The Other Piracy Problem: Why 3D Printers Are Scaring Hollywood

Since businesses are demanding that consumers assume more and more responsibility - and cost - for customer service, they should not be surprised that emboldened consumers take that knowledge and confidence - and expand on it. 

Erich Schwartzel reports in the Wall Street Journal:

The nascent marketplace for do-it-yourself consumer products means the film industry could soon face the same kind of legal quagmire that the music industry waded into over piracy.
Right after watching the trailer for “Star Wars: The Force Awakens” last April, Ken Landrum began building his own Stormtrooper gun. From his home in St. Louis, he cobbled together images of the “blaster” featured in the ad, and then used software on his personal computer to design nearly 40 separate pieces to be 3-D printed and assembled into a near-exact replica of the Walt Disney Co. DIS 0.56 % prop.
“My goal is to make it better than the studio did,” he said. At a minimum, he has done it faster: Mr. Landrum posted photos of his design on a message board for 3-D printing enthusiasts—some eight months before the movie premieres and five months before most official Disney toys hit shelves. As the movie’s opening gets closer, fans have filled his inbox asking for the files needed to print their own. Mr. Landrum said he handed out more than 100 in one week in mid-July, recently deciding to start charging $55 a file. “It’s gone haywire,” he said.
Mr. Landrum’s hobby is part of a looming problem for Hollywood. The steady rise of 3-D printing as an accessible activity for millions means that the specter of digital piracy, which has wreaked havoc on the media business in the Internet age, now hangs over sales of physical products long considered immune to such forces.
The nascent marketplace for do-it-yourself consumer products means the film industry could soon face the same kind of legal quagmire that the music industry waded into over piracy in the early 2000s. At this point, most of the printing is done by loyal fans who want to trade blueprints and products for free. But that is changing as more 3-D printers turn living rooms into mini-factories and piracy sites list 3-D files alongside illegally copied movies.
Among other likely effects, prices for legitimate products may have to go down when 3-D printers crowd the marketplace with viable alternatives to the toy store.
“You used to buy a CD, and the fact that it was physical lent it certain protections. When music was digitized, it became a pure information good and costless to replicate,” said Brett Danaher, a professor of economics at Wellesley College who studies piracy and digital distribution. “I think there’s a direct parallel to be made with 3-D printing.”

The phenomenon is likely to go far beyond entertainment, he added, affecting everything from auto parts to coffee cups. “It’s not going to be a geek thing,” said Mr. Danaher. “It’s going to be part of our everyday lives.”
The online marketplaces for 3-D printed objects resemble a Wal-Mart aisle full of comic-book heroes and well-known cartoon characters—including “Shrek” statuettes, a recreated prop designed to resemble Angelina Jolie’s headdress in “Maleficent” and a snack dish modeled after the “Star Wars” Millennium Falcon (lightsaber toothpicks included). Gandalf, Homer Simpson and Walt Disney’s head also make appearances.
Hobbyists peer-review designs until they arrive at a professional grade of precision and can respond faster than the studios to a product opportunity. When “Star Trek” actor Leonard Nimoy died in February, a fan uploaded a file that can be used to print a statuette of his trademark “Spock” hand gesture that day.
The nascent market has the potential to eat into one of Hollywood’s most important moneymakers.
DreamWorks Animation DWA 0.39 % SKG Inc. has built out its consumer-products division to help when a movie underperforms. Consumer products can also turn a hit movie into a yearslong financial windfall. Disney’s second-quarter consumer-products revenue was up 10%, to $971 million, in large part thanks to “Frozen” toys selling at a fast clip more than 18 months after the movie’s release. (Rudimentary versions of that movie’s Elsa and Olaf characters are available for download on several 3-D printing sites.) Spokespeople at both studios declined to comment on the fan creations available online.
So far, Hollywood has avoided taking significant legal action against 3-D printing enthusiasts, careful not to re-create the fallout that occurred when the music industry sued fans for sharing songs online. Several consumer-products executives at major studios said they’re monitoring the trend with a watchful eye, even if it is unclear how exactly to respond. Some in the industry, like Viacom Inc.’s Paramount Pictures, Disney’s Marvel Studios and Time Warner TWX 0.49 % Inc.’s Warner Bros., have released sanctioned 3-D designs to promote fan creations ahead of a new movie’s release.
“It’s a tightrope walk between maintaining control…and not getting in the way of the passionate fan embrace,” said Marty Brochstein, senior vice president of industry relations at the Licensing Industry Merchandisers’ Association.
The tools needed to join the printing community are getting cheaper and more accessible by the day, even as the process of building an object layer-by-layer remains time-consuming and expensive. About 217,000 3-D printers are expected to ship world-wide this year—more than twice the number of units last year, according to Gartner Inc. That figure is expected to double each year between now and 2018, and cheaper models costing less than $1,000 are also becoming more prevalent. Free software can be used to design the schematics used to print the objects.
Knowing who to pursue in a court case can be a challenge for studios. Many hobbyists trade designs for free, while others charge hundreds of dollars and accept bulk orders for products. And because a 3-D printed object exists in the digital ether before becoming a tangible item, legal experts say it is hard to know who exactly to target: The person who conceptualized the design, the person who wrote its code or the person who operated the printer.
“Right now, counterfeit products are made from a handful of countries and imported and then sold,” said Michael McCue, an intellectual-property lawyer at Lewis Roca Rothgerber LLP. “[New printing technology] lowers the barriers to entry for counterfeiting and makes it possible for anyone with a 3-D printer to be a counterfeiter.”Studio action against 3-D printing has followed guidelines set out in the Digital Millennium Copyright Act, which calls on websites hosting copyright-infringing content to remove it when notified by the rightful owners.
Shapeways, an online marketplace that also handles 3-D printing orders for hobbyists and merchants, said it responds to such “takedown notices” from a studio or other company. Shapeways asks users if they are the rightful copyright owner when uploading a design, but says its marketplace is too expansive to police every item. In a recent search, several hundred products currently for sale on Shapeways were inspired by Marvel properties, including an Avengers logo ring ($10), Incredible Hulk figurine ($170) and wearable Iron Man helmet ($1,847).
One new company, Source3, is in negotiations with several major studios to manage 3-D licensing for fan creations. The company envisions a system that allows rights holders to set rules on how 3-D files are made available.
But there are hurdles: It can be harder to trace 3-D files, and confirm that an infringement is occurring, than it is with music or movies. And no major online outlet like Google Inc.’s YouTube or Apple Inc. AAPL -0.18 % ’s iTunes Store yet exists for the format.
Still, the Source3 believes it is tapping a growth market. In a presentation to studios, Scott Sellwood, Source3’s vice president of business development, shows a photo of a group of elementary school students who printed 3-D toys as part of a class project. Many hold replicas of their favorite action figures and cartoon characters. “Are these kids infringers?” he asked. “Or extensions of your brand?