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.
by Ellen Seidler | Copyright, Law, Politics
These past few years as the tech industry as boomed so has a movement to condemn copyright as being obsolete and/or unnecessary. Some. in fact, view copyright protections a hinderance to their beloved (and biased) concept of “innovation.” Such anti-copyright activists are myopic when it comes defining “innovation” and repeatedly fail to recognize that those who depend on copyright to protect their livelihoods are, in fact, are in fact true “innovators.”
Today we have a new study published by the International Intellectual Property Alliance, that documents just how significant “copyright” is to our national economy. The report, “Copyright Industries in the U.S. Economy,” The report examines the impact the copyright “industry” has had on the U.S. economy from 2009 to 2012, a period in which the U.S. economy was still recovering from 2008 free-fall. Unlike many other sectors of the economy, jobs in the copyright sector as a percentage of U.S. employment grew:
The core copyright industries employed 5,178,100 workers in 2009, representing 3.96% of the total U.S. workforce. By 2012, the number of core copyright employees in the United States had increased by 221,00 workers to 5,399, 100. These workers represented 4.04% of the total U.S. workforce in 2012.
The report was released as Congress begins a series of hearings on copyright law and what, if any, revisions should be considered. Clearly, as lawmakers debate the issue, these statistics would seem to support the concept that copyright is, and should remain, a fundamental “incentive” for those who create, and disseminate creative content that consumers enjoy: films, music, books, software, games, etc. As Sandra Aistars, Executive Director of the Copyright Alliance notes in a statement issued today in response to the report:
…copyright owners of all backgrounds work actively and creatively to ensure their work is easily accessible and can be enjoyed as widely as possible. Copyright is not an impediment to innovation and distribution — it is rather the erosion of these rights that would harm consumers the most, by diminishing the abilities of creators to create and creative industries to invest in funding and disseminating their work.
While these figures are positive news in terms of U.S. “copyright industries” ongoing contribution to our overall economy, we must remain vigilant to make sure that the independent creators among us–those whose work may be difficult to measure statistically–are included in future discussions around copyright reform. These independents, who often reflect creative voices on the margins are in many respects the most vulnerable, and theirs is work that should be treasured and protected.
by Ellen Seidler | Copyright, Law, Piracy
Online Pirates are the latest criminals to turn to Bitcoin to fill their coffers
Last week the Creativity Tech blog reported on the RIAA’s warning about the growing popularity of the peer-to-peer “crypto-currency” Bitcoin among online pirates.
The bitcoin, you may recall, is the purely digital currency which is traded and derived ultimately from the value of complex data work completed by computers online. They are not backed by a government or bank. The RIAA asserts that the use of bitcoin as payment for pirated content has made it difficult if not impossible for government to track and to seize such assets from infringing sites as they are able to do with traditional national currencies.
The virtual currency, has drawn increasing scrutiny from government officials for its potential use by criminals. Mary Shannon Little wrote about this worry in a recent Huffington Post piece:
Even before FinCEN’s regulations, the FBI last year issued an internal report warning that the anonymous bitcoin payment network was a growing haven for money laundering and other cyber-criminal activity including terrorism financing, human trafficking, kiddie porn, illegal internet gambling, and theft of the bitcoins themselves from their anonymous owners’ virtual wallets. In the report, the FBI notes that because bitcoin combines cryptography and a peer-to-peer architecture to avoid a central authority, law enforcement agencies will have more difficulty identifying suspicious users and obtaining transaction records.
While the long-term viability of Bitcoin may be uncertain, for now it does appear that online pirates view the “currency” as a new way to exchange money beyond the reach of regulation. As the RIAA’s letter pointed out, the Pirate Bay began accepting Bitcoin donations in April and from the looks of it, the notorious pirate website is not alone.
Just this week I received some emails (below) from an online pirate movie forum x264-bb that I’ve written about in the past. The first email announced that the website’s PayPal account was terminated and the second informed users about the x264-bb’s new “donation” procedure using Bitcoins.
Apparently the pirate forum’s users are not responding positively since site administrators sent this email update today:
Dear XXXXX,
We do understand its additional hassle to purchase Bitcoin for donations, however it is the safest method and best one currently for safe keeping of donated funds.
For PayPal or Credit Card users, if you have any problem with the guide on the Official Bitcoin Donation page, don’t fret! :DThis is an extremely straight forward guide available for PayPal & Credit Card users here: http://bitcoinwithcard.com/buy-bitcoinspaypal-credit-card/
Please check it out, any amount of donation works now for donation!!! We need your help right urgently right now!!! Without funding, we will not be able to push through this crisis! Come on now, please help us if you can! [emphasis added]
Discussion @ Official Bitcoin Donation Page: http://www.x264-bb.com/x264-bb-news-center/227827-read-bitcoin-donation-available-now.html
Thank you from the bottom of our heart!
Warm Regards,
x264-United aka djXpire
Forum Administrator
www.x264-BB.com
Awww, poor guys. It seems they’re struggling a bit now that PayPal has pulled the cash rug out from under them, but even users of the pirate forum seem cautious when it comes to paying for Bitcoins.
Ironic, but you can apparently pay for the Bitcoins using PayPal or a credit card?
Meanwhile one of the administrators tries to convince users that supporting the pirate movie forum via Bitcoin donations is really a great way to go:
Bitcoins is something that Paypal nor any financial institute can control. 100% perfectly safe for the website to keep funds and keep the website going for a long time to go!!!
Here’s another exchange between a forum administrator “x264-United” and a moderator “”Reisin” who suggests Google Checkout as better alternative.
Reisen: Fileparadox went with google checkout, maybe we should consider it as an alternative.
My biggest worry with bitcoins is the fact they are pretty unstable (silk road for example, although it bounced back).
Paypal’s biggest appeal was its simplicity for end user, with bitcoins is a bit more complicated and this might scare away some people who dont wanna spend their time getting into subject.
In the other hand its independence as DJ mentioned and being under google’s radar, since google already dipping their fingers in everything. I wouldn’t be surprised if one day they would go sheriff of the internet full time, its something they already trying anyway.
x264-United: Reisen, warez indexing sites are losing Google Checkout as well…. 
Instead of discouraging donors, please be more positive and encourage members to pick up a new “knowledge” for donation.
This is by far the safest method now!!!
Bitcoin’s lack of traceability aside, the fact is that pirate forums are in the business of making money and when they can’t get paid via payment processors like PayPal they’re forced find alternatives. Bitcoins are already popular with online criminal enterprises like the recently busted Silk Road so it’s not surprising to see the crypto-currency gain favor among web pirate operations as well.
Perhaps online pirates’ cozy embrace of the same cyber money favored by drug dealers, pornographers and other web criminals will erode the idea that online pirate entrepreneurs are not criminals. In this case it’s safe to say that a pirate should be known by the company he keeps…
by Ellen Seidler | Copyright, Google, Law, Piracy, Tech
Claiming to be a “leader” in the fight against piracy is Google’s first mistake
This past week Google issued a report, “How Google Fights Piracy,” in which the tech giant attempts to explain what a great job it’s doing leading battle against online piracy. After reading it I think a more accurate title would be “Why Google Shouldn’t Have to Fight Piracy Because it Offers so Much Other Good Stuff.”
While the report does outline various positive steps Google’s taken (under duress) to mitigate its role in incentivizing and enabling piracy, most of the document reads more like an evangelical tome as to how their innovations have benefited content creators, blunting any collateral damage that may have occurred. In other words, let’s overlook the bad in favor of the good…
On a personal note, one line I found particularly galling was: “Google is a leader in rooting out and ejecting rogue sites from our advertising and payment services, and is raising standards across the industry.” The claim that Google has been a “leader” in any way in the fight against online piracy is chutzpah at its best. A more accurate characterization would be that–after years of obfuscation and inaction–Google’s finally taking (some) action. Never mind that such efforts are long overdue and may never have happened had their nefarious business model (profiting off content theft) not been exposed to the light of day.
In an effort to burnish their tarnished image, the authors resort to repeating well-worn and disingenuous Google-spawned memes (which I’ve repeatedly deconstructed on this blog). These include:
- YouTube makes money for artists so there’s no need to provide a transparent accounting.
- DMCA abuse is a considerable problem.
- Search is “not a major driver of traffic to pirate sites.”
- Google is committed to “rooting out and ejecting rogue sites” from AdSense.
- Google quickly and efficiently terminates Blogger websites that feature pirated content.
I would counter that Google should be doing much more, including:
- Offer complete transparency with its YouTube content monetization accounting. It shouldn’t be opaque. Provide content owners with an accounting breakdown for each and every piece of claimed content. Reveal precisely how much Google makes monetizing the work of others? Employ more safeguards to prevent pirates from using YouTube as a stepping-stone to infringing content and do more to prevent bogus claims that allow criminal users to earn money by uploading content they do not own.
- Stop claiming that Google search isn’t an important link to pirated content and review and remove sites that are in the business of trafficking in pirated content. Allow others into the mysterious “Trusted Copyright Removal Program for Web Search (TCRP).” After al, it’s those with the fewest resources (like independent filmmakers and musicians) that have the least access to takedown resources and could benefit the most from access to a such a (supposedly) streamlined process.
- Offer more transparency as to where AdSense revenues come from and what sites have had accounts disabled.
- Quickly remove Blogger websites have been reported (and verified) for trafficking in pirated content.
YouTube
Google’s report begins with a warm and fuzzy anecdote about the previously unknown Korean K-pop “artist” Psy whose viral video “Gangnam Style” became an online sensation and generated more than 8 million dollars in ad “deals” in addition to having been purchased “digitally millions of times.” According to a footnote, the figures quoted come from an article in New York Magazine, “Gangnam-Buster Profits,” It’s worth noting that along with Psy’s profits, Google’s bank account did pretty well too:
Number of YouTube views of the “Gangnam Style” video (as of 1 p.m., November 30): 853,942,076
Standard rate YouTube pays to video owners for every 1,000 views: $2
Estimated total YouTube revenue received by Team Psy: $1,707,884.15
YouTube’s estimated cut: $1,366,307.32
(Based on rates provided by Jason Calacanis, CEO of Mahalo, a top YouTube partner.)
I’m not sure what the report authors meant when they wrote “8 million dollars in ad deals” as there’s no documentation to back that claim up…perhaps they were confused and mixed up deals with YouTube “views?” Even though the actual figures quoted are at best guesses, there’s no denying that the video was a YouTube sensation and made mega-bucks for both the artist and Google–but so what? What does that really have to do with explaining Google’s anti-piracy efforts? The answer is nothing.
The tale of this outlier merely seems designed to deflect attention (and disgust) away from Google’s long-standing role in promoting, and profiting from, content theft. No one’s saying that YouTube doesn’t offer opportunity to content creators–but with opportunity comes responsibility–and that’s where Google still has far to go.
I’ve written previously about the positive aspects of YouTube Content ID and monetization, but there remains that nagging question Google fails to address–transparency. As demonstrated by our dependence on “guesstimates” to calculate the Gangnam Style video’s possible profits, why does Google still refuse to offer content owners specific information about how much money is being made from their work?
Sure, content owners can see how much they earn, but how much does Google take off the top? How much is earned per view, etc? Such basic information has never been made clear. Nor are breakdowns offered when there are multiple claimants on a video (i.e. movie mash-up with music from another artist). Why does Google refuse to offer a “transparent” accounting breakdown of just how much everyone makes off advertising on claimed content? What’s there to hide?
Uploads on YouTube that feature links to infringing downloads
Also, try as they might to focus on the positives, YouTube is also still a conduit for illegal activity. Not only does the site provide online pirates with a convenient means to advertise their illegal download links (on other sites) but it also allows thieves (content leeches) to earn income by monetizing bogus claims.
Why doesn’t Google do more on this front? Simple answer, monetized uploads make them money. Who cares what the uploaded file actually is and who owns it (never mind the advertisers being ripped off paying for adjacent ads). Google/YouTube pays these parasitic pirates and pockets more profit for themselves.
Google Search
When it comes to reporting on the role Google’s search engine plays in promoting piracy, the report report borrows heavily from the recent (Google-funded) study that alleges “search engines are not a major tool in the infringer’s toolbox.” Both that study and this report concluded that better SEO optimization on the part of content creators is all that’s required to fix the problem. Given Google’s report merely repeats talking points from the CCIA repeating part of my response seems appropriate:
Sorry, but I read the entire paper and found no evidence to support this. Sure, lots of downloaders bypass search because they are experienced downloaders and know how to go to Pirate Bay or Filestube to find what they’re looking for, but where did they get their start? Perhaps it’s better to think of search engines like Google as a “gateway” to finding pirated content online.
Google search leads to illegal downloads, counterfeit products, illegal pharmacies and more. Clearly the search giant can de-list sites engaged in unlawful behavior (like child pornography) but rather than do so in this case, its proxy (the CIAA) gins up headlines to muddy the waters, deflect and obfuscate the real issues at play.
If Google were a brick and mortar mall featuring stores selling bootleg DVDs authorities would step in a force them to shut down the illegal enterprises, but when it comes to the online world the “tech” industry’s constant refrain is that the need to “innovate” trumps the need to do what’s right. Yet this debate isn’t really about protecting innovation, that’s simply tech-speak for protecting the industry’s bottom line (at the expense of those other innovators, content creators).
Since Google deems search to “not be a major driver of traffic to pirate sites” one wonders why in the same breath, the company touts how efficiently it responds to the 4 million weekly requests it receives in a report on its efforts to fight piracy?
…today we receive removal requests for more URLs every week than we did in the twelve years from 1998 to 2010 combined. At the same time, Google is processing the notices we receive for Search faster than ever before—currently, on average, in less than six hours.
Google has a strong track record of developing solutions that scale efficiently. The trend line is striking—from more than three million pages for all of 2011 to more than 4 million pages per week today. As the numbers continue to swell, it becomes both more difficult and more important to detect and pick out the abusive [emphasis added] and erroneous removal notices.
This so-called DMCA “abuse” is another tired red herring. Google routinely employs to deflect attention from the 4 million pages per week of mostly legitimate ones. Given the huge volume of takedown requests Google receives it’s no surprise there are errors, but the collective “damage” done by mistaken DMCA notices does not begin to compare to the damage piracy has on content creators. However, Google would like us to believe otherwise. As I wrote in an earlier post:
Piracy apologists like to focus on erroneous takedowns and highlight stories whereby a 9 year-old in Finland had her computer confiscated, or a grandmother in Colorado had her ISP account wrongfully suspended. Certainly mistakes happen, and when they do it’s unfortunate, but they are few and far between when compared with the cumulative harm being done to those whose livelihoods are damaged by rampant online theft. For every search result removed in error there are thousands, if not hundreds of thousands, removed for valid reasons. Sensationalistic anecdotes make for splashy headlines and provide convenient red herrings for those who defend the piracy status quo–big bad Hollywood versus the grandmothers of the world–but meanwhile the genuine stories documenting piracy’s ruin are routinely minimized or ignored.
Also lost in this debate is the fact that if one takes the time to read the DMCA, it’s easy to see that the law actually favors the reported party, not the other way around. If a site has been removed in error, the owner can use the Google website to file a counter-claim with a click of a mouse. That immediately puts the onus on the party that filed the original DMCA request to go to court and prove the legitimacy of their claim. If that next step isn’t taken, the takedown becomes moot. Filing a court case is a costly endeavor so it’s unlikely that those whose file false DMCA claims, whether in error or purposely, would bother to spend money to enforce a bogus DMCA. Conversely, those content creators who don’t have deep pockets have little recourse when it comes to enforcing a valid DMCA takedown if the other party, representing an infringing (pirate) website, chooses to file a counter-claim.
Chilling the rights of creators who attempt to protect their work from theft
Demonstrating a (selective) dedication to transparency and warning hat DMCA abuse can be a “pretext for censorship,” Google touts the fact that copies of all DMCA notices received are posted on ChillingEffects.org, an online “clearinghouse” operated by a various legal clinics that depend heavily on Google donations for financial support.
According to their website, “Chilling Effects aims to support lawful online activity against the chill of unwarranted legal threats,” but it appears they’re not too interested in the threat that illegal content theft has on the livelihoods of musicians, filmmakers, authors, etc. From the beginning, Google’s posting of DMCA notices on Chilling Effects seems designed to intimidate those whose rights are being trampled upon. In this scenario the only thing being “chilled” is the right of content creators to protect their work from theft in order to make a living.
Google also claims to lower the rankings of sites that are repeatedly reported for content theft (another questionable claim), but justifies the fact it refuses to remove such sites, like the notorious Pirate Bay, entirely.
While we use the number of valid copyright removal notices as a signal for ranking purposes, we do not remove pages from results unless we receive a specific removal request for the page. As shown on the Transparency Report, we generally receive removal notices for a very small portion of the pages on a site. Even for the websites that have received the highest numbers of notices, the number of noticed pages is typically only a tiny fraction of the total number of pages on the site. It would be inappropriate to remove entire sites under these circumstances.
I should add here that when I checked today and did a search for the movie ” a ‘Perfect Ending’ download” the second result (after a paid Netflix link) was none other than a torrent on the Pirate Bay. So much for re-ranking pirate sites eh?
Why is it inappropriate to remove a site that routinely engages in illegal activity? If a brick and mortar store’s merchandise routinely includes stolen goods it would be put out of business. Why does Google hold sites like Pirate Bay in such high regard? Does every single infringing torrent on Pirate Bay have to reported for Google to consider blocking it? Is there a tipping point, ever?
AdSense
I could only shake my head when I read that Google claims to be the industry leader when it comes to “following the money.” When I first began blogging about the link between online piracy and profit when my film was released in 2010, Google wouldn’t even admit there was a problem. Finally, after having a spotlight shined on their dubious sources of profit, Google has been forced to take action–but a leader they ain’t.
Despite the claim that “Google does not want to be in business with rogue sites specializing in piracy” they’ve yet to provide any documentation to support it. One nugget in the report noted, “…we find that AdSense ads appear on far fewer than 1% of the pages that copyright owners identify in copyright removal notices for Search.” Does this mean that Google is screening the reported pages for AdSense accounts before removing the link from its search engine? If so, in the name of “transparency” it would be great to see these results documented. Speaking of “transparency,” how about letting us “follow the money” to Google’s own bank account. Just how much money has Google made off advertising on rogue sites over the years?
In my experience with AdSense links were often removed while the site (and its AdSense ads) on other illegal downloads remained active, but looking around the web it does seem that fewer AdSense sponsored ads appear on pirate websites. I’m thankful some progress appears to have been made, but for Google to infer that it acted willingly to clean up its dirty laundry and has become leader in the battle against ad-sponsored piracy is just absurd.
Blogger
Last but not least we come to Google’s Blogger hosted websites, a go-to (free) platform favored by web pirates around the world. According to the report, Google’s efforts to keep the Blogger platform pirate-free should earn the company another feather in its cap.
Blogger is Google’s free blog publishing platform, which enables users to create and update blogs. We remain vigilant against use of the Blogger platform by pirates looking to set up a free website. Consistent with other Google products that host user-uploaded content, we will remove infringing blog posts when properly notified by a copyright owner, and will terminate the entire blog where multiple complaints establish it as a repeat infringer.
Blogger has also created an automated bulk submission tool for copyright owners who have a track record of reliable submissions and a regular need to submit large volumes of takedown notices. This tool allows qualified copyright owners to obtain rapid removals of infringing posts appearing on Blogger.
Sounds good, but as I’ve written many times previously on this blog, the truth with regard to Blogger-hosted websites is not so rosy. Also, to be honest, Google’s “automated” bulk submission tool is a time-consuming pain. Why not give content creators a Copyright Management Account that allows for bulk reporting of Blogger sites and search links? Why should continually have to fill out my name, company, email, etc. each and every time I have more blogger sites and pirate search links to report? Actually sending an email to Google would be much faster but that’s not allowed. Ironic that the now defunct Megaupload made it easier to send DMCA notices than Google does…
Google’s online removal process is time consuming. Sending an email would be much more efficient.
More significant is the fact that, in my experience, the word “rapid” should not be part of Google’s lexicon when it comes to targeting piracy on Blogger sites. Despite repeated reports of piracy and obvious and repeated copyright infringement, many Blogger pirate sites remain online. I will be posting a follow-up on this subject soon.
Google-hosted Blogger (blogspot.com) websites are a pirate favorite
There’s no doubt that Google has revolutionized the online world in a variety of positive ways but when it comes to its role fertilizing online piracy, the company has been spinning and deflecting its way through the a minefield for the better part of a decade. Thanks to outside pressure the situation has finally begun to improve, but there’s still much to be done before Google can rightfully claim to be a leader in the fight against online piracy.
by Ellen Seidler | Copyright, Law, Music, Piracy, Tech
MPAA victory against Hotfile is a victory shared by all content creators hurt by online piracy
The best news in the fight against online piracy since Megaupload’s demise came yesterday as the MPAA annouced a big victory in their copyright infringement lawsuit against Hotfile, a cloud-based cyberlocker website known to harbor pirated movies, music, books and more. Though specific details of the court decision won’t be released for another two weeks, the judge issued a summary judgement in favor of the plaintiffs. From the LA Times:
This decision sends a clear signal that businesses like Hotfile that are built on a foundation of stolen works will be held accountable for the damage they do both to the hardworking people in the creative industries and to a secure, legitimate Internet,” said former Sen. Christopher J. Dodd, Chairman and CEO of the Motion Picture Assn. of America.
“We applaud the court for recognizing that Hotfile was not simply a storage locker, but an entire business model built on mass distribution of stolen content,” Dodd added. “Today’s decision is a victory for all of the men and women who work hard to create our favorite movies and TV shows, and it’s a victory for audiences who deserve to feel confident that the content they’re watching online is high quality, legitimate and secure.
Headlines called the decision a huge victory for the MPAA, which of course it is, but it’s also important to appreciate that it’s really a victory for the rest of us who create content for a living. Cyberlocker sites do not discriminate, offering pirated copies of indie films alongside the latest Hollywood blockbusters. It’s a business model that depends on stolen content (and the website traffic it attracts) to make money and pirate operators are happy to exploit the public’s thirst for free content, no matter the source. Hopefully this court decision will cause other pirates who operate similar sites and willfully facilitate copyright infringement to give pause.
Given these developments I thought I’d repost “Cyberlockers: Explaining Piracy’s Profit Pyramid ” a piece I wrote in 2011 explaining the cyberlocker (pirate) business model whereby operators earn millions by monetizing content theft at the expense of content creators around the globe. Some of the names have changed, but they piracy game remains the same.
First of all, make no mistake, the vast majority of today’s piracy is driven by the thing that has motivated mankind since time began—the desire to make money. If you take the time to spend a few minutes online exploring websites engaged in piracy (most people who speak out on the issue don’t seem to bother) you’ll quickly recognize that money is at the center of everything.
Mediafire download link (for flm-Unhappy Birthday) featuring Google ads.
If the ads aren’t hitting you squarely in the face, or the offers of high-speed, high quality downloads don’t spark suspicion, then perhaps it’s time to clean your glasses. How ‘bout I take you on a tour?
Let’s begin with the sites that serve as the lynchpin for today’s online pirates. No, I’m not going to talk about Pirate Bay or other notorious P2P (peer to peer) sites. No need for that. Consumers are all about convenience, and it’s not particularly convenient to download torrents and reconfigure the numerous file parts in order to view a movie. Today it’s all about the one-stop shopping experience, and for that there’s no better storefront than the cyberlockers where, with the click of a mouse, you can download (or watch) your favorite film. You’ll likely find other items on your wish list (e-books, music, software, and more) available for easy download as well.
You’ve probably heard the term “cloud based storage” floating around a lot lately. Well, thanks to companies like Apple, and the recent launch of their cloud based offering called “iCloud,” the notion of storing files online via a virtual hard drive is gaining ground. Cyberlockers have been providing this “service” for nearly half a decade now, and while there is legitimate activity taking place via some cloud-based storage sites like Drop Box and Yousendit, there are many others whose business model is predicated on content theft. The now disabled Megaupload.com is a good example of the latter variety. (Read the indictment for a step-by-step tour through the inner-workings of their criminal enterprise.)
How does an illicit Megaupload-like business model work? Well, if you want to understand how cyber lockers work 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.
At any rate, if you journey to the cyberlocker of your choice–Megaupload, Filesonic, Fileserve, Filefactory, Uploading, Uploadstation, Mediafire, Megashares, Sockpuppet, Putlocker, etc. you will see enticements offered encouraging visitors to join this type of profit pyramid.
Cyber lockers offer CASH for uploads.
Why do they do this? Well the cyberlocker business model depends on traffic. In order to drive traffic to their site they need content that will attract visitors. What better carrot than popular movies, books or music? Never mind copyright, there’s the “safe harbor” provision of the DMCA that allows the cyberlocker operators to essentially look the other way (plead ignorance) when it comes to the content that affiliates upload. In fact, if uploaders did abide by a site’s published Terms of Service, the cyberlockers would quickly be out of business.
In other words, cyberlockers depend on an army of affiliates to do the dirty work for them. It’s a scenario that enables the cyberlockers to shield themselves from legal liability, while their servers are simultaneously receiving thousands of (stolen) files every day–fresh content sure to attract new (and returning) customers.
So, in order to set this eco-system into motion, the cyberlockers lure their minions. Uploaders can earn rewards, which usually start at around $35 per 1,000 downloads. Simply put, the more downloads you generate for your file, the more money you earn.
Cyberlockers are booming thanks to profits from piracy.
That fact sets in motion the next level of piracy—the viral spread of the download links. The affiliate armies take their links and post them on download (Warez) forums far and wide. The more these links are “shared” across the web, the more money made.
Click to for PDF with 36 posts of viral links.
To further ensure their earnings, these cyberlocker affiliate pirates—I’ll refer to them as CAPs from now on–usually upload their stolen files to multiple cyberlocker sites. This is called ‘mirroring” and what it means is that if a link is disabled on one cyberlocker site you can easily find the identical file on another. Each CAP generally has affiliate accounts with multiple cyberlockers so that their illicit income won’t suffer if some links are disabled.
Since they are paid per download to maximize profits, CAPs often break a film file into several parts. An average size for an uploaded film is around 700 MB (HD films can easily be double that size) but if divided into smaller chunks, requiring multiple links, and thus multiple downloads, the CAP can earn more download points. There’s a trade-off to this approach, however, as it can dissuade downloaders who prefer the convenience factor of downloading a “single” file.
Film download broken into several links in order to maximize profits.
Some sites like Megavideo (the streaming partner site to Megaupload) offer visitors the ability to watch an entire film streaming online with no download wait time. Watch the film, and if you like it, you can add it to your “collection” and download a copy for later viewing.
So, now that it’s pretty easy to understand how so much illegal content gets uploaded to the cyberlocker sites, let’s look for a moment how site operators turn that traffic into actual income.
At the top of the list is online advertising. Click a cyberlocker download link and you will arrive at a page like this.
Cyber locker site streaming the film “Unhappy Birthday” with Netflix ads serviced by Google.
There’s a link or stream for a film and there are ads. Various companies serve these ads, but one can’t ignore the fact that Google and other U.S. based ad servers like AdBrite are ubiquitous on the cyberlockers. For the record, the ads seen on the image above and below are served by Google, though now that they’ve changed their icon and obscured their connection to them, it’s more difficult to tell. In any case, no matter who serves the ad, the cyberlocker makes money and the ad service provider makes money. The creator gets squat.
Another cyber locker stream with more ads (provided by Google).
In addition to ad income, cyberlockers derive profit by offering “subscriptions.” In this instance users pay a fee, averaging around $9.00 per month, that enables high-speed downloads on the website. This means instead of waiting a half hour to download a full film, the entire process takes only 3 minutes. For those who are repeat customers, this may be money well spent. In this instance the cyberlocker site is making money and the payment processors (Visa, MasterCard, PayPal and the like) are making money. Again, the content creator earns ZERO.
Cyber lockers cash in on selling subscriptions for high speed downloads.
In order to boost its subscriptions cyber lockers again turn to affiliate rewards. Remember those forums where the CAPs go to spread their viral seed? Well, many, if not most of those forum operators also have relationships with the cyberlockers and are an integral part of the piracy profit pyramid. For every individual they “refer” who becomes a cyberlocker affiliate, they earn a referral fee. Thanks to unfettered access to free content and income, the eco-system of online piracy continues to thrive and grow.
HD-BB an online forum where viral cyberlocker links are spread.
HD-BB is just one example of such a forum. The forum operators boast of the high-quality “rips” shared by its members. If you drill down into forum posts you’ll quickly discover that moderators only allow users to post links to specific, “approved” cyberlockers that the forum has a relationship with. There are also links that direct users to the various affiliate options ensuring that the forum earns its fair share. The forum makes money, the cyberlocker makes money and the creator of the content makes ZERO.
This is what I know.
Now that this black market business model is entrenched as a way of doing business around the globe, what can be done to stop it? Well, I’m afraid that nothing can stop it–piracy will never disappear entirely–but something can be done to mitigate its effects. This can happen if we can encourage the majority of websites at the center of this illicit cyberlocker eco-system to become (more) legitimate.
Cutting off the money that feeds this pirate profit pyramid is one part of the equation, but there’s also another component that may be equally important. It’s a solution that it’s already working right in our own back yard.
I look to Youtube’s solution to piracy as an imperfect, but reasonable fix. Let’s meet the pirates halfway. Why not ask them to set up Content Management Systems (CMS) like the one Youtube has? A system like this would allow content owners to determine the fate of their work. A CMS system basically allows for the fingerprinting of content so that infringing content can be instantly identified upon upload to the cyber locker site.
Dashboard for Youtube’s “Content Management System.”
The content owner could then determine, as they do on Youtube, whether to remove the content, monetize the content, or block it in certain territories. In this scenario the cyberlocker can still earn money off uploaded content, but only at the discretion of the content owner. Users will also be less inclined to post infringing content in the first place. It’s a solution that allows the content owner to take back control from the pirates (thieves) and earn income off files that previously were simply stolen. In this equation, at least everyone gets a piece of the pie.
It’s at this point that the false “piracy is good for business” refrain parroted by piracy apologists begins to gain some traction and some truth. If piracy’s black market business model can be remolded into a practice that can financially compensate the content creator–and restore their control of the content–perhaps it could become better for business.
The problem is that cyberlockers are not going to adopt a CMS system just to be nice. Youtube, a U.S. company, was forced to act under threat of ongoing litigation and legislation. The only way today’s crop of cyberlockers can be forced to institute similar content ID systems is if their current business model becomes unsustainable. For that to happen, like Youtube, they too will need to face the threat of litigation and/or the long arm of the law. At this point, that puts the ball squarely back in the lap of Congress.
That is what I know…
The company’s co-found Kevin Systrom, quickly issued a “Thankyou, we’re listening” mea culpa:
