April 18 (Bloomberg) -- ``88 Minutes,'' a thriller starring Al Pacino, won't open in theaters until today. That hasn't stopped SurfTheChannel.com from playing it 51,000 times.

A new threat in Web piracy, SurfTheChannel links to 56.com, Tudou.com and dozens of sites in China and other countries. Streaming technology makes films and TV shows instantly available on Web browsers, cloaks the viewer's identity and makes it almost impossible for Hollywood to stop.

Sony Corp.'s ``88 Minutes,'' made for $30 million, is among 95,000 film and television titles at SurfTheChannel, where visitors watching free videos have soared to 650,000 a month since October. The Stockholm-based company offers films still in theaters, such as News Corp.'s ``Jumper,'' and movies not out yet, including Time Warner Inc.'s ``Good Chemistry.''

``For most of the last year, downloading was the dominant form of movie piracy,'' said David Davis, of Santa Monica, California-based Arpeggio Partners, who began investigating copyright infringement for Walt Disney Co. in 1999. ``Streaming presents a much larger problem. It requires less technical skill and, unlike downloads, it's available immediately.''

Online piracy cost the film industry $7.1 billion in 2005 and is the fastest-growing threat, according to the Motion Picture Association of America. The losses come as the industry looks to the Web to replace shrinking DVD sales, which fell 2 percent to $23.7 billion in 2007, according to Digital Entertainment Group, a trade association. Sales of movie tickets, averaging $6.88 in the U.S., rose less than 1 percent last year, according to the MPAA.

Web Links

SurfTheChannel, which uses an Internet service to hide its location, links to sites that make copyrighted material available, spokesman Richard Foxton said in an e-mail. It's legal because the content doesn't reside on SurfTheChannel's network, he wrote.

That may not protect the site's parent, SurfTheChannel Ltd., from litigation, said Rob Rader, an entertainment attorney at Mitchell, Silberberg & Knupp LLP in Los Angeles.

Dozens of sites including QuickSilverScreen.com, Joox.net and SideReel.com provide similar services. SurfTheChannel had a page on MySpace.com, News Corp.'s social networking site. News Corp.'s spokeswoman Julie Henderson said MySpace has ``zero tolerance'' for piracy. SurfTheChannel's page was blocked after the company learned of it.

``Linking to content you know, or reasonably should have known, is illegal is a lawsuit waiting to happen,'' Rader said in an interview. ``For movies or TV shows that are currently in release, this adds insult to actual economic injury.''

Quality Varies

About 40 percent of SurfTheChannel's visitors are from the U.S., the most of any country, according to researcher Alexa.com. U.S. visitors totaled 259,000 in March, Reston, Virginia-based ComScore Inc. said, suggesting a worldwide audience of 650,000. Foxton puts the total above 2 million.

The quality of films at SurfTheChannel varies. Some are shaky copies recorded in theaters. Others are similar to DVDs or broadcast TV. ``Evan Almighty'' had Chinese subtitles. Camcorders in theaters account for the majority of movie piracy while theft during film production also contributes, according to the Motion Picture Association.

Advertisers at SurfTheChannel include Qualcomm Inc.'s MediaFLO, which promoted programming from NBC. Visitors are asked to donate to Cancer Research UK.

``STC's existence has never been for commercial gain,'' Foxton said. ``It's a good month if we manage to cover our hosting costs, which has happened once so far.''

The studios are battling piracy as much through marketing as the legal system. CBS Corp. and Disney are putting episodes of new and vintage TV shows and films online. Hulu.com, started March 12 by General Electric Co.'s NBC and News Corp.'s Fox, offers TV programs and movies such as ``The Big Lebowski.''

Worldwide Releases

Sony's film unit, based in Culver City, California, releases big-budget films such as ``Spider-Man 3'' on the same day worldwide to reach more people and cut demand for pirated copies.

``To fight piracy, the best way to do it is to be out there readily available, well-timed, well-priced to market,'' Robert Iger, Disney's chief executive, said at a March 10 investor conference. ``It doesn't mean you're still not going to get pilfered. It happens all the time.''

Sony, based in Tokyo, doesn't expect U.S. ticket sales for ``88 Minutes'' to be noticeably lower because the film is online free, spokesman Jim Kennedy said.

Sweden is starting to crack down. Last month, the government began targeting file sharing after the International Federation of the Phonographic Industry registered complaints against PirateBay.com which, like SurfTheChannel, locates pirated material. It may also require Internet providers to identify people illegally sharing music and films.

Legal Remedies

Other legal remedies remain elusive. Sites that are shut down often reappear under a new name, said John Malcolm, director of anti-piracy operations for the MPAA.

SurfTheChannel was told by one network to remove shows or face prison and a $1 million fine, the blog MakeUseOf.com reported Feb. 3, citing Coco Lambucca, the director of operations. None of the listings were removed, Foxton said.

The threat posed by streaming raises the possibility studios may face the same fate as the music industry, where sales are shrinking and ``tens of billions'' of illegal files were swapped in 2007, the phonographic association said.

``This is exactly what every Hollywood studio should fear,'' Rich Greenfield, an analyst at Pali Capital in New York, said in an interview. ``SurfTheChannel is the beginning of what happened to the music industry.''

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

Last Updated: April 18, 2008 06:23 EDT