It's All Free!

James Phung saw phone booth before you did. What's more, he saw it for free, in the comfort of his private home-screening room. Phung isn't a movie star or a Hollywood insider; he's a junior at the University of Texas who makes $8 an hour at the campus computer lab. But many big-budget Hollywood movies have their North American premieres in his humble off-campus apartment. Like millions of other people, Phung downloads movies for free from the Internet, often before they hit theaters. Phone Booth will fit nicely on his 120-GB hard drive alongside Anger Management, Tears of the Sun and about 125 other films, not to mention more than 2,000 songs. "Basically," he says, "the world is at my fingertips."

Phung is the entertainment industry's worst nightmare, but he's very real, and there are a lot more like him. Quietly, with no sirens and no breaking glass, your friends and neighbors and colleagues and children are on a 24-hour virtual smash-and-grab looting spree, aided and abetted by the anonymity of the Internet. Every month they--or is it we?--download some 2.6 billion files illegally, and that's just music. That number doesn't include the movies, TV shows, software and video games that circulate online. First-run films turn up online well before they hit the theaters. Albums debut on the Net before they have a chance to hit the charts. Somewhere along the line, Americans--indeed, computer users everywhere--have made a collective decision that since no one can make us pay for entertainment, we're not going to.

As crimes go, downloading has a distinctly victimless feel to it--can anything this fun be wrong?--but there are real consequences. Click by click, file by file, we are tearing the entertainment industry apart. CD shipments last year were down 9%, on top of a 6% decline in 2001. A report by Internet services company Divine estimates pirates swap between 400,000 and 600,000 movies online every day. It's information-superhighway robbery.

If you ask the pirates, they'll say they're just fighting for their right to party. If you ask the suits, they'll say they're fighting for their lives. "If we let this stand, you're going to see the undoing of this society," says Jack Valenti, head of the Motion Picture Association of America (M.P.A.A.). "I didn't preside over this movie industry to see it disintegrate like the music industry." Them's fightin' words, and the battle lines are being drawn. Two landmark legal decisions last week, one in favor of the entertainment industry and one against it, will shape the way we deal with digital movies and music for years to come. The only thing left to decide is which side of those battle lines you're on.

It's easy to see why the pirates do what they do. Right now you can find thousands of free movies online if you know where to look--a glance at one popular website yields links to copies of Holes, Malibu's Most Wanted and even the Rowan Atkinson comedy Johnny English, which won't hit U.S. theaters until July. Just about every song ever released--as well as quite a few that haven't been--is available online for nothing more than the effort it takes to point and click. Record-industry types have a cute nickname for this phenomenon: "the celestial jukebox."