by Ellen Seidler | Ad Sponsored Piracy, Copyright, Piracy, Politics
Once a thief, always a thief
Last night 60 Minutes ran a segment featuring a Bob Simon interview with the now-defunct Megaupload’s Kim Dotcom. Much has already been written, and debated, about the German pirate entrepreneur who currently resides in New Zealand as he fights extradition to the United States on charges of copyright infringement. So did we learn anything new from last night’s broadcast that billed Kim Dotcom (predictably) as “Hollywood’s Villain?”….the short answer–nope.
Per usual, explanations were limited as to how Megaupload operated (and launched a business model that many others would follow), Mr. Simon explained it this way:
Here’s how it worked. If you wanted to send a friend a file that was too large to email– a wedding video, for example– you could just upload it onto Mega Upload’s servers and your friends could click a link to download it. It was a virtual warehouse where people stored and shared digital files. By selling advertisements and premium subscriptions, Mega Upload brought in an estimated $175 million. It became one of the most frequented sites on the internet. How did it get so popular and profitable? According to federal authorities, by also allowing users to illegally share the hottest new movies, or hit songs, or TV programs, including some CBS shows.
Unfortunately Simon failed to explain probably the most important factor to Megaupload’s financial success, its affiliate program. What good is hosting tons of pirated content if no one know where to find it? If there’s a genius to Dotcom’s acumen as a black market businessman, this is it. Basically the cyberlocker (cloud-based storage) site’s business model was that of multi-level marketing style pyramid scheme. Instead of selling cosmetics or cleaning products, his company “sold” access to stolen movies, songs and e-books.
As with all pyramid-style companies, Megaupload depended on attracting armies of underlings to “sell” its offerings. It did so by offering incentives to users who signed up to become “affiliates.” Upload stolen content, spread the download links far and wide like a virus, and the more downloads you attracted, the more cash you would earn. Affiliates could also earn cash for recruiting more affiliates. This army of mini-pirates was the key to Dotcom’s success and fueled piracy’s rampant growth beyond the traditional, more cumbersome torrent sites like Pirate Bay. The internet was suddenly filled with forums where users “shared” their download links over and over and over again.
Those who clicked on a Megaupload download link would find that they could generally stream or download a favorite film, or song, with a mere click of the mouse. For those who wanted faster download speeds they could subscribe to “premium” services and by doing so dump more cash into Dotcom’s coffers.
By having others do their dirty work uploading stolen content, Megaupload attempted to skirt copyright law by claiming refuge under the “safe harbor” provisions of the DMCA (Digital Millennium Copyright Act). Dotcom reiterated this excuse in his interview with 60 Minutes:
Am I the one who is at fault if users upload that kind of stuff and up… re-upload it again? Do I have to go to jail for that? Because I didn’t do it. I didn’t upload these things to Mega Upload.
Dotcom also blamed his flamboyant lifestyle and his nationality as reasons for his targeting by U.S. officials not the 2 and a half billion his company was worth at its peak when he left Hong Kong for New Zealand—a valuation built by pirating the hard work of others—musicians, filmmakers, authors and more. Too bad the folks at 60 Minutes didn’t think it worth interviewing any of those (beyond Hollywood) whose livelihoods suffered thanks to Megaupload and sites like it.
At this point, whatever happens with Dotcom is pretty much irrelevant. The key truth is that with the demise of Megaupload the entire piracy for profit industry was finally put in the spotlight. Why did so many other cyberlocker sites immediately shut down after the Megaupload indictment? If Filesonic, Wupload, Fileserve and other sites’ business models were legit, why did their operators scurry like cockroaches exposed to bright lights. The answer is simple. They, like Megaupload before them, were engaged in (illegal) theft for profit.
The shuttering of Megaupload marked an important shift for the landscape of online piracy. Just as cyberlockers’ illegal business models were being called into question, legitimate online options were gaining steam. The sudden vacuum allowed legal alternatives like Netflix, Hulu and their ilk to gain traction. Consumers who’d sought out pirated content out of convenience suddenly found that using their Roku or Apple TV box was a better option than scouring the internet for torrents or Russian streaming sites.
I for one don’t care much about what the future holds for Mr. Dotcom. I’m sure he’ll figure out another way to game the system and make money at the expense of others, but in the meantime I’ll be happy that content creators were the victors this time ’round.
P.S. for more analysis on the case against Kim Dotcom and copyright law I suggest Robert Parloff’s excellent piece published in Fortune Magazine in 2012: Megaupload and the twilight of copyright
by Ellen Seidler | Copyright, Film, Piracy
Santa doesn’t have much in his stocking this year for pirate website
Not to sound to be a grinch, but I must say it warms my heart during this holiday season to see pirate websites on the verge of closure, begging for donations. I wrote about x264.bb site losing access to PayPal and turning to Bitcoin as a source of donations. Well, apparently that isn’t going too well because, according to an email received today, the site is on the verge of closing due to lack of funds.
Due to insufficient funding from donation, we deeply regret to inform that x264-BB might not be able to survive should the donations are not coming in by the end of December 2013. We hate to see this great community die off, therefore we are seeking for everyone’s help now, kindly donate generously to help keep this website alive.
Alternatively, should there be any individual with ample monetary support who wishes to buy over x264-BB and able to support x264-BB for long term, send an email to: [email protected] with your offer price, please bear in mind that we will only sell off x264-BB as the last resort. All offers must be at logical prices and we will make the final decision for the sell-off at our sole discretion.
Now, before you get all teary-eyed over their possible demise, you should know that this site is in the business of piracy. Basically it offers its members a place to “share” download links and earn money via cyberlocker affiliate accounts. The more downloads forum users attract to their links, the more they earn. The site, which at one point boasted having 100k member, displayed advertising in the past, but now seems to depend primarily on donations for their survival. They explain their need for donations as follows:
Dear all, The Staff here at x264-BB truly value and appreciate the support that you all provide as members. With your help we have seen this community grow to where we are now fast approaching 100k members! Hard to believe for those who were here with us from the very start to partake in our humble beginning, but with your constant support we have been able to reach milestones. It would honor us if you would continue to support x264-BB through a small contribution.
This forum, and others like it, thrived during Megaupload (and other cyberlocker’s heyday). When Megaupload was taken offline by the feds, cyberlocker sites that mirrored its business model fell like dominoes as their operators chose not to suffer the same fate as Kim Dotcom. Now that the black market business model of paying affiliates to upload stolen content is fading, so too it seems is this pirate eco-system. Another factor in x264’s difficulties is due to the cornucopia of legit streaming sites now available. Just goes to show you that with a little nudge from law enforcement, legit sites can compete and win back the market.
Hopefully all the folks at x264 will get in their Xmas stocking is a lump of coal.
by Ellen Seidler | Copyright, Law, Piracy, Tech
Yahoo China search results for our film in 2010
Piracy is OK, until it’s not
When our film And Then Came Lola was released in 2010, illegal copies were easy to find on Chinese video websites like the Youku. Search results (shown left and below) listed dozens of links to websites where you could find the full movie streaming (with subtitles). DMCA notices we sent were routinely ignored.
Search results showing dozens of pirated copies of our film on Chinese websites
Now, nearly four years later, it appears that these Chinese websites that once overlooked illegal uploads are changing their tune–at least according to this Reuters story:
Advertisers willing to put money on legal content, and the popularity of online video, have also provided incentives: China’s online video market is expected to grow by more than a third this year and see annual revenues of 12.3 billion yuan ($2 billion), according to data from Beijing-based Internet research firm iResearch.
Youku’s shift demonstrates a oft-overlooked truism about copyright–attitudes about its importance are often in the eye of the beholder. For those who denigrate copyright enforcement as antiquated and unworkable, it’s worth looking at the issue from the creator’s (or licensee’s) perspective. When that happens attitudes can shift quickly–and not just for companies.
When Instagram attempted to change its terms of service to “sell users’ photos without payment or notification,” its users were outraged and and posted comments like:
“You DO NOT have permission to use my stuff just because it’s hosted on your servers,”
“My photos will not sell without my knowledge and compensation. I spend time on my pictures.”
The company’s co-found Kevin Systrom, quickly issued a “Thankyou, we’re listening” mea culpa:
The language we proposed also raised question about whether your photos can be part of an advertisement. We do not have plans for anything like this and because of that we’re going to remove the language that raised the question. Our main goal is to avoid things like advertising banners you see in other apps that would hurt the Instagram user experience. Instead, we want to create meaningful ways to help you discover new and interesting accounts and content while building a self-sustaining business at the same time.
Ownership Rights Instagram users own their content and Instagram does not claim any ownership rights over your photos. Nothing about this has changed. We respect that there are creative artists and hobbyists alike that pour their heart into creating beautiful photos, and we respect that your photos are your photos. Period.
I always want you to feel comfortable sharing your photos on Instagram and we will always work hard to foster and respect our community and go out of our way to support its rights.
Bottom line, and hyperbole aside, whether it be a huge Chinese corporation or an individual Instagram user, when something’s at stake, copyright matters.
by Ellen Seidler | Ad Sponsored Piracy, Copyright, Law, Piracy, Politics
The business of online piracy has always been dependent on advertising revenue. Without ad income, many pirate sites would cease to exist. Now it appears that law enforcement in the UK is taking action against this type of criminal activity through an effort called “Operation Creative,” an alliance that include law enforcement, advertisers, publishing and music interests. According to a story published today by the BBC:
In an operation run by the Police Intellectual Property Crime Unit (PIPCU), 61 websites were identified as displaying unauthorised material.They were asked to “correct their behaviour” and “operate legitimately”. Details of those that did not were passed to brands with a request to stop advertising on the sites in an attempt to reduce their revenue. Forty websites have now been suspended.
This graduated approach provides a blueprint for others. The offending websites (and advertisers) were notified that their sites contained copyrighted material and were asked to remove the content. Only when they ignored warnings was action taken to close them down.
This past July, U.S. Intellectual Property Enforcement Coordinator Victoria Espinel issued a statement, “Coming Together to Combat Online Piracy and Counterfeiting,” that outlined a voluntary “best practices” agreement to reduce ad-sponsored piracy in the United States:
Today, 24/7 Media, Adtegrity, AOL, Condé Nast, Google, Microsoft, SpotXchange, and Yahoo!, with the support of the Interactive Advertising Bureau, committed to a set of best practices to address online infringement by reducing the flow of ad revenue to operators of sites engaged in significant piracy and counterfeiting. The Administration strongly supports voluntary efforts by the private sector to reduce infringement and we welcome the initiative brought forward by the companies to establish industry-wide standards to combat online piracy and counterfeiting by reducing financial incentives associated with infringement. We believe that this is a positive step and that such efforts can have a significant impact on reducing online piracy and counterfeiting.
Voluntary agreements are all well and good, but at some point there’s a role for enforcement when such agreements are ignored. UK authorities seem to understand that. Perhaps it’s time that U.S. authorities take a similar, graduated approach. It may also help to garner more public support than seizing domains outright.
Internet-based commerce has matured to the point that it’s reasonable to expect online transactions to adhere to the law. Actions like this will help rein in the bad actors and hopefully make what has been the “wild” west a tad less so.
I wanted to alert folks to a great piece by Sam Levin in the East Bay Express,“When Corporations Want Profits, They Don’t Ask for Permission.” Most discussion around copyright has focused on movie and music piracy, but the plight of creative artists, illustrators and designers is equally significant and must be included in any debate about “theft” in this digital age.
