“Once the police have verified the evidence, they notify MasterCard and Visa who require the acquiring bank providing the retailer with payment services to produce evidence of appropriate licenses to sell music or cease providing those services to the retailer,” IFPI explained.

It’s suggested by IFPI that the main targets of the action are Russian ‘AllofMP3′-style clones, sites that often operate legally under domestic legislation much to the disappointment of the international music industry.

However, the engagement of a new and powerful ally this week has the potential to affect many ‘private’ members-only BitTorrent sites, wherever they may be.

While the March announcement from MasterCard and Visa would have been of little concern to the majority of torrent sites, the news that online payment processor PayPal is now getting on board will be viewed very differently and will sound a cautionary warning for the future.

Admittedly the relationships between PayPal and torrent sites don’t always run smoothly (accounts and funds are often frozen or completely lost), but nevertheless PayPal remains the long-standing donation service of choice for dozens, maybe hundreds, of torrent sites. Very often donations are their only source of revenue.

While in connection with this scheme IFPI specifically refer to the ‘sale’ of illicit music (something which the vast majority of torrent sites don’t directly engage in), previous anti-piracy cases have framed torrent site user donations as “subscriptions” or “paid memberships.” To the UK police, who have already been happy to arrest the admins of several torrent and other file-sharing sites, the difference may be academic.

“Today’s announcement shows that PayPal is very serious about fighting music piracy,” said Carl Scheible, PayPal UK’s managing director.

“We’ve always banned PayPal’s use for the sale of content that infringes copyright, and the new system will make life even harder for illegal operators. Our partnership with the music industry helps rights holders make money from their own content while stopping the pirates in their tracks.”

As highlighted in our earlier article, it is perfectly possible to run a few-hundred-thousand-peer private tracker for a fairly modest monthly outlay but with rising costs associated with topsite access (for obtaining new content quickly) and site-run seedboxes, outlay can begin to spiral out of control.

If the music industry does indeed pressure PayPal to take action against torrent site donations as well as sites directly selling unauthorized music, administrators will be forced to reconsider their positions. Some will undoubtedly call it a day.

Source: PayPal, IFPI and Police Collaborate To Strangle Pirate Music Sites

Liberty describes Hotfile Corp as a Panamanian company with no physical presence there and one that takes steps to “obfuscate the facts of its location, address, and principals.” The studio states that Hotfile’s owner is a Russian named Anton Titov, who may or may not be a resident of Bulgaria and/or The Netherlands, and who also may have a residence in Florida.

A company called Lemuria Communications is also listed as a defendant. The company is claimed to be Hotfile’s webhost and an alter ego of Anton Titov. Hotfile is said to operate servers in Dallas, Texas and Florida.

The studio goes on to list 1000 ‘John Doe’ defendants who it’s claimed “jointly and severally, with actual or constructive knowledge of or with willful blindness, reproduced and distributed certain LIBERTY-owned works through www.Hotfile.com.”

PayPal is also named as a defendant on the basis that it offers financial services to Hotfile, Titov and Lemuria. Liberty demands that the court freezes defendants’ assets held by PayPal pending the outcome of the case.

Liberty Media says that while Hotfile may have legitimate uses, its aim is “to profit from the illegal sharing of copyrighted materials, many of which are the intellectual property of LIBERTY,” material which the studio says is placed there by “an army of assistants.”

These assistants, Liberty claims, are otherwise known as affiliates which together form a business model described as a “massive pyramid” of cascading payments from which Hotfile, but not copyright holders, profit.

Liberty says it discovered more than 2,400 links to 800 of its titles stored on Hotfile and that the file-hoster used Lemuria Communications’ servers to achieve its “unlawful goals”.

“Hotfile.com cleverly avoids cataloging or indexing the files in order to be willfully blind to their users’ uploads and downloads, while profiting from the site’s web traffic,” the lawsuit states, adding:

“Demonstrating that Defendant Hotfile.com is aware of the illegality of its conduct, it offers two methods for download services. For its first option, Defendant Hotfile.com permits its partners to download a stolen movie at a very slow transfer speed for no charge. The other option allows users to pay a premium to download the movie ten times faster.”

In respect of safe harbor, Liberty Media claims that while Lemuria had a registered agent as required under the Digital Millennium Copyright Act (DMCA) at the time of the infringements, Hotfile did not. As such it is “not entitled to the DMCA’s safe harbor provisions for the complained of infringements.”

Liberty describes Hotfile as a massive copyright infringer which encourages affiliates to upload copyright material in order to attract further visitors to its website from which both the company and affiliates profit.

With demands for a jury trial, Liberty Media claims Hotfile is guilty of inducing, contributory and vicarious infringement and wants statutory damages of $150,000 per infringed work.

Furthermore, Liberty requests that the court seizes Hotfile’s domain name pending the outcome of the case.

Source: Hotfile, 1000 Users and PayPal Named In Piracy Lawsuit

When Part 1 was released, “The League of Noble Peers” asked downloaders to donate $1 (or more) if they wanted to support the project. Unsurprisingly, the vast majority donated just that. However, for the new release the majority donated $15 or more. Why? Well it could be that donators were motivated by a mystery gift they were offered when they gave more than $15, but there are alternative explanations as to why pirates may be more generous than people assume.

Jamie King, producer of the film gives the following explanation on his blog: “Over 90% of people donating are deciding to go over the artificial $15 threshold we set. But I don’t think people literally ‘want that gift’; I think they want an excuse to be generous!”

This could be true, the people who donate (still only a small percentage) are obviously dedicated to the cause, but there is more. It could also be that they donate more because they now don’t have an excuse to donate only $1, even pirates don’t want to look miserly. Most importantly perhaps, is that it shows that it can be wise to avoid psychological reactance, and leave the choice about what to donate or spend on a film or a music album up to the consumer. It is a challenge to build business models around free will and free content, but the Steal This Film project shows that there are opportunities.

Another interesting point raised by Jamie in his post is the need for alternative payment models. Sure, PayPal works but they take away too much money – it’s replacing one money sucking middleman with another. Take the Radiohead release for example, you could get the album virtually for free, but you still had to pay the credit card company nearly $1. This is probably why most people decided to pirate the album, instead of getting it for “free”. It seems that The Pirate Bay agrees on this, as they are working on a p2p based payment model that will probably be released by the and of this month.

TorrentFreak briefly talked to Brokep about this upcoming project a while ago, unfortunately we are not allowed to give you any more details, but it’s certainly an interesting project with a lot of potential. Brokep did reveal a bit on Jamie’s blog as he said: “I think that people will pay if there’s a simple solution. The payment solutions of today are not built for the new, network economy — they’re built around the old one. As we move away from the old economy, we’re here without a new payment solution.”

We will definitely keep you informed on this upcoming project. BitTorrent opens up possibilities for independent filmmakers. Distribution costs are now non-existent, and new business models are slowly starting to emerge. The future of film making looks bright and will be in part funded and formed by the innovators who were once called pirates.

Source: When Pirates Pay, They Pay Good