to see what the technology can provide.

There was announced yesterday by Rep. Cornyn of Texas and Sen. Feinstein of California a bill that would make it a felony to camcord a movie in a theater, which I think is terrific, because our piracy research tells us 92 percent of the stuff that gets uploaded is camcorded.

I’d like to ask one question about the DMCA, and its effect on home moviemaking for personal use: Let’s say a homeowner is making an amateur video using video footage of his son playing pee-wee football. To jazz it up, he buys a copy of the movie Rudy and uses the De CSS program to strip it of its copy protection—

Well, then he’s committing a violation of federal law.

So if he wants to add a few seconds of crowd shots to the final version of the new home video he’s creating—

He should go to the company that owns the movie and get permission to do it. If you start that, where does it end? How much is a little snippet? Is it 10 seconds? Ten minutes? Thirty minutes? He might want the first 23 minutes of Saving Private Ryan, or all of Gene Kelly’s Singin' in the Rain. Once people have the power to do a snippet, they could do a whole movie.

So you’re suggesting there is no fair use right to a few seconds?

There is no fair use to take something that doesn’t belong to you. That’s not fair use. If you’re a professor in a classroom, you show Singin' in the Rain to your class. You can fast forward it, and there’s no performance fee for that. That’s fair use. Now, fair use is not in the law. People are taking fair use and changing it to unfair use and claiming that it’s fair use.

The Los Angeles Times on Sunday carried a story saying that you were advising the studio heads to continue exploring more advanced technological copy protection, but the studio chiefs instead pushed ahead with a plan to move ahead with lawsuits against those who infringe on movie copyrights. Can you tell me whether there’s a disagreement about strategy?

I can’t comment on that because somebody leaked a story. All I can tell you is that there are no plans at this time to file suit against anybody. On the other hand, I have said publicly that when you’re being pirated and pillaged and plundered, you can’t rule out any option. But at this moment, I can assure you, we’re not ready to sue anybody. [note: Two months after Valenti stepped down, new MPAA chief Dan Glickman announced the studios would begin suing movie file sharers.]

Let’s spend just a quick minute discussing the Oscars screeners controversy. As I understand this, a compromise was reached: the academy members received VHS videotapes of the nominated films, and they were admonished by the academy not to loan the tapes and to destroy them once they had been watched. Is that where things stand now?

If they sign a paper in which they authorize the academy to send their address, name to the studios, if they pledge they are not going to let those VHS screeners out of their home, and recognize that the studios reserve the right to mark every screener, and if a pirated screener is traced back to an academy member, he will be summarily expelled from the academy, and would never receive a screener so long as he lived. We sent out 68 titles as screeners; 34 were pirated. The problem has gotten out of hand A friend of mine just traveled on a China Airlines flight. For their in-flight movie, they showed a film, and at the bottom it said, ‘For your consideration.’ It was a pirated screener, and they were showing it on China Airlines.

So, if we see confirmable real-time piracy and we don’t do anything about it, we’re both stupid and mad. Remember, the academy functioned for 55 years without screeners.

For the book I’m writing, I’m looking back at the invention of DVD. How important were Warren Lieberfarb’s contributions to the creation of the DVD?

I would say Warren Lieberfarb was the father of the DVD. I’ve had many conversations with him. Early on, he said, 'Jack, this is the future.' He got a group together and led the group to do the CSS copy scramble system on the DVD, and then had me join with him imploring all the companies to get titles out there. It was not easy to do that. But he was the godfather, there’s no question about it.

And now there’s another group figuring out the next generation of DVD copy protection?

MPA’s technology people have been meeting with the IT and CE people and the chip manufacturers. We have meetings every month, trying to find some way to come to some concord about how we’re going to deal with the future.

How is it proceeding?

It’s moving but at a lesser velocity than I would like. It’s very hard. You’re dealing with technology, with fragile concepts. I’m not putting the blame on anybody, I’m just a fellow who likes to move. I’m an action-now fellow, and sometimes I get frustrated.

In an interview earlier this year you said the music industry is suffering significant financial loses and that if compounded over three or four years, “the music industry is dead.” Is that a prediction, or —

That I don’t know. I don’t know about the financials, all I know is what I read about the RIAA and what they say.

What would you say to a law-abiding homeowner who wants to make a backup of his children’s DVD movies?

I would say this: When you go to your department store and you buy 10 Cognac glasses and two weeks later you break two of them, the store doesn’t give you two backup copies. Where did this backup copy thing come from? A digital thing lasts forever. No enterprise in the world gives you a backup copy of anything. You go buy a suit of clothes and you tear it and you come back and the guy says I’ll try to sew it up for you, but he doesn’t give you a backup pair of trousers. If you need a backup copy of a DVD you can go out and buy another one.

What keeps you up at night?

Not a thing. I sleep like a baby. Once my head hits that pillow, I don’t think of anything. I feel like what i’m doing in my mind is right, the long-term interests of what I think is America’s most extraordinary enterprise — the entertainment industry, movies and television.

What's your vision of the future? What would you like the motion picture landscape to look like in five years?

The one thing that won’t change 50 years from now is the story is the thing wherein it will catch the conscience of the king, as Mr. Shakespeare put it.
When Frank Capra was making movies, when D.W. Griffith was making movies, it was the story, and that’s what people in Hollywood are looking for now. Now, we will have technological changes. Already have them, when you can do all sorts of digital things. But digital morphing is not a story, it’s a technical thing to help you enhance your story. So I don’t think technology will make a story. I think the computer is the smartest mechanism the world has ever seen, but there’s one thing a computer cannot do. It cannot predict human behavior. So that’s what is not gonna change.

Does it bother you that you’re portrayed as a villain in some quarters of cyberspace?

I don’t relish it but I know what I’m doing is right. I think I’m on the right side of the future. I don’t try to dwell on the past, I want to look ahead. I want to have what Mr. Churchill says is the seeing eye, to know what’s on the other side of the brick wall. And I believe in change. Change irrigates every enterprise, and particularly the movie business. So, I welcome it, but I want to make sure that thievery is not going to lacerate our future.

The MPAA has a real strong on presence on Capitol Hill.

I’d like to believe we have it all over the world.

Is that due to the good will Hollywood fosters or—?

I think good will takes you so far but if you don’t have merit to your case, you’re dead. I’ve been in politics all my life, and I never saw charm do it. Charm might get you one appointment with somebody, but after that, you better know your brief, you better know what the hell you’re talking about and you better have a good case to make. I don’t believe you can buy a congressman or a senator. I’ve never seen that happen. Therefore if we have some credibility on the Hill, I make sure that we never lie, we never play it cute around the turns, and we treat everybody with respect and courtesy, and never lessen their dignity.

Doesn’t Hollywood also have an advantage in being able to roll out the red carpet for congressmen and fly in Hollywood stars?

Well, people can have dinners with congressmen and senators, you can take them on fishing trips and all that stuff, but when it comes down to it, they’re not doing to vote for something if they don’t think it’s right. They really aren’t. Because in the end they have to get reelected.

You’ve announced plans to look for a successor. It strikes me that you’ve come to personify the MPAA—

Well, I’ve been here almost 38 years, so if you last that long you become an institution.

Will it be hard for anyone to step into your shoes?

I was in Dallas in the motorcade on Nov. 22, 1963, and I saw that day a brave young president murdered, and a new president take over. The president is dead, long live the president, the nation goes on. No one is indispensable, I learned that day in Dallas. Someone will come in take this job and they won’t be me but they’ll be themselves and they might do a hell of a lot better job than I’m doing.

What do you hope your legacy will be?

I hope people will say I never had a hidden agenda and I never played it cute around the turns, and that my integrity stayed intact.

Interview conducted Nov. 14, 2003