Taiwan ‘MTV’ Films Rile U.S. Producers

WASHINGTON — The American film industry and the Bush Administration are trying to halt the spread of a new method of watching movies in East Asia, a method that could cut Hollywood’s revenue by tens of millions of dollars annually.

Over the last two years, hundreds of so-called “MTV” outlets have cropped up in Taiwan. Inside these complexes, small groups of teens and young adults watch videotapes in private rooms containing a television, a couch and free refreshments.

Originally, these establishments featured rock videos from the American cable-television network MTV. Gradually, however, they switched to videotapes of feature-length movies, and the MTV name came to stand for “movie television” instead of its original meaning, “Music Television.”

For a rental fee of less than $1 for the videotape and an additional $3 for the room, Taiwanese teens can watch movies away from home and out of parents’ earshot. Many of the establishments are open 24 hours a day.

“You have much more privacy than in a movie theater,” said Daniel Huang, a Taiwanese official in Washington. “The atmosphere is very cozy.”

While U.S. officials contend that some MTV houses have served as fronts for sex and prostitution, they acknowledge that most simply provide an outlet for residents of overcrowded Asian cities to view the same sort of videotapes that millions of Americans watch at home.

“In the Far East, people have tight living quarters. They don’t have two TV sets, and when one TV set is taken, they can’t go downstairs to the rec room,” said Raymond Sander, a Washington-based representative of the American Institute in Taiwan. Sander is one of several Americans handling the trade dispute with Taiwan over MTVs.

Sociology aside, American film-industry executives complain that MTVs have significantly reduced movie attendance in Taiwan. Charles Morgan, senior vice president at Universal Studios, said that Universal’s revenue from movie houses in Taiwan declined 32% from 1987 to 1988. “It had been on a steady climb until then,” he said.

While movie attendance increased in most of the world last year, industry figures show that attendance fell 40% in Taiwan. Taiwanese officials acknowledge that the MTVs are at least partly responsible for the decline.

According to Peter Allgeier of the U.S. Trade Representative’s Office, Taiwan’s MTVs are costing the American film industry $30 million to $60 million annually.

Over the past year, Taiwan-style MTVs have also shown up in Hong Kong, Thailand and the Philippines. Fearing their proliferation, the Motion Picture Export Assn. of America, which represents U.S. film distributors overseas, recently warned of possible problems if other countries follow in Taiwan’s footsteps.

“Based upon what has happened in Taiwan, U.S. film distributors stand to lose as much as $100 million (annually) in the Pacific region,” the group told the U.S. Trade Representative’s Office in a written complaint two months ago.

For more than a year, U.S. officials have been trying to persuade Taiwan to close the MTVs.

American officials complain that some establishments are showing pirated videotapes. Even when the videotapes are legitimate, U.S. officials say, the MTVs are breaking the law by not obtaining permission for a “public performance.”

The MTV dispute is the latest in a long series of copyright controversies involving Taiwan. Indeed, some officials say the disputes reflect the fact that the practice of copying someone else’s work does not carry the same moral opprobrium in Taiwan as it does in the West.

“If I copy you, that means I must respect you,” says Peter Kang, an official at Taiwan’s Coordination Council for North American Affairs, which represents Taiwan’s interests in the United States. “That’s the traditional concept that has prevailed for thousands of years in China. Now, we’re moving away from that.”

For years, American publishers complained that Taiwanese bookstores offered cheap pirated copies of English-language works. U.S. officials say Taiwan has taken some steps to curb the sales of pirated books. The proliferation of MTVs now heads the list of intellectual property disputes between the two countries.

“They are using pirated videocassettes without paying any royalties,” said William Nix, senior vice president of the motion-picture export group. “The theater owners (in Taiwan) are struggling to keep their heads above water.”

In some instances, U.S. officials contend, MTVs have been found showing movies that had just opened in Taiwan movie houses and had not been cleared for videotape release.

“I’ve visited lots of the MTVs on Taiwan,” said Universal’s Morgan. “Some of them have a Top-10 list at the cashier’s desk, which corresponds to the Top-10 list of (first-run) movies. When it comes out in the (Taiwan) newspaper that ‘Jaws V’ is opening up at the Bijou, you can just go to the MTV with your friends and smoke a cigarette and watch the movie. These movies have to be pirated.”

Lin Chi-min, another official at Taiwan’s Coordination Council for North American Affairs, acknowledged that some of the MTV videos are pirated. Nevertheless, he and other Taiwanese officials insist that most videos are purchased legitimately and their use by MTVs is legal.

“It’s like Erol’s,” said Lin, referring to a Washington-based videotape rental chain. “Once (an MTV proprietor) purchases a videotape, he can rent it to anyone he wants. Different people can view the thing in different ways.”

U.S. government officials and film industry executives disagree. They contend that the use of videotapes by MTV customers constitutes a public performance. Under U.S. law, public performances require the permission of the copyright owner.

“They are displaying these films publicly without authorization,” declared Fritz Attaway of the film export association. “These rooms hold anywhere from two to 40 people.”

Taiwanese officials insist that watching a video inside a closed room at an MTV is as private as watching it inside a hotel room. “Once the door is shut, only the customer and his best friend or family can view the tape,” Lin said. “It’s not shown in the store itself. It’s shown in a private room.”

In a test case filed by American film distributors, a Taiwanese district court ruled last summer that showing a videotape in an MTV does not constitute a public performance. The ruling is being appealed.

Meanwhile, American film-industry officials have asked the Bush Administration to consider invoking trade sanctions against Taiwanese products exported to the United States if the country fails to curb MTVs. Taiwanese and U.S. officials have had several rounds of MTV talks, but they have failed to settle the controversy.

Taiwanese officials said they have agreed to eventually change Taiwan’s copyright laws. “When we revise the law, we will take into consideration the American position on public performances,” said Eric C.C. Chiang, a Taiwanese press officer.

U.S. trade officials argue that such promises aren’t good enough. They want Taiwan to do something now, rather than waiting the year or so it would take to change the law.

American film executives, noting that Taiwan is among the top 25 foreign markets for U.S. movies, agree that the situation is too serious to postpone a solution.

“If we wait until 1990, there will be a couple of thousand MTVs,” said Morgan.

“What MTVs mean is simply the demise of the exhibition market on Taiwan. We (the U.S. film industry) are the No. 2 export product of the United States, behind aviation. And they (Taiwan) now operate under a set of laws that make it impossible for us to do business there.”