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They are, though? If two groups offer the same product, they are competing. The fact piracy doesn’t cost money hardly changes that.
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A lot of people who download stuff would never have bought it in the first place. Many people just download all new movie releases and watch them, somewhat enjoying them, but would not have bought them if they were in the store and limited by the money in their pocket. That's the difference. So I wouldn't say it's direct competition.
Also the MPAA is either getting desperate or getting frustrated, but they have
publicly threatened to pull campaign funding for some politicians if they don't back the MPAA's ideas and bills. They basically admitted to bribery in public and there's a petition to the White House to investigate Chris Dodd and the MPAA in these matters. Sign it
here. If the numbers get high enough the white house can't simply ignore it, which would mean another big blow against the MPAA and their influence in Washington.