Sales of Bootleg DVDs thrive despite crackdown.

THE lookout's shrill whistle shot across Santee Alley and a handful of men grabbed up their cardboard boxes and ducked into nearby stalls or simply walked away, losing themselves in the thick of Saturday shoppers.

The outdoor bazaar in downtown's Fashion District, long a mecca for bargain hunters looking for deals on clothing, jewelry and electronics, has emerged as a leading marketplace for another product.

Pirated movies.

Second in volume only to Canal Street in New York, according to the Motion Picture Association of America, Santee Alley is home to most of L.A.'s bootleggers, who last week were openly hawking copies of "The Last Samurai," "Big Fish," "Along Came Polly" and "Torque" all recent releases still in theaters.

"Santee Alley has always been a hotbed of piracy," said Ken Jacobsen, director of worldwide piracy operations for the MPAA. "They go down there and set up illegally in front of some stall and they just start selling. If the police show up, they usually run away, leaving their stuff behind."

Despite ongoing sweeps by the Los Angeles Police Department, Fashion District security patrols and private investigators hired by the MPAA, which represents the interests of the major studios, dozens of vendors can be found on most days selling DVDs of the newest releases for $5 a copy.

One bootlegger estimated selling 50 DVDs on an average day; but MPAA investigators believe the daily average is closer to 300 discs per bootlegger.

So easy is it to copy fihns and so pervasive is the problem that recent hauls of bootlegs have barely dented the trade. In November, police confiscated more than 14,000 pirated DVDs on Santee Alley. A month later, they seized more than 16,000, according to the Fashion District Business Improvement District.

Uphill battle

On a blanket spread out on the sidewalk in front of their gray Toyota 4Runner, two men--one in his early 20s, the other a teen-ager--produced a portable DVD player from a black leather case to prove that some of the 20 titles they were selling were indeed watchable.

(Despite assurances on the street, officials warn counterfeit DVDs are of poor of quality and occasionally only blank discs. A reporter's copy of "The Last Samurai" froze halfway through the film. When placed into a laptop, it crashed the computer.)

A shopkeeper near the operation leaned against the outside wall of his store and watched the scene. While his store sat empty, a steady stream of passersby stopped to pick through the contraband merchandise.

The scene didn't seem to bother the shopkeeper--it was the first time the men had set up near his store. "I don't think they're very serious," he said, nodding to the two men. "I think they're just having fun."

The problem isn't just the hawkers selling discs on the street, but the network that supports them, Jacobsen and others said.

A single decent copy of a pirated movie is all it takes for thousands of copies of a first-run feature release to be churned out and available on the streets in less than a day.

The volume of pirated media has increased as the equipment needed to produce it becomes better, faster and cheaper, said Jacobsen. He speculated that a simple set-up could be had for less than $3,000.

And despite concerns about Internet downloading, as well as so-called screeners--videos of new films issued by the studios for award consideration by members of guilds and the Academy of Motion Picture Arts and Sciences --most reproductions found on the street are still copies made from camcorders.

"We are still actively involved in fighting hard goods piracy," Jacobsen said. "Our biggest problem still tends to be DVD-R sales, stuff that has been burned from a ripped DVD or a camcorder."

Unlike the copies found on the street a decade ago, where the video was grainy and the sound muffled, thieves these days have access to better camcorders and home video editing programs that allow them to adjust the color and contrast of the film. Most plug a recording device into a movie theater's sound system for the heating impaired, giving them near perfect sound and avoiding ambient noise from the audience.

"The camcorder stuff (before) had heads in the way and the sound was terrible," said a Warner Bros. executive. "Now it's so good you might not go buy the DVD, which is where we make all our money."

Efforts thwarted

The MPAA estimated the movie industry lost $3.5 billion last year from global DVD piracy, $250 million of that in the United States. Investment house Smith Barney estimated in November that those losses could balloon to $5.4 billion this year.

"That number doesn't include losses from Internet downloading," Jacobsen said. "You can't effectively download a movie with dialup service, but people are switching to cable and DSL and that makes it much easier. It's a problem that's here and it's substantial."

While Jacobsen wouldn't disclose the amounts the MPAA spends fighting piracy, he said 60 percent of the organization's annual budget is dedicated to the task. Its annual budget is also confidential, but it has been estimated in excess of $42 million as recently as 2000.

In New York, which leads the nation in sales of pirated materials, the MPAA has set up an office dedicated to enforcement. Meanwhile, in Los Angeles, where piracy is almost as bad, the MPAA runs its enforcement operations from its Encino headquarters.

The organization also has retained more than 100 private investigators in the United States to find out where pirated movies are being sold and how they're distributed.

"We can't cover the whole country, so we do retain people with private investigator licenses," Jacobsen said.

On the gritty streets surrounding Santee Alley, which on weekends are swarming with thousands of shoppers picking through stalls loaded with discount merchandise, men sell pirated movies out in the open.

Camouflaged by the thick crowds, they are aided by lookouts perched atop milk crates. When the bright yellow jacket of a patrolling Fashion District security guard is spotted, the lookout lets out a loud whistle and the men grab their cardboard boxes and run into adjacent stalls or simply blend into the crowd.

Even if security guards catch someone selling pirated videos, they are powerless to take action beyond chasing them away and calling the police.

Typically, the LAPD's central division doesn't have the resources to tackle DVD piracy on an everyday basis, and commits itself to several sweeps a month, according to Kent Smith, executive director of the Fashion District Business Improvement District.

During the height of the most recent sweeps, timed to deter piracy during the holiday season, lookouts with cell phones were posted on rooftops and would call to their cohorts below when the police arrived.

"They are pretty street smart," Smith said. "When they see LAPD coming, they have a very good early warning system. That makes it a challenge to eliminate."

Beyond catching the purveyors, law enforcement is powerless to stop people from buying the discs. While California law makes it illegal to sell pirated copyright material, there are no penalties for individuals caught buying it.

"We arrest people buying huge quantities who are obviously distributors, but it's not a crime to buy one of these things," Jacobsen said. "It's a loophole in the way the law is written."