Oscar-nominated director Taylor Hackford pitched "Ray" for 13 years before he found a financier to front $35 million. It took another two years to produce the critically acclaimed film.

Online copyright thieves took no time at all, however, to siphon proceeds from the creative people who earned them. Less than a week after the film's 2004 theatrical release, digital copies of "Ray" were being "shared" around the globe illegally via peer-to-peer computer networks. By the millions, consumers accessed "Ray" without paying a cent and without regard to the financial consequences for location scouts, sound technicians, assistant directors and hundreds of others.

Illegal downloading "amounts to taking food out of working people's mouths," Hackford says, still riled.

Two years ago this month, the Supreme Court announced what should have been a major victory for those who create music and motion pictures. In MGM v. Grokster, a unanimous court held that marketers of peer-to-peer file-sharing systems may be liable for the online theft they induce among consumers. The ruling gave copyright owners a target far preferable to suing individual downloaders.

But it's hard to find anyone in entertainment celebrating the two-year anniversary of what some billed the digital age's blockbuster copyright case. For despite the ruling, online theft remains rampant, and federal enforcement is insufficient to quell the looting.

Some entertainment executives say Grokster helped nudge digital-technology companies to the bargaining table with content-creating companies. BitTorrent, for example, approached the film industry post-Grokster, agreed to filter infringing traffic from its website, and today provides authorized online content.

Yet by any serious estimate, the online theft picture remains ugly.

For music, the illegal downloading rate is at least 5.6 billion digital files a year -- still several times greater than the growing volume of legal downloads. And for motion pictures, online theft has grown to about 40% of all film piracy. These statistics translate to several billion dollars in lost revenues for U.S. film and recording businesses, several billion more lost for such downstream businesses as advertising and retail, more than a billion dollars in lost U.S. tax revenues, tens of thousands of U.S. jobs, and constricted opportunities for new and veteran entertainment artists alike.

Songwriters have been especially hard hit. "Even writers I know with multiple hit songs are cleaning out their desks," says Songwriters Guild President Rick Carnes. "Illegal downloading is taking jobs away."

The online theft phenomenon surfaced in 1999, led by Napster's popular file-sharing network, and became deeply rooted overnight. Taking something for free suddenly seemed OK. Domestically, the problem is most acute among college students, studies show.

Illegal downloaders often rationalize that they're just little consumers exercising a trifle of freedom against big corporations. It's a shoplifter-like mentality.

"Young people tend to be anti-establishment, and they see us as big entertainment companies. But there's an insidious quality to that thinking," Hackford says. "People just don't understand. We're freelance people. Every job could be our last job. There is no steady employment."

In the inherently touch-and-go industries, where eight of 10 recordings and motion pictures won't earn back their costs, the added drain of an online-theft culture isn't easily absorbed.



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