The Chinese handed over Randolph Hobson Guthrie to U.S. authorities in Los Angeles to face multiple charges of copyright infringement last week. The Chinese convicted Guthrie of selling pirated DVDs and he’s to appear in U.S. federal court today for a bond hearing.
Once he’s done with the hearing, he’ll be whisked to Mississippi where he’ll face charges of money laundering, trafficking and copyright infringement. These charges stem from a sting operation in September 2003, when an undercover federal agent purchased counterfeit DVDs at Mississippi flea market. The money laundering charge carries a possible life sentence.
According to authorities, Guthrie and his cohort in crime, Abram Cody Thrush, had quite an operation running in China. They would make the DVDs there and then ship them all over the world. According to China Daily, the initial raid turned up 210,000 DVDs in three warehouses. Chinese courts said the operation sold 133,000 DVDs from November 2003 to July of 2004 for 3.3 million yuan or $406,000. He sold the DVDs for $3 each.
Guthrie moved his product via his now defunct website, ThreeDollarDVD.com and through the online auction house eBay. Apparently, an attorney for movie company MGM spotted an ad for Guthrie’s illicit enterprise. MGM then went to the MPAA, who, in turn, went to authorities in Shanghai.
Piracy of intellectual problem continues to grow in the U.S. and throughout the world. Software companies are facing many of the same issues as the movie industry. The movie industry says loses more than $3 billion a year in lost revenue. The software business lost $6.6 billion last year.
The piracy in China has become a real problem for the world’s most populous nation. The United States has even gone so far as to threaten to take the issue to the World Trade Organization. The MPAA president Dan Glickman said back in May that China had seized over 500 million discs in the last five years and it didn’t even make a dent in the piracy problem.
The web site DVD-Intelligence reported high-quality copies of “Star War: Revenge of the Sith” showed up on the streets of Beijing within days of its release and were selling for 85 cents a copy. It’s tough to justify $15 or $20 for a DVD when one can pick them up very inexpensively.
The basic problem in the end is economics. The MPAA, RIAA and the software industry will continue to have a constant problem. While various groups may have a right to profit from their intellectual property, good old free market capitalism tells us that as long as the market demands significantly cheaper products, there will be piracy.
The only way for these industries to deal with the extraordinarily high volume of piracy is to make their products inexpensive enough to undercut the illegal business. They have to remove the financial incentive to commit the act of piracy. Until that point, this piracy problem will continue to grow.