Online Piracy: Controversial House Bill Proposed to Block Pirate Sites

  • The Stop Online Piracy Act was introduced in the House of Representatives last week.
  • “While sites that host and distribute pirated content continue to operate around the world, members of the House of Representatives are seeking a new legal method to shutting down access to copyrighted content,” reports Digital Trends.
  • The proposed bill would provide the U.S. Attorney General with the power to order search engines and ISPs to block sites that feature pirated content.
  • The Act is the House’s version of the PROTECT-IP Act introduced in the Senate that if passed, would enable the government or courts to monitor users and remove infringing websites from the global network, even without hearings.
  • Critics have used labels such as the “Internet Death Penalty” and “Great Firewall of America” to describe the proposal.
  • “The bottom line is that if it passes and becomes law, the new act would give the government and copyright holders a giant stick — if not an automatic weapon — with which to pursue websites and services they believe are infringing on their content,” suggests GigaOM. “That might make for the kind of Internet that media and entertainment conglomerates would prefer, but it would clearly be a much diminished version of the Internet we take for granted.”

DRM Effectiveness: Is Piracy a Pricing Issue or a Service Issue?

  • Valve co-founder and managing director Gabe Newell has reiterated his take on the issue of piracy. Valve is the creator of game platform Steam that distributes games to a global community of 35 million players.
  • Newell believes that DRM does not work and pirates are not necessarily always seeking free content.
  • “One thing that we have learned is that piracy is not a pricing issue. It’s a service issue,” he says. “The easiest way to stop piracy is not by putting antipiracy technology to work. It’s by giving those people a service that’s better than what they’re receiving from the pirates.”
  • “Most games available on Steam are easily found in pirated form on the torrent sites,” writes ETCentric contributor Nick Nero. “Even if you buy the game, many users download the torrent because most DRM requires the disc to be present which slows down the game startup and level load/access times.”
  • “What keeps me as a Steam customer is their cloud service,” adds Nick. “I can download any of my games to another PC, I can backup my games to encrypted physical media, my game saves are stored in the cloud, and I can easily find my friends for mulitplayer. The service layer is what brings in the customers.”

Could Removal of DRM Restrictions Actually Decrease Music Piracy?

  • New research from Rice and Duke universities challenges conventional wisdom by suggesting that the removal of digital rights management restrictions can actually decrease music piracy.
  • “Marketing professors Dinah Vernik of Rice and Devavrat Purohit and Preyas Desai of Duke used analytical modeling to examine how piracy is influenced by the presence or absence of DRM restrictions,” explains the press release. “They found that while these restrictions make piracy more costly and difficult, the restrictions also have a negative impact on legal users who have no intention of doing anything illegal.”
  • “In many cases, DRM restrictions prevent legal users from doing something as normal as making backup copies of their music,” said Vernik, assistant professor of marketing at Rice. “Because of these inconveniences, some consumers choose to pirate.”
  • According to the research paper, copyright owners don’t necessarily benefit from less piracy. “Decreased piracy doesn’t guarantee increased profits,” Purohit said. “In fact, our analysis demonstrates that under some conditions, one can observe lower levels of piracy and lower profits.”
  • The press release includes a compelling statement from the late Steve Jobs: “Why would the big four music companies agree to let Apple and others distribute their music without using DRM systems to protect it? The simplest answer is because DRMs haven’t worked, and may never work, to halt music piracy.”

Spotlight on Spotify: Facebook Integration, Radio Feature, Impact on Piracy

  • Spotify has been drawing a great deal of media attention this week, more so than the growing number of other streaming music services.
  • Since the company announced its partnership with Facebook at the recent F8 event, Spotify has gained more than one million new users, despite the public outcry from those who question limiting the service’s signup to Facebook users only.
  • In response to concerns regarding Facebook’s media-sharing philosophy, Spotify released a new update that enables users to access the Facebook app without sharing their listening habits, reports Digital Trends. This may be good news for subscribers not happy with the recent announcement regarding Facebook integration — and could potentially serve as a model for how others offer access to services via social networking.
  • In related news from The Hollywood Reporter, Spotify recently released a radio feature in the U.S. that has long been available to European users. Radio will be accessible on the desktop client, but not on the Spotify mobile app. The add-on is reportedly in no way a Pandora killer, due mainly to its lack of mobility and attention to detail.
  • Additionally, Digital Trends reports that Spotify may be having a significant impact on music piracy. Illegal downloads in Sweden have reportedly dropped 25 percent since Spotify launched there in 2009. “Here in the U.S., Spotify isn’t the only option — and it may not even be the best, depending on user preference. Pandora, MOG, Rdio, Grooveshark — the list goes on,” indicates the article. “We don’t yet have numbers to show how these services are affecting music piracy in the U.S. But we’d put our money on them having a similar effect as Spotify is having in Sweden.”

More Piracy News: Grand Jury Indicts Five in Illegal Movie Download Service

  • A federal grand jury has returned indictments against five people associated with the NinjaVideo.net website. The indictments include one count of conspiracy and five copyright infringement counts.
  • The individuals were charged with engaging in illegal downloads of Hollywood movies following investigations conducted by several federal agencies, including the departments of Homeland Security and Justice.
  • “From February 2008 until June 2010, NinjaVideo.net allegedly offered users the ability to illegally download infringing copies of copyright-protected movies and television programs,” reports Home Media Magazine. “Many of the movies offered on the website still were playing in theaters, while others had not yet been released.”
  • According to the article, the site allegedly offered access to copyrighted movies and TV shows for free, with increased access to a greater content selection for users who would donate at least $25. In addition to “donations,” the website generated revenue through advertising.
  • “The action today marks one of the first such prosecutions of an illegal download and streaming site — indeed, one of the most notorious infringing sites on the Internet until it was shut down by law enforcement,” said Mike Robinson, EVP of content protection and chief of operations with the MPAA.

Darwin Award: How the FBI Discovered an Actor Uploading Movie Screeners

  • In April, the FBI raided the apartment of Screen Actors Guild member Wes DeSoto who was suspected of uploading Hollywood pre-release screeners to The Pirate Bay.
  • DeSoto had reportedly uploaded torrents including “The King’s Speech,” “Rabbit Hole,” “127 Hours,” “The Fighter” and “Black Swan” (the actor had access to DVD-quality screeners via the use of special codes on iTunes).
  • According to reports, DeSoto has now agreed to plead guilty to breaching the Family Entertainment and Copyright Act of 2005 (for “Black Swan”) and possibly faces three years in prison.
  • The actor’s IP address was apparently discovered by Deluxe Webwatch using Google after DeSoto responded to criticism in The Pirate Bay’s comments section. According to Torrent Freak: “After several users questioned the authenticity of the file, mf34inc weighed in with ‘SAG now send out iTunes download codes for screeners’ and the utterly priceless ‘I’m a SAG member and thought i’d share these.'”
  • The article describes in detail how “an almost unbelievable series of amateurish mistakes” helped the FBI work its way from Deluxe Webwatch’s initial discovery to DeSoto’s apartment.

Will Integrating BitTorrent into HDTVs Provide Easier Access to Pirated Content?

  • Turkish HDTV manufacturer Vestel has announced it would be the first to integrate BitTorrent software into its televisions, enabling European consumers easier access to expanded content offerings.
  • BitTorrent emphasized the deal does not allow easier access to pirated content, but enables “consumers to find, play and share all types of personal media, independently produced content and Internet files directly on their TV,” reports Home Media Magazine.
  • Shahi Ghanem, chief strategist at BitTorrent, said Vestel is a “good and early” example of his company’s push to be included on as many connected devices as possible, and added that by the 2012 Consumer Electronics Show, BitTorrent would be available on more CE devices.
  • However, there are detractors. “I do not believe this offering will get much attention from CE companies on this side of the ocean,” said an unnamed exec for a major electronics company. “Unlikely a CE company would be indemnified if the software was misused. Reminds me of Napster, [which] at one time facilitated piracy.”
  • BitTorrent is used by more than 100 million-plus global Internet users.

Piracy Surge: Fox 8-Day Delay Draws Negative Consumer Response

  • Since Fox implemented its 8-day delay of content availability on Hulu, downloads from BitTorrent for shows such as “Hell’s Kitchen” and “MasterChef” have increased 114 percent and 189 percent, respectively. Others are watching Fox shows on video sites including YouTube.
  • Moreover, the situation is creating negative consumer reactions as consumers are forced to find content elsewhere.
  • “One of the main motivations for people to download and stream TV shows from unauthorized sources is availability,” reports TorrentFreak. “If fans can’t get a show through legal channels they turn to pirated alternatives.”
  • The post suggests that some consumers have indicated they will be returning to their DVRs and may even dust off their VCRs in response.

MPAA Wins Piracy Case Against UK File-Sharing Site

  • Britain’s High Court ruled in favor of Hollywood studios on Thursday, forcing Internet service provider British Telecom to block access to the Newzbin2 website, a hub for pirated media content.
  • Newzbin2 has more than 700,000 users, and opened last spring after its predecessor, Newzbin, was shut down by court order. The members-only site aggregates illegally copied material found on Usenet discussion forums.
  • “In my judgement it follows that BT has actual knowledge of other persons using its service to infringe copyright,” said Justice Arnold in his ruling. “It knows that the users and operators of Newzbin2 infringe copyright on a large scale, and in particular infringe copyrights of the studios in large numbers of their films and television programs. It knows that the users of Newzbin2 include BT subscribers and it knows those users use its service to receive infringing copies of copyright works made available to them by Newzbin2.”
  • The suit was hailed as a victory for creative industries by the Motion Picture Association, which repped the studios in the suit. The ruling marks an important precedent, opening the doors for copyright holders to call on ISPs to help prevent infringement.
  • Chris Marcich, MPAA president and managing director for Europe, the Middle East and Africa said: “This ruling from Justice Arnold is a victory for millions of people working in the U.K. creative industries and demonstrates that the law of the land must apply online.”

Piracy Takes to Broadway with The Book of Mormon

  • Trey Parker’s “The Book of Mormon” has joined the growing collection of pirated media available on the Internet.
  • In what may be a first for Broadway musicals, a bootlegger shot the popular award-winning production on video and made it available online.
  • The recording was made in March and is now available as a 1GB download on sharing sites.

Media Industry Groups Announce New Anti-Piracy Coalition

  • A collection of Hollywood studios and guilds this week announced the formation of “Creative America,” a non-profit grassroots organization intended to fight piracy that threatens creative jobs.
  • Creative America intends to provide a unified voice for some 2 million Americans who work in film, television, and other creative fields and believe, “that halting the looting of America’s creative works and protecting jobs must be a national priority.”
  • Members of the coalition include: AFTRA, CBS, DGA, IATSE International, NBC Universal, SAG, Sony Pictures Entertainment, Twentieth Century Fox, Viacom, Disney and Warner Bros.
  • The coalition supports a new bill before the U.S. Senate, which would allow the Department of Justice to pursue pirates overseas.
  • The group aims to provide IP protection and related information through its website and social networking entities such as Facebook and Twitter.

Media Piracy is Big Business for Organized Crime

Businessweek reports that the entertainment studios lose more than $6 billion a year to movie piracy (according to a report by the Institute for Policy Innovation) — and that media piracy has become big business for organized crime. For example, the Los Zetas drug cartel of Mexico earns a reported $1.8 million a month through its “side” business of pirated music and DVDs. Some groups — including Los Zetas — even stamp their products with gang logos before distributing them to public markets.

The article cites an array of international drug smugglers and crime rings based in Russia, Mexico, China and Ireland that have made trafficking counterfeit entertainment media products a highly lucrative enterprise.

In an effort to address these international concerns, the MPAA is employing former law enforcement officers in Russia, Singapore, Britain, and Malaysia, to work with local police. The impact of piracy has been so severe in South Korea that “major studios have closed their regional home-entertainment offices because sales aren’t high enough to support the operations.”

The MPAA explains that some of these criminal elements have found significant success with online efforts, creating rogue websites that look so professional they’ve been bold enough to sell advertising on them. In these cases, pirated movies are streamed from the sites for free while the criminals earn revenue from the advertising. The MPAA is reportedly lobbying for passage of new U.S. legislation to combat such enterprises.

Is Piracy is a Product of Market Failure?

Internet law columnist Michael Geist, writing for the Toronto Star, comments on a new global study on piracy backed by Canada’s International Development Research Centre that suggests “piracy is chiefly a product of a market failure, not a legal one.”

The media piracy study — in an effort to analyze infringements regarding music, movies, and software — was launched five years ago by the Social Science Research Council. Institutions in South Africa, Russia, Brazil, Mexico, Bolivia, and India were identified to better understand the international media market and related piracy issues. The resulting 440-page report is the most thorough analysis of media piracy to date.

The report sets the record straight on several popular piracy myths. For example, it states there are no links between piracy and organized crime, there is no evidence indicating that anti-piracy education programs have any impact on consumer behavior, and tougher legal penalties do not necessarily provide a deterrent to piracy.

The report also suggests that piracy is primarily a result of market failure, not legal failure. Geist writes: “In many developing countries, there are few meaningful legal distribution channels for media products. The report notes ‘the pirate market cannot be said to compete with legal sales or generate losses for industry. At the low end of the socioeconomic ladder where such distribution gaps are common, piracy often simply is the market.’”

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