Pirates of the Thai Kingdom

The first two installments of the Thai trilogy, The Legend of King Naresuan, each topped Spider-man 3 at the box office in local theaters. The first movie, Pegu’s Hostage, pulled in about $5.5 million in the three weeks after its January 18 release, while Reaping Sovereignty, the second film released a few weeks later, made about $6 million.

Spider-man 3, which shattered box office records across the world in its opening weekend, earned $5.22 million in its first three weeks in Thailand.

Along with most Hollywood blockbusters, a pirated DVD of Spider-man 3 can be found nearly anywhere in Bangkok for about 100 baht (US$2.85). But even though The Legend of King Naresuan proved one of the biggest draws in Thailand, a pirated copy is nearly impossible to find.

“It’s nowhere,” says one illegal DVD retailer in Bangkok’s notorious Patpong district. “In Thailand we respect the king. Nobody dares to make a copy.”

It’s not entirely true that no copies have been made, as recently the police raided an apartment on the outskirts of Bangkok and found 4,500 pirated VCDs of the King Naresuan films. But that find was rare and surprised many police officials, industry executives said.

By all accounts, most pirates have agreed to avoid copying the flag-waving films directed by Chatrichalerm Yukol, a prince’s son. The military leaders have lauded the patriotism of the movies, which offer a pseudo-historical look at how King Naresuan won Thailand’s independence from Burma (for a comprehensive look at the film’s accuracy, see this column by Chang Noi from the Nation Newspaper.)

Another film directed by Chatrichalerm a few years back called The Legend of Suriyothai received similar treatment from DVD pirates. It also dealt with Thais fighting against Burmese invaders, and served as a prelude to The Legend of King Naresuan.

“For King Nauresuan and the Suriyothai movie, although no one has formally documented this, there seemed to be a tacit agreement between producers and distributors that the products would not be found on the streets,” a long-time industry executive in Bangkok said in an interview. “Both Suriyothai and King Naresuan received government financing and royal financing, so they were treated differently. They are in their own sub-class of Thai movies.”

Although many people in Thailand are wary of discussing this due to the revered status of the country’s monarch, the scarcity of the three royal movies on the streets provides a glimpse into Thailand’s efforts to control optical disc piracy. Indeed, it reveals that the market is controlled to an extent and suggests Thai authorities could do much more to stamp out piracy if they wished to do so.

Big fish swim freely

As for now, the illicit market is flourishing. Thailand is among the world’s top-three distributors of pirated films along with China and Russia, according to the Motion Picture Association of Thailand. Although technically illegal, pirated CDs, DVDs and computer software can be found everywhere in Bangkok. Vendors don’t need to hide.

And pirates aren’t simply selling Spider-man 3 and other Hollywood blockbusters either, although those titles are everywhere. Retailers are increasingly offering classic and cult films to meet the demands of more sophisticated consumers. Movies from Thailand and other Asian countries like China, Japan and Korea are also distributed widely.

So why is this criminal activity allowed to go on in broad daylight? The simple answer is that police are paid to look the other way, and they would rather not take on an industry linked to Thailand’s powerful mafia that doesn’t appear to be hurting anyone except large corporations.

“Thailand is second to none in legislation, but we need more serious intentions from the enforcement side,” said Piset Chiyasak, a local representative for the International Federation of Phonographic Industries. “We have to run after the big fish, because if we cut the chain we will be successful in stopping piracy. But right now when we shout to the government, they will crack down by going after street vendors and then they don’t do any further investigation because they say it’s quite difficult to get evidence. But this is the duty of police to investigate further. Instead they just arrest a street vendor and say, ‘case closed.’ When we ask them to push harder they say they have lots of other work to do.”

Certainly the police play a role in perpetuating the system, and even demonstrate a firm control over the market in some areas. In Pantip Plaza, Bangkok’s largest computer mall, vendors are allowed to sell Hollywood films but they will be arrested for selling Thai movies. Similarly in Patpong, a large tourist destination, police deter sales by insisting that bribes for selling Thai titles are much higher. One vendor said police demand 15,000 baht for English movie sales, and a whopping 250,000 baht to sell a Thai movie.

“The policeman without a uniform comes regularly and we pay,” said the vendor, speaking anonymously along with every other retailer. “But it's still a very good business.”

Unsurprisingly, pirated Thai films and music tend to be found in predominately Thai neighborhoods. Although Thai companies may have more success in dealing with pirates than firms representing foreign clients, industry executives say local products are still swiped regularly.

“Sometimes a Thai distributor will work out an agreement with pirates or law enforcement folk where they will say, ‘I don't want to see a pirated copy on the streets in the first four weeks of the Thai release.’ After that it would be fair game,” said the industry executive. “I don't think the system is centralized but within the market there is really good communication that some movies are off limits for a given time.”

“Pirates are not afraid”

Entertainment companies undoubtedly face an uphill battle in getting anyone to care enough about intellectual property rights to crack down on piracy. The issue is nowhere near as emotional as the government’s efforts to obtain cheap AIDS drugs for poor patients. As one executive put it, “If you don't get the latest Pirates of the Caribbean movie, you're not going to die.”

The challenge for the industry is to sell a macroeconomic theory about the benefits of intellectual property to a public that sees cheap DVDs as a basic right. That won’t be easy.

“We need foreign investment and technology transfer,” said Piset. “We attract many tourists, but we have nothing to sell them but pirated goods. We have to change our attitude and point of view and encourage people to create new things. We can no longer compete with Vietnam or China on labor costs, so we need something else to give us a competitive advantage.”

So far, any concept relating Thailand's piracy problem to its ability to compete in the globalized economy has been completely lost on police.

“The police feel that piracy is not a big issue, but something they have to do because they are pressured by a Western country,” Piset added. “They don’t feel that the Thai people receive any benefit from cracking down on piracy. Many Thai people are poor, so if people can earn money and spread pirated products widely, it means the Thai people can get easy access to knowledge and information.”

Some in the industry say the attitude towards piracy within the ranks has started to change since Seripisuth Temiyavej took over as police chief a few months ago. Indeed, Seripisuth has carved out a reputation over the years for convicting crooked cops and busting up mafia crime rings.

“In some areas, enforcement is better since the new police chief and a new commander of ECOTEC [Economic and Technological Crime Suppression Division] took over after the September 19 coup,” said Thienchai Pinvises, executive director of the Motion Picture Association in Thailand. “The situation in Khlong Thom is getting better than in the past. It used to be a wholesale, warehouse and retail outlet, but now some of the retailers and warehouses have moved out.”

Last month, Seripisuth led a raid that resulted in 11 arrests and seizure of more than 140,000 CDs. The police chief and Deputy Prime Minister Paiboon Wattanasiritham have vowed more crackdowns at eight major Bangkok markets.

Even so, industry executives have yet to see major progress on the ground. Although arrests were up 25 percent in 2006 from a year earlier, the number of vendors still seems to grow. Illicit DVD manufacturers face maximum sentences of 800,000 baht and four years in prison, while retailers can be fined up to 200,000 baht and sentenced to two years in jail — but often they are released with a slap on the wrist.

“Pirates are not afraid of the system,” Thienchai said. “When they go to court they get a small fine and the jail time is suspended. None of them go to jail and they do not believe it’s a serious crime.”

Burn baby burn

As the police try to get tougher, pirates find new ways to adapt. In August of last year, the US government bought Thailand a new forensics machine that can detect defects in optical discs that allow police to trace their origin, similar to finding the grooves on a bullet fired from a gun. Now all optical disc factories in Thailand must register with the police, so authorities can trace discs back to specific factories.

To get around this, more pirates are moving from using factories and warehouses to disc burners. As DVD orders come in, the pirates simply burn each disc from a master copy on a computer. This eliminates the need for inventory and the pirates are clear in the event of a raid. Disc quality will be the same as the master copy.

The pirates are also increasingly mobile. Typically a cluster of DVD stalls will have the same owner. After a disc is ordered, the clerk will phone it in, the discs will be burned or taken from a warehouse and then brought to the customer.

Pirates usually operate out of condominiums or apartments close to each site. Although police tend to raid these apartments from time to time, the pirates simply find a new one. Industry executives now say some pirates operate out of large vans, and will circle the streets in an area close to the retailers.

Distributors typically sell the DVDs at 30 baht apiece, but for 35 baht each, retailers can also pay for mafia protection. The vendors then pay more money to the police to avoid arrest before raking in a nice profit.

Thai authorities appear more intent on cracking down on optical disc piracy after the US Trade Representative downgraded Thailand to the “Priority Watch List” in its annual 301 report on Intellectual Property Rights issued in early May. Washington has even offered to have FBI agents train Thai officials to take down the large pirating rings, although discussions are still in an early stage.

“Giving money away to organized crime”

Even though Hollywood keeps pumping out blockbuster films, legitimate retailers in Thailand are struggling to survive. Tsutaya (Thailand) Co, the country’s largest rental movie chain, saw revenues drop 12 percent last year and had to relocate 12 stores away from pirated retailers. Pongsaap, another retail chain, had 370 shops last year but has since closed nearly half of them because they are unprofitable. It has slashed VCD prices to compete directly with pirates. CVD Entertainment, a listed company in Bangkok, has also seen profits shrink.

Meanwhile, mafia types are making extremely high profit margins. A report a few years ago from the Motion Picture Association says the average markup on a DVD is more than 1,150 percent — a higher margin than selling heroin or cocaine. The pirated movie business offers other advantages for organized crime as well. In particular, income earned from selling pirated movies, music and software does not fall under the Thai Anti-Money Laundering Act, meaning that funds earned from drugs, gambling, prostitution and human trafficking could be passed off as money earned from DVD sales. This prevents authorities from seizing their assets.

“One thing people need to understand is that on all the money we make we pay taxes to the government, and the pirates don’t pay any tax,” Thienchai said. “So every time you go to the theater or buy original copies, Thailand gets more schools or hospitals. Meanwhile, if you buy pirated movies you are simply giving money away to organized crime.”

At the end of the day, the fight against piracy is a matter of political will.

The Legend of King Naresuan shows that it is possible to reduce the amount of pirated material flowing through Bangkok. But as long as the higher ups don’t want to take on Thailand’s powerful crime syndicates, the pirates will continue to plunder.

“The biggest issue in developing consistent sustainable enforcement is for senior government officials to have the political will to set a policy to eliminate piracy,” said Christopher Knight, general counsel of Pacific Marketing and Entertainment Group. “Under the previous administration, rights holders felt that type of personality was in charge to take difficult positions and communicate those positions to others. But right now with the interim government, they don’t seem to be taking action. They are just trying to maintain the status quo.”