by Ellen Seidler | Copyright, Film, Law, Piracy, Tech
PayPal has finally ceased doing business with Kim Dotcom’s Mega site and he’s pouting about it. The man who has made millions be monetizing content stolen from others continues to assert that Mega is a legit cloud-based service and that its operations are legal. A statement posted on the site announcing that, “PayPal has ceased processing MEGA customer payments effective immediately…” also makes the claim that the cyberlocker site is being unfairly targeted:
MEGA has demonstrated that it is as compliant with its legal obligations as USA cloud storage services operated by Google, Microsoft, Apple, Dropbox, Box, Spideroak etc, but PayPal has advised that MEGA’s “unique encryption model” presents an insurmountable difficulty. The encryption models claimed by various USA and other entities apparently do not represent any problem to PayPal or the parties behind PayPal.
Nice try but even if you dress a wolf in sheep’s clothing he’s still just a wolf. It’s important to note that Mega rose from the ashes of Megaupload, the granddaddy of cyberlockers where the piracy for profit model was perfected and later copied by dozens of other online entrepreneurial thieves. 
After the feds shut the site down in January of 2012, Dotcom got busy working a better way to circumvent copyright law and a year later launched a more nefarious piracy for profit site named Mega. The site uses encryption technology to protect its users (and site operators) from prying eyes. Dotcom claims Mega is full of folks’ baby pictures and the like, but in reality its business model continues to provide pirates with a profitable, and protected, haven for their transactions.
Until PayPal’s recent departure, officials at Mega even pointed to the relationship with the payment processor as a sign that Mega was “legit.” In response to charges in a study published last September by NetNames and the Digital Citizens Alliance, Mega CEO Graham Gaylard told TorrentFreak:
“We consider the report grossly untrue and highly defamatory of Mega…Mega has been accepted by PayPal because we were able to show that we are a legitimate cloud storage site. Mega has a productive and respected relationship with PayPal, demonstrating the validity of Mega’s business…”
For the past few years payment processors like Visa, Mastercard and PayPal have come under increasing scrutiny for their role in facilitating (and profiting from) pirate-linked transactions. Following publication of the NetNames study, Senator Patrick Leahy, Chairman of the Senate Judiciary Committee at the time, sent letters to the head of both Mastercard and Visa urging that the companies sever ties with piracy operations.
I’ve been reporting on this issue since 2010, and while some progress has been made as processors have severed ties with many of the worst offenders, much work remains. According to the study, PayPal was singled out for its business dealings with Dotcom:
PayPal was offered as payment option on only one site (Mega). This represents a major change in the cyberlocker universe compared to just three years ago. The fact that the vast majority of cyberlocker sites do not attempt to take PayPal through hidden or disguised means demonstrates that the payment method is not even considered as an option for accepting subscription payments.
Dropvideo still depends on PayPal
Apparently PayPal officials finally decided that doing business with Mega was no longer an option. Unfortunately, aside from Mega, PayPal’s involvement with pirate sites persists and extends beyond offering subscribers a way to pay for services.
PayPal remains an important cog in the the flow of money that’s central to the business model Dotcom perfected on Megaupload. It was essentially a pyramid scheme as I explained in this blog post from 2011. Basically, cyberlocker affiliates provide the fuel that drive the piracy machine. Individuals sign who up to be cyberlocker affiliates earn money for uploading (stolen) content based on the number of times a file was downloaded. They can also earn commissions for attracting other to enroll in various cyberlocker account offerings. Affiliate payments continue to be the lifeblood that sustain the cyberlocker eco-system and PayPal continues a popular means for affiliates to receive payment for their role in bringing traffic to sites. According to the NetNames report:
…PayPal is still used by some sites for affiliate or reward scheme payments. Of the thirteen sites that offered an affiliate scheme, eight (61.5 percent) offered PayPal as a way for affiliates to receive their payments (other online payment systems such as WebMoney and Payza were also used but PayPal was the most popular).
This morning I took a quick look at Dropvideo.com, a cyberlocker I’d recently sent DMCA notices to. Sure enough, they use PayPal for their affiliate payments. So while PayPal has distanced itself from Mega, the company still has a long way to go to clean up its dirty piracy profits.
by Ellen Seidler | Copyright, Film, Law, Piracy, Tech
Netflix doesn’t pay for all the content it allows subscribers to stream
VPNs make it easy for Netflix subscribers to watch movies and TV shows that aren’t licensed in their country
source: http://www.nasdaq.com/
Netflix profits grow as its brand spreads around the world–but who’s paying the price?
In January the popular online streaming service claimed its subscriber base had grown to nearly 60 million worldwide. Although nearly 3/4 of those are in the U.S., Netflix has already extended its reach to 50 countries and by 2017 has plans to expand to 200. Just this past week Netflix opened up shop in Cuba.
As Netflix grows, so too should the amount of money filmmakers earn right? Well, no…not really. Enter the VPN, or virtual private network, a simple technology that allows internet users to access geo-blocked websites by providing access via a local IP address. Also known as “tunneling,” a VPN makes it easy to jump virtual fences.
How does it work? Let’s say I want to watch a movie that isn’t available via my Netflix account in the U.S. but it is available on Netflix’s Danish site. With the help of a free browser plugin that takes just seconds to install, I can click a button and surf the web from an IP address in Denmark. When I go to Netflix.com/dk/ and login using my U.S. account, and voilá–I can stream the program (see example above).
Why is this a problem? After all, I have a legit, Netflix account which I pay $8.99 per month for, so why shouldn’t I be able to watch content via Netflix portals around the world? It’s a problem because while I’m happy as consumer to watch a film via Netflix sites worldwide, those who actually paid to produce it are financially left out in the cold. For Netflix it can be viewed as a win, win. Netflix pays for U.S. rights, but forgoes purchasing rights elsewhere knowing full well its subscribers worldwide can still watch. Netflix profits grow at the creators’ expense.
This scenario also hurts smaller distributors of independent film who negotiate with Netflix to license titles for streaming rights in their territories. Why should Netflix worry about spending more money to (legally) acquire rights for from distributors operating in small territories when subscribers can happily watch their films on U.S. Netflix via a VPN?
As Netflix expands offerings to attract subscribers worldwide who pays the price?
How much of an impact might this type of VPN pirate viewing be? GlobalWebIndex, a UK firm, estimates that some 54 million people access Netflix via VPNs each month, 21.6 million of them from China alone. How do subscribers in China get Netflix accounts in the first place? It’s easy using PayPal or other payment method like a virtual credit card. Apparently Netflix doesn’t dig too deep–since it can pocket more cash and grow its brand to reach markets outside its realm. Why should the company crack down on a winning, albeit slimy, way to attract customers?
There was some speculation that Netflix was changing course when it reportedly tweaked its Android app to make accessing content via illegitimate VPNs more difficult, but according to the BBC company officials denied reports that it has changed its approach:
“The claims that we have changed our policy on VPN are false,” said Netflix’s chief product officer Neil Hunt.
…”People who are using a VPN to access our service from outside of the area will find that it still works exactly as it has always done.”
According to Variety, Netflix supposedly employs other methods to thwart subscribers who don’t belong:
Netflix has always tried to block such unauthorized access, via a multistep verification process that encompasses credit card info, mailing addresses and Internet addresses.
“You may view a movie or TV show through the Netflix service primarily within the country in which you have established your account and only in geographic locations where we offer our service and have licensed such movie or TV show,” the company’s terms of use say. “Netflix will use technologies to verify your geographic location.”
Despite company claims to the contrary, this morning, as I sat at computer to write this post I found it only took me seconds to login to Netflix sites in the UK, Denmark, Cuba and Brazil. Instead of blocking me, a pop-up window politely explained since I was “traveling with Netflix” I might notice a different offering of movies, etc. Of course, one could ask shouldn’t I be able to travel with Netflix? Of course that should be OK, but the problem is, using a VPN I can travel with them while seated at my home computer.
In fact, in order to confirm that I had full, unfettered access to geo-blocked content I searched for a TV series unavailable in the U.S. I chose the Danish series Den som dræber (Those Who Kill) I own on dvd. By selecting Denmark via the VPN (see graphic at the top of post) I was able to log into Netflix.dk and easily stream the program. Question is, are the producers of the program being paid by Netflix for viewers, like me, who watch outside of Denmark? I believe the answer is no.
Generally distributors receive a flat fee for programs/films Netflix adds to its catalog. Rights are given for specific territories and, while sometimes rights are worldwide, often they’re restricted. Why not just give Netflix worldwide rights? Well, easier said than done.
Contrary to the rhetoric promoted by piracy apologists, financing TV and films productions is not a simple task. In many cases foreign rights pre-sold as part of financing deals cobbled together to cover the costs of production. Without such agreements many of the films and TV shows we enjoy could never be made. So for now, when it comes time to distribute them, these financing packages are invariably part of the equation. It often means a single entity doesn’t hold all the (territorial) distribution cards, hence the complexity.
However, with VPNs, Netflix doesn’t have to make negotiating territorial rights a priority. By not restricting the use of VPNs and indirectly allow users to watch programming they aren’t paying for, Netflix can continue to grow its subscriber base and pocket more profit. Why pay the producers of Den som dræber for U.S. rights when U.S. viewers, using their VPN, can use their accounts to watch it anyway?
Emails uncovered in the Sony hack show that Netflix do-si-do around the geo-blocking issue is of growing concern to producers and distributors. As noted in a recent piece by Sean Gallagher in Ars Technica:
The latest data leaked from Sony Pictures Entertainment by hackers reveals that Sony executives had accused Netflix of breaching its licensing contract for Sony Pictures Television (SPT) shows by allowing customers in foreign markets to use virtual private networks to stream them, calling it piracy that is “semi-sanctioned by Netflix.”
Sony pressed Netflix for increased “geofiltering” control over its customers to prevent the practice, including restricting payment methods for the service to ways that would allow screening for customers living outside countries where Netflix had contractual rights.
Gallagher quotes a hacked email between Sony Pictures Television’s president, international distribution,Keith LeGoy and the division’s president, Steve Mosko that outlines concerns over Netflix’s tacit acceptance of VPN abuse:
Netflix are [sic] heavily resistant to enforcing stricter financial geofiltering controls, as they claim this would present a too high bar to entry from legitimate subscribers. For example, they want people to be able to use various methods of payment (e.g. PayPal) where it is harder to determine where the subscriber is based. They recognize that this may cause illegal subscribers but they (of course) would rather err that way than create barriers to legitimate subscribers to sign up.
…Netflix of course get to collect sub revenues and inflate their sub count which in turn boosts their stock on Wall St., so they have every motivation to continue, even if it is illegal…
So what to do? Clearly, there’s a problem. In certain situations VPNs can be a good thing, particularly for those who live in places like China where access to web services is routinely restricted by government firewalls. However, when tens of millions of Netflix subscribers are using VPNs to access unlicensed content it’s clear that the company isn’t doing enough to make sure that content creators receive fair compensation.
Netflix isn’t cracking down on VPN use because it’s good for (their) business
When Australian journalists attending the recent Consumer Electronics Show in Las Vegas tried to ask Netflix officials about a VPN crackdown reported by Torrent Freak, they were rebuffed–even though, according to an article on news.com.au, “An estimated 200,000 Australians pay for Netflix subscriptions, and access the service by masking their computer’s location so they appear to reside in America.” The story also notes:
The movie giant is due to launch its service in Australia this March, but many of its popular shows including Orange is the New Black and Better Call Saul, are unlikely to screen on the local service due to licensing agreements, potentially providing little incentive for existing subscribers to switch.
It’s yet another tangible example of how a program’s producers may be left holding the bag. Netflix gets 200,000 paid subscribers from Australia, but it doesn’t have to pay the filmmakers for rights to their films in that territory.
Some make the argument that overall, Netflix is a good online influence and has helped diminish the lure of piracy, because, as this piece in Billboard explains, it offers consumers, “Content, value and ease of use.” While that’s mostly true, it’s really a tangential issue and certainly doesn’t exempt Netflix’s business practices from scrutiny. Nor does the fact that Netflix has opened the door to new creative possibilities–both in terms of production and distribution. Creators are justified in demanding that the content Netflix subscribers stream is actually paid for–otherwise it becomes just another variant of (corporate) piracy.
What next? Well, as moves forward its with global expansion plans, either Netflix needs to spend some of its profit to find a way to begin effective geo-blocking, or–if that’s not possible–find another formula to calculate a fair price for content that factors in total (worldwide) views, VPN or no VPN. It might be a bitter pill for stockholders to swallow, but for now, it’s the only legitimate way forward.
by Ellen Seidler | Copyright, Film, Law, Piracy
Photo via http://commons.wikimedia.org/
Piracy apologists love to pull out the Robin Hood card in order to justify their theft. After all who cares about all those rich people in Hollywood right? Wrong….a fact which the MPAA’s Chris Dodd pointed out in piece published in Variety this week:
Two million people get up every morning in all 50 states to go to work in good-paying jobs. Few will ever walk a red carpet, but their jobs are in jeopardy because of piracy.
When we talk about stolen property like pirated films or shows, I think the assumption is these are wealthy people, so what difference does it make if I steal from them? There’s not an understanding that 96% are hard-working, middle-income families paying mortgages and trying to educate their kids.
Like any other industry, the American film industry depends on its worker bees to make its products. In turn, those workers depend on a healthy film industry for their paychecks.
In fact, one of the reasons Hollywood became such a successful cog in the U.S. economy was because the studio system that emerged in the early part of the 20th century was really a factory system modeled after Henry Ford’s automobile assembly line. In Hollywood’s studio system, each worker played a specific role in the film production (or manufacturing) process.
At their peak, Hollywood studios were producing hundreds of movies each year. Last year, the six major studios produced only 120 movies. Contrast that with the 204 produced in 2006. Fewer films means fewer jobs on the production line for Hollywood’s 96%.
Looking back, it’s also worth noting that a thriving movie industry allowed some of the greatest American movies of all time to be made. As noted in Wikipedia:
Many film historians have remarked upon the many great works of cinema that emerged from this period of highly regimented film-making. One reason this was possible is that, with so many films being made, not every one had to be a big hit. A studio could gamble on a medium-budget feature with a good script and relatively unknown actors: Citizen Kane, directed by Orson Welles and often regarded as the greatest film of all time, fits that description.
The more income studio’s generate, the more chances they can take to finance less mainstream movies. When losses due to online piracy undermine the industry, it also undermines the diversity of choices that movie lovers appreciate. In lieu of funding less mainstream fare, studios stick with formulaic flicks that generate big bucks opening weekend (before piracy can dilute audiences). The sad thing is that we won’t know what we’re missing because it’s not made. In the future films like Citizen Kane may never see the light of day.
Of course, new ways of producing and distributing films online are taking hold, but even the new guard is suffering from the scourge of online piracy. As Netflix CEO Reed Hastings wrote in a recent letter to shareholders, “Piracy continues to be one of our biggest competitors.” He pointed to Popcorn Time, a platform that makes viewing pirated films as easy as watching one on Netflix as evidence of the damage being done.
Online piracy not only diminishes livelihoods, but consumer choices and unless we can limit the losses, the picture will only grow dimmer. In the end, we may well be left with only cute cat videos on YouTube to entertain us. Piracy hurts everyone.
by Ellen Seidler | Copyright, Google, Law, Piracy
For those of you who still depend on the Chilling Effects search to find your pirated content, don’t worry, the DMCA database is still alive and well, ready to offer you a streamlined way to find illegal content online. Earlier this month Torrent Freak headlines claimed that the archive had “censored itself” and warned that the move was “a telling example of how pressure from rightsholders causes a chilling effect on free speech.” Hyperbole much? Here’s the truth.
Chilling Effects has, for the time being, de-indexed “individual notice pages” from search engines results. In a blog post, the move was explained this way:
Given increased public attention on the project, the wide variety of notices and types of claims that we catalog, and the sheer number of notices included in Chilling Effects’ database, we decided to take the interim step of de-indexing the site’s individual notice pages from search engines’ search results. Now that we have taken this step, we are hard at work building new tools and workflows that will allow us to better achieve the balance we are constantly seeking to strike between our dual missions of transparency and educating the public (on the one hand) and the strongly-felt concerns of those who send takedown notices (on the other).
Sounds nice, but the real impact of this move on creators’ rights is minor. Neither Torrent Freak nor Chilling Effects mentioned that the “balance” the folks at Chilling Effects are trying to strike includes continuing to operate a search engine that provides a direct line to illegal content.
Chilling Effects is a Where to Watch for pirated movies
In fact, it’s so easy to use that Chilling Effects’ search engine should be called a “Where to Watch” for pirate movies. I’ve written about this fact before, but given the recent hyperbolic hullabaloo I’d thought I’d take another look to see if anything has really changed? The answer is NO.
Search results removed from Google are replaced by direct link to DMCA notice containing original pirate link.
Not only does the Chilling Effects database search engine make it easy to find pirated movies, its benefactor Google, still includes referral links to when its search results are removed due to DMCA notices. For both sites it’s business as usual.
As I wrote in an earlier post, here’s how Google makes sure users are not inconvenienced by DMCA removals:
- Search for a free (pirated) movie
- Review results and find one removed due to a DMCA notice, the link replaced by this statement:
- Click the link “read the DMCA complaint.”
- Arrive at a list that includes the missing pirate link along with a bunch of others infringing links (courtesy of Chilling Effects)
- Click one of the listed pirate links and go directly to (free) movie
Chilling Effects own search provides users with an uncluttered path to piracy.
Finding pirated music and movies via Google search requires persistence since one has to comb through various types of results to find actual live links. In contrast, hop over to Chilling Effects and voilà , most every result is a stripped down list of URLs reported for piracy. It’s a simple and direct path to pirate URLs that, in fact, are vetted by rightholders (via their DMCA notices).
After the Torrent Freak headlines hit the web I went to Chilling Effects and did a search for the recently released “Boyhood.” Using Chilling Effects’ search results, it only took me a couple of minutes to find a streaming version of the film online. Google and Chilling Effects remain partners in piracy, having perfected a shell game that makes a mockery of creators’ rights and the DMCA.
For now, Chilling Effects remains what it has long been–a site where pirate links are eternal.
by Ellen Seidler | Ad Sponsored Piracy, Copyright, Law, Piracy
Notorious piracy emporium, Pirate Bay is down–for now–after a raid on its servers by Swedish authorities, but what does that mean for the future of piracy?
If you read Caitlin Dewey’s piece in today’s Washington Post “You can take down Pirate Bay, but you can’t kill the Internet it created,” the ship has already sailed and creators may as well give up. Per Dewey:
…even if TPB doesn’t return, the politics and the conventions it advanced — that content should be free, and if you torrent, they can be! — will be very difficult to eradicate.
You may be able to shut down Pirate Bay, but good luck raiding the Internet that Pirate Bay created.
If she’s talking torrents, then yes, we’ll never eradicate them. The laissez-faire attitude of lawmakers over the past decade has allowed online theft to flourish un-checked and spawned a well-entrenched piracy eco-system. However, despite the sentiment Ms. Dewey suggests–all is not lost. Whether The Pirate Bay continues to exist is beside the point.
Content consumers are willing to pay; they just aren’t willing to wait
Consumers of piracy seem driven by two, somewhat separate, catalysts. On the one hand, people download content out of a desire to see, hear, or read it. This is the part of piracy that most people can empathize with, particularly when it comes to a TV show that might not be available where they live. Individuals who want to “stick it to the man” populate the other segment. They download stuff–not because they are necessarily fans–but because they feel entitled to free stuff. “F#*! Hollywood…information should be free” is their battle cry. They have neither appreciation nor concern for those they are stealing from–people who make their living by creating the films, music, and books we enjoy.
Now, obviously there’s not much we can do about the latter group of piracy aficionados, but with regard to the first group–the more important audience–we are doing something. Over the past few years there’s been an effort to develop new outlets to satisfy consumer entertainment demands. Most people who want access are willing to pay a reasonable amount for it. Netflix only costs $8.99 a month, or in modern terms, the cost is approximately = to 4 and a half cups of Starbucks (grande) coffee. In other words, it’s not a budget buster.
Not a Netflix subscriber, well check out the handy new search portal Wheretowatch.com to find out where you can find favorite TV Show or movie. When I searched for the BBC series “Broadchurch” I found I could watch it via Netflix, XBox, Amazon or Target. If I want to watch the acclaimed indie film “Pariah” I can rent or buy via the same outlets in addition to Flixster and iTunes.
The key here is to make it easy to find, reasonably priced and available worldwide. There’s still work to be done in achieving the latter, as territorial broadcast rights and release windows can still be a roadblock, but that is improving and I can see a future, that’s not far off, where day and date releases become the norm and release windows are synchronized across the globe. As I noted in an earlier post on this blog:
…we are seeing an evolution as to how release dates are managed. The notion of “territories” is quickly becoming obsolete–audiences are no longer regional, but global.
As for those who get off on grabbing free stuff (kinda like looters), that’s a mentality that will be difficult to change. The good news is that most people have better things to do than download torrents or click through dozens of ads to watch a crappy stream– so, if creators and distributors can continue to make progress on streamlining access, progress against piracy will continue to be made.
Of course, it also helps when the legal system can gently divert people into taking the legit path. Takedowns of sites like Pirate Bay help this effort. Operators of pirate torrent sites like The Pirate Bay or cyberlockers like Megaupload are not in the piracy business out of altruism–they’re in it to make money. Running a piracy website is profitable and those who do so deserve to be taken out of action. Other cogs in piracy’s profit machine–advertisers and payment processors–should also remain under scrutiny.
It would also help if our lawmakers worked on crafting legislation to help creators protect their livelihoods. Revisiting the terms for DMCA “safe harbor” might be a good place to begin.
Piracy remains a “well-entrenched” threat to a wide-range of content creators, but unlike Ms. Dewey, I am not ready to throw my hands up and say, “I give up.” Neither are most creators I know. We are not blind to the reality of today’s online culture that espouses a “free for me” attitude, but our livelihoods depend speaking out, and fighting back, and we will continue to do so.
by Ellen Seidler | Ad Sponsored Piracy, Copyright, Film, Google, Law, Piracy
YouTube and Russian “aggregator,” piracy partners in crime?
When a bad guy steals your car stereo, to turn it into easy money, he often turn it over to a “fence” in exchange for quick cash. Wikipedia explains this criminal workflow this way:
A fence is an individual who knowingly buys stolen property for later resale, sometimes in a legitimate market. The fence thus acts as a middleman between thieves and the eventual buyers of stolen goods who may not be aware that the goods are stolen. As a verb, the word describes the behaviour of the thief in the transaction: The burglar fenced the stolen radio. This sense of the term came from thieves’ slang, first attested c. 1700, from the notion of such transactions taking place under defence of secrecy.[1]
The fence is able to make a profit with stolen merchandise because he is able to pay thieves a very low price for stolen goods…
It’s no surprise that in this digital age, criminals have turned their attention to dealing in stolen digital goods. Instead of car stereos thieves steal movies, music, etc. and, using the web advertising, convert it into income. It’s low risk way of making money and there’s a myriad of ways it can be done.
Deposed cyberlocker king Kim Dotcom did it with his Megaupload piracy pyramid scheme, but there are plenty of others who have perfected variations of this illicit business model along the way. Many, seemingly legit companies like Google have perfected the infrastructure and revenue formula so as to make it routine, right under our noses.
Most consider Google’s YouTube to be a raging success. After all, where else can you find the best cat videos or latest PR packages from ISIS terrorists in one place? It’s also a great place to “fence” stolen movies and music.
YouTube’s ads are ubiquitous and generate billions in profits, estimated to be over 1.9 billion for Google in 2013 alone. YouTube users can also share in (some of) the revenue if they set up an AdSense account and choose to monetize their uploads. According to a report in Barron’s, YouTube users make out pretty well:
…YouTube will bring in $5.9 billion in revenue this year, rising to $8.9 billion by 2016, with 53% of that paid out to users who provide the clips.
In cases where users upload work they actually own rights to, it’s great. Problem is, a lot of those people collectively pocketing 3.1 billion–in many cases–don’t own what they upload. These leeches set up channels, upload pirated content, and make money. Of course, YouTube as enabler-in-chief still pockets the majority of the profits, rightful ownership be damned.
When placing a myriad of advertisements adjacent or on videos, YouTube makes ZERO effort to vet the content for ownership. It doesn’t require any proof that uploaders own rights; it just assumes they will honor copyright law. Yeah, just like a fence assumes that every car stereo he receives wasn’t stolen from someone else.
When posed with the question as to whether it can “determine copyright ownership” YouTube justifies this hands off approach with this carefully crafted response:
YouTube isn’t able to mediate rights ownership disputes. When we receive a complete takedown notice, we remove the content as the law requires. When we receive a valid counter notification we forward it to the person who requested the removal. After this, it’s up to the parties involved to resolve the issue in court.
Mediating a dispute once something is uploaded is NOT equivalent to vetting content ownership prior to upload, yet YouTube apologists continue to claim that to do so would “stifle innovation” and “limit free expression” online. I’m not entirely sure how cracking down on thievery stifles innovation, but it makes for a good soundbite doesn’t it? How would vetting certain content before users are allowed to profit from it limit anything, aside from criminal behavior? Oh right, it could lower profits. That’s what this is really about.
YouTube claims be the broadcaster for the 21st century, yet can you imagine NBC airing a movie and earning income from advertising in the process without having cleared the rights prior to doing so? When my documentary aired on various PBS stations I had to document ownership and submit detailed paperwork that verified I had permission to use various works of music used throughout the piece. When we produced our feature film we had to purchase errors and omissions insurance and license all the music used in order to protect the rights of other creators.
These practices are the cost of doing business in the creative world yet YouTube doesn’t have to do the same? Why are companies like YouTube, that generate income by screening created by others, considered exempt from standard broadcast practices? Why is their bad business behavior exempt? Why are such practices on internet considered sacrosanct?
For Google, protecting innovation means protecting profits
It’s no wonder the powers that be at Google/YouTube fight tooth and nail against any effort to rein in this copyright-evading cash cow. Since enforcing copyright would put a serious dent in YouTube’s profits, you can bet that Google will move heaven and earth to prevent that from happening. Their apologists (and lobbyists) have mastered the spin that warn enforcing copyright (in a meaningful way) is a threat to innovation. In Google parlance innovation is merely a code for growing profits.
Other companies profit too. The graphic below illustrates how the Russian aggregator, Quiz Group, either creates its own pirate puppet users, or works with them to game the YouTube monetization system by monetizing pirated movies. By joining Quiz Group YouTube users don’t need an AdSense account. In exchange for giving up 20% of any income earned, they can easily earn money when by uploading illegal content.
Ford, Microsoft, CVS, LinkedIn, Dodge, North Face, Geico and more put money in pirate pockets
On its website, Quiz Group lays claim to 5 BILLION monthly views and more than 15,000 channels. I can only imagine how many of those billions of views come from stolen goods. Advertisements, 30 seconds and longer, from LinkedIn, Ford, Dodge Ram trucks, North Face stream before the full-movie appears. Cha’-ching…money, money, money…
This pirated movie was uploaded by a user who’s part of Quiz Group, a Russian aggregator that makes monetizing YouTube videos easy.
Surely YouTube has received thousands of DMCA notices linked to videos monetized by Quiz Group, but since it only penalizes individual users (and not the masterminds) Quiz Group can continue to rake in the dough alongside Google.
Quiz Group sports its own YouTube page and claims to be “YouTube certified” and on its own website recruits with this claim, offering to cut through any copyright red tape:
…we are aware of all the problems you may face around YouTube and we know the best solutions as well. We understand how it hurts, having third party claims, facing conflicts and resolving strikes. We have been through all these stories many times and learned our lessons based on the most complicated scenarios. We have converted our experience into effective tools, you may move forward smoothly and with a high confidence, grow really fast within YouTube environment.
Clearly YouTube’s standards aren’t particularly high if they allow a shadowy this Russian piracy-for-profit model to thrive. Perhaps YouTube’s standards for “certification” mandate moneymaking over respecting copyrights owned by others ?
I attempted to “join” Quiz Group to determine how they vet affiliates. In order to be considered, I had to give them access to a Google account. It took only seconds, but not surprisingly I was rejected for not having enough subscribers (10) nor views (1,000) within the last month.
Of course I’d like to speak with a Google representatives to ask why the company develops, and sustains business relationships with self-described “YouTube” channel aggregators like Quiz Group but folks at company headquarters won’t pick up phones or respond to emails from people like me. Stonewalling is another corporate skill they’ve mastered with virtual moats encircling their shiny corporate offices in Mountain View.
After all, why shouldn’t Google look the other way when this criminal enterprise is mutually beneficial?
For the record, I easily found other YouTube users linked to Quiz Group engaged in the same scheme (see example below). Given it took me only a couple searches to find them, I don’t imagine it’s stretching the truth to assume that a good number, if not the majority of Quiz Groups affiliates are in the business of making money off pirated uploads.
I wonder how North Face, Dodge, Amazon, Microsoft, Airborne, Geico, LinkedIn, CVS and Ford feel about their advertising appearing on these stolen movies? Are they OK with YouTube, Quiz Group and this pirate making money off stolen movies (and them)?
Why don’t advertisers pressure Google to do better? YouTube could start by applying the 3 strikes policy to those, like aggregators like Quiz Group, that routinely monetize infringing content, not just penalize the (often fake) users that upload it. There are also numerous other technological safeguards that could be implemented to prevent this abuse so why don’t advertisers demand better?
We constantly hear from representatives their industry, how concerned they are about ad sponsored piracy abuse. But, as I’ve noted repeatedly on this blog, so far the advertiser’s words are a million times louder than their actions. Industry reps could exert pressure to ensure ad profits go to rights holders, but it would require some effort–obviously more than they seem willing to give.
There are also tons of YouTube pirates who bypass third party aggregators and pocket cash directly via their own AdSense accounts. This isn’t the first time I’ve written about this scenario on YouTube. Time passes, but nothing changes.
Here’s a pirated copy of Paramount’s “Sliver” starring Sharon Stone. The film has been viewed over a million times earning profits for YouTube and the user who uploaded it without permission.
YouTube finds a Safe Harbor to protect its piracy profits
Aside from the advertisers, the only other way to exert pressure to change can come from Washington. Is this dirty profit scenario was what lawmakers had in mind when they crafted the “Safe Harbor” provisions of the DMCA. It’s one thing to offer service providers (like YouTube) protection from legal liability from “consequences of their users actions”, but does that also mean it’s OK to (knowingly) profit from illegal activity?
The DMCA states services providers have to “terminate” accounts of repeat infringers, but in the meantime let the tainted profits flow? It’s OK to be a criminal as long as you don’t get caught? This seems to be Google/ YouTube’s modus operandi.
I wonder if Congressman Darrell Issa, in his new role as chair of the subcommittee on the Internet, Courts, and Intellectual Property,will hold hearings on these types of nefarious business practices? He’s repeatedly voiced concern over patent trolls, what about pirate trolls? It’s been reported that discussion regarding copyright will remain the purview of the full committee, so perhaps such discussions will be handled there.
Until something changes, YouTube’s eco-system will remain a cesspool rather than a legitimate and laudable business model. For all the great stuff streaming on its pages, there’s a lot of s*&^ too…and because it’s YouTube practices business are intentionally nubilous, those who do follow the rules–like filmmakers and musicians–continue to be victimized. YouTube is the Wild West, a swamp of online fraud, where profits soar, often for those who are least deserving–morality be damned…
PayPal has finally ceased doing business with Kim Dotcom’s Mega site and he’s pouting about it. The man who has made millions be monetizing content stolen from others continues to assert that Mega is a legit cloud-based service and that its operations are legal. A statement posted on the site announcing that, “PayPal has ceased processing MEGA customer payments effective immediately…” also makes the claim that the cyberlocker site is being unfairly targeted:
After the feds shut the site down in January of 2012, Dotcom got busy working a better way to circumvent copyright law and a year later launched a more nefarious piracy for profit site named Mega. The site uses encryption technology to protect its users (and site operators) from prying eyes. Dotcom claims Mega is full of folks’ baby pictures and the like, but in reality its business model continues to provide pirates with a profitable, and protected, haven for their transactions.
