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Anti-Piracy Bill Battle: Hollywood vs. Silicon Valley

It's hard to argue that the government shouldn't crack down on the $58 billion piracy problem. The question is how.

Ron Koeberer | Aurora | Getty Images

But a bill designed to tackle piracy has sparked a major showdown between Silicon Valley and Hollywood. The issue at the heart of a heated Capitol Hill debate: how much companies should be held accountable for policing pirated material to which they might inadvertently link.

Hollywood wants to protect valuable intellectual property. Silicon Valley wants to protect Internet innovation and growth.

A new bill, the so-called OPEN Act, backed by Silicon Valley giants like Google , Yahoo and eBay is facing off with the SOPA (Stop Online Piracy) bill introduced a few weeks ago , which is backed by Hollywood studios' lobbying arm, the MPAA, as well as the recording industry.

What Silicon Valley Wants

OPEN, the Online Protection and Enforcement of Digital Trade, introduced Thursday by Sen. Ron Wyden (D-Ore.) and Rep. Darrell Issa (R-Calif.), aims to limit lawsuits for Internet companies by limiting their responsibility to eradicate access to rogue sites.

The executive director of NetCoalition, which represents a number of Internet companies like Google and Amazon, Markham Erickson, tells me that his clients are encouraged by the new proposal because it is taking a "follow the money" approach. That means credit card companies and processors would have to shut off the flow of money to sites that are declared illegal — it wouldn't be up to services like Google to make them disappear. Erickson calls blocking user activity on illegal sites "inefficient."

It's not just Silicon Valley companies opposed to the prior bills — SOPA and ProtectIP. The consumer Electronics Association argues that SOPA "allows movie studios foreign luxury goods manufacturers, patent and copyright trolls, and any holder of any intellectual property right to target lawful U.S. websites and technology companies."

Erickson points out that organizations from both sides of the aisle — from the ACLU to conservative groups like Red State and the Tea Party — have opposed the more active government role in the bills.

Why Hollywood Isn't Satisfied

The MPAA issued a press release declaring that the new draft legislation "goes easy on Internet piracy."

The bills the MPAA favors, Protect IP and SOPA, has what some call the "Internet death penalty": That measure gave the Justice Department the power to seek a court order against copyright-infringing web sites and serve that on search engines, Internet ad firms, and domain name providers, mandating that they make offending websites invisible.

The MPAA takes issue with the fact that the draft legislation shifts venue from federal courts to the U.S. International Trade Commission.

What Will Happen Now?

Lots and lots of lobbying. Both sides have spent about $90 million each on lobbying efforts according to the Center for Responsive Politics. The battle between these two sides is far from over. We'll see if they can negotiate enough to near a compromise that can eventually make it into law.

Questions? Comments? MediaMoney@cnbc.com

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.