This much was made clear during the opening day of the Digital Hollywood conference in Los Angeles: Piracy remains a confounding problem for the movie and music industries. And at least one perspective is taking hold--that both industries need to figure how to offer online services that are "better than free," a phrase offered up by Mitch Singer, senior VP of strategic development and legal affairs for Sony Pictures Entertainment's digital-policy group.

In the meantime, with studios and labels busily concocting new business models but with no "better than free" option yet available, movie executives are taking a different anti-piracy approach than their music counterparts, who were caught off-guard by the file-sharing phenomenon. Rather than targeting peer-to-peer networks--a step that may come later--the studios have been working on ways of stopping piracy at its source. And that source isn't where many people might think it is.

A panel of studio executives, including Sony's Singer, agreed Monday that the No. 1 problem facing the movie industry's piracy police is the use of videocams to record films during screenings. Whether it's a well-financed operation that gains access to the projection booth and plugs directly into a theater's sound system, or a teenager sitting in a dark theater with a digital videocam, it's believed the copies of films showing up on file-sharing networks like Kazaa and LimeWire are being pirated from theaters. Breaches from inside studios are thought to be few and far between.

To combat videocam piracy, the industry has been taking numerous steps, including:

Using metal detectors to screen those attending pre-release screenings of films;

Developing a technique that marks film prints so that individual copies can be easily identified, thus allowing officials to discern where copies circulating on the Internet were obtained;

Working on a technology that will let digital projectors use light patterns invisible to the naked eye to essentially jam digital video recorders, thus preventing them from copying screenings; and

Working closely with technology and consumer-electronics manufacturers to ensure that future devices will be equipped with copy-control technologies that will make it far more difficult not only to copy programming, but also to play back discs and tapes that have been copied illegally.

There was clear agreement among movie and music executives that anti-piracy campaigns have to be countered with efforts to give consumers more flexibility in how they access content. But an expert in media law said efforts to lock down content with digital rights-management software and the combative stance the music industry has assumed with file-swappers who are taking advantage of the ability to access free content shows that the entertainment world remains in a state of denial. Says Tracy Dolgin, managing director of the law firm Houlihan Lokey Howard & Zukin, "Trying to sue your customer as a silver bullet to solve the problem is something I've never seen work."