Inside the MPAA, Netflix & Amazon Global Anti-Piracy Alliance

Back in June, MPAA, Amazon, Netflix, CBS, HBO, BBC, Sky, Bell Canada, CBS, Hulu, Lionsgate, Foxtel, Village Roadshow, and many more, revealed the Alliance for Creativity and Entertainment, a brand new initiative to tackle piracy on a global scale. Today, TorrentFreak can reveal the deal behind this massive operation.

The idea of collaboration in the anti-piracy arena isn’t new but an announcement this summer heralded what is destined to become the largest project the entertainment industry has ever seen.

The Alliance for Creativity and Entertainment (ACE) is a coalition of 30 companies that reads like a who’s who of the global entertainment market. In alphabetical order its members are:

Amazon, AMC Networks, BBC Worldwide, Bell Canada and Bell Media, Canal+ Group, CBS Corporation, Constantin Film, Foxtel, Grupo Globo, HBO, Hulu, Lionsgate, Metro-Goldwyn-Mayer (MGM), Millennium Media, NBCUniversal, Netflix, Paramount Pictures, SF Studios, Sky, Sony Pictures Entertainment, Star India, Studio Babelsberg, STX Entertainment, Telemundo, Televisa, Twentieth Century Fox, Univision Communications Inc., Village Roadshow, The Walt Disney Company, and Warner Bros. Entertainment Inc.

The aim of the project is clear. Instead of each company considering its anti-piracy operations as a distinct island, ACE will bring them all together while presenting a united front to decision and lawmakers. At the core of the Alliance will be the MPAA.

“ACE, with its broad coalition of creators from around the world, is designed, specifically, to leverage the best possible resources to reduce piracy,”
outgoing MPAA chief Chris Dodd said in June.

“For decades, the MPAA has been the gold standard for antipiracy enforcement. We are proud to provide the MPAA’s worldwide antipiracy resources and the deep expertise of our antipiracy unit to support ACE and all its initiatives.”

Since then, ACE and its members have been silent on the project. Today, however, TorrentFreak can pull back the curtain, revealing how the agreement between the companies will play out, who will be in control, and how much the scheme will cost.

Power structure: Founding Members & Executive Committee Members

Netflix, Inc., Amazon Studios LLC, Paramount Pictures Corporation, Sony Pictures Entertainment, Inc., Twentieth Century Fox Film Corporation, Universal City Studios LLC, Warner Bros. Entertainment Inc., and Walt Disney Studios Motion Pictures, are the ‘Founding Members’ (Governing Board) of ACE.

These companies are granted full voting rights on ACE business, including the approval of initiatives and public policy, anti-piracy strategy, budget-related matters, plus approval of legal action. Not least, they’ll have the power to admit or expel ACE members.

All actions taken by the Governing Board (never to exceed nine members) need to be approved by consensus, with each Founding Member able to vote for or against decisions. Members are also allowed to abstain but one persistent objection will be enough to stop any matter being approved.

The second tier – ‘Executive Committee Members’ – is comprised of all the other companies in the ACE project (as listed above, minus the Governing Board). These companies will not be allowed to vote on ACE initiatives but can present ideas and strategies. They’ll also be allowed to suggest targets for law enforcement action while utilizing the MPAA’s anti-piracy resources.

Rights of all members

While all members of ACE can utilize the alliance’s resources, none are barred from simultaneously ‘going it alone’ on separate anti-piracy initiatives. None of these strategies and actions need approval from the Founding Members, provided they’re carried out in a company’s own name and at its own expense.

Information obtained by TorrentFreak indicates that the MPAA also reserves the right to carry out anti-piracy actions in its own name or on behalf of its member studios. The pattern here is different, since the MPAA’s global anti-piracy resources are the same resources being made available to the ACE alliance and for which members have paid to share.

Expansion of ACE

While ACE membership is already broad, the alliance is prepared to take on additional members, providing certain criteria are met. Crucially, any prospective additions must be owners or producers of movies and/or TV shows. The Governing Board will then vet applicants to ensure that they meet the criteria for acceptance as a new Executive Committee Members.

ACE Operations

The nine Governing Board members will meet at least four times a year, with each nominating a senior executive to serve as its representative. The MPAA’s General Counsel will take up the position of non-voting member of the Governing Board and will chair its meetings.

Matters to be discussed include formulating and developing the alliance’s ‘Global Anti-Piracy Action Plan’ and approving and developing the budget. ACE will also form an Anti-Piracy Working Group, which is scheduled to meet at least once a month.

On a daily basis, the MPAA and its staff will attend to the business of the ACE alliance. The MPAA will carry out its own work too but when presenting to outside third parties, it will clearly state which “hat” it is currently wearing.

Much deliberation has taken place over who should be the official spokesperson for ACE. Documents obtained by TF suggest that the MPAA planned to hire a consulting firm to find a person for the role, seeking a professional with international experience who had never been previously been connected with the MPAA.

They appear to have settled on Zoe Thorogood, who previously worked for British Prime Minister David Cameron.

Money, money, money

Of course, the ACE program isn’t going to fund itself, so all members are required to contribute to the operation. The MPAA has opened a dedicated bank account under its control specifically for the purpose, with members contributing depending on status.

Founding/Governing Board Members will be required to commit $5m each annually. However, none of the studios that are MPAA members will have to hand over any cash, since they already fund the MPAA, whose anti-piracy resources ACE is built.

“Each Governing Board Member will contribute annual dues in an amount equal to $5 million USD. Payment of dues shall be made bi-annually in equal shares, payable at
the beginning of each six (6) month period,” the ACE agreement reads.

“The contribution of MPAA personnel, assets and resources…will constitute and be considered as full payment of each MPAA Member Studio’s Governing Board dues.”

That leaves just Netflix and Amazon paying the full amount of $5m in cash each.

From each company’s contribution, $1m will be paid into legal trust accounts allocated to each Governing Board member. If ACE-agreed litigation and legal expenses exceed that amount for the year, members will be required to top up their accounts to cover their share of the costs.

For the remaining 21 companies on the Executive Committee, annual dues are $200,000 each, to be paid in one installment at the start of the financial year – $4.2m all in. Of all dues paid by all members from both tiers, half will be used to boost anti-piracy resources, over and above what the MPAA will spend on the same during 2017.

“Fifty percent (50%) of all dues received from Global Alliance Members other than
the MPAA Member Studios…shall, as agreed by the Governing Board, be used (a) to increase the resources spent on online antipiracy over and above….the amount of MPAA’s 2017 Content Protection Department budget for online antipiracy initiatives/operations,” an internal ACE document reads.

Intellectual property

As the project moves forward, the Alliance expects to gain certain knowledge and experience. On the back of that, the MPAA hopes to grow its intellectual property portfolio.

“Absent written agreement providing otherwise, any and all data, intellectual property, copyrights, trademarks, or know-how owned and/or contributed to the Global Alliance by MPAA, or developed or created by the MPAA or the Global Alliance during the Term of this Charter, shall remain and/or become the exclusive property of the MPAA,” the ACE agreement reads.

That being said, all Governing Board Members will also be granted “perpetual, irrevocable, non-exclusive licenses” to use the same under certain rules, even in the event they leave the ACE initiative.

Terms and extensions

Any member may withdraw from the Alliance at any point, but there will be no refunds. Additionally, any financial commitment previously made to litigation will have to be honored by the member.

The ACE agreement has an initial term of two years but Governing Board Members will meet not less than three months before it is due to expire to vote on any extension.

To be continued……

With the internal structure of ACE now revealed, all that remains is to discover the contents of the initiative’s ‘Global Anti-Piracy Action Plan’. To date, that document has proven elusive but with an operation of such magnitude, future leaks are a distinct possibility.

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