Christian Ian P. Lim Prof. Dr.

Jose Waldemar Veloso Valmores

MPA 1-1 Decision-Making (Cognate)

Case Analysis
(Movie Piracy: The High Cost of Going Cheap)

VIEWPOINT

The age of computer and technology (information) has come. The role of computer and
technology in our life has been an integral part of our lives. The misusage of this would not be
advantageous in our society, especially in our economy as a developing (rising) country. One of
the issue arising is piracy. The existence of Movie Piracy and its detrimental implication has
caught the attention of movie industry which fears for their work and profits being jeopardized.
The tacitly condoning of movie piracy is extensive as a Filipino because of expediency affects
the acceptability of the existence of this crime.

Despite the laws against piracy (Anti-Camcording Law of 20101, Intellectual Property
Code of the Philippines2 and etc.) and agency (OMB3) created to fight the emerging issue, the
curbing is beyond far accessible. This paper aims to provide analysis that would give stance in
order for us to make and offer some solutions in this rampant problem. Thus, to balance the
interests of the movie industry as well as the Filipino consumers the action for partial protection
is proposed. In a dynamic setting, partial protection means minimize, if not avoid, piracy. In this
scenario/s of partial protection, consumer surplus and overall welfare is enhanced while movie
industry ensures profitability and retains the incentives to continue and make new movies.

PROBLEM STATEMENT

This case analysis is to assess the movie piracy as the major problem in movie / film
industry. This sought to provide an answer with the following statement:

1. How effective is the intervention scheme and strategy of Agency (Optical Media
Board) and Laws created in addressing the issue on the movie piracy?

a. What are the main identified effects in contributing the illegal activities of
movie piracy?
b. What are the various intervention mechanisms or actions worked by the OMB
in order to mitigate or at least to control the movie piracy?
c. What are the effects of OMB intervention policy regarding the movie piracy?

1
Republic Act No. 10088
2
Republic Act No. 82093
3
Under section 4 of Republic Act No. 9239
 2. How determined are the patrons/consumers when it comes to the tacitly condoning of
movie piracy?

a. What are the acceptability factors affecting in patronizing the movie piracy?
b. What are the effects (short and long-term) of condoning the CD’s/DVD’s
piracy to the patrons’/consumers’ moral obligation?

3. How far are the extents of compromising the consumers who are patronizing the
movie piracy to the Government stance to alleviate the piracy under the Intellectual
Property Rights (IPR’s)?

a. What would be the factors that could affect their decisions when it comes to
choosing the stance of OMB (Government) to patronize only the original and
legal movie whether local or international films?
b. What are the possibilities of OMB (Government) in meeting the satisfactory
wellness of consumers without hampering the expediency of consumers?

STATEMENT OF THE OBJECTIVES

This case analysis aims to find out the assessment of Movie Piracy in the hands of OMB
(Government) to its problem and the practicality of consumers over moral obligation. This part
will provide a description of various objectives of the analysis.

1. To assess the crime of Movie Piracy in learning paradigm of making a decision process
and its detrimental effects to our economy, especially the Movie/Film Industry.
2. To determine the cause/s and effect/s of patronizing the movie piracy rather than the
moral obligations of a consumer.
3. To understand the willingness of consumers to rebuff the culture of Piracy.
4. To come up a solution to the impact of piracy in movie/film industry and make a courses
of actions that would uplift the wellness of both parties-consumers and movie industries
with the intervention of Government.

AREAS OF CONSIDERATION

It is said that we are living under the age of technology. Indeed, the innovations of
computers and technology is inevitable, the innovations are the lifestyle of the gadgets and
computers. This is exactly why the technology is very tough to limit its evolution; sometimes it
exceeds the part where the power of technology should be controlled by the policy in order for us
to avoid the conflict of interest in our moral responsibility.

The “Pirates-in-Caribbean” is a profound phenomenon that dominated the sea history

before by Jack Sparrow. Albeit, it did not stop there. Piracy changes too as human’s life evolves
and now piracy is terrorizing the land. The common meaning of piracy is robbery on high seas.
However, because of the advances in technology and the extensive modernization the world gave
birth to the second meaning of this word. The term ‘piracy4’ for electronic and audio-visual
meaning is the unauthorized reproduction and distribution of intellectual property.

External Environment

The production hot spots of bootlegged DVDs and CDs seem to be in China, Indonesia
and Malaysia, the Philippines was on the "priority watch-list" of the International Intellectual
Property Alliance (IIPA), another industry lobby group from the US, until very recently
(International Intellectual Property Alliance 20055). While the Philippines was dropped from this
list in early 2006, news reports indicate that the movie pirates have a surprising influence and the
effects are still deteriorating in our economy-Movie/Film Industry.

These neighborhoods major suppliers of illegal acts would be the result of porous process
in our customs, allowing them to pass in the inspection by just an amount of less compared to the
benefits / profits of our economy without these crime. Even in the reason of negligence in
customs is also a crime that contributing to the lineage of Piracy.

The Business Software Alliance (BSA), software piracy in the Asia-Pacific region cost
manufacturers about $8 billion in 2004. Worldwide, losses due to software piracy were estimated
at more than $32 million in that year6. Software Piracy is also a form of movie piracy indirectly
(Online Film Piracy), the movies can also be seen in the internet by using of computer and
fingers, just a click away and a little bit patience your downloaded movies can be converted to
CD’s and DVD’s and replicate this for business purposes, you will have a movie piracy in the
easy form.

Muslim Connection and the Chinese Connection

The trade with illegal goods is organized along two main trajectories, which they called
the “Muslim Connection” and the “Chinese Connection”. The “Muslim Connection” operates
mainly from the Southern Philippine island of Mindanao. Mindanao is characterized by its
Muslim population and the close connections with Malaysia and Indonesia. The movies that
come from this region into the rest of Philippines are predominantly from these two countries –
an account that rings true considering the large number of DVDs that have subtitles in Bahasa
Indonesia or Malay available in the Philippines7.

The “Chinese Connection” in the Philippines operates slightly differently (Richie 2006) 8.
Their goods usually come from Hong Kong, sometimes from Singapore. Often the couriers are
unsuspicious looking, young women, coming into the country as tourists by plane. They typically
hide the disks in their luggage, often in bags with other, legal DVDs and CDs. Another method is
to hide the disks in big boxes of second hand clothes, which are imported into the Philippines.

4
Derived from Daniel Defoe’s novel True-Born Englishman in 1703 where he said: “It’s being printed again and
again by Pyrates.”
5
Page 5, The Culture of the Movie Piracy in the Philippines
6
Page 9, The Culture of the Movie Piracy in the Philippines
7
Page 23 (Joel 2006), The Culture of the Movie Piracy in the Philippines
8
Page 27, (Richie2006), The Culture of the Movie Piracy in the Philippines
Once these disks reach Manila, they are manufactured and reproduced like the ones coming from
the “Muslim Connection”.

Internal Environment

The never-ending problem of Movie Piracy would be completed upon the distribution of
supplies to the designated places, and then the small vendor (middle-men) will sell the copies to
the participation of the consumers. From the neighborhood major suppliers to the operations /
machinations of replications of pirated movies to the hands of consumers are internal affairs of
Piracy.

Lawrence Lessig9 and other lawyers usually draw the line, when media material is used
and reproduced without “transformative authorship”, a legal term that denotes a use of other
author’s material without substantial changes. This is just what the media pirates of the
Philippines do. They simply make copies of movies, CDs, software and sell them for profit.
Lessig sets this apart from what many users of file sharing services do. Because these users
provide playing lists, additional information or they mix the music they share, they are adding
content to the public domain. The “Asian piracy”, on the other hand adds no value and
contributes nothing.

Moral Obligation vs Practicality

The moral decency is following the quality of accepted moral standards. Our freewill
dictates us to the capacity of Moral Obligation over the tacitly condoning of the movie piracy.
Decision may be the first process whether or not to patronize the Pirated Movies. In the status
quo we may conclude the moral obligation of consuming pirated movies is tantamount to
practicality and acceptability to watch movie by using of pirated movies. The level of our moral
obligation when it comes to expediency might compromise to our maximizing of practicality as
long as our wellness prevails. Does our moral obligation affect by our practicality?

Code of Honor

The unwritten code of honor10 is the black market policy which deals and agrees that the
payments are made as the agreed upon and in time and that the various participants in the black
market acknowledge their obligations towards each other. The distributors replace disks that
were confiscated during police raids, and that traders exchange defective disks for their
customers’ satisfaction.

The reason why the habitual offenders are still pursuing their piracy business is because
of the power granting the assurance of Code of Honor to the distributor and to the seller. The
unwritten agreement between the distributor to the seller and to the consumer is the persistent
strength of the actors in the black market of Piracy. The replacement given by the distributor to
the seller is an assurance of the continuation of source of income for the Piracy vendor after the

9
Lawrence Lessig, “Asian piracy (63)” in his book Free Culture
10
(Joel2006), Page 37, The Culture of Movie Piracy in the Philippines
raid and confiscation executed by the law-enforcer. The logic of raid and confiscation of Piracy
Movies would be a shorter program to defeat the Piracy.

ALTERNATIVE COURSES OF ACTION

These are the actions and proposals in order to achieve the objectives of the case analysis
and to provide an answer to the problems:

1. Palit-Livelihood Program

Piracy Sellers shall surrender their Pirated Copies of CD’s and DVD’s to the
Agency (OMB) as an exchange to the Livelihood Program equal to the
surrendered amount of Pirated Paraphernalia (CD’s, DVD’s and Optical Machines
used in the replication purposes).

2. Control and Regulate the Movie Fare

The Movie Fare/Movie Ticket of all the registered cinemas and movie film
centers shall be controlled and regulated by the Government in order to maintain
the (more) satisfaction for the costumers when it comes to the budget.

3. Imposing of additional taxes to the CD’s and DVD’s which especially come to the
neighborhood countries (China, Indonesia and Malaysia)

The imposing of additional taxes to the CD’s and DVD’s which come to the
neighborhood countries (China, Indonesia and Malaysia) shall control the
replication of syndicate when in it comes to the mass production of Pirated
Movies.

4. Strengthening of existing laws, regulations and policies

The Philippines may have a different laws regarding to the welfare of Movie
Industry against the piracy. Our Laws (Anti-Camcording Law, Intellectual
Property Code of the Philippines and etc) have a complete provision for the
benefits of Movie Industry, as well as the policies and regulations for the
designated Bureaus (Customs). The implementation should be more raging for us
to monitor the Movie Piracy and control their productions and for the maximizing
of Laws. What the laws lack is the iron-hand of its implementation.

ANALYSIS

This part shall be the discussions of alternative courses of action (aca) in the perspective
of Advantageous and Disadvantageous stance. The comparative discussions of advantages and
disadvantages will be the focused of this in order to understand further the Alternative Courses
of Action.

1. Palit-Livelihood Program

The lawful alternative Livelihood to the illegal vendors is a key success to reach out the
needs and welfares of sellers. If the Piracy Sellers shall surrender their Pirated Copies of
CD’s and DVD’s to the Agency (OMB), they shall be granted as an exchange to the
Livelihood Program equals to the surrendered amount of Pirated Paraphernalia (CD’s,
DVD’s).

The qualified surrendered vendors of Pirated Movies shall receive the Livelihood which
the capital equal or higher to the value rendered from pirated copies that they have. The
qualified beneficiaries of Palit-Livelihood Program shall be determined by the by the
coordination of OMB and DSWD. OMB will audit the amount of pirated copies according to
the bargain values of pirated copies. Then DSWD shall orient them the essence of Piracy-
Free in the Philippines and some guidelines and techniques how to handle a micro-business
to make it profitable.

Advantages of Palit-Livelihood Program

a. Promotes a dwindling effect of Piracy Sellers due to the conversion of them into having a
livelihood not against to the Government but works to the society.
b. Control and minimize the numbers of Piracy Seller and determined a great opportunity
consistent under the law.
c. The syndicate shall reduce the profits of both them, because of the lacks of the seller to their
products.
d. The profits of Movie Industries shall gradually increase their profits because of the less
sellers of piracy and more demand of the consumer to watch their favorite movies.

Disadvantages of Palit-Livelihood Program

a. May promote a (habitual) offender to be more dependent to the Government.

b. May use the Palit-Livelihood Program as a rented livelihood to their close relatives and
friends or they sell it and be a offender again of Piracy.
c. The amounts of Palit-Livelihood Program used as a capital is not so strong to be founded.

2. Control and Regulate the Movie Fare

The Movie Fare/Movie Ticket of all the registered cinemas and movie film centers shall
be controlled and regulated by the Government in order to maintain the satisfactions for the
costumers when it comes to the budget without hampering the wellness of Movie Industry.
Discounted Price shall be determined by the OMB to make a standard discounted price.
Advantages of Controlling and Regulating the Movie fare

a. More satisfactions come to the consumers with Movie fare.

b. Lessen the case of Movie Piracy because of patronizing Movie Cinemas to the affordable
prices of Movies than to buy pirated movies without the guarantee of satisfactions.
c. The Underground Market shall reduce their profits due the regulated movie fare which is also
an affordable and make it possible to everyone.
d. Though the increase is minimal, the Movie Industries shall noticeably increase their profits by
the help of this course of actions.

Disadvantages of Controlling and Regulating the Movie fare

a. The Movie Industry may not maximize the profits that they may have to get to the movies
under this Controlled and Regulated Movie Fare.
b. The Possibility of making more movies is tainted due to the controlled and regulated movie
fare.

3. Imposing of additional taxes to the CD’s and DVD’s which especially come to the
neighborhood countries (China, Indonesia and Malaysia)

The imposing of additional taxes to the CD’s and DVD’s which come to the
neighborhood countries (China, Indonesia and Malaysia) shall control the replication of
syndicate when in it comes to the mass production of Pirated Movies.

The imposing additional tax shall be determined by the Bureau of Internal Revenue and
the OMB shall make sure that this policy is limited for those neighborhood countries (China,
Indonesia and Malaysia).

Advantages of Imposing additional taxes to the CD’s and DVD’s come to the neighborhood
countries (China, Indonesia and Malaysia)

a. Controlling and limiting for the syndicate to mass produce of replications of Pirated Movies
due to the imposed tax.
b. The distributor of Pirated Movies shall bear the additional taxes to the consumers and making
the pirated movies increased on its bargaining values due to the imposed tax.
c. The consumers of Pirated Movies shall discourage to buy because of the increase value and
they may find it as against their practicality will.
d. The consumers shall find watching movies in cinemas are more practical than to buy a pirated
movie.
e. Minimizing the Profit-loss of Movie Industries due to the piracy and promoting cinemas are
better than to the Pirated CD’s and DVD’s due to the imposed tax.
Disadvantages of Imposing additional taxes to the CD’s and DVD’s come to the neighborhood
countries (China, Indonesia and Malaysia)

a. The imposed tax may promote more underground transactions of Pirated Movies.
b. The lawful businessmen shall affect their business due the imposed tax and may promote to an
increasing value of the products.

4. Strengthening of existing laws, regulations and policies

The Philippines may have a different laws regarding to the welfare of Movie Industry
against the piracy. Our Laws (Anti-Camcording Law, Intellectual Property Code of the
Philippines and etc) have a complete provision for the benefits of Movie Industry and to the
consumer, as well as the policies and regulations for the designated Bureaus (Customs). The
implementation should be more raging for us to monitor the Movie Piracy and control their
productions and for the maximizing of Laws. In status quo, what the laws lack is the iron-
hand of its implementation.

Advantages of Strengthening of existing laws, regulations and policies

a. Promote more strict implementations of existing regulations, policies and laws, as well as the
sanctions given to the designated violations/crimes.
b. Killing of all illegal transactions (smugglings, under the table transactions and many
irregulaties).

Disadvantages of Strengthening of existing laws, regulations and policies

a. None
CONCLUSION

This part of case analysis is to understand each of Alternative Courses of Action (ACA)
and identify the variables and how each variable is rated for each ACA. The decision matrix used
below shows which ACA should be adopted.

Decision Matrix of each Alternative Courses of Action (ACA)

ACA 1 ACA 2 ACA 3 ACA 4
ACA Palit- Control and Imposing of Strengthening
Livelihood Regulate Movie taxes to CD’s of Existing
Program Fare and DVD’s Regulations,
Criteria Policies and
Laws
a. Addressing the
needs and Yes No Yes Yes
wellness of
Movie Industry
b. Addressing the
needs and No Yes No Yes
wellness of
Consumer
c. Addressing the
needs and
wellness of No No No Yes
both Movie
Industry and
Consumer
Total (Yes=1) (Yes=1) (Yes=1) (Yes=3)
(No=2) (No=2) (No=2) (No=0)

From the above table, we can conclude that ACA 1 (Palit-Livelihood Program) has only
compromised when it comes to the Addressing the needs and wellness of Movie Industry. The
ACA 2 (Control and Regulate Movie Fare) has only cooperated in Addressing the needs and
wellness of Consumer. When it comes on ACA 3 (Imposing of taxes to CD’s and DVD’s) the
only agreed upon to the Addressing the needs and wellness of Movie Industry. While ACA 4
(Strengthening of Existing Regulations, Policies and Laws) has compromised in Addressing the
needs and wellness of both Movie Industry and Consumer.

Thus, the best Alternative Courses of Action is ACA 4 (Strengthening of Existing

Regulations, Policies and Laws) showing the fulfillment of both parties (Movie Industry and
Consumer).
PLAN OF ACTION

This part delineates the series of actions to be undertaken to operationalize the adopted
ACA. The plan implements the ACA come up mechanisms for the adopted APA.

The adopted ACA is strengthening of existing regulations, policies and laws that
would address the needs and wellness of Movie Industry and Consumer of Pirated CD’s and
DVD’s. From this action adopted, the mechanisms shall be limited to the Laws pertaining to the
Anti-Piracy Law and Intellectual Property Code of the Philippines, as well as the process of
guarding our areas where the lunatic objectives might infect our country. The Bureau of Customs
shall be the one who restrict the things that may kill the future of our lineage from the outrageous
mind of others. The Coast Guard shall protect not only our territory but also things that the
foolish businessmen want to install in our country.

The improved Laws, Rules, Regulations and Policies are key to completely protect us
from the evil mind, and the accountable officials and employees should implement the laws
consistency with Law Enforcers. This may be the equation of how we get rid of Piracy.

The illegal distributors and sellers of Pirated Movies are should compromise to the needs
and wellness of both sides to achieve the reality of Piracy Free. Once an illegal, always an
illegal, unless the change of laws have been approved to the benefits of citizens and for the
situation given.

As a consumer we have to do our part to contribute the advantages of our states and
constituencies. At least making our part is a great help as an individual, Moral Obligation
sometimes is important whether to determine the values of our decisions. We can do it.