by Ellen Seidler | Copyright, Film, Law, Music, Piracy, Tech
Megalomaniac Kim Dotcom is at it again. With a launch of a new campaign announced via an all caps headline screaming that “THE TRUTH WILL COME OUT!” on his website, he’s ratcheted up his assault on the big, bad U.S. government, the so-called “copyright lobby” bogeyman and everyone else who views him as the criminal thug that he is.
As part of his campaign to get out his (version of the) truth he’s published a “white paper” called “Megaupload the Copyright Lobby and the Future of Digital Rights.”
In it he claims the case against him “represents one of the clearest examples of prosecutorial overreach in recent history.” He takes particular aim at the White House, claiming his arrest was “propelled by the White House’s desire to mollify the motion picture industry in exchange for campaign contributions and political support.”
He goes on to claim that it’s a case of him and “digital rights advocates, technology innovators and ordinary information consumers on the one side, and Hollywood and the rest of the Copyright Lobby on the other.” He characterizes his highly profitable pirate website as a wonderful public service, with piracy only a minor concern.
Megaupload operated for seven years as a successful cloud storage business that enabled tens of millions of users around the world to upload and download content of the users’ own choosing and initiative. The spectrum of content ran from (to name just a few) family photos, artistic designs, business archives, academic coursework, legitimately purchased files, videos and music, and – as with any other cloud storage service – some potentially infringing material. [emphasis added]
How about some real truth about Megaupload? Until its takedown in January of 2012 it was the largest and most profitable repository of pirated content in the world. Contrary to claims made in his “white paper” Dotcom’s business model was dependent on content theft to drive traffic to, and generate income for, the site. The pirated content on Megaupload included music, movies, e-books and more–and represented the creative work of artists, filmmakers, authors and musicians across the spectrum.
For Kim Dotcom it’s easy to create propaganda that points to the big, bad MPAA or RIAA as the enemy…after all they are in the business of making money right? Well, the fact is, so is Mr. Dotcom and, unlike Hollywood, he doesn’t play by the rules. Why invest in content (and employ thousands to make it) if you can just steal it?
As an independent filmmaker I’ve had plenty of opportunities to witness first hand the piracy supported by Mr. Dotcom’s illegal enterprise, and it wasn’t pretty. Our film, like thousands of others, was easy to find on Megaupload as a free download or streaming in HD, complete with subtitles in various languages. Meanwhile it could be also be streamed or downloaded (with subtitled versions) on legit sites like iTunes, Amazon, Netflix, Busk Films and others portals worldwide.
The difference between these legit online distributors and Dotcom’s Megaupload was that we earned income from our film’s distribution on the legit sites while it was Mr. Dotcom (and his uploading minions) that profited from our film on Megaupload. For indie filmmakers like us who don’t have theatrical releases, back-end distribution is the only way to recoup expenses. Megaupload’s pirated offerings forced filmmakers like us and other content creators to compete against FREE versions of their own creations. How crazy is that?
Despite his splashy spin minimizing the amount of “infringing material” disseminated through Megaupload (and Megavideo), the fact is that without stolen content, he would not be the “Mega” millionaire he is today.
How did the illicit Megaupload business model become a profit machine? Well, it’s helpful to think of a company like Amway. Amway’s business success popularized the multi-level marketing style pyramid business model (or scheme ) whereby the operators at the top of the pyramid recruit people to work for them. They, in turn, recruit more workers who, in turn, sell products to the public. Those at the top make money only if they can recruit, and keep, enough people below to do the actual work. Those doing the bulk of the work earn money, but at a much lower rate than those at the top. It’s the trickle up theory of profits.
Megaupload’s business was predicated on offering enticements to users (uploaders) to join this type of piracy-4-profit pyramid. This approach was essential to maximizing the number of visitors to the site. Another essential part of this equation was making sure the UCG (user generated content) that would attract eyeballs. Sorry, but your ” family photos, artistic designs, business archives” wouldn’t do the trick. No what better UGC carrots than popular movies, books or music? Dotcom didn’t seem too worried about copyright thanks to the “safe harbor” provision of the DMCA that allow UGC sites to easily look the other way (plead ignorance) when it came to vetting infringing content.
In order to set this eco-system into motion, Megaupload lured its worker bees. Simply put, the more downloads users generated for each file, the more money/rewards they earned. These rewards precipitated the next, and most insidious stage of piracy—the viral spread of infringing links. With dollar signs in their eyes, Megaupload’s affiliate armies took their links and posted them on web Warez forums far and wide. The more Megaupload links they “shared” across the web, the more money they made.
Pirate forum search results for new indie film showing more than 300 posts “sharing” download links.
In other words, Megaupload created, and was dependent on, an army of affiliates to do the dirty work for them. The scenario enabled Megaupload (and dozens of cyberlockers modeled after them) to shield themselves from legal liability, while their servers were simultaneously receiving thousands of (stolen) files every day–fresh content sure to attract new (and returning) customers.
Though the site claimed to respond to takedown requests, Megaupload was in fact playing a shell game, by not removing the actual infringing files and instead generating fresh links to replace those removed via the DMCA process. When Megaupload was first taken down in 2012 I wrote a blog post about this and put together a short video demonstrating how this worked (below).
[vimeo 35648310 w=500 h=375]
Megaupload Unmasked from fastgirlfilms on Vimeo.
It’s also important to remember the impact Megaupload’s business model had on encouraging and sustaining piracy profiteering across the web. It’s takedown marked a significant turning point in the fight against online piracy profiteering. As I wrote in an earlier post in response to the launch of Kim Dotcom’s new site Mega:
…when U.S. law enforcement took his popular Megaupload offline a year ago, it marked a significant turning point in the battle against online piracy. Since then real progress has been made. Copy-cat sites that modeled the success of Dotcom’s business model closed their doors. At the same time, more options for timely and legitimate online distribution of movies and music emerged–options both profitable for creators and affordable for consumers. Advertisers and payment processors have also stopped partnering with some remaining pirate cyberlocker sites, diminishing their profits and popularity. Other companies, such as Google, have also had to address their role in aiding, abetting and profiting from piracy. Overall, the lure of online piracy as a cottage industry has been greatly diminished.
Kim Dotcom is not Robin Hood and he’s not a hero. He’s a (wealthy) thief who, thanks to technical know-how and a black market business acumen, was able to exploit the work of content creators across the globe for his own, personal gain. Dotcom’s lies cloaked as “truth” may gain him sympathy from his acolytes, but it won’t change the fact that stealing from others isn’t sharing, it’s theft.
by Ellen Seidler | Copyright, Film, Law, Piracy
This past Saturday, Director Stephen Soderbergh gave the keynote address at this year’s San Francisco International Film Festival. In his address on the “state of cinema” Soderbergh spoke about the nature of art, movies vs. cinema, studios, and budgets among other things. He also discussed online piracy’s impact on indie filmmaking:
Theft is a big problem. I know this is a really controversial subject, but for people who think everything on the internet should just be totally free all I can say is, good luck. When you try to have a life and raise a family living off something you create…
There’s a great quote from Steve Jobs:
“From the earliest days of Apple I realized that we thrived when we created intellectual property. If people copied or stole our software we’d be out of business. If it weren’t protected there’d be no incentive for us to make new software or product designs. If protection of intellectual property begins to disappear creative companies will disappear or never get started. But there’s a simpler reason: It’s wrong to steal. It hurts other people, and it hurts your own character”.
I agree with him. I think that what people go to the movies for has changed since 9/11. I still think the country is in some form of PTSD about that event, and that we haven’t really healed in any sort of complete way, and that people are, as a result, looking more toward escapist entertainment. And look, I get it. There’s a very good argument to be made that only somebody who has it really good would want to make a movie that makes you feel really bad. People are working longer hours for less money these days, and maybe when they get in a movie, they want a break. I get it.
But let’s sex this up with some more numbers. In 2003, 455 films were released. 275 of those were independent, 180 were studio films. Last year 677 films were released. So you’re not imagining things, there are a lot of movies that open every weekend. 549 of those were independent, 128 were studio films. So, a 100% increase in independent films, and a 28% drop in studio films, and yet, ten years ago: Studio market share 69%, last year 76%. You’ve got fewer studio movies now taking up a bigger piece of the pie and you’ve got twice as many independent films scrambling for a smaller piece of the pie. That’s hard. That’s really hard.
You can find the transcript of his entire address here or listen to it or watch below:
[soundcloud url=”http://api.soundcloud.com/tracks/90033156″ width=”100%” height=”166″ iframe=”true” /]
State of Cinema: Steven Soderbergh from San Francisco Film Society on Vimeo.
by Ellen Seidler | Copyright, Film, Piracy, Tech
Over the past months, as I’ve journeyed across the web investigating pirate websites I found that many shared something in common (besides stealing content to profit off the work of others). Along with illegal downloads to popular movies, often times the sites deliver pop-up ads for MacKeeper software, a product of Silicon Valley based Zeobit.
Ads and piracy go hand in hand. It’s how pirate sites make money. Ads appearing on such sites run the gamut from Progressive Car Insurance to online sex chat, but more often that not it seems, I’m greeted by an advertisement for MacKeeper.
MacKeeper ad pops up on an illegal download.
Had these ads been an isolated incident, it wouldn’t bother me. Unfortunately as far as MacKeeper goes, it’s not limited to an ad or two here and there. In fact, if you were to asking me the most common advertisement that pops up to fill my computer screen via pirate downloads, it’s MacKeeper. Below are just a few examples that I’ve recently come across after clicking an illegal download link that I was investigating.
MacKeeper’s advertising methods have generated controversy in the past, not because of the fact the company seems happy to partner with pirates, but because of their ubiquity. According to a story published on Cult of Mac, the software itself isn’t particularly popular among Mac aficionados for this reason. The company’s PR director Jeremiah Fowler explained their approach to advertising to the Cult of Mac’s Leander Kahney this way:
Legitimate Mac Users who are annoyed or tired of our advertising campaigns or partner’s campaigns. Do we advertise? Yes! Do we advertise aggressively, I would not like to use that term but we do have a massive advertising presence online! [emphasis added] We have had 15,000,000 downloads of MacKeeper and have a less than 3% refund rate. The reality is that many people are truly happy with the product even if they hate the advertising (and unfortunately some do). The bad part is some people take their hatred for advertising to a level where they dedicate hours of their lives to making MacKeeper a “Forum Punching Bag”… In a perfect world there would be no advertisements on radio, TV, billboards or the internet, but this is not a reality. As long as there are ads, there will be people who hate them.
We believe that we have a great product and we want people to know about it and the only way to do this is to explore every medium of advertisement. [emphasis added] It is like investing everything in to a great restaurant and hiring the best chefs, buying the best food only to hide the location somewhere in the woods and then tell no one about it. Then wondering why no one comes to your restaurant? We are discussing phasing out our ads and trying to please the vocal minority, but we realize that pleasing everyone is impossible.
It’s not the ads or the product that I mind, it’s where their ads appear. Given the fact the MacKeeper ads pop-up more often than not on pirate downloads, I think it’s safe to generalize and say they must send a great deal of money the pirates way. As Mr. Fowler made clear in his conversation with Cult of Mac, the company views its advertising methods as good business. Never mind, it seems, who they are doing business with.
I attempted to reac Zeobit for comment, but as is usually the case with Silicon Valley tech companies, transparency is not part of their business plan. (Updated 4-24-13 in blue) Following the publication of this blog post, I did actually receive an email from Jeremiah Fowler (quoted above). His response included the following:
As you know we are a software company and illegal software pirating is one of the biggest threats to our livelihood and that of our entire industry. Software is vulnerable in the very same ways that an artist or musician would be impacted. It is a fact that when no one buys a movie, album or software application, there will be no money to invest in future projects or research and development. You can quote me when I say In straight terms “we do not support illegal downloading and we think that it sucks”.
These pirate websites are actually partnered with major Ad Networks and Media Buying Agencies and not MacKeeper. We purchase only impressions or click units and the Ad / Media companies dictate on what websites where they will appear and how often they appear on millions of basically nameless websites across their network. The only reason you personally see so many of our ads is because we buy ads that target only your operating system and nothing more. These guys can only filter ads between Mac or PC and very little else. We advertise on a relatively large scale with the biggest networks to make sure that people actually do buy our software and we do not partner with these sites where people will not buy anything anyway because the whole reason they are on that particular site is to steal. It is a total waste of money for our ads to even be displayed on these channels, but that is also why you see ads for insurance and other random things because these companies just have millions of sites in their network and throw ads based on purchased space or clicks. The flaw is in the terms and conditions of what type of sites these ad networks will allow for the delivery or their customer’s ads. As far as being against illegal downloading we are actually on the same team.
While I understand full well that MacKeeper is a software company and that software is as vulnerable to piracy as are other forms of digital content, I find little satisfaction in his explanation as to why the ads so often pop-up on pirate websites. I in fact do use a Mac and ironically actually OWN the MacKeeper software. I’m well aware that today’s browsers can identify one’s operating system (as well as one’s web history), otherwise it’s likely I would see ads for their PC product.
However, the fact that browsers are smart and “Ad Networks and Media Buying Agencies” partner with these sites, does not absolve Zeobit (or any advertiser) from responsibility in when it comes to the issue of brand-supported piracy. It’s easy to blame the messenger, but why aren’t these companies demanding more oversight on behalf of ad servers? Certainly Zeobit is not the first company to employ the “we can’t control where our ads appear” excuse. I’m asking why not?
As I told Mr. Fowler in my response to him, when companies advertise in print publications, they are acutely aware of where their ads are placed and what editorial content appears next to them. When it comes to the internet, however, these same companies seem content to participate in an online free-for-all where the goal of saturating web visitors with ads for their products–no matter what site the ads are linked to. I must point out one obvious exception to this–somehow these ad servers do avoid porn sites, so their must be some vetting/filtering going on at some level. Why can’t this happen for sites that are engaged in promoting (illegal) downloading? If companies that pay for advertising are against online piracy, why not withhold their business from ad servers that do “partner” with such sites?
Ironically, the company touts its belief in “social responsibility” on its website’s front page. It seems that their view of “social responsibility” does not extend to creator’s rights. It’s shameful that the company doesn’t take action to prevent their ads from subsidizing what is, essentially, illegal activity.
For the record, Zeobit receives an A- on the Better Business Bureau’s review website. From my perspective, the company should receive an F when it comes advertising accountability. Per usual, profits trump ethics.
by Ellen Seidler | Copyright, Film, Piracy, Tech
The fact that online piracy has flourished over these past few years is nothing new. Neither is its co-dependence on an ever-efficient distribution network, largely developed and maintained by an assortment of tech enterprises based in Silicon Valley . Up to this point, Facebook’s role in enabling this plague of piracy has, for the most part, generally been minimized, if not ignored entirely. But given the ever-expanding influential reach of world’s #1 social network, perhaps it’s time to take a closer look at the site’s role as a purveyor of pirated content.
In the past I’ve written about the popularity of Google’s blogger platform among pirate entrepreneurs because it offers both an easy (and free) way to distribute stolen movies and make money via online ads. How does Facebook fit into this equation? Well, just as legit businesses use Facebook to gain customers, pirate profiteers around the world also utilize its popularity to attract users to their illegal websites. Check out any pirate site on blogspot.com, or anywhere else on the web for that matter, and you’re likely to find a link to the site’s Facebook pages (as well as other social networking sites like Twitter).
The Facebook page (shown below) for the FilmesYouTube site (shown above) boasts more than 166k “likes.” The Facebook page sends visitors to the pirate website, and also features numerous posts which link directly to easy-to-use, active streams and download links for a variety of popular movies.
Facebook links directly to full stream of pirated movie starring Tom Cruise.
Depending on one’s preference, one can either watch the movie online or download a copy. Either way it’s free–the only inconvenience being a pop-up ad or two.
Facebook links to full stream (and download links) to GI Joe.
In this example, it appears that this Facebook pirate has also been busy creating multiple websites that also link to mirrored Facebook pages. If one notes the “likes” listed on this page, you’ll find links to several other “free” movie sites setup in a similar fashion. This redundancy may be in part due to concerns that one or more of these pirate sites could go offline. However, given the fact this particular page boasts 166K “likes” it appears this fan page has been active for some time.
The common thread between the Facebook pages and the pirate websites is that both generate income from advertisements. The more visitors, the more money for Facebook and, in turn, the more traffic to the pirate sites which,in turn, generates more ad profits for the online pirate entrepreneur. Who’s left out of this equation?-the content creator of course.
When I viewed the above page it featured “sponsored ads” promoting Capitol One and Discover credit cards, along with political PACS and Ancestry.com. Do these entities realize that the sponsored advertising they’re paying Facebook for appear adjacent to pirate links to bootleg, illegal movie downloads? I doubt it.
As for advertising on the actual pirate web site (which translates into motive and money for the pirate) I found ads for Amazon.com and others served up by the Ad Council, a U.S. based non-profit whose mission is to “deliver critical messages to the American public.”
Perhaps the time has come for the Ad Council to add anti-piracy messages to their slate of “critical” messages for the American public?
Like Google, Facebook offers rights holders the opportunity to send DMCA takedown requests to have these illegal links removed. Unfortunately, Facebook mirrors Google in another way–when it comes to DMCA notices, usually only individual posts are removed, not the infringing page.
It’s been my experience that when I’ve reported infringing content to Facebook via a DMCA only the post with the pirate link is removed. The Facebook page, with dozens more pirated offerings, remains online. I can understand if only a single link is reported, but what about a site that’s repeatedly reported for copyright infringement? From what I’ve seen such sites generally remain online. If it’s obvious that the page is dedicated to promoting pirated content, why leave it online?
I’ve asked Google this same question, if a site is reported for promoting infringing (illegal) downloads why not remove it? Surely Facebook has the staff to investigate and determine whether a site exists purely to traffic in stolen content. If not, why not? Why is it OK for a company with the reach and financial resources of Facebook to look the other way? Their censors often seem all to eager to remove photos of breastfeeding mothers or LGBT movie advertising. Why not go after pages that are trafficking in illegal content?
I’ve tried to contact Facebook to ask for clarity on the criteria, if any, they have for removing pages and will update this post if I should receive a response. Given my past experiences with inquiries to Facebook, I’m not optimistic that I’ll hear back anytime soon. The “community standards” that define what type of “expression is acceptable” is conveniently vague when it comes to copyright and intellectual property:
Before sharing content on Facebook, please be sure you have the right to do so. We ask that you respect copyrights, trademarks, and other legal rights.
Facebook is careful to point out, however that the decision as to whether to remove content reported for violating their terms is entirely up to them.
The link between piracy’s advertising profits and those of so-called legit entities like Google (including YouTube, AdSense, Blogger & search) and the corporations they service ads for has been well-documented so that fact that Facebook is a part of this web of illicit profit is no real surprise. However, it’s worth asking once again, why isn’t something being done?
The notorious Pirate site Movies2k even boasts it’s own Facebook page.
How is that mainstream tech companies like Google and Facebook–and those who pay to advertise with their networks–continue to look the other way and ignore their role in providing both a motive, and a means, for this illegal activity to occur? The obvious answer is that profit trumps morality when it’s a matter of making millions. In this era, and until the law adapts, there’s little to no risk in skirting U.S. law in order to maintain their cash cows. Clearly the fact that this is tainted revenue doesn’t matter to these companies or their stockholders. With the amount of lobbying muscle they’re displaying in Washington these days, things appear unlikely to change any time soon.
Updated (4-16-13) to add the response I received from Facebook. Just as I suspected, nothing but boilerplate verbiage. Here it is:
Facebook may “stand ready” to respond, but in my experience, they don’t do much else.
by Ellen Seidler | Copyright, Film, Law, Piracy, Tech
According to a study released yesterday by researchers at Carnegie Mellon University, last year’s shutdown of the notorious pirate file-sharing hub Megaupload, had a positive impact on movie revenues. Citing the increase in sales following the popular cyberlocker’s demise, the researchers (Brett Danaher and Michael Smith) note:
…immediately following the shutdown, there was a positive and statistically significant relationship between a country’s sales growth and it’s pre-shutdown Megaupload penetration, such that for each additional 1% (lost) penetration of Megaupload the post-shutdown sales increase was between 2.5% and 3.8% higher (depending on which of our models you believe to be most accurate).
The fact that these trends didn’t exist before the shutdown but existed after the shutdown suggests a causal effect of the shutdown on digital sales, and we find a similar (but slightly weaker) relationship for digital rentals. In aggregate, our estimates suggest that, across the 12 countries in our study, revenues from digital sales and rentals for the two studios were 6-10% higher than they would have been if Megaupload hadn’t been shutdown.
Given the size of Megaupload’s illicit traffic (ranked #63 worldwide in 2011), these results are not particularly surprising. However, in terms of its overall impact on piracy, it’s important to note that the seizure of Megaupload had a ripple effect across the entire cyberlocker landscape. Shortly after Dotcom’s arrest, other major players in the piracy’s profit pyramid, also bit the dust. These included Filesonic, and Wupload. Others, such as Fileserve, shifted their business models away from a rewards system that paid cash for downloads. Clearly the site operators, who grew wealthy through a cyberlocker business model that had thrived for so long in a lawless environment, were suddenly running scared. Their black market had been discovered and many jumped ship rather than face potential jail time.
Now, more than a year later, a cornucopia of new cyberlocker sites has emerged to take their place. So far, these sites–many based in Eastern Europe far from the reaches of U.S. authorities–have failed to achieve the size and scope of the defunct giants.
Another significant factor working in favor of content creators is that Megaupload’s takedown created a brief vacuum that gave legitimate streaming portals a respite, providing them with a much-needed opportunity to elbow their way into the global marketplace and establish a loyal costumer base.
After all, it’s always much easier to set up a successful shop if you don’t have another store down the block giving away the same products for free.
by Ellen Seidler | Copyright, Film, Piracy, Tech
As the Annenberg Innovation Lab releases its February “Ad Transparency Report” on major brands link to advertising on pirates sites it’s also worth taking a look (again) at yet another recent example as to how Google–along with Netflix in this case–continues to incentivize, and monetize, online piracy.
Google-hosted site features ads for Netflix and active (free) download links for a popular movie.
This is a Google-hosted website (via their Blogger platform) that features (as of yesterday) active download links to the Hollywood hit “The Dark Knight Rises.” Note the (Google-served) advertising to the right. At the top of the list is an ad for Netflix. Now, I’ve asked this before and I’ll ask it again….Why go to Netflix and pay to watch the movie when you can click a download link and watch it for free?
Remember, Google is earning money, Netflix is gaining customers (earning money) and the Blogger pirate is earning money. The film’s distributor, Warner Brothers, earns nothing. Sure, the studio is part of “big” Hollywood, but please remember–big Hollywood employs hundreds of thousands of “little” people who toil behind the scenes. These grips, gaffers, caterers, drivers, makeup artists, script supervisors, carpenters, etc. depend on these Hollywood-generated jobs to put food on the table. This is not a victimless crime.
There is no reason on earth that Google (and Netflix) can’t do a better job vetting websites where their advertising appears. Profits for both are soaring. Rather than hire additional staff to deal with these issues, it appears both companies are happy with apparently profitable, yet shameful, status quo. 
- Profits for Google and Netflix are robust.
Despite lip-service to the contrary, neither company seems willing to take voluntary action for fear that it could impact their bottom line. So what’s left? As Dennis Kneale of Fox Business wrote in his piece today:
The report deploys a new weapon in the assault on online piracy: public shame. The USC Annenberg lab’s director, Jonathan Taplin, hopes that publicly identifying the offending ad-nets will persuade them to block pirate sites entirely.
Ad supported piracy is nothing new, but finally the public is starting to pay attention. Shame on Google and shame on Netflix and all the other established companies that continue to look the other way.
Megalomaniac Kim Dotcom is at it again. With a launch of a new campaign announced via an all caps headline screaming that “THE TRUTH WILL COME OUT!” on his website, he’s ratcheted up his assault on the big, bad U.S. government, the so-called “copyright lobby” bogeyman and everyone else who views him as the criminal thug that he is.
Megaupload’s business was predicated on offering enticements to users (uploaders) to join this type of piracy-4-profit pyramid. This approach was essential to maximizing the number of visitors to the site. Another essential part of this equation was making sure the UCG (user generated content) that would attract eyeballs. Sorry, but your ” family photos, artistic designs, business archives” wouldn’t do the trick. No what better UGC carrots than popular movies, books or music? Dotcom didn’t seem too worried about copyright thanks to the “safe harbor” provision of the DMCA that allow UGC sites to easily look the other way (plead ignorance) when it came to vetting infringing content.
