Hollywood Robbery

Studio executives, no strangers to melodrama, have begun to talk about movie piracy the way FBI agents talk about terrorism: they watch the Web for "chatter," they embed films with hidden "fingerprints," and they speak without irony about "changing hearts and minds." They even use night-vision goggles. It's not going too far to say they are completely paranoid, which doesn't mean they are wrong.

On the night of Nov. 29, Warner Bros. transformed more than 500 American theaters into secure compounds for a sneak preview of The Last Samurai . The $140 million Tom Cruise vehicle, designed to transport the star from the screen to the Oscar podium, was filmed on location in New Zealand and Japan with a cast of 750. All the hype, along with the adolescent story line samurai fight against the Japanese army! guaranteed the film to be of interest to pirates. And in the age of faster Internet connections, protecting a movie has become like guarding very expensive air. So to prevent an early bootleg from squashing ticket sales, more than 1,000 security guards hand delivered prints of the film to projection rooms. They searched each facility for recording devices. In lobbies, moviegoers were siphoned through metal detectors. Camera phones were confiscated. As the lights went down and Cruise and his movie-star teeth flickered onto the screen, men and women in dark blazers walked solemnly down the aisles, searching for the pale glow of camcorders through their night-vision goggles. Maybe because this was Los Angeles, the moviegoers didn't seem to notice the paramilitary scene unfolding beside their military fiction.

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Last year more than 50 major movies were illegally copied and released even before they came out in theaters, according to the Motion Picture Association of America (M.P.A.A.). But for all the talk about movie piracy, few people understand how it actually works the stunning velocity at which copies move and how far the studios will now go to hold back this threat. To tell the tale of how films get to black-market stores and shacks across every continent, from Beijing to New York City and to computer hard drives everywhere, TIME tracked the winding journey of The Last Samurai (full disclosure: Warner Bros. and TIME share the same parent company). And the trajectory confirms that movie executives are right to be alarmed. But it also shows that most of their protective acrobatics are, at best, just buying time. The harder it is to get a movie, the more pirates want it. "It's like a piece of gold," says one male American downloader. That's an unsustainable dynamic, says Eric Garland, CEO of BigChampagne, which tracks the most popular entertainment downloads: "You don't get to go to war with your core customer. You have to court him."

Marc Brandon works in a far corner of the Warner Bros. studio in Burbank, Calif., not far from where the old western back lot used to be. His office is plain and neat, and there was a time when his job was too back when, as director of antipiracy Internet operations, his chief responsibility was reminding online T-shirt companies that the studio owns Bugs Bunny. Today, Brandon, 30, in jeans and an oversize T shirt, says the pirates dictate his daily schedule. In 2002 some 41 million illegal copies of movies were seized by law-enforcement authorities around the world with assistance from the M.P.A.A. Last year the film industry made $52 billion but would have made $3.5 billion more if not for piracy, according to a Smith Barney estimate released in November. Next year the loss may rise to $5.4 billion. Brandon can't hope to stop bootlegs of Warner Bros. releases from spreading like a virus. It's a Herculean task just to delay the inevitable. "It's not a matter of if," he says, "but when." And when makes a huge difference. If a high-quality copy is made before a film's lucrative first weekend in release, the studio can lose tens of millions of dollars.

For Samurai , evasive maneuvers began before the film was finished being shot. Every work print of the movie was encoded with a hidden marker so that it could be identified if it was leaked. Even the scripts had codes stamped across every page, each corresponding to the owner's name. Before sending Samurai to dubbing houses, Warner Bros. rendered the copies less piratable by going through every scene and editing out characters not relevant to the particular dubbing job an exercise that took about three days per cassette. The studio did send out "screener" copies to Oscar voters a high-risk move but far fewer than normal.

Studio executives feel so threatened by piracy that they do not even like to dignify it with the word. "It's a word that has a swashbuckling, cool kind of feel, and that's not what we're talking about. This isn't Johnny Depp on the front of a boat," says Barry Meyer, chairman of Warner Bros. "It's theft. It's shoplifting. It's grand larceny."