Glenn Gaslin
September 21, 2001 AT 04:00 AM EDT

Shrek. Planet of the Apes. American Pie 2. When studios promised these blockbusters were coming to a screen near you, they didn’t mean the one attached to your PC. Hollywood is under siege, its net profits hurt by Net losses. More and more, films are being swapped via the Web — as compressed, downloadable, and very illicit files — even as they’re opening at your local multiplex.

Net-based flick swapping has thrived for years in exclusive underground circles, and while it’s still not Napster-easy, a number of factors have recently put this capability in the hands of anyone with a fast modem. ”The biggest change has been over the last three months,” says Aaron Fessler, CEO of MediaForce, an antipiracy firm that issues a monthly list of the most-pirated movies. With file-swapping programs like KaZaA, widespread broadband access, and new compression techniques, Fessler claims ”it’s now a piece of cake to download an entire movie.”

To ensure that Snatch isn’t snatched and Traffic isn’t trafficked, companies like MediaForce have helped studios track down and root out digital piracy. And acting on info from another monitoring firm, Ranger Online, the Motion Picture Association of America sends cease-and-desist letters to thousands of small-time movie pirates and reports bigger sites to the FBI.

Besides, looking for riches on the high seas of cyberspace is fraught with more perils than a knock on your door by a bunch of feds. In fact, putting a new film onto your hard drive is beyond the ability of all but the computer elite. Most of the movies found using trading sites like Hotline or DivXLisT are months-old titles available at any Blockbuster. According to MediaForce, pirates posted 10 times as many copies of the already-on-DVD Dude, Where’s My Car? in July than the still-in-theaters Shrek.

(And let the pirate beware. Last month, American Pie 2 was supposedly online weeks before its opening. But Fessler says the postings wound up being porn films.)

The few movie marauders who do broker new releases belong to members-only online clans that trade the films via private chats and secure hard drives, explains a 20-year-old pirate who goes by RobOnCrak. ”You have a whole underground society living there, a whole world of trust, public relations, and competition,” he tells EW. A dozen such clans in North America are considered ”the best of the best,” and only a select few can log on to snag a movie like Rush Hour 2.

Where do they get the goods? Swappable copies of, say, Pearl Harbor usually begin with a camcorder being sneaked into a theater — or, better yet, set up after hours on a tripod, with an audio feed from the projector. Prerelease copies are made from VHS screener tapes sent to critics, film festivals, or talk shows — some are even struck from unfinished prints. RobOnCrak says that Jurassic Park III was traded online five days before it opened.

It takes several weeks for still-in-theaters fare to filter down from members-only sites to more-open peer-to-peer networks. And most traders won’t let newcomers download a new movie without uploading another one in return. Like most hackers, these pirates believe in an everything-should-be-free ethos. ”The mentality of the whole thing is to share the wealth,” says RobOnCrak. ”No one has to pay for pirated movies. If somebody does, whoever’s selling it to them deserves to go to jail.”

Of course, the studios feel that anyone illegally copying their films should be punished. But instead of just beating them, the industry is joining them. On Sept. 5, Disney and News Corp. (owner of Twentieth Century Fox) announced the creation of Movies.com, a video-on-demand pay service allowing users to download feature films onto their computers. Other studios have similar plans in the works. And if it’s unclear at this point whether Hollywood can defeat the pirates, they’ve fired the first shot across their bow.

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