Luckily for Hollywood, many Americans choose to consume their online media through legal services such as Netflix. In fact, there are now so many that the total Internet traffic generated by Netflix has outgrown that of BitTorrent.

This made us wonder – what would happen if all movie-downloading BitTorrent users made the switch to Netflix? What if movie piracy via BitTorrent disappeared?

Before we crunch some numbers we have to say that the model we use relies on a lot of assumptions. However, we try to keep these in favor of the movie industry to maximize their potential ‘profits’. We obviously chose Netflix as a BitTorrent replacement because it comes closest to what ‘pirates’ want.

What’s the ‘value’ of BitTorrent piracy?

What we’re going to do is determine the amount of Internet traffic movie and TV related BitTorrent downloads generate in the US. Since the file-sizes of Netflix and BitTorrent downloads are about the same, we then compare this traffic to what Netflix is generating now. Assuming a linear relation between revenue and traffic we can then “guess” how much extra money would come in if all BitTorrent users switched – and paid.

Step 1: How much BitTorrent traffic is movie/tv related?

The first assumption we’re going to make is that all BitTorrent traffic is unauthorized. This is of course not the case, but we’ll leave that debate for another time.

If we then take a look at one of the more recent reports on the BitTorrent ecosystem, often cited by the MPAA, we see that 35.2% of all torrents are movie related. Another 12.7% are TV-related. For the purpose of this thought experiment we are going to forget about Hulu and other free services and add TV to the ‘pirate traffic’ mix.

The total percentage of video torrents is then 47.9%.

Since we’re comparing traffic we have to adjust for the file-size of videos compared to all other content on BitTorrent and the actual popularity of the files. This is nearly impossible to estimate precisely , but several reports show that movie and video are downloaded the most by far. So we’re going to set the total amount of infringing BitTorrent video traffic at 85%, which is probably on the high end.

Step 2: How does BitTorrent traffic compare to Netflix traffic?

The next step is to see how much of total Internet traffic 85% of all BitTorrent traffic actually is.

A recent report from the Canadian company Sandvine shows that in the US 16.5% of total Internet traffic on an average day comes from BitTorrent. Since BitTorrent traffic goes both ways (upload and download), 8.75% of this is downstream traffic. This means that a little under 7.5% (85% of 8.75) of all Internet traffic in the US is video downloads over BitTorrent.

The same Sandvine report shows that 23.3% of total Internet traffic an average day comes from Netflix. More than 95% of this traffic is downstream, so we can set Netflix downloads at approximately 22.5% of all US Internet traffic, which is three times as much as BitTorrent’s video download traffic.

Step 3: How much revenue would these pirates generate on Netflix?

Here comes the interesting part. What would it mean in terms of revenue if ALL BitTorrent traffic moved to Netflix?

If we assume that BitTorrent and Netflix users consume roughly the same amount of content (again an assumption favoring the movie studios), then this is an easy calculation. Netflix would generate a third more revenue. Based on the shareholders report of the last quarter of 2010 (where most of the torrent stats in this article are based on) this translates into $198 million additional revenue for Netflix.

Based on more recent stats contained in Netflix’s third quarter filing of this year, the increase in revenue would be $266 million for that quarter.

Step 4: How rich would Hollywood become?

It’s clear that according to our (very unrealistic) calculations Netflix would greatly benefit from the sudden disappearance of BitTorrent piracy. The next step is to see how Hollywood would be impacted. Since most licensing deals are fixed and not based on usage, one could argue that the movie studios wouldn’t benefit at all. However, that’s not much fun.

So let’s look at the licensing deals that were in place already and determine Hollywood’s added profits based on that, assuming they would be more flexible.

In the whole of 2010, Netflix paid the movie studios $181 million in licensing fees according to the shareholder reports. If we add a third to that, Hollywood would have “made” roughly $60 million extra. Salient detail, the yearly budget of the MPAA is higher than that.

In recent months the movie studios have exponentially increased Netflix’s licensing costs, but still the added profits for the movie studios will be nowhere near a billion dollars. No, getting rid of ALL BitTorrent movie and TV piracy appears to have a ‘relatively’ small effect, even if all pirating BitTorrent users signed up for a Netflix account.

What does this mean?

Nothing. It’s a simplistic attempt to put a number on BitTorrent piracy in the US.

It shows that even when you assume that 90% of all US BitTorrent traffic is dedicated to video piracy, the added revenue for Hollywood in 2010 would have been less than the amount they paid to the MPAA. That is, if all BitTorrent users switched to Netflix.

The real added revenue if BitTorrent disappeared would of course be a fraction of this, as not everyone would start paying.

We don’t want to draw too many conclusions on this simple thought experiment, but it’s something to consider, especially when ISPs are expected to dedicate millions of dollars in resources to send BitTorrent users warning letters early next year. Not to mention the negative effect of the censorship bills that have been proposed recently.

Is it really worth all that?

Source: MPAA Costs Hollywood More Than US BitTorrent Piracy

Last month a man in South Africa was arrested and discovered to be in possession of logins and passwords which he used to download products directly from Sony Music Entertainment’s computer systems. But it’s when items like these are burned to disc and sent out onto the streets that the real action begins.

The Creative Workers Union of South Africa, a group of music and TV company representatives, warned on Sunday that their piracy fight is really getting out of hand. Perhaps not such a surprising claim when one learns that their current nationwide anti-piracy campaign – and this isn’t some sort of a joke – is called ‘Shoot the Pirate‘.

Creative Workers Union of South Africa president Mabutho “Kid” Sithole said that people involved in the campaign had already received death threats with one label owner being forced to hire bodyguards. Sithole says that artists are so angry the government must quickly intervene to prevent another “Soweto Uprising“, a reference to a series of protests in 1976 that brought 20,000 students onto the streets and resulted in 176 deaths.

While Sithole’s projections hopefully prove to be an over-dramatization, claims that the police aren’t helping led several artists supporting “Shoot the Pirate” to take to the streets last week to confront the pirate vendors. It didn’t go well.

A brawl ensued which at its height involved artists, vendors and police, who reportedly beat up the artists’ supporters. The protesters then moved on and had another brawl with more pirates at another location.

Gospel artist Lusanda Mcinga was arrested along her son who reportedly had to have 10 stitches in his head, an injury sustained after he allegedly attacked a pirate. Mother and son appeared in court on Monday.

David du Plessis, operations director at the Recording Industry of South Africa, said there’s not much they can do about the problem.

“As long as there is a market for it, there will be piracy,” he said.

But despite the mess and the difference in the physical piracy world described above and the one being fought on the Internet in the West, the same old propaganda and claims of lost sales still exist.

Only last week the manager of rising star “Zahara” said that piracy was “destroying our game” and despite hard work “at the end of the day we do not get anything.”

Zahara is on TS Records, a label run by ‘TK’ – the man who had to hire bodyguards due to his support of the Shoot the Pirate campaign.

“The people have spoken! It has never happened before that a newcomer sells 100,000 units within a few days,” he said in September commenting on Zahara’s “unthinkable” success.

On or offline, the problem is the same. Piracy will never be stopped or, it seems, the sales of good music in spite of it.

Source: “Shoot the Pirate” Copyright Campaign Descends Into Real Violence

Piracy has a different effect in each unique case. Not only does it differ between the gaming, music, book and movie industries, but also between the relative popularity of the artists and the characteristics of their audiences.

As we’ve pointed out repeatedly in the past, there are plenty of cases where piracy may have a positive effect on sales. Research has shown that “pirates” are the music industry’s best customers, something EMI’s new music boss Douglas Merrill confirmed earlier this year.

“For example, there’s a set of data that shows that file sharing is actually good for artists. Not bad for artists. So maybe we shouldn’t be stopping it all the time. I don’t know,” Merrill said at the time.

Merrill’s conclusions are quite unique coming from a music industry boss, but he is certainly not alone. The same conclusion was reached by people in the anime and book industries in recent months.

The conclusion that piracy is not detrimental to sales has not gone unnoticed by the courts either. In a recent ruling in Spain a local judge noted that it’s impossible to determine the damages a seller of pirated copies had caused, because it’s unclear how many people would have bought the products for the original price.

“It is not possible to determine the damage and corresponding compensation due to loss of benefits to the rightsholder, for the simple reason that customers of pirated copies of music and movies, when making the purchase of pirated copies, externalize their decision not to be customers of music and movies as originals, so there is no profit that could have been gained.”

“In other words, those customers either buy a pirated copy at a low price or they don’t buy an original at a price between 15 and 20 Euros,” the judge added.

On the contrary, instead of hurting the income of copyright holders piracy may actually boost sales, the judge noted.

“In any case, reversing the legal argument, it is conceivable that a customer, after hearing or viewing the pirated copy, may decide to purchase the original, finding it to their taste, so that the sale of pirated copies, far from harming, benefits the market for original items.”

“I declare that there is no harm for which compensation is required,” the judge concluded in her verdict.

Although there are several studies and anecdotes that arrive at a similar conclusion, this is the first time that a judge has brought this up in a verdict. And rightly so.

In a time where people’s rights are stripped to protect the interests of a few multi-million dollar entertainment industry companies, a more realistic, balanced and independent look at the “real” consequences of piracy in individual cases should be encouraged.

Source: Piracy May Boost Sales, Judge Concludes

However, not all of the big players in the entertainment business subscribe to this theory. During the MIPCOM conference where movie and TV moguls gather, Miramax CEO Mike Lang and Netflix chief content officer Ted Sarandos touched on the subject of piracy. Both appeared to have a rather positive stance towards the issue.

Lang, whose company today debuts the Blu-Ray version of the cult classic Pulp Fiction, emphasized that people don’t necessarily want to pirate, as long as they get what they want. “Innovate or die,” should be the motive of entertainment industry companies, where it’s key to listen to customers.

“Piracy has not been the bigger issue for our company,” Lang noted. “I think all consumers at some point in their life , whatever market of the world, don’t want to pirate. They really don’t.”

“Maybe not college kids, but ultimately over time they do not want to pirate, and that the way to react to that is to offer legitimate and great service for them,” he added.

Responding to a question from the audience, Miramax’s CEO talked about the lessons he learned from the music industry. Interestingly, Lang disputed that piracy is the main problem for the music industry.

“Why everyone does focus on piracy, for the music industry, what’s really interesting is that it’s not the biggest issue for the music industry,” he said. Lang explained that the change to digital music and the lower price tags that come with it shouldn’t be discounted.

Netflix chief content officer Ted Sarandos agreed on the effect of lower prices and said that “Walmart changed the music industry more than Napster.”

Another problem, related to the pricing issue, is the emergence of digital monopolies such as the one Apple has in the digital music business. This threatens the music industry more than piracy, Miramax’s CEO suggested.

“Apple is the strongest company in the music industry because there was not enough competition, and still to this day there is not enough competition. As an industry it can’t then influence, packaging, merchandising – all the things that are vital,” Lang said.

“As an industry – the movie industry – we have to be very cognisant of that. That’s why we did our deal with Netflix, and why we also did our deal with Hulu. We want multiple players to be successful.”

Sarandos also learned his lesson from watching the music industry struggle with their digital strategy. “When consumers tell you what they want, give it to them. Figure out a way to give it to them, because they will figure out a way to get it.”

Or in other words. Don’t blame piracy for everything, but innovate – or die.

Source: Digital Monopolies A Bigger Threat Than Piracy, Says Miramax CEO

Having the option to stream millions of tracks supported by an occasional ad, or free of ads for a small monthly fee, Spotify appeared to be serious competitor to music piracy. Data just released by the Swedish Music industry appears to support this theory.

Through quarterly surveys researchers have polled the music consumption habits of thousands of Swedes between the age of 15 and 74, and in their most recent report they find that music piracy continues to drop.

Since 2009 the numbers of people who download music illegally has decreased by more than 25 percent, and over the last year alone it dropped by 9 percent. The data further suggests that this downward trend is caused by the availability of improved legal services such as Spotify.

When Spotify opened up to the public early 2009, it took only three months before the number of Spotify users had outgrown the number of music pirates. In the months after that the number of downloaders continued to decline while Spotify expanded its user base.

playing in Spotify..

Streaming services such as Spotify are now the most popular way to consume music. More than 40 percent of the participants in the survey now use a music streaming service, compared to less than 10 percent who say they download music legally.

About 23 percent continue to pirate music, but this number is dwindling.

“The long-term trend is a sharp increase in legal streaming while we see a reduction in illegal file sharing and downloading,” Music Sweden’s CEO Elizabet Widlund said commenting on the results.

“When 800,000 Swedes are willing to pay for streaming music, there is clearly a market for more legal players in the digital music market. We encourage diversity of music services as it will provide better conditions for both those who create music and those who listen to it,” she added.

Looking at the motivations for people to switch to legal services, participants in the survey cited “the range of music that’s released” as the primary reason (40%). Other explanations were the absolute increase in available music (30%), and the fact that legal services have become cheaper (24%) and simpler (24%).

Although the above is certainly good news for the music industry, it has to be noted that the ‘change’ to legal services is ‘fragile.’ The survey shows a slight change in the ongoing trend during the second quarter of 2011, exactly when Spotify announced that its free service would have some new limitations.

Although this change motivated some (15%) to sign up with a paid Spotify account, the majority (31%) said they would leave Spotify to turn to other streaming services, like YouTube, or file-sharing sites.

There is no doubt that, unlike music industry bosses have claimed in the past, there are indeed ways to compete with free. However, time is needed to find the right balance between giving music fans what they want, and secure a healthy revenue stream.

Source: Music Piracy Continues to Decline Thanks to Spotify

The European Strategy: Send Money to the US

Most of the time, the international politics of intellectual property law are pretty easy to follow: countries that are large exporters of intellectual property usually favor stronger international IP agreements that help exploit international markets.  Countries that are large importers of IP, in contrast, generally favor lower levels of IP protection that minimize the outflow of royalties, licensing fees, and other payments for foreign-owned products and technologies–whether computers, drugs, movies, or books.  Whatever other rhetorics are in play, from the rights of authors to the right to development, political positions usually line up with those underlying incentives.

The turn toward the use of trade agreements to set IP obligations–from the early bilateral agreements of the 1980s to the WTO’s TRIPS agreement in the early 1990s–more or less formalized this instrumental approach to IP law.  Trade agreements, at the end of the day, are about economic deals–not morality or even fairness.  For anyone clinging to a moral interpretation of these arrangements, it’s worth revisiting at the US and EU positions in the South African AIDS drug controversy from the late 1990s or more recent opposition to the proposed WIPO treaty for the visually impaired.

I raise this not to attack trade agreements, but to ask some similarly instrumental questions about the European Commission’s position on IP rights and enforcement.  Over the past two decades, the EC has been a very active proponent of higher IP standards and stronger enforcement, from the ACTA agreement, to the upcoming revision to the Enforcement Directive, to the imminent extension of copyright on recordings (see here).  Let’s ask the obvious question: why?

Follow the Money

I’ll focus on audiovisual markets and piracy, since these are driving the EC and wider EU push on enforcement.  Media piracy–not counterfeits–are why we’re talking about major changes to the emerging digital architecture of public life, including Internet surveillance, ’3-strikes’ disconnection laws, public and private censorship of websites, and a host of other measures.

So where do the EU’s economic interests lie?  Let’s look at the numbers:

*** According to the World Bank, Europe’s audiovisual imports exceed its exports by a ratio of around 4-1.  In 2008, Europe (EU 27) imported roughly $14.7 billion in audiovisual and related services (basically, licenses for movies, TV, radio, and sound recording).  In contrast, it exported about $3.9 billion, for a net trade deficit of $10.8 billion  (International Trade Statistics 2010: 156).

*** About 56% of those imports ($8.35 billion) come from the US.  The EU, in turn, exports about $1.7 billion to the US, resulting in a net negative trade balance of around $6.65 billion.  This does not include software licenses, where US companies monopolize larger parts of the European consumer and business markets.

*** The US, in contrast, is a large net exporter of audiovisual goods, with roughly $13.6 billion in exports and $1.9 billion in imports.

For countries or regions that are net importers of copyrighted goods, higher IP standards and stronger enforcement will result in increased payments to foreign rights holders.  Because the US thoroughly dominates European audiovisual markets, stronger enforcement in these areas is, in practice, enforcement on behalf of Hollywood.

Now, one can make this story more complicated.  The vast majority of European audiovisual production is for domestic or intra-European consumption.  Exports from European countries to each other significantly outweigh exports outside the EU (by about 50%).  Won’t stronger IP laws and enforcement capture more benefits for European industry?  Probably, but these should not be confused with overall benefits to the European economy.

Here’s how we put it in our Media Piracy report:

Domestic piracy may well impose losses on specific industrial sectors, but these are not losses to the larger national economy. Within a given country [or in this case, region], the piracy of domestic goods is a transfer of income, not a loss. Money saved by consumers or businesses on CDs, DVDs, or software will not disappear but rather be spent on other things—housing, food, other entertainment, other business expenses, and so on. These expenditures, in turn, will generate tax revenue, new jobs, infrastructural investments, and the range of other goods that are typically cited in the loss column of industry analyses.

To make a case for national economic harms rather than narrower sectoral ones, the potential uses of lost revenue need to be compared: the foregone investment in the affected industries needs to represent a better potential economic outcome than the consumer surplus generated by piracy (Sanchez 2008). The net impact on the economy, properly understood, is the difference between the value of the two investments. Such comparisons lead into very complicated territory as marginal investments in different industries generate different contributions to growth and productivity. There has been no serious analysis of this issue, however, because the industry studies have ignored the consumer surplus, maintaining the fiction that domestic piracy represents an undiluted national economic loss.

For our part, we take seriously the possibility that the consumer surplus from piracy might be more productive, socially valuable, and/or job creating than additional investment in the software and media sectors. We think this likelihood increases in markets for entertainment goods, which contribute to growth but add little to productivity, and still further in countries that import most of their audiovisual goods and software—in short, virtually everywhere outside the United States.

The EC clearly speaks for the European audiovisual industries on these issues, who stand, in theory, to gain from stronger IP enforcement (or maybe not!).  But who speaks for the massive and very real consumer surplus?  No one.  I’m aware of only one study that makes any effort to model it: the Dutch government funded “Ups and Downs: Economic and Cultural Effects of File Sharing on Music, Film and Games,” which estimated the annual welfare benefit from music filesharing in the Netherlands at around 100 million euros.  Multiply by 30 for a very crude extrapolation of this benefit across the EU.

Whose Piracy is It?

But to what extent does piracy actually impact European movies?  For better and for worse, the answer appears to be: very little.  Ernesto at TorrentFreak  regularly compiles lists of the top ten films downloaded via BitTorrent, which generally track recent Hollywood hits.  He generously furnished me a ranking of the 99 top downloaded movies for the first half of July (99 because the top 100 included Thor under two different titles).  Although not a rigorous sample, I’d suggest that it is  a decent proxy for the global demand for film.  Among these 99 films:

*** 74 were solely US productions
*** 3 were solely European productions
*** 3 were Indian productions
*** 17 were jointly produced by the US and one or more other countries, including 14 with European companies.
*** UK production companies were solely responsible for 2 films, and partnered in 11 more.
*** German companies co-produced 4 films.
*** Canadian companies co-produced 3 films.
*** South African and New Zealand companies were sole producers of 1 film each. Japan and Romania co-produced 1 each.

French production is an interesting case given the leading French role in promoting both strong IP protection and Europeanist cultural politics–including the well known ‘cultural exception’ for trade in audiovisual goods and services.  French companies figure in only 4 films on the list—and in no cases for movies filmed in France, in French, or prominently involving French actors or filmmakers. The No.1 film on the list, Source Code, was co-produced by Vendome Pictures–a relatively new French production company dedicated to producing, by all appearances, American movies.  Source Code stars Jake Gyllenhaal and was filmed in Chicago.

Another feature of this list is that 97 of 99 of the films are in English (the two non-English films are Indian).  The list makes a strong case that, in the absence of licensing barriers, the international market is an English language market and more particularly a Hollywood market that occasionally involves foreign production partners.

Even the long tail (down to #99 at least) isn’t European.  For the most part, it’s composed of the Hollywood movies from the last year that you’ve never heard of: the Kevin Bacon filmElephant White; the girl surfer/shark attack/Dennis Quaid movie Soul Surfer; the Russel Crowe/Elizabeth Banks film, The Next Three Days; the Topher Grace/Anna Faris flick, Take Me Home Tonight, and many others. According to the MPAA, 677 film were produced by US production companies in 2009.  That’s a lot of movies that go straight to the back catalog! And even that number is well off the peak of 2006-2007.

Is this the sign of a European cinema in decline?   Not if we look at the number of feature films produced, which should certainly factor into any account of piracy’s effects on incentives to produce.  The number of feature films produced in Europe has increased every year in the last five.  Almost 1200 were produced in 2009.

[The blue part of the chart is the percentage of a film's total audience that it receives in its home country (vs. the rest of Europe). Source]

Some of this insularism reflects linguistic and cultural differences within Europe.  And some of it reflects the fragmentation of the European market.  The burden of rights clearance across 27 countries and innumerable production companies makes it very difficult to distribute European films widely within Europe–and far more difficult, in particular, than licensing large catalogs from the six US studios.  The EC has made reducing these market barriers a high priority, but has shown less certainty about how to move forward.  As EC reports have noted:

The practice of territorial licensing has a lot to do with commercial decisions based on the structure of a European market that is characterised by linguistic and cultural differences, as well as by high transaction costs in distributing local content across borders. (p.185)

In other words, it’s not clear where the market obstacles stop and the mismatch of product with demand begins.

Here, our list of downloaded films points to the future–and to the main dilemma facing European cultural policy.  The emergence of a more unified audiovisual market suits both the political project of European unity and the culturalist project of making more European productions available to more Europeans.  Given the current constraints, lower barriers to licensing will certainly increase the range of European offerings to European consumers.

But there’s a catch: so far, the European market and–beyond that–the global market, has had little to do with expressions of cultural specificity or auteur-driven visions.  It has to do, above all, with making films in English that minimize those particularities.  It means producing a Europe built around historical epics (Ironclad), sci-fi/fantasy (Inception, Harry Potter) or, often quite literally, the perspective of the universal (American) tourist, like last year’s The Tourist (Johnny Depp in Venice) or Unknown (Liam Neeson in Berlin).

All of the above were joint US/EU productions on our July download list.  And it means a European film industry reorganized further into an investment vehicle for Hollywood movies, like Vendome Pictures, the now defunct publicly-funded Medienfonds in Germany (Battlefield Earth,Terminator 3), or Luc Besson’s massive, soon-to-be opened Cite du Cinema north of Paris.

My goal is not to make an anti-Hollywood argument here.  There are pros and cons to this system of public subsides, and greater integration into the global market might be, on balance, a good thing in business and cinematic terms. But it is important to be clear about the future that the EC is promoting with its IP policies.  It is not a defense of European heritage or–primarily–a vision of the French auteur able to bring his or her distinctive vision to a global audience. It’s a vision of European production companies  as slightly better integrated junior partners in global Hollywood.

It’s this junior partnership that should be weighed against the wider sacrifices of privacy and freedom of speech built into so many recent national and EC-level IP enforcement policies, such as the French ’3-strikes’ plan, which will cut French citizens off of the Internet for the piracy of Hollywood productions.  Strong enforcement reinforces status quo positions in the market, but at an escalating public cost as consumer behavior becomes the real focus of enforcement activities.  There is nothing in these policies will alter the balance of cultural power or change the direction of payments.  That’s why I’ve characterized the EC enforcement plan as: “send money to the US.”

Moralizing IP rhetoric is also a handicap in this context.  Continuing to defend IP as a fundamental right long after it has been made an object of trade policy is to surrender any real leverage in making deals.  A trade negotiator would be very lucky have such a partner on the other side of the table.  Where could Hollywood find such a partner?

How the European Commission Took Up the Cause of Hollywood

I know and understand that our french conception of author’s rights isn’t the same as in the United States or other countries.  I simply want to say that we hold to the universal principles proclaimed in the American constitution as much as in the Declaration of the Rights of Man in 1789: that no one should have the product of their ideas, work, imagination–their intellectual property–expropriated with impunity.

Each of you understands what I say here because each of you is also a creator, and it is in virtue of these creator’s rights that you have founded businesses that today have become empires.  The algorithms that give you your strength; this constant innovation that is your force; this technology that changes the world is your property, and nobody contests it.  Each of you, each of us, can thus understand that the writer, the director, or the performer can have the same rights. – French President Sarkozy, opening the ‘e-G8? conference that he convened this past April.

With this fulsome praise of tech and media CEOs at the e-G8, Sarkozy expressed the basic European cognitive dissonance on IP:  the embrace of universal rights as a way of pretending equality with the real powers in the room.  More cynically, it is the embrace of the foreign agenda as a way of rewarding the local junior partners.  Indigenous elites used to play this game with the French back when they had the empire.

How did Europe get here?  Tellingly, there was initially little European enthusiasm for a broad trade agreement on IP in the 1980s.  By most accounts, lobbying by US tech and pharmaceutical industries made the difference, capitalizing on a wider overestimation of–and nostalgia for–Europe’s role as a cultural superpower, when it was the primary beneficiary of stronger international IP laws.  More narrowly, the European Commission’s IP activism can be traced to the actions of a handful of American CEOs, who convinced their European counterparts of the benefits of a global IP deal in the run-up to the WTO agreement in the 1980s.   Those counterparts, in turn, applied pressure on their national governments and, through them, the EC.

This gambit has been described in several histories of the WTO negotiations, including Peter Drahos and John Braithewaite’s excellent Information Feudalism.

EC bureaucrats were less keen on trying to harmonize intellectual property standards via the trade regime. They had had some experience of the difficulties of trying to harmonize intellectual property standards in Europe. Some states, such as Germany and the UK, were keen on higher standards while others, such as Spain and Italy, were not so inclined. The view coming out of the EC at this time was to press on with the initiative on counterfeiting in the GATT (a lot of luxury European trade marks were the subject of counterfeiting) and make a general IP code a much longer-term priority….

The problem facing Pratt and Opel [Edmund Pratt, CEO of Pfizer and John Opel, Chairman of IBM] was clear enough. They had to convince business organizations in Quad countries [the US, the EU countries, Japan, and Canada] to pressure their governments to include intellectual property in the next round of trade negotiations. That meant first convincing European and Japanese business that it was in their interests for intellectual property to become a priority issue in the next trade round…..

Pratt and Opel’ s response was swift. In March 1986 they created the Intellectual Property Committee (IPC).24  The IPC was an ad hoc coalition of 13 major US corporations: Bristol-Myers, DuPont, FMC Corporation, General Electric, General Motors, Hewlett-Packard, IBM, Johnson & Johnson, Merck, Monsanto, Pfizer, Rockwell International and Warner Communications. It described itself as ‘dedicated to the negotiation of a comprehensive agreement on intellectual property in the current GATT round of multilateral trade negotiations’ (pp.117- 118) ….

Enrolling European business in the network was the essential first step for the IPC… The IPC had established a line of dialogue with the Union of Industrial and Employers’ Confederations of Europe (UNICE) in November 1986. It proved vital. In Europe’ s more hierarchically ordered world of business lobbying, UNICE was the key portal of European business influence on the EC. During 1986 and 1987 close cooperation developed between UNICE representatives and EC officials; UNICE was given the opportunity to comment on the EC’ s negotiating position and drafts. In May 1987 UNICE produced its own position paper on GATT and intellectual property arguing that the EC’ s approach was ‘deemed too narrow by European industry’ and that the ‘scope of the negotiations must be broadened’ to include other areas of intellectual property where European industry was making heavy R&D investments.  In the following months this became the position of European Community negotiators (p.128)….

Perhaps what US CEOs were able to sell to their European and Japanese counterparts was a vision of a globally secure business future. Ultimately, US corporations might do best out of the globalization of intellectual property standards. A world in which US corporations were dominant but European and Japanese corporations still remained powerful players and strategic partners was preferable to a world in which corporations from all these countries faced competition from increasingly efficient developing country manufacturers. It made sense for the most powerful corporations from the world’ s three strongest economies to collaborate on a project that would enable them to lock up the intangible assets of business in the new millennium and allow them to use those assets to set up production facilities wherever it suited them best. The international character of their production along with their need to capture new markets became the basis of the mutual interest needed for an alliance between them. (p.119) ….

Although they never quite grasped the fact, European trade negotiators had more in common on intellectual property standards with their developing country counterparts than they realized. The US initiative on intellectual property was aimed at European and Japanese markets as much as it was at the tiger economies of Asia. (p.83)

So what would a disenchanted, liberated EC do?  As an American citizen, it is perhaps presumptuous to make suggestions.  But as a French citizen, hey, it’s my EC too!

It could start by distinguishing more clearly between the broader welfare interests of EU citizens and the commercial interests of junior production partners in global Hollywood.  In an earlier era,  it was plausible to think of these commercial and public interests as substantially the same.  Movies were cheap and played a much larger role in public culture.  French or German or Swedish cinemas made stronger claims to being globally-relevant, distinctive national cultural champions.  Copyright infringement was harder, less frequent, and generally industrially organized, which made enforcement a relatively painless proposition.

Today is different.  As IP enforcement targets individual behavior and comes into conflict with other basic values (privacy, freedom of expression), commercial and public interests have begun to diverge.

The EC could also think differently about Europe’s opportunities in the larger digital media transition.  Where some parts of the EU audiovisual industries lose from piracy, the larger impact is chronically exaggerated in EC statements and mitigated (if not completely overshadowed) by the EU system of public subsidies for production.  This may be an inefficient system that produces a lot of movies that relatively few people want to see, but it’s arguably a pretty good model for managing the transition to a more fully realized digital media economy, in which piracy drives the development of cheap, legal, digital access (see Netflix, Hulu, Spotify), and public subsidies ensure that there’s a lot of relatively rich European content to distribute. That, it seems to me, is a plausible vision of a digital media economy that leverages Europe’s strengths, rather than reinforces its weaknesses through a costly war on internet users.

Creating a more unified European audio-visual market is an important goal in this context, but also an achievement that is likely be built on the homogenization of EU production.  The public subsidy model is probably the only counterweight–at a continued cost to wider commercial prospects.  Struggling to adopt the fragile economics of Hollywood blockbusters, in contrast, is a risky bet that should probably be left entirely to the commercial sector.  Leading the way in strengthening digital enforcement seems like an especially bad choice in this context since its short term effect is just to send money the US.  Europe has little to lose from a wait-and-see approach.

De-moralizing the IP debate is also an important step.  At the Americans’ insistence, it’s a trade policy debate now, and nothing should be freely conceded by the lesser partner in those trades.  What, in other words, do the French get in return for enforcing Hollywood’s copyrights?  The answer should not be limited to: the dignity of the French auteur.  Don’t bring a knife to a gun fight.

Source: Europe’s Odd Anti-Piracy Stance: Send Money to the US!

During the last decade the RIAA made quite a name for itself going after the students of the United States for cash payouts, but eventually abandoned the practice in favor of sending them warnings via their university or college.

While educational establishments in many countries are prepared to forward such notices, in Norway the very notion has just been torpedoed by the Norwegian Data Inspectorate, the government body set up to manage the privacy framework of the Personal Data Act of 2000.

According to Universitetsaviser, the Norwegian University of Science and Technology (NTNU) has been receiving enquiries from several rightsholders who believe they have tracked instances of illegal file-sharing to IP addresses held by the university. Of course, the rightsholders want further action taken, including the forwarding of infringement notices to the students in question.

However, the issue raised two important questions. Firstly, does NTNU – a university with 20,000 students and an $800 million budget – have the right to log students’ Internet traffic in order to detect illegal file-sharing or other illegal activities.

Secondly, can NTNU make use of personal information it holds in order to pass on infringement notices from rightsholders to students.

These questions were posed to Datatilsynet, the Norwegian Data Inspectorate, and the responses couldn’t have been worse for rightsholders. The privacy body responded in the negative to both questions.

The Data Inspectorate decided that students should enjoy the same levels of privacy when using computers at university as they do while accessing the Internet from home. Furthermore, Datatilsynet noted that NTNU has no legal obligation to pass on warnings from rightsholders to students.

Additionally, NTNU has been told that while in future it can keep personally identifying information in computer logs, it may only do this for up to 3 weeks and only for the purposes of network management. Rightsholders will not have access to the information.

The deadline for implementing these data privacy practices runs out tomorrow but NTNU have said that they will be in compliance by then.

Source: Hunt For Student File-Sharers Thwarted By Data Privacy Ruling

During a closer examination IT staff found that the student had 24 Hollywood movies stored on his hard drive. The 15-year-old boy in question had obtained them from two Swedish torrent sites – tankafetast.se and tankaner.se.

Ultimately the school’s head teacher learned of the IT technicians’ discovery but rather than deal with the issue in-house, she chose to drastically escalate the matter – by calling in the police. Now, five months after the alleged offenses, the boy is on trial in Sweden.

“Our policy is to always notify the police if we have suspicion of a crime,” the head teacher told GP.se. “It is not our job to investigate, it’s a matter for the police.”

The investigation was led by the International Public Prosecution Office in Stockholm and the trial began in the Gothenburg District Court yesterday. Prosecutor Fredrik Ingblad, a veteran of such cases, says this trial is a record-breaker – no-one this young has ever been prosecuted for file-sharing violations.

“If I find that I can prove a crime, I have to prosecute. I do not consider the person’s age or whether file sharing has occurred on a small or large scale,” Ingblad says. “By contrast, his young age, of course, is important in terms of what punishment he will be sentenced to.”

Although Ingblad says he will press for the teenager to be sentenced as a juvenile, the punishment for copyright infringements still run from fines to two years in jail.

“Politicians and copyright monopolists alike have been promising solemnly to never send the police after the entire younger generation,” Pirate Party founder Rick Falkvinge told TorrentFreak. “Here, we can see for ourselves how much those promises were worth. The politicians who let this happen need to be kicked out of office.”

During the hearing the boy admitted downloading movies such as The Fighter, The Mechanic, The Social Network and Scary Movie 4, but said that he had no idea he was uploading them to others at the same time.

“It’s paradoxical,” says Inglblad. “The thousands of small users who are online to download a single movie is a prerequisite for the entire system to work.”

“To prosecute one of them is of course just scratching the surface. But if you want the legal download services to work there must be at least a small chance you will get caught if you download illegally, even if you are young,” he says.

Rick Falkvinge sees the situation somewhat differently, in that sharers should not be subjected to criminal trials but rewarded, and that hopefully attitudes in the future will change.

“If the government should interfere at all with people sharing culture, it should be in the form of medals to those who share the most,” he told us.

“It is of poor comfort for a 15-year-old in a criminal court that the laws will have changed to prove him right and dignified several years later. In the meantime, he has the full moral support of pirates all over the world, from San Francisco to Sydney,” he concludes.

Source: 15-Year-Old Schoolboy On Trial After Head Teacher Tells Police About File-Sharing

At the center of their plan is a system to notify and educate suspected copyright infringers by sending them so-called ‘copyright alerts’.

According to the participants, including the MPAA, RIAA and all major ISPs, the warning system is likely to result in a massive decrease in online piracy in the U.S. All partners stress, however, that the agreement is merely a ‘common framework’ to deal with copyright infringements and it doesn’t oblige ISPs to disconnect users’ Internet access.

So what the plan?

The new agreement will streamline the current avalanche of DMCA notices Internet providers are already forwarding to their customers. A third-party will monitor file-sharing networks and collect the IP-addresses of suspected infringers. These will then be added to a database and forwarded to the Internet provider who will send a corresponding copyright alert.

This alert will inform the Internet subscriber that his or her account was allegedly used to share copyrighted content, and how to prevent this from happening in the future. If the same IP-address is spotted again a similar alert will be sent, and only after 5 ‘strikes’ will the Internet provider take action.

The ISPs have several options on how to deal with repeat infringers. One of the suggestions is to slow down their connection speed, but ISPs may also temporarily redirect the customer to a landing page which offers instructions on how to engage in a friendly and educational chat with the abuse department.

Before any of the above sanctions go into effect Internet subscribers have the right to call for an independent review at the cost of a $35 filing fee.

But will it be effective?

Not really. First of all this agreement only covers a few of the many sources of online piracy. The millions of U.S. Internet users who download via cyberlockers are not affected by this agreement at all, as these downloads are impossible to track by third parties. The same is true for the many online streaming portals which have become very popular recently.

The agreement is mainly targeted at BitTorrent users, but these can also bypass the copyright alerts quite easily. Signing up for a VPN or proxy does the trick, and the same is probably true for more obscure private BitTorrent trackers which are less likely to be monitored.

A recent survey in France, where Internet users can actually lose their connection, revealed that the new agreement might not be worth the cost. Only 4% of the polled file-sharers said they stopped sourcing music from illegal services out of fear of detection. In the UK, a recent survey by an ISP revealed similar results.

Despite the relative ease with which copyright infringers can bypass the warning system and the lack of deterrence, all parties involved are ecstatic about the new agreement.

“This groundbreaking agreement ushers in a new day and a fresh approach to addressing the digital theft of copyrighted works,” RIAA’s Cary Sherman trumpeted in a comment.

We have our doubts.

Source: MPAA, RIAA Team Up With ISPs to ‘Alert’ Pirates

We’ve previously documented how people moved from buying albums to buying singles. But there’s another big change that occurred, one that may have an even bigger impact on the music industry as a whole; YouTube and other ‘free’ music sources.

If we go back in time 5 or 6 years, people had only one option if they wanted to listen to their favorite artists online without paying for the pleasure. That one option was piracy. Today the public has a wide variety of legal options, and the medium of choice for most people appears to be YouTube.

Although true music aficionados are hard to please, the majority of the public appreciates the option of listening to their favorite tunes for free on YouTube. Google is not complaining either, as music videos are a substantial revenue source for them.

But what about the record labels, are they happy too? This is not an easy question to answer, but we’re going to give it a try.

Revenue wise YouTube and Vevo have be come a serious revenue source. The major labels haven’t been very open about their revenue sharing deal, but EMI Music chief financial officer Paul Kahn said (pdf) during the LimeWire trial that his label gets half a penny for each YouTube play.

Half a penny may not sound much, but with billions of views it adds up quickly.

If we look at David Guetta, one of EMI’s top artists, we see that his YouTube uploads were viewed 308,000,000 times over the past 12 months. That means $1,540,000 in revenue, for only one artist.

Just as a comparison, Guetta and EMI have to sell more than 2 million singles to earn that much from ‘paid’ music.

In their latest report music industry group IFPI write that at the end of last year the major record labels were getting 1.7 billion views a month, and this number is rising rapidly. In the last 12 months alone Universal Music tripled the number of YouTube views from 2.3 billion May last year to nearly 7 billion today.

Staggering numbers that bring in tens of millions of dollars at least, with free music.

In part YouTube’s success goes at the expense of music piracy. With free music on YouTube a large group of people have less incentive to pirate, and indeed, the number of people who share music on BitTorrent appears to be slowing because of these and other alternatives.

This doesn’t mean that music sharing BitTorrent communities are fading away, but the more casual downloaders have found an alternative in YouTube and other streaming services.

That’s great news for the labels right? Well not so fast.

All those billions of views on YouTube each month may have slowed piracy down, but if we have to follow the logic of the music industry then actual sales of recorded music would also be affected. After all, for years they’ve claimed that “free music” on pirate sites caused billions in losses. Free music on YouTube should have a similar effect.

The big question is of course whether the revenue from YouTube can match these alleged losses or not. Not an easy question to answer, but these are crucial factors that define how the major record labels will fare in the coming years, probably even more so than piracy.

TorrentFreak asked both the RIAA and BPI to share their thoughts on how YouTube could affect music sales, but both unfortunately withheld their comments.

This leaves us with the conclusion that, unlike many record label execs have argued in the past, you can compete with free. You can even compete with piracy. Whether the net result is going to be a positive one has yet to be seen, but YouTube is taking up a larger chunk of the record label revenues each year.

Source: Is YouTube Killing Music Piracy?

Considering the reputation of the SAS for using force and the years of training they undergo to make that response come naturally, it was refreshing this morning to hear McNab suggesting a rather different approach to problem solving, specifically the issue of piracy.

In an open letter, McNab details how piracy often stems from copies of books sent out to reviewers which are scanned and subsequently posted on file-sharing sites. He also notes, however, that these copies are often of poor quality and in the inconvenient PDF format, something which diminishes reader experience and enjoyment.

Despite these shortcomings, book publishers still spend a lot of effort trying to get these books taken down with DMCA notices and the like, but McNab says he prefers a different approach.

“Taking down illegal books from file sharing sites is only a short term fix and both a time-consuming and expensive business as we have already seen from the music industry. Maybe it is better for us to invest these resources in other ways, to stop consumers from migrating to pirate sites that are always going to exist anyway,” he writes.

Some book publishers feel that by not providing a digital version of their products, somehow they’re going to stop online piracy. McNab notes, correctly, that’s not the case and that publishers have the opportunity to do what pirates do, but better.

“Holding back on releasing a digital version of a book won’t stop it from being pirated. With so many of the illegal copies out there originating from printed proof copies that are then put up on sites, if consumers are going to read a digital copy, it’s better that they purchase them legitimately,” he notes.

But its not just the product itself, but the discovering and accessibility experience that McNab feels can be a leverage point for legitimate outlets to persuade, not force, would-be pirates into obtaining the real deal. Restrictive DRM and security, he suggests, are counter-productive.

“If you surround a digital book with too many security obstacles which makes it difficult to find, purchase and read, it will only force consumers to look elsewhere to get their book,” says McNab.

“It is also important to realise that digital books have a quality of content that can not be pirated. These include: immediacy, personalisation, accessibility, discoverability and authenticity. As an industry, we need to understand and use these distinct properties in the fight against piracy,” he says.

“In order to be successful, legal ebooks need to bring more value to the consumer than pirated ones and we can already see great progress in making this happen.”

All this from McNab without a single mention of a lawsuit, getting the law changed, arresting site owners, hijacking domains, disconnecting file-sharers and other similar negative-energy approaches to dealing with this complex issue.

In his previous role McNab was undoubtedly well-versed in sabotage techniques and asymmetric warfare scenarios. His training has served him well.

Source: Ex-SAS Soldier Avoids Conflict in Book Piracy Battle

While there are ultra-aggressive approaches – such as the pay-up-or-else schemes flooding Europe and the United States – occasionally individuals come up with more creative approach worthy of attention.

One such individual is manga creator Ken Akamatsu, who today announced that he will start an ambitious scheme to monetize illicit copies of out-of-print manga currently residing in huge volumes on file-sharing networks.

Akamatsu will launch the “Illegal Manga File Purification Project” tomorrow via his J-Comi site. While noting that all fans have obtained illicit out-of-print manga via file-sharing networks “at least once”, Akamatsu is offering to ‘purify’ these files so that the creators can be paid for their work and subsequent downloaders can do so legally. According to AnimeNewsNetwork, the scheme will work as follows.

Manga fans with illicit files on their hard drive will be asked to upload them (or links to them on file-sharing networks) to the J-Comi site. Whilst keeping uploader identities private, J-Comi will contact the original creators of the files and obtain permission to monetize the content.

Once they have agreement, J-Comi will bundle advertising into the manga releases and reintroduce them back onto file-sharing networks. For this service there will be no charge and the original creators will receive 100% of the advertising revenue.

If agreement with the creators cannot be reached “the files will be abandoned and the files will continue to drift through hell [file-sharing networks]. Perhaps forever…,” Akamatsu predicts.

While this attempt at returning some revenue to the creators of these files is to be applauded, Ken Akamatsu could find himself an extremely busy man indeed, and maybe one with a rather large headache. Nevertheless, we wish him good luck for trying something positive. It has to be better than the alternative.

Source: Distributor Offers To ‘Purify’ and Monetize Pirate Files

In both cases the parties involved had secured the rights to use the material, but out of convenience they chose to use the services of ‘pirates’ instead. However, there are also plenty of cases where pirated copies are used without permission. To sell iMacs or Macbooks for instance.

Another example of these alternative uses of pirated media was spotted by a passenger of Saudi Airlines this week. The picture posted below this article was taken on a flight between Dubai and Riyadh last Monday by Twitter user @Alwagait.

At first everything seems normal, but those who look closely will notice something interesting. On the film’s cover we can read the following text – “Killers 2010 BDRiP AC3 XViD-ILOVE” – which is a direct reference to a pirated copy of the film that can be found on numerous torrent sites.

It is unclear whether any of the other films on board were also being provided from pirated sources.

Although there is little doubt that we’re dealing with a pirated copy of Killers, this doesn’t mean that Saudi Airlines doesn’t have a license to show the film. Sometimes it’s just more convenient to deal with non-DRMed files than the copies that are provided through official channels.

To quote Saudi Airlines’ company slogan: It’s the new era.

Source: Saudi Airlines Shows Pirated Film to Passengers

Another claim of the music industry, that piracy hinders the creation of new music, has now been debunked by Applied Economics Professor Joel Waldfogel of the University of Minnesota. In a recently published paper he shows that there is no evidence that piracy hurts creativity or slows down the supply of recorded music.

“The legal monopoly created by copyright is justified by its encouragement of the creation of new works, but there is little evidence on this relationship,” Waldfogel starts in his introduction of the paper catchily titled: “Bye, Bye, Miss American Pie?”.

“The supply of recorded music appears not to have fallen off much since Napster, and there is at least suggestive evidence that independent music labels, which operate with lower break even thresholds, are playing an increased role in bringing new works to market,” he later concludes.

Where some researchers focused heavily on finding out what the link between piracy and music industry revenues is, another major shift in the music industry in the past decade was left mostly ignored. Without going into detail on the data provided, we want to highlight some excellent points Waldfogel lays out in his paper.

The Democratization of Music

In the paper Waldfogel reiterates some of the points we’ve made here earlier, namely, that alongside the increase in file-sharing, the state of technology advanced at a rapid pace as well. With new and cheaper recording technologies, digital music outlets and social networks, many of the tasks that were previously fulfilled by the big labels could easily be taken over by independent labels, or even the artists themselves.

To a certain degree the big labels are slowly becoming obsolete. At the least, their monopoly is falling apart as their role can be taken over by independent labels that operate with a much smaller profit margin. Where the majors sometimes have to sell half a million albums to break even, independent labels can do the same by selling 25,000 or less, Waldfogel illistrates.

On a broader scale it’s not hard to see that new technologies and the Internet in particular are a huge game changer for the music industry.

Production, Promotion and Distribution

“Bringing music successfully to market has three component activities – creation, promotion, and distribution – and new technologies have changed each of these substantially,” Waldfogel writes in his paper, explaining how each of the three components changed drastically in recent history.

Since the Second World War the costs of producing music have decreased decade after decade, and this process accelerated in the post-Napster era. Nearly every garage band can now record an album with high quality sound with a limited budget. This was pretty much impossible a few years ago.

Similarly, thanks to the Internet there are a million ways to promote one’s content, with the only cost being the time that’s invested in it. Thanks to Youtube, Facebook and more specialized music services such as Last.fm and Pandora, artists have many platforms to promote themselves. Previously, although illegal, labels often paid radio stations to promote their music.

On the distribution side things have changed too. With a minimal investment artists can now put their work up for sale on iTunes, and those who wish to give it away for free have hundreds of options to do so as well. Now compare that to a decade ago, when the iPod had yet to be invented and artists had to physically ship their CDs all over the world.

The changes the music industry has gone through are unprecedented, but instead of adopting to the new reality the big labels have been focused almost exclusively on piracy. And yes, the revenues are down for the major labels, but thousands of smaller independent labels have been started during the same period, many of which are turning healthy profits.

In sum, Waldfogel’s paper concludes that, unlike the major labels often suggest, the supply of new music has not decreased because of piracy. Instead, the entire music industry has changed with more power going to the artists and smaller labels. Although this is hurting the majors, piracy is not to blame and music is more alive than ever before.

Source: Report: Despite Piracy, Music Is More Alive Than Ever Before

Yesterday yet another study was announced, this time by the Australian Content Industry Group, an umbrella organization of pro-copyright groups that conveniently doesn’t have a web presence. According to a news item the report claims that of the 22 million Australians, nearly 5 million are pirates.

Together, these downloaders were responsible for $900 million in losses the games, movies, films, music and software companies suffered in 2010, and that’s just the start. According to the report Australia’s National Broadband Network will cause the losses to rise to $5.2 billion by 2016.

As is often the case, the study itself is not available online, neither are the publishers responding to any requests to get a review copy. This makes it impossible to point out where the flaws are, but anyone with a calculator and some sense of economic reality will realize that the numbers are bogus.

If we believe the researchers, 6.5 million pirating Australians will be responsible for $5.2 billion in losses by 2016. This means that without piracy those people – including children and the unemployed – would spend an extra $800 per year, on average. Right.

Even if we assume that this would be even remotely possible, why would it go to $800 per head from the $187 they estimate now?

We suspect of course that the report makes some wild claims, such as arguing that every download is a lost sale. So with more and better broadband connections people will download more, and so cause more losses. Of course, this type of reasoning lies far from reality.

Insane, yes, but we’ve seen it before. A similar report published last year had a trend line where the ‘lost’ revenue because of piracy would actually exceed the actual revenue. Not impossible by definition, but highly unlikely. We expect that the Aussie report is based on a similar faulty trend.

Although the above suggests that even without seeing the full report, it’s not that hard to cast doubt on the validity of the claims, journalists simply pass it on without a critical note. This resulted in a fair bit of criticism in the comment section of the SMH article.

SMH wasn’t too happy with the critical readers and instead of addressing the concerns and valid commentary, they decided to close the comments section. How convenient.

Luckily there are still independent journalists who are rather more skeptical, and favor some analysis over a scoop, but they are in the minority. Most news outlets simply republished the industry-fed numbers without a critical comment.

This makes it easy for the entertainment industry outfits to influence public opinion with their fear-mongering propaganda. But even more importantly, these flawed and delusional reports are used as leverage to convince politicians to put the industry’s revenues before the rights of citizens and implement harsher anti-piracy legislation.

This time it will not be different. If only the industry representatives would get their heads out of the sand and address the gap between consumer demands in the digital age, and their offerings. That would really make a lasting impact.

Source: Fear Mongering and Delusional Piracy Report Upsets Aussies

One might argue that their actions have been pretty successful. Five years ago or more, very high-quality cammed movies were commonplace on the Internet and the release of the best Telesyncs (cammed video with a direct sound source) from Scene groups such as Centropy and maVen were a highly prized and anticipated event. These days, although cams are still reasonably common, very high-quality releases are much less prevalent. Mission accomplished then? Maybe not.

This week the case against the administrator of the EliteBits BitTorrent tracker came to its conclusion, with the judge pondering on an interesting issue.

The judge said that since he could not assess the quality of the movies being offered via EliteBits, he found it difficult to know how much compensation to award the movie companies. The implication was that rightsholders should get less money if the product was low quality – cammed movies for instance – but lawyers for the plaintiffs disagreed. They said that rightholders lose goodwill when films are distributed in poor quality so the compensation should be more.

This raises an interesting argument. There is a school of thought which suggests that when people are presented with a cam copy of movie they will expect it to be poor. However, if they enjoy it, they will invest in a trip to the theater to see it properly. Others won’t even want to spoil their enjoyment by watching these inferior copies and will see the movie in the theater straight off. It’s probably fair to assume that people expect some aspect of a copy to be lower quality that the original.

There can’t have been many people who didn’t appreciate that when the workprint copy of Wolverine leaked out, they were getting an unfinished product. Did the lack of effects ruin the reputation of the movie? Sales seems to suggest not. Would the movie industry have preferred it if a perfect copy had leaked out in this instance rather than a second-rate version? Hardly. Nevertheless, the Wolverine leaker was still hauled over the coals, much more so than those who leak perfect copies. However, if he had lived in Argentina, things might have been different for him.

This week a case was heard in Argentina’s Federal Court. It involved the issue of seven individuals caught selling pirate movies on the streets in 2008. In the first hearing the individuals were found guilty of copyright and trademark offenses but in the latest hearing that decision was overturned – and it all came down to the quality of the product they sold.

The judge decided that it was “impossible to jeopardize the credibility of the legitimate manufacturers” since the buyers of the pirate copies knew full well they were getting an inferior product. One might argue that individuals downloading cammed material from EliteBits also knew that they wouldn’t be getting a good copy, yet rightsholders in that case would certainly have disagreed with the judge’s assertion here.

So, if there is to be any punishment at all for sharing copyright material, should quality be taken into consideration? Should a perfect DVDrip of a movie attract a higher fine because people are less likely to seek out and pay for an original?

Should those sharing low bitrate MP3s be left alone because they providing a low-quality try-before-you-buy service, or should they be heavily punished for ruining the reputation of the artist with a pale imitation of the real thing? As usual, we’d love to hear your thoughts in the comments.

Source: Should Piracy Punishments Scale To The Quality Of The Copy?

However, in a time where nearly every MPAA press release deals with piracy concerns, box office revenues are booming worldwide. The MPAA has just announced that in 2010 yet another record was broken at the box office. In the US and Canada last year’s record of $10.6 billion was equalled, while worldwide grosses swelled to a massive $31.8 billion.

“It was a strong year at the movies in 2010. Despite a weak economy, shifting business models, and the ongoing impact of digital theft, we had another record year at the global box office driven by growth outside the U.S. and Canada,” MPAA President Bob Pisano said, commenting on the record-breaking revenues worldwide.

“The continued theft of movies online will have a sustained adverse impact on movie attendance in the coming years,” Pisano added somewhat predictably. “It’s impossible to compete with free.”

Oh really? That last statement, although catchy, makes absolutely no sense in this context.

Does the MPAA chief truly believe that a shaky camcorded version of a movie is somehow depriving movie theaters of visitors? Are there millions of people who prefer watching a low quality camcorded version of a movie over a theater visit simply because they can save a few bucks?

Pisano is comparing apples and oranges here – and he and his buddies have nearly 32 billion reasons in their back pocket to prove it.

It would be the same as saying that a fan of band X won’t go to a concert because he can download a bootleg copy on the Internet instead. Movie piracy is hardly a threat (or competition) to movie theater attendances. If anything holds people back from spending a few dollars on a movie it’s probably the insane security measures that have been implemented in recent years.

Still, the MPAA is confident that piracy is affecting box office revenues, so it will therefore continue to push for new legislation and enforcement tools.

“We will continue to work with our industry partners to fight for common sense ways, through legislative, enforcement and legal avenues, to vigilantly protect the creativity at the heart of our industry from theft,” Pisano says.

One of the focuses of the MPAA has been to reduce camcording in movie theaters, but one has to question whether the investments that are made in this area are worth it. Do movie theater employees really have to be equipped with night vision goggles? Are metal detectors, emotion recognition and advanced audio watermarks really needed to pinpoint pirates?

It is almost as if the MPAA and other anti-piracy outfits continue this “piracy theater” just to guarantee and justify their jobs and those of their comrades. Make no mistake, anti-piracy is big business. There are dozens of anti-piracy outfits, copyright protection vendors and lobby groups that each earn millions of dollars merely because of this supposed piracy threat.

Something to think about.

Source: Evil Pirates: Movie Industry Tops $30 Billion Box Office Record

“A scammer could use this information to build a profile of a person and then target them with convincing phishing messages—perhaps referring to specific purchases on another website,” writes TechnologyReview in response to the study.

But while this research is certainly relevant to Internet users in general, it is also of great interest to those who may be sharing files online without the copyright holder’s permission.

TorrentFreak learned last year, perhaps unsurprisingly, that anti-piracy companies are increasingly using profiling techniques to identify and track the habits of the more prolific file-sharers, in particular initial uploaders.

However, while it’s unclear to what use this gathered data is being put, we can confirm 100% that users targeted in so-called Speculative Invoicing (we caught you sharing files, pay us money to go away) campaigns are being tracked through their general Internet use and comments they have made used as leverage against them.

In several cases last year, Internet users caught up in ACS:Law’s pay-up-or-else sweep asked for advice on how to respond to the law firm using online forums. The usernames they used were not unique. In fact they corresponded perfectly with ones they used on other forums where they had been less careful about disguising who they were.

In at least one case a user even discussed downloading the material he was accused of, albeit some months earlier. In another there was general talk about file-sharing, hardly proof of infringement, but it doesn’t help a case longer term.

Another person, who contacted TorrentFreak with his plight, had previously emailed ACS:Law using the same email address. We Googled that and found a site where the person mentioned his website, which led to a WHOIS which, coupled with his forename posted freely on the forum, conveniently supplied his surname and address.

From that information we were able to discover not that he had infringed, but had just come into some money – valuable information to a law firm looking to screw someone for hard cash.

In another recent case which ended particularly badly for one confirmed file-sharer, armed with nothing but an email address and a forum post we were able to follow a trail which led into highly personal aspects of the individual’s life. Our deep suspicions, without compromising this person’s privacy further, is that this same trail was cynically exploited by copyright holders to extract a very sizeable settlement.

Today, while writing this post, we spent just an hour on a private torrent tracker researching the site’s top 20 uploaders. In 13 cases we were able to find the users on other sites, including YouTube, Last.fm, eBay and any number of non-filesharing related forums. In 4 cases we were able to quickly identify real names. Given more time the exposure would almost certainly prove greater.

As the INRIA researchers note, people using unique and easily identifiable usernames are more vulnerable to cross-site profiling. Others with common usernames are far more difficult to track down and in our quick tests we have to agree.

Try Googling your regular usernames and email addresses….

Food for thought.

Source: Some File-Sharers Leave Trails To Their Front Door

On one side sit the music and movie creatives, leaking blood, sweat and tears over their latest masterpieces. The toils of their labor will bring joy and happiness to millions while providing much-needed employment and a positive effect on the economy. If you’re looking to join a team of damn fine upstanding good guys, then this is the side to be on.

If, however, you prefer the forces of darkness and intend to steal, thieve and defraud your way through the Internet, look no further than the opposing team. These scummy parasites contribute nothing, but instead munch their way through endless piles of media without a single thought for anyone but themselves. They never spend their money and are ruining the entertainment industries and the economy bit by bit, each and every time they connect to the Internet.

It doesn’t take a genius to see that when the piracy ‘problem’ is defined like this, with good on one side and bad on the other, reaching a compromise is unlikely. In reality the situation should be explained in much broader terms, to encompass the reality of the file-sharing landscape and to acknowledge the status of the majority in the middle.

Let’s not delude ourselves. There are people out there who won’t pay for any media, literally none whatsoever. If it’s not nailed down it’s getting downloaded. They won’t even pay for their cable TV and if a cloned modem or other hacked box is available, they aren’t paying for Internet access either.

Equally, there are some crazy people in the entertainment industries who think that some day it will be possible, given enough force, aggression, technical measures and political pressure, to force everyone to pay for every single last piece of media, not just once, but time and again.

Given these opposing standpoints with a veritable Grand Canyon between them, it’s little wonder that the file-sharing problem has turned into a war. But, in common with all wars, there are millions caught up in the middle who while tending to take sides, neither want nor deserve to be subjected to a massively polarized situation brought on by the feuding and unmoving factions on either side.

The other reality is that, to a greater or lesser extent, the millions stuck in the middle of this war are all pirates to some degree. It’s very difficult to go about our daily business without infringing someone’s rights in today’s environment. Many millions will also download music and a movie here and there, or take the opportunity to grab a TV show from BitTorrent that aired at an inconvenient time or in another country.

But these very same people buy and finance media too. They are consumers of regular TV, they go to the movies and pay for music in a dozen different forms, they go to concerts, buy products from ads with the latest Beyonce track in the background and make straight purchases from iTunes. They buy DVDs, they buy software, they buy magazines and they buy books.

Last year someone helping with one of my articles commented “you must be the biggest pirates in the world at TorrentFreak”, and then responded with surprise when I revealed how much I spent on all sorts of media and entertainment in the previous 12 months. Just because people have the means to pirate, it doesn’t necessarily follow that they do.

Nevertheless, for those who supplement their paid purchases with a visit to The Pirate Bay once in a while, the entertainment industries’ uncompromising stance means that they too are labeled in terms close to that of sub-human scum, but as millions of us know the piracy battle lines are nowhere near as clear cut as the industry lobbyists would have governments believe.

But we aren’t on the brink of disaster either. As long as the overwhelming masses continue to understand that they can’t pirate everything all of the time and that a reasonable amount of money has to be made on media in order for it to exist, things will be just fine.

However, if the entertainment industries continue with their current position – that they are absolutely entitled to their untold billions at any cost, that there is no middle ground, that all file-sharers are simply evil and should expect their activities to be monitored, throttled and legislated against – they should expect fewer moderates and more extremists in the future.

Peace lies in the middle with the moderates being treated as such, but if the extremists on both sides have their way we will all be dragged into the persistent fighting of a war that simply cannot be won.

Source: Extremists on Both Sides Means Piracy War Goes On Forever

Therefore, it would come as no surprise if the game repeated this success on BitTorrent. And indeed, Black Ops takes the honor of most pirated game on the PC this year, a title which went to Modern Warfare in 2009. Even though it has only been available for a few weeks, the game beat Battlefield: Bad Company 2 by a wide margin with 4,270,000 downloads in total.

Despite this ‘success’, Black Ops does not lead the Xbox 360 and Wii lists.

As expected, Mario and Donkey Kong are in high demand on the Wii with a 1st and 3rd place respectively. Wii Party is listed in second place with well over a million downloads, while Black Ops fell a few thousand downloads short to make it into the top 5.

On the Xbox 360 the title of most pirated game goes to Dante’s Inferno. This game was released in February and amassed a total of 1,280,000 downloads, beating Black Ops which ended up in 5th place with 930,000 downloads. The latter, however, did make the headlines several times due to an early leak.

Weeks before the official release of Black Ops, reports came in that the Xbox 360 version had already leaked to BitTorrent. Although not all “leaks” turned out to be legit, a copy of the game did eventually come out a week before it hit the stores. This, despite efforts from Treyarch’s community manager Josh Olin to stop it.

As can be seen from the three lists below, PC games are by far the most downloaded titles, with on average more than three times the number of downloads compared to Xbox 360 and Wii releases. Overall, the number of downloads of the top titles in each category grew a little compared to last year.

The data for these lists is collected by TorrentFreak from several sources, including reports from all public BitTorrent trackers. All the data is carefully checked and possible inaccuracies are systematically corrected.

Source: Call of Duty: Black Ops Most Pirated Game of 2010

As we have argued before, Google is probably the number one reason why millions of people are using BitTorrent sites today. This trend hasn’t gone unnoticed to the music industry either, and today The British Phonographic Industry (BPI) went as far as blaming Google and other search engines for being a main source for online piracy.

“Search engines are as popular as P2P applications as a source of illegal downloads,” BPI stated in a report today. “It’s not hard to see why. Key in the name of any popular artist, add search terms like ‘mp3′ or ‘download’ – both neutral terms – and typically the large majority of results that appear are blatant links to illegal downloads.”

As an example of this alleged facilitating behavior by Google, the BPI performed a few test searches. They found that the majority of the top Google search results for popular singles pointed to ‘illicit’ sources.

“In a single week in November, BPI test searches were made on Google for the UK’s top 20 singles or albums, followed by ‘mp3′. On average 17 of the first 20 Google results for singles and 14 of 20 search results for albums were links to known illegal sites.”

The search results are just one part of the search engine problem though. In addition, the BPI points out that services such as auto suggest and Google’s instant service may drive people towards ‘rogue’ or ‘illegal’ sites.

“The predictive search tools offered by some search engines go further by actively directing users towards free illegal downloads by auto-completing artist searches with additional phrases like ‘torrent’, or providing specific references to unlicensed sources like Mediafire or mp3raid.”

Although the BPI is right in their analysis, they also know that the search results are merely the result of a set of algorithms. Piracy related searches float to the top and are suggested because that’s what people tend to search for. Google has no active role in it.

This is what the BPI hopes to change. They suggest that search engines should actively censor their search results, and move links to ‘authorized’ music stores higher up. According to the music industry this would be a very effective tool to decrease piracy.

“The music industry continues to press search engines to help consumers stay on the right side of the law and has suggested concrete solutions such as prioritising music search results in favour of legal online services such as those highlighted by the Music Matters campaign,” the BPI writes.

In part, these lobbying efforts have already been successful. Two weeks ago Google announced several upcoming changes that would benefit copyright holders. Among other things the search mogul said that it would censor ‘piracy’ related words for appearing as auto-complete suggestions.

For Google this is a slippery slope to be on, and the next step could very well be the sort of commercial censorship the music industry is suggesting. And if the music industry is successful, other industries will soon follow. The question is, however, if that will solve the piracy issues or just hide them.

Source: Record Labels Blame Google For Piracy, Hint At Censorship

“Pay what you want. If you bought these five games separately, it would cost around $80 but we’re letting you set the price! All of the games work great on Mac, Windows, and Linux. We didn’t want to leave anyone out,” the Wolfire team announced a week ago.

Not only can downloaders choose the amount they want to pay, they can also decide whether they want the money to go to the developers, charity or any combination of both. The minimum amount required to get a download link is a penny.

Thus far the project has been a great success. The games have been downloaded more than 80,000 times and have raised $683,090 at the time of writing. Linux users have been the most generous with an average donation of $14.01, while Windows users are stuck at $7.31.

Over the past days Wolfire has covered the results of the “Humble Indie Bundle” project in detail. Overall they have been very satisfied with the results, but they also found that there is still a high percentage of people who didn’t even want to pay a penny, and pirated the bundle instead.

Jeffrey Rosen, the co-founder of Wolfire Games, alerted us to this issue and reported his findings in a recent blog post. According to their analysis of the incoming donations and the amount of data that was transferred, some 25% of downloaders did not pay for the bundle.

If Wolfire Games were the RIAA, they would have quickly characterized this group as evil freeriders without any sense of ethics, but Rosen and his colleagues are more realistic in their analysis. Obviously money can’t be an incentive to pirate here, since the games can be legally owned for just a penny.

So what motivates people to download the bundle without paying then? What are the barriers that prevent people from coughing up a single penny?

Rosen mentions that the download links have been posted all over the Internet and that some people would rather click on those directly, than go through the entire payout process just to send over a penny. We could call this the laziness or convenience argument to pirate.

Another explanation is that the payment processors that are used are not available in every country, so some people couldn’t pay even if they wanted to. In a similar vein, but not mentioned by the Wolfire team, is that many people in the target audience are young and don’t have access to a credit card.

These two payment restrictions are related to availability, which is a common reason for people to pirate. Even if they want to buy something legally, they can’t because they don’t have access to a credit card or are in a country where they can’t use the required payment processors.

Other reasons for downloading without paying could be that one downloads the bundle from different computers after having paid, or that the download is shared with friends who made a joint donation. These should not be counted as ‘piracy’ either.

Lastly, there could also be a group of people that think that paying a penny is too much, choosing to grab a free copy instead just to be rebellious pirates. We don’t think that this group is very large, and even if it is significant we’re sure that money is not their incentive.

Rose said that they do not intend to add any restrictions to the download links because that would only make the download process more cumbersome for those who do donate generously. He does have a request for future ‘pirates’ though.

“If you are deadset on pirating the bundle, please consider downloading it from BitTorrent instead of using up our bandwidth! Also, even though you are pirating our games, please tell some of your friends about the Humble Indie Bundle.”

Source: Piracy: When Even a Penny Is Too Much

Yesterday the music industry lobby group IFPI presented its 2009 figures, again putting the blame for decreased physical sales on file-sharers. Unfortunately, most mainstream media outlets simply reposted the IFPI press release and their flawed analysis. In general, no effort is made to actually balance out or check the message being sent out to millions of readers.

In their annual Digital Music Report, IFPI states that file-sharers are half as likely to buy physical CDs than the average music buyer. Although the report is about digital music, they carefully avoid saying anything about file-sharers and digital sales. That would actually show a completely different picture as we will explain below.

The music group made this statement based on an IFPI-commissioned study that was executed by Jupiter research. Although IFPI refused to share the entire research report with TorrentFreak, we can conclude the following from the two pages that were published online.

Compared to music buyers, music sharers (pirates) are…

* 31% more likely to buy single tracks online.
* 33% more likely to buy music albums online.
* 100% more likely to pay for music subscription services.
* 60% more likely to pay for music on mobile phone.

These figures (as reported by the music industry) clearly show that file-sharers buy more digital music than the average music buyer. In fact, the group that makes up the music buyers category actually includes the buying file-sharers, so the difference between music sharers and non-sharing music buyers would be even more pronounced.

How can this be true and why was there no mention of this in the Digital Music Report? They must be spending less on digital music then, right? But again, this is not the case at all. On average, file-sharers actually spend more than non-sharing music buyers. At least that’s what Mark Mulligan, Vice President and Research Director at Forrester Research who conducted the study for IFPI told us.

Mulligan has his hands tied and couldn’t say much about the findings without IFPI’s approval, but we managed to get confirmation that paying file-sharers are the music industry’s best customers. “A significant share of music buyers are file sharers also. These music buyers tend to be higher spending music buyers,” Mulligan told TorrentFreak.

So why do file-sharers download music without paying? According to the annual IFPI report, one of the main reasons people share music is because it’s free. This leads the music industry group to conclude that they are cheapskates and not willing to pay for music at all. But, as the above clearly shows, they are misinterpreting this finding, and we’d like to explain why.

In the digital age, people’s demand for music has changed significantly, but their budgets are still limited. The average file-sharer is currently spending $100 a year on music according to IFPI’s own research, not really a group that can be classified as freeloaders. However, their demand for music simply exceeds their budget and that’s where they start downloading music on file-sharing sites, because it’s free.

Just to be clear on our motivation to balance the ‘facts’ as reported by IFPI. We are not advocating that all music should be free and neither do most of the music lovers who share files online. However, the music industry continues to ignore that file-sharing is much more of a signal from the market that it is the increased demand for music that fuels piracy.

The solution to the problem is relatively easy. Start offering more unlimited and unrestricted music services and piracy will go into a free-fall. File-sharers are already paying for digital music, and they pay more than the average music consumer. File-sharing is simply a market signal showing that there is a need to compensate for the lack of high quality and affordable subscription services.

If anything, the music industry should have more respect for file-sharers, as they are their most valuable consumers. They are ahead of the curve and actually leading the way for the future of digital music, buying more digital music than anyone else. It’s the music industry that has to change, not the other way around.

Source: Pirates Are The Music Industry’s Most Valuable Customers

Downloading music illegally, or watching a movie online without paying, was okay with a much smaller group, 18 and 13 percent respectively.

In fact, hiding your online porn viewing habits from your spouse is still more morally accepted than downloading a movie or music album without paying for it. Of the respondents, 18 percent thought that is was fine to secretly watch porn in a marriage.

At first sight the results of the survey are not really that surprising. Downloading music and movies without consent from the copyright holders is in violation of the local laws in New Zealand and watching porn obviously isn’t. Still, a closer look at the findings reveals some remarkable inconsistencies.

Firstly, most of the adult entertainment is actually viewed on sites that are dominated by copyright infringing content. So, many of the people who watch porn online are actually pirating as well, without realizing it.

Another remarkable finding was that people seem to be fine with copyright infringement if it’s on a video streaming site such as YouTube. Of all respondents, 31 percent said that it is morally acceptable to stream copyrighted TV-shows on YouTube, while only 13 percent believed that downloading copyrighted video was morally okay.

Thus, streaming copyrighted content is somehow perceived as more acceptable for some odd reason. The 5 percent difference between the moral acceptability of music and video downloading is another mystery that is left unexplained.

Overall, this survey shows how malleable peoples’ perceptions are when it comes to copyright issues online, with approval rates swaying back and forth between different types of media and the various distribution platforms.

Source: Watching Porn Online More Acceptable Than Pirating Music

In five days the game’s worldwide sales climbed to $550 million, crushing previous record holders Harry Potter and the Half-Blood Prince (only $394m) and The Dark Knight (just $203.8m).

“In just five days of sell through Call of Duty: Modern Warfare 2 has become the largest entertainment launch in history and a pop culture phenomenon,” Activision CEO Bobby Kotick said commenting on the game’s success. This is, of course, reflected in the number of pirated copies being traded on BitTorrent.

With 4.1 million unauthorized downloads of the PC version alone, the game more than doubles the achievement of last year’s ‘winner‘ Spore. Modern Warfare 2 leads both the PC and Xbox 360 lists, by a landslide.

The overall trend across all platforms is that, unlike last year, all of the games are 2009 releases. What makes Modern Warfare 2′s chart-topping even more impressive is that this has been achieved after just two months of availability. We further see that the figures for the most downloaded titles have more than doubled compared to last year, equaling the growth in uTorrent users.

PC games are by far the most downloaded titles, with on average more than three times the number of downloads compared to Xbox 360 and Wii releases. As expected, Mario titles are in high demand on the Wii.

The data for these lists is collected by TorrentFreak from several sources, including reports from all public BitTorrent trackers. All the data is carefully checked and possible inaccuracies are systematically corrected.

Source: Modern Warfare 2 Most Pirated Game of 2009

The Delhi High Court decided to fine the software giant, after it found out that the cases the company had initiated in India’s capital were related to alleged copyright infringements that occurred in Bangalore, Hyderabad, Chandigarh and Mumbai.

According to the Court, Microsoft is needlessly abusing its unlimited cash flow as a power tool to financially hurt the defendants, who will have to travel all across the country in order to defend themselves. This abuse of “money power” to “harass” defendants is unacceptable according to the Court.

“When the constitution of India provides equality before law, this equality has to be all pervasive and cannot be allowed to be diluted because of money power or lobbying power,” Judge Dhingra commented on the case.

Aside from the harassment angle, the Court found that Microsoft chose Delhi because the High Court can order compensation up to $40,000 for the alleged crimes.

However, instead of taking on the case directly, the court chose to fine Microsoft $4,000 for each of the four defendants instead. If it turns out that the software piracy claims are unfounded, this money will go directly to the accused. In addition, Microsoft was ordered to pay a local commissioner who will investigate the piracy claims.

Although it was not illegal for Microsoft to file the four cases in the national capital where the company is headquartered, the Court found that something had to be done to prevent shear abuse of power by the software giant.

“On the strength of its money power it [Microsoft] has the added advantage of choosing a court of its own liking which is so far away from the defendant that it becomes problematic and a harassment for the defendant to contest the suit itself,” the Delhi High Court ruling read.

Source: Microsoft Fined For Abusing Power to Harass Pirates

In the past we’ve covered many disputes between artists and labels, where the latter is being accused or even sued for using songs without permission. Just a few months ago Latin America’s biggest artist, Alejandro Fernández, sent the police to a Sony Music office to confiscate over 6,000 CDs that the label refused to return, and this is just the tip of the iceberg.

The labels have made a habit of using songs from a wide variety of artists for compilation CDs without securing the rights. They simply use the recording and make note of it on “pending list” so they can deal with it later. This has been going on since the 1980s and since then the list of unpaid tracks (or copyright infringements) has grown to 300,000.

Growing tired of the labels’ piracy, a group of artists have filed a class-action lawsuit in Canada against four major labels connected to the CRIA, the local equivalent of the RIAA. In October last year Warner Music, Sony BMG Music, EMI Music and Universal Music were sued for illegal use of thousands of tracks and at present the case is still underway.

How and why this blatant copyright infringement could go on for years is a mystery, but the labels’ double standard has been picked up by the plaintiffs as well. “The conduct of the defendant record companies is aggravated by their strict and unremitting approach to the enforcement of their copyright interests against consumers,” the artists argue in their claim for damages.

The suit is still ongoing but already the labels have admitted to owing at least $50 million for infringing the rights of artists, and this figure could grow as high as 6 billion. So who are the real pirates here?

Update: The correct figure is 6 instead of 60 billion.

Source: Record Labels Face $6 Billion Damages for Pirating Artists

Just two weeks ago a coalition of several British “creative industries” called on the UK government to implement legislation that would make it possible to disconnect repeated copyright infringers. At the time they were convinced that the French model was the right way to go, but it appears they have already changed their minds.

The UK film industry – backed by some of the same organizations that previously called for the disconnection of pirates – now think this approach is too extreme. Instead, Internet service providers should slow down repeated offenders, in the hopes that this will stop their defiant behavior.

“We see the use of technological measures as similar to creating road humps – they will make potential copyright infringers pause and think twice,” Lavinia Carey, chair of Respect For Film said in a comment.

In addition, the movie industry group vaguely mentions the possibility for ISPs to block access to ‘pirates sites’ or at least warn their customers that they could end up in court if they continue to download copyright infringing content.

By itself, the speed bumps are an interesting approach to the ‘piracy’ problem, but we seriously doubt it will have much effect. A reduction in available bandwidth will surely annoy people previously used to downloading a lot of content, but will it also stop them from return to their old habits when the bumps are gone?

Or phrased in the speed bump analogy; will speed bumps on a road still have an effect on the behavior of drivers when they are removed? It might very well be that the restrictions are only effective when they are in play, which makes them useless as an anti-piracy tool.

Nevertheless, the UK government has committed itself to helping the entertainment industries tackle the piracy problem. In the words of David Lammy, Minister of State for Intellectual Property: “We know that the copyright industries in the UK are suffering huge losses due to illegal downloading.”

The use of the term ‘copyright industries’ by Lammy is telling. Meanwhile, Minister Lord Carter is tasked with making sense of all the industries’ piracy solutions. The legislation he comes up with will be announced on 16 June.

Source: Movie Industry Wants “Speed Bumps” for Pirates

By sheer volume the number of downloads these lesser known bands accumulate might only be a fraction of those generated by the Britney Spears and Duffys of this world, but 10,000 downloads is pretty significant for developing artists. Artists need to be heard in order to build a steady fanbase.

Revenue wise, most artists trying to earn a living making music only have a moderate income, and every fan counts. Generally, they don’t make much from album sales – contracts where the band/artist gets less than 10% of the revenue are quite common. Merchandising and playing gigs are the largest source of income, income that is generated by fans.

If the average artist can pick up a few hundred extra fans by giving away his music for free, this can make a huge difference. This group might not be that interesting for the record labels and the royalty collectors, who tend to feed off the top 1% of artists who are generally well marketed by million dollar budgets from the music industry.

Contrary to the conclusions of the PRS study, a special brand of ‘pirates’ are particularly interested in new and unsigned bands. On the music tracker What.cd, which hosts almost 100,000 users, the most downloaded album ever is a compilation of unsigned artists. Second is an album from The Flashbulb, with 10 times as many downloads as Britney Spears’ Greatest Hits collection.

Similarly, on the music sharing website Jamendo thousands of artists are giving away their music for free. Rob Costlow, one of the early adopters of the site told TorrentFreak that thanks to this free music model, he is able to make a living off his passion. His most popular album on Jamendo was downloaded over 80,000 times while nearly half a million listened to it on the website.

So, even though the vast majority of the the users of file-sharing services download music from the top of the charts, there is undoubtedly a huge potential for new artists to market themselves through file-sharing. Perhaps less interesting for the major labels who make most money off cleverly marketed top acts, but extremely valuable for the average artist trying to make a living off music.

Source: Shocking: Pirates Like Britney Spears Too

In the United States, MIT is leading the list for the second year in a row, followed by the newcomer University of Washington. Purdue University dropped 4 spots and is now ranked 8th, but this could be due to the fact that students at Purdue launched their own private P2P network.

BayTSP reports that the overall number of copyright infringements hasn’t changed much over the past three years, despite the expensive anti-piracy systems that were implemented.

BayTSP also recorded statistics for non-US universities and schools, topped by the University of Botswana. Greece is well represented with four universities in the top 10 and Polish universities are up and coming with three entries. Sweden – home of The Pirate Bay – completes the top 10 with Uppsala University in second place and students from Gothenburg in 10th.

TorrentFreak discourages prospective students from using these lists to select an appropriate school.

Source: MIT Harbors The Most P2P Pirates

BayTSP told TorrentFreak that it will mainly target rebroadcasts of live TV-signals on popular streaming sites. Those who use their mobile phone to stream their favorite football game when they’re at the stadium are safe, at least for now. BayTSP is already offering a similar service to the movie and music industries for ‘non-live’ clips uploaded to sites like YouTube and Dailymotion.

Illegal broadcasts of live sporting events are nothing new though. The P2P based TVU Networks has been around for years, and allows users to watch and broadcast live TV signals all over the world. With the increase in popularity of services such as Ustream and Stickam the number of illegal streams is growing.

“Since 2006 we’ve seen a steady increase in piracy of sports broadcasts and pay-per-view events, primarily as a result of video streaming technology becoming easier to use,” says BayTSP CEO Mark Ishikawa. “Since broadcasters make the majority of their money from the initial broadcast, they understand the impact that signal theft can have on the bottom line.”

The name BayTSP might sound familiar to BitTorrent users, as they are also sending takedown requests on behalf of the movie and music industries. The company does so by joining BitTorrent swarms to record the alleged infringer’s IP-address and other relevant information. This information is then forwarded to the user’s ISP.

With web based streams, however, it is often impossible to identify the source directly, as their IPs are not broadcasted on the web. “In most cases, take down notices are sent to the site hosting the stream. On some occasions, notices are also sent to the ISP of the hosting site,” BayTSP told TorrentFreak.

Whether the money that the sports broadcasters pay BayTSP will make up for the lost revenue though piracy is a question that remains unanswered.

Source: Sports Broadcasters Go After Live Streaming Pirates

A recent post by isoHunt founder Gary Fung inspired us to run a poll. We know that TorrentFreak readers might not be representative of the average file sharer, but we would love to find out why you use BitTorrent. The following poll has four answer options, based on the four types file-sharer, as described by Lawrence Lessig in his book Free Culture.

The options are as follows.

1. Because it’s free

Some use BitTorrent to download music, movies and software so they don’t have to pay for them. Instead of purchasing a CD or buying a DVD, they prefer to download it for free on BitTorrent.

2. To ‘try before I buy

The second type uses BitTorrent mainly to sample content and try before they buy. They download music to discover new artists and might end up buying the album if they like it. Similarly, they try software or download movies but buy them when they live up to their expectations.

3. Because I can’t get it elsewhere

The third group mainly downloads content they can’t get elsewhere. The TV-show that it not on TV in your country yet, or that song you can’t buy easily online without having to deal with all kinds of digital restrictions.

4. To download ‘legal’ torrents

The last type of file-sharer mainly downloads content that the creator wants to share for free, often indicated by the misleading term ‘legal torrents’. Music from Jamendo for example, or films that are ok to share.

So where do you fit in? Let us know.

Source: Poll: Why Do You Use BitTorrent?

Quite common by now are the watermarking techniques used by the studios to track down the origin of cams. Through these watermarks the theaters where the movies are recorded can be identified, and every now and then an arrest is made. Recent technological advances even make it possible to get a fairly accurate estimation of the location of the camcorder equipment using audio watermarks. These audio watermarks have not been implemented yet since they require a lot of extra paperwork in order to work well.

In a recent blog post John August, the director of hit movie The Nines, discusses some of the anti-piracy tools the movie studios are using to decrease or deter camcording in theaters. August himself has a fairly balanced view on illegal downloading. In a previous interview with TorrentFreak he said that he wouldn’t think bad of people who downloaded his movie using BitTorrent. In talks with other studio insiders, however, he discovered something that made our jaws drop.

We’ve mentioned many times before that when a movie hits the theater, or a DVD or TV show debuts in one country before it does in another, this is a major incentive for people to turn to BitTorrent. People don’t like waiting for something that other people already have, especially if the solution to that is just a few clicks away. However, instead of putting time and effort into making their content premiere globally, the studios are purposely delaying movie releases in some countries because a lot of cam releases originate there.

So, instead of working towards solving the problem, the studios are actually encouraging piracy by restricting access to millions of potential customers. Like many others, August himself acknowledges that delayed premiere dates in some locations might actually encourage people to pirate movies and TV-shows.

Instead of adding restrictions and thereby alienating their customers, the movie and TV studios should focus on dropping the release windows for their content. It may have been possible to keep people and countries apart pre-Internet, but not any more. People worldwide are closer together today than ever before – and only getting closer.

Source: Fear of Movie Piracy Delays Theater Releases

We thought it would be interesting to compare the users of different operating systems on their sharing behavior. Therefore we decided to take a closer look at the share ratios of Windows, Mac and Linux software on The Pirate Bay. The results are quite interesting and indicate that Windows users share twice as much as their Mac counterparts.

In order to calculate the share ratio we simply looked at all the seeders (completed downloads) and leechers (still downloading) on the torrents in the software category on The Pirate Bay. The share ratio is the number of seeders divided by the number of leechers. So, the higher the ratio, the more users share.

In the table below you can see that there are much more torrents for Windows software, 49345 compared to 2952 for Mac software and 1271 for Linux. Nevertheless, those downloading Windows software tend to share the files for longer, even compared to the Linux users.

Not listed in the table, but worthy of note, are the average number of downloaders per torrent. Mac software is in the lead here with 22 downloaders, followed by Windows with 9 and Linux with a measly average of 4 peers per torrent. Although we can conclude that those who download Windows software share more compared to others, the ratios for Mac and Linux software aren’t bad either. It can get a lot worse – Xbox 360 downloaders don’t even make a 0.3 share ratio.

Of course, the term ‘pirate’ obviously doesn’t apply to all downloaders either, especially not for the Linux group. It is interesting to see the huge differences in share ratios between the different categories though; perhaps Microsoft should consider building their next campaign around these stats. Sharing is caring, right?

Source: Mac vs. PC: The Pirate Edition

The report, which was commissioned by the government, estimates the positive effect on the Dutch economy to be around 100 million euros a year. While it is recognized that the entertainment industry suffers some losses, these don’t outweigh the positive effects of file-sharing.

File-sharing gives people access to a wide range of cultural goods and is often used to sample content that is bought later, the report concluded. Most file-sharers would have never bought the content they downloaded, but having access to such a large media library increases the welfare of Dutch citizens, the researchers note.

The researchers further found that people who download music and movies are not buying less than people who don’t. In fact, downloaders are reported to be more frequent visitors of concerts, and game downloaders actually bought more games than those who didn’t. In the music industry, lesser-know bands profit most from file-sharing, the researchers report.

The report goes on to discuss the legal situation in the Netherlands. Downloading music and movies for personal use is currently legal under Dutch law while uploading is illegal, although most file-sharers are uncertain as to what is allowed and what is not. Although anti-piracy outfits are lobbying for harsher copyright laws, this will have little effect.

The researchers think that stricter copyright laws will not have much of an effect on the income of the entertainment industry. Most reported losses can be attributed to things other than piracy, they say. One of the main reasons for the loss in sales for the music industry, is competition with other forms of entertainment.

BREIN, the anti-piracy voice of the Netherlands hasn’t commented on the conclusions of the report yet, but we’re looking forward to hearing from them.

Source: Economy Profits From File-Sharing, Report Concludes

One of the key statistics that is hyped every year, is the piracy ratio of downloaded music. Just as last year, IFPI estimates that 95% of all downloads are illegal, without giving a proper source for this figure. Interestingly, those who take a closer look at the full report (pdf), will see that only 10% of the claimed illegal downloads are seen as a loss in sales.

Contrary to the RIAA’s arguments in court, the BPI and IFPI don’t believe in the “every pirated download is a lost sale” myth. Matt Phillips, BPI’s Director of Communications wrote in an email to TorrentFreak: “No, we don’t think every illegal download is a lost sale (and never, ever, have, if my memory serves me correctly). The estimates for lost sales revenue is [sic] not calculated on this basis.”

To come up with a ‘best guess’ of the real losses for the UK market, the music industry have commissioned Jupiter Research. For two years in a row, Jupiter estimated the losses are to be about equal to the revenue that comes from digital sales. If we combine this with the ‘only one in 20 downloads is paid for’ guesstimate, only one in 10 illegal downloads is seen as a loss in sales.

Of course we will be very reluctant to draw conclusions from research that is commissioned by the music industry itself, however, it would interesting to know what the effect is of those downloads that are not seen as a loss. Could they perhaps used by consumers to discover new music, and generate revenue in the long run?

What is clear from the report is that ‘pirates’ have shown the music industry what consumers really want. The music industry is slowly starting to recognize that they have to compete with piracy, by offering high quality products. In the 2009 report, for example, IFPI proudly reports that many services now sell DRM-free music, while they themselves are the reason why these restrictions were implemented in the first place.

In the report IFPI writes: “An important development in 2008 was the licensing of more online stores to sell downloads without digital rights management (DRM), meaning consumers can play the music they acquire on any portable device. In January 2009, Apple announced it had signed deals with leading record companies to offer eight million DRMfree tracks at flexible price points. The move is expected to significantly boost download sales.”

Besides the usual anti-piracy ramblings on how ISPs should help to disconnect pirates from the Internet, the report documents another interesting trend. The music industry clearly recognizes that they’ve done something wrong in the past, and is now promoting unlimited download services, either ad supported or for a low monthly fee. If done right, this ‘piracy inspired’ model might just be the future of music consumption, or at least a worthy competitor to piracy. But then again, they will find something else to complain about sooner or later.

Source: Music Piracy Not That Bad, Industry Says

The legal action, under the Copyright and Related Rights Acts 2000, claims the ISP knowingly facilitated the infringements of its customers and is therefore liable for their actions. Willie Kavanagh, Managing Director of EMI records in Ireland said of Eircom: “With the greatest of respect” it was “well aware” that its customers used its networks to infringe copyrights “on a grand scale”. In response, Eircom (correctly) believes that as a carrier, it is under no obligation to monitor the content of traffic on its network.

Being heard by Justice Peter Charleton, the trial started yesterday in Court 7 at the Commercial Court and is listed to run for the next four weeks. Michael McDowell SC, a former politician now representing the ‘Big Four’ in the case, said Eircom should be forced to stop its customers from illegally downloading music. According to reports, he quickly began his attempts to portray Eircom in a bad light.

McDowell read out an internal email from 2001, written by Eircom’s head of Internet, Denis Curran, which noted that the issue of “MP3 piracy” should be the subject of discussion at a forthcoming management meeting. All fine so far, but Curran wrote “Piracy is a loaded term. Could we say ‘sharing‘- ‘piracy’ implies there’s something wrong with it.”

Clearly not realizing his off-the-cuff comments would be aired worldwide eight years down the line, Curran added “Think of it as helping the health and good living of rich cocaine sniffing rock stars by leaving them with less free money to spend on sex and drugs.”

McDowell didn’t stop there. Not wanting to miss an opportunity to imply that Eircom supports piracy, McDowell noted that only this week, the ISP was seen to be advertising its services on The Pirate Bay. Of course, Eircom would have no idea that this was the case, as they will have out-sourced their advertising to an agency.

In attempting to quantify the ‘losses’ incurred by the ‘Big Four’ at the hands of Eircom, McDowell noted that illegal downloading costs the Irish music industry 13.8 million Euros every year, and since Eircom has 40 per cent of the ISP market, it must be responsible for causing the industry losses of between 4 and 5 million Euros.

It will be no surprise if the rest of the statistics provided by the ‘Big Four’ and IFPI are equally vacuous.

The case continues.

Source: IFPI vs ISP: Piracy Means Less Sex and Drugs for Rock Stars

At this stage, little is known about ACTA, but what we do know is that the RIAA has put forward some radical proposals. One of their suggestions was to force ISPs to become ‘copyright cops’, ordering them to filter out pirated files on their networks, and making the ISPs liable if they fail to respond to the demands of copyright holders. That, in addition to the request for an official crime unit to track down and bust alleged pirates.

Most governments that have commented on the ACTA negotiations have refused to reveal any information about its contents, but were quick to refute rumors. According to the New Zealand government (ppt), ACTA is aimed at commercial piracy only, and no one has to be worried about getting their iPod through customs. Nevertheless, they also stress that “draft versions of the text will not be made available.”

According to the FFII, all this secrecy goes against EU regulations, and in response they have filed a complaint with the Ombudsman against the EU Council for concealing ACTA documents. “Making agreements to keep texts secret goes much further than allowed. The Council deliberately obstructs access to ACTA documents,” FFII analyst Ante Wessels commented. FFII requests that the documents should be made public. Alternatively, the EU could withdraw from the negotiations, they say.

Bottom line is this: we don’t know what the plans for ACTA are, and it is impossible to remedy this since requests for information are denied at all levels. There is no good reason to keep them secret either, other than to prevent the public and other institutions voicing their opinion on the proposal before it is signed. Convenient perhaps, but not very democratic.

Source: EU Conceals Anti-Piracy Treaty Documents

The RIAA recently announced that it would stop its massive legal campaigns and limit the court visits to a minimum. No surprise there. Lawsuits are expensive and the RIAA lost more of those than they had hoped, so they turned their attention to lawmakers, local governments and ISPs instead.

The new plan is to get legislation implemented that will allow the entertainment industry to spy on the filesharing behaviors of individual Internet subscribers, and order their disconnection when they are suspected of repeated copyright infringements. Ideally they would like to make “downloading” a criminal offense of course, and this is exactly what the Pirates Prison Project is anticipating.

According to Dimitri Johnson, CEO of Pirate Prisons Project (PPP), billions of Internet users around the world will have to be thrown in jail if the anti-piracy lobbyists have their way. “Everyone is guilty by default: since nobody will want to do without Internet access, no matter what, everyone will end up going to jail. All of our kids, parents, friends and peers. Off to jail we go,” he writes.

“This trend has led PPP to foresee a gigantic business opportunity,” Dimitri adds, while introducing his plans to build thousands of prisons where these Internet pirates can be locked up. Investors can buy shares in these yet to be built prisons, and pirates have the opportunity to book a comfortable cell in advance. PPP currently offers three options:

1. Buy Shares

You can invest in the new prisons due to be built, which is a solid investment according to the PPP. 150 shares currently trade at $10,000, but people with a smaller budget can get 2 shares for just $200.

2. Denounce Someone

If you happen to know someone who pirates music, software or movies on the Internet, you can first report them, and then send them over to the PPP website to book their cell early on. There are several options to choose from, and early birds get the best picks.

3. Book a Cell Yourself

Last but not least, you can book a cell yourself, and make sure that you’ll have a comfortable time in prison once you’re locked up. If your budget allows it, you can book the “jail premium” package: the largest cell available, complete with broadband Internet.

TorrentFreak contacted one of the project leaders, who told us that he hopes to get the RIAA and MPAA on board as one of the main investors in the project. He’s right, it’s their future…

Source: Pirate Prisons Project Launches, Book Your Cell Now!

Perhaps even more importantly, the rise of unauthorized downloading of TV-shows is a signal that customers want something that is not available through other channels. Availability seems to be the key issue why people turn to BitTorrent.

This also becomes clear when we look at the geographical location of the downloaders. The vast majority of the downloads come from overseas, over 90% on average. Outside the US, fans sometimes have to wait for weeks or even months before the show airs on TV in their country. Many of them are simply not that patient or willing to torture themselves, and turn to BitTorrent in desperation.

Legal online streaming services are only available in the US, and change very little in the overall download figures. Until the availability problem is addressed, we’re not likely to see a decrease in TV-show downloads from BitTorrent. Indeed, compared to last year, the download figures have grown a little, especially for the top three TV-shows in the list.

Below we have compiled a list of the most downloaded TV-shows, together with the viewer average for TV in the US, based on data from Nielsen. Note that the download count for each show is per episode, the most downloaded in this case. The Olympics Opening Ceremony was one of the most wanted broadcasts of the year with 4,620,000 downloads, but we decided only to include TV-series.

The data for the top 10 is collected by TorrentFreak from several sources, including reports from all the large BitTorrent trackers. The download number is the sum of all torrent downloads for the most popular episode. Based on previous experience a correction is made for smaller .torrent releases that we might have missed.

Source: Top 10 Most Pirated TV-Shows of 2008

Sony’s PSP Product Manager John Koller told Multiplayer recently “[There] certainly has been some piracy on the PSP. We’ve seen that as a significant issue — it’s trending down right now, we’ve seen the piracy not be as such prevalent in the last month to two months”

According to Koller, more and more PSP users are joining the “good side” and standing up for the intellectual property rights of the company. “We’ve noticed there’s kind of a ‘good vs. evil’ battle that we track on many of the forums and many of the pirated web sites,” he said. “There are certainly people that are standing up and fighting for what we consider the good side, the rights of developers and publishers to make money on their IP.”

To verify this assesment, we decided to take a look at the piracy rate of PSP games. This data, based on direct monitoring of BitTorrent trackers seems to contradict Sony’s statements. From our statistics, there seems to be an increase instead of a decrease in the past months, which is true for all content. There is a steady increase in downloads for PSP games throughout 2008, and an even steeper one over the last three months.

To give an example of the piracy rate of PSP games, Dissidia: Final Fantasy was downloaded 200,000 times via BitTorrent over the past 5 days, which is pretty significant for a PSP game. The two most pirated games for the PSP in 2008 were Final Fantasy VII and GTA Vice City Stories, with an estimated 650,000 and 550,000 downloads. As a comparison, the average PSP game sells 133,000 copies. We’re curious where Sony got their statistics, perhaps it was just a PR stunt, to give pirates a guilty conscience.

Despite the increase in pirated downloads, for other types of games, more units were sold November this year compared to the same month in 2007, adding up to an impressive $4 billion in sales.

Source: PSP Piracy is Trending Up, Despite Sony’s Claims

This means that millions of people will receive warning emails from their Internet service provider, based on ‘evidence‘ gathered by a third party with a vested interest in the outcome. This will also mean, however, that thousands of individuals will receive emails in error, as the evidence gathering techniques are not as solid as the anti-piracy outfits say. There have been a lot of false accusations already, and this was recently confirmed in mainstream media by the BBC show Watchdog.

The move from individual lawsuits to controlling piracy at the ISP level seems to be the new trend this year. Many countries have looked into the possibility of disconnecting file-sharers from the Internet, often gently pushed by anti-piracy lobbyists. France was the first to present their “three-strikes” law earlier this year, which would allow anti-piracy outfits to police the Internet. The IFPI now plans to implement this worldwide, with or without legislation.

It wont stop there though, if the RIAA gets its way ISPs will also have to pro-actively check for copyrighted content on their network. In their list of suggestions for the controversial ACTA proposal, the RIAA wants ISPs to spy on the files that are transferred by their customers, and check them against a reference database of “copyrighted files”.

ISPs worldwide are not looking forward to policing their networks, but they might find themselves with no other option. Adding further pressure, the RIAA wants ISPs to be held liable for the copyright infringement that takes place on their network, as their proposal suggests “…in the absence of proof to the contrary, an Internet service provider shall be considered as knowing that the content it stores is infringing or illegal, and thus subject to liability for copyright infringement…”

So, while dropping the mass-lawsuits might be considered to be a step forward by some, the change in tactics might very well result in a virtual police state where consumers (and ISPs) are guilty until proven innocent. The RIAA has lost some major battles in court, but if they gain control over ISPs, the future might be even darker than the past.

Source: RIAA Stops Lawsuits, But Not the Threats

In fact, earlier this year the MPAA had to release a statement saying ‘they made a mistake’ in the figures. Nevertheless, the $6 billion figure in question has been quoted a lot, with MPAA chairman Dan Glickman still using it in almost every public talk, to convince his listeners of the seriousness of the ‘piracy’ issue. According to the MPAA there is more bad weather ahead, as it is now worried that piracy might flourish in the current financial climate.

“If you look at the situation, the current economic crisis makes this problem much more serious than before,” Glickman said recently at a forum, adding, “If we don’t protect IPR (intellectual property rights), our economic losses will be far worse.” The MPAA will of course leave no excuse unused to justify its anti-piracy measures, nothing new there. Although there are no studies that show how illegal downloads actually affect sales at the box office, there has been a significant bump in the number of BitTorrent users recently.

One should always be cautious to interpret these two events as having a causal relationship. However, after several months of relatively slow growth, BitTorrent sites have seen a dramatic increase in visitor numbers this fall. Since September, the number of peers tracked by The Pirate Bay has nearly doubled from 14 million in early September, to 25 million now. Other BitTorrent sites such as Mininova, Torrentz and BTjunkie report an increase in downloads, searches and web traffic, ranging from 25 to 50 percent over the same time frame.

This increase, even if it is directly related to the economic downturn, is not necessarily linked with a drop in box office grosses or DVD sales. ‘The Dark Knight’, which is the most downloaded movie on BitTorrent in 2008 sold millions of DVDs, and grossed a record breaking billion dollars in cinemas worldwide. That does not really sound like a ‘bad year’ to us.

Source: MPAA Fears Economic Downturn Will Boost Piracy

The film, produced by Hiroyuki Kobayashi, is set for a Sony Pictures DVD release in the USA on December 30. A few days ago it leaked onto the Internet and since then it has already been downloaded a million times via BitTorrent.

This is not the first time that a movie quickly became popular online due to the release of a pirated copy. “The Man from Earth” is another example of a film that became immensely popular due to its distribution on BitTorrent. Contrary to the opinion of the big studios, many independent filmmakers see piracy as free promotion instead of a threat.

We doubt that Sony Pictures will respond similarly to the leak of ‘Resident Evil: Degeneration’, which tops our weekly download chart. Below is the full list of this week’s most downloaded movies on BitTorrent. The Dark Knight, which led the chart three weeks in a row, has dropped to third place. Later this week and following on from our top 10 most downloaded games chart, we will publish the top 10 most downloaded movies in 2008.

The data for our weekly download chart is collected by TorrentFreak, and is for informational and educational reference only. Currently both DVDrips, DVD Screeners and R5 rips are counted.

RSS feed for the weekly DVDrip chart.

Source: Resident Evil Degeneration: BitTorrent Blockbuster

Intellectual Property Minister David Lammy endorsed the launch of the ambitious ‘Fake Free London’ project, noting that the police will be required to enforce already-existing laws: “Legislation alone will not combat counterfeiting and piracy. Good law is great but enforced law is better.” He said the aim of the campaign was send a message that people are serious about tackling the problem, and that consumers and legitimate businesses would be better off as a result.

Apparently there have already been dozens of arrests, but it is unclear if these were connected to running an operation manufacturing the counterfeit DVDs, or selling them. In the UK right now, the difference in terms of how the courts deal with the people at the top compared to the bottom is marked.

Street sellers, often from other countries, are at the bottom of the food chain and are usually cautioned by the police, DVDs confiscated and sent on their way. Some receive small fines but more usually, those that continually flout the warnings could find themselves the subject of an Anti-Social Behavior Order. If they breach the terms of those, it’s possible they’ll go to prison, but few do. It’s hard to see that this process is much of a deterrent, it relies on an offender getting caught lots of times. Besides, the UK has very little prison space right now.

Towards the top end of the food chain, things are different. Last month, another UK man Steven Adams, a fairly large-scale counterfeiter who also fitted huge numbers of XBox and Playstation modchips, received a fairly hefty sentence from the courts. He pleaded guilty to 44 charges, including the manufacture and selling around £1 million of counterfeit products. Adams had toured computer and flea markets all over the UK and at the time of his arrest, police found 31,000 counterfeit discs in his possession. He had numerous expensive properties, vehicles and possessions but didn’t try to hide his wealth, something which he will now regret as the court takes action to seize them. For his sins, Adams also received 3 years in jail.

The punishment for commercial piracy in the UK starts with a simple caution and goes up 10 years in jail and an unlimited fine, so it seems the tools to deal with the problem are already there, but is there the will to start locking more people up? Time will tell, but it seems unlikely. So can the MPA win its very own Olympic event? A bronze medal, absolute maximum.

Source: Movie Industry: London ‘Fake-Free Zone’ by 2012

The amendment, drafted by Guy Bono and other members of the European Parliament, was supposed to put a halt to the march of the anti-piracy lobby. However, despite the fact that is was adopted by an overwhelming majority, with 573 parliament members voting in favor with just 74 rejections, the European Council went against this democratic vote.

In September, Bono stated in a response to the vote: “You do not play with individual freedoms like that,” going on to say that the French government should review its three-strikes law. Sarkozy had other plans though, and in his position of President of the European Council, he convinced his friends this Thursday to reject the proposal.

The rejection also goes against conclusions from the EU culture ministers last week, who sided with the more balanced view of the European Commission, by encouraging copyright holders to work on offering “high quality, accessible, easy to use and consumer friendly” content online – instead of chasing pirates.

Guy Bono was appalled by the recent decision of the Council, which he referred to as “an arrangement between friends.” Not all is lost though, the amendment might pass in January or February 2009, when it will be proposed again. However, as Bono noted, this initial rejection is likely to result in a negative image of European democracy.

It seems that the lobbying efforts of the MPAA, RIAA and others have paid off, and for France and other European member states the road to a ‘three-strikes law’ for alleged pirates is now wide open again.

In France, Sarkozy will now go forward with implementing his controversial three-strikes law. We can only hope that other European countries wont follow this example. What a great demokarzy Europe has.

Source: Anti-Piracy Lobby Defeats European Democracy

Recently their efforts to make money from alleged pirates was picked up by the mainstream press, because an elderly couple was incorrectly accused by them of pirating an Atari game, Test Drive Unlimited. It is of course a stereotype to think that people over fifty don’t play games, but with the help of consumer magazine, Which? Computing, the lawyers were forced to drop the case.

If anything, this suggests that the evidence they gather for use against alleged sharers is not as strong as it should be. In fact, this is not the first time that a case has dropped before it went to court. Apparently, the lawyers that represent the various copyright holders will only make their case when they have a sure win – that is, when the defendants fail to show up. Others who dig in their heels and refuse to pay learn that the consequences aren’t nearly as bad as the law firm would have everyone believe.

Meanwhile, thousands of UK citizens are receiving letters in which they are accused of downloading music, games or more recently, adult entertainment. In these letters, they are asked to pay a few hundred pounds, or else they are threatened with the prospect of being dragged through court, where the fine – if the law firm is to be believed – will be multiplied several times over.

There aren’t any precise figure on how many alleged pirates have paid up, but based on earlier comments from the law firm itself, it’s believed to be between 40 and 60%. It’s not unthinkable that some copyright owners are making more from this type of pirate-chasing than they do from sales of their actual products. Quite an innovative business model actually, especially since in many cases it guarantees a revenue stream for sub-standard products that otherwise simply wouldn’t sell.

But now, according to The Register, computer game manufacturer Atari has had enough, as they have canceled their collaboration with Davenport Lyons and Logistep. Exactly why is open to speculation, but it is difficult to find a single positive article about the activities of these companies, particularly when recent and rather more potentially embarrassing actions are taken into consideration. It’s not surprising that they choose to distance themselves from the operation.

In a comment to El Reg, Atari said that it will “always retain and reserve the right to protect our intellectual property from illegal copying and piracy.” An interesting comment, since cashing in on alleged piracy happens after the offense, and has nothing to do with protection. However, this statement seems more of an attempt to show that this withdrawal doesn’t indicate that Atari is going soft on piracy.

Of course, copyright holders have every right to protect their material, or even make up for the losses they claim to suffer. Whether it is the right thing to do is questionable though, especially when the tactics are as aggressive as they are in these cases.

The complete lack of transparency in respect of the evidence gathering techniques just makes matters worse, and every negative aspect is compounded when people like Simon Davies of Privacy International speak about facets of the operation in very unfavorable terms. “This is appalling, it breaches a number of fundamental human rights,” he said. “They risk bringing the law into disrepute – just because lawyers can do something it doesn’t mean that they should.”

A great example of where copyright has gone wrong has emerged recently. In a leaked contract between DigiProtect (copyright protection outfit) and Evil Angel (content producer), the copyright was actually transferred in order for DigiProtect to make it available on filesharing networks.

“LICENSOR grants DIGIPROTECT the exclusive right to make the movies listed in Appendix 1 worldwide available to the public via remote computer networks, so-called peer-2-peer and internet file sharing networks such as e-Donkey, Kazaa, Bitorrent, etc. for the duration of this agreement.”

So, DigiProtect makes the files available to cash in on the people who attempt to download the files, but not to protect their intellectual property in a way copyright law was put in place for. In fact, this has nothing to do with copyright protection, they are simply exploiting the system. Probably a good thing that Atari got out before it all falls apart.

The question now is how are the other publishers feeling now that Atari has had enough? Since they are based in the UK, the focus now falls on CodeMasters, who are still pursuing people over Colin McRae Dirt, but does the return on the project cancel out the mountains of bad PR it generates? Time will tell.

Source: Atari Cancels Anti-Piracy Witch-Hunt

Today, through an AFACT (Australian Federation Against Copyright Theft) press release, studios including Village Roadshow, Universal Pictures, Warner Bros Entertainment, Paramount Pictures, Sony Pictures Entertainment, Twentieth Century Fox Film Corporation, Disney Enterprises, Inc. and the Seven Network (the top rated free-to-air broadcaster in Australia), announced that they are to sue iiNet for copyright infringement.

The companies state that they are suing iiNet for “failing to take reasonable steps, including enforcing its own terms and conditions, to prevent known unauthorized use of copies of the companies’ films and TV programs by iiNet’s customers via its network.”

Adrianne Pecotic, Executive Director of AFACT said that the studios were forced to sue, since iiNet failed to take action against its customers who the studios claim are committing copyright infringement. Chris Chard, Managing Director of Roadshow Entertainment, claims their titles Happy Feet, No Reservation and I am Legend had all been pirated by iiNet customers using BitTorrent.

The studios want iiNet to disconnect infringers, but up to now, iiNet has refused to do so. Mark White, chief operating officer at iiNet told APC that his company would consult with the Internet Industry Association (IIA) to formulate a response.

“Our view is pretty straightforward. We don’t condone or support piracy in any form, and people who choose to pirate content should face the force of the law,” he said. “This is an industry issue, and we’ve been talking with the IIA, and we’ll work with them in terms of handling it.”

iiNet’s CEO Michael Malone said that the company disputes AFACT’s claims that they refused to do anything about the problem, telling Computerworld, “They send us a list of IP addresses and say ‘this IP address was involved in a breach on this date’. We look at that say ‘well what do you want us to do with this? We can’t release the person’s details to you on the basis of an allegation and we can’t go and kick the customer off on the basis of an allegation from someone else’. So we say ‘you are alleging the person has broken the law; we’re passing it to the police. Let them deal with it’.”

Of course, it is not unusual for movie studios, copyright holders and commentators to skim over the details in claiming that it’s trivial to kill copyright infringement, it absolutely is not. Just this week, Mike Mulligan of Jupiter Research said in a piece entitled “Why Music Can’t ‘Just Be Free’”, that all P2P developers (and presumably ISPs in this case) have to do is “support their claims off innocence by embedding filtering mechanisms into their apps.” TorrentFreak wrote to Mike offering to present precise details of his suggestions to Vuze, LimeWire, Shareaza and Morpheus but, unsurprisingly, there has been no response.

The problem is clearly not lost on Michael Malone: “I think they genuinely believe that ISPs have a secret magic wand that we are hiding and if we bring it out we can make piracy disappear just by waving it.”

The legal action against iiNet was filed in Australia’s Federal Court on November 20th (today), and the proceedings will continue December 20th 2008.

Source: Movie Studios Sue ISP Over BitTorrent Piracy

A new survey, conducted by the The National Research Institute of Legal Policy, looked into the unlawful behavior of Finnish 9th grade youngsters, including their illicit downloading habits. Among other things, the results show that 6% of the 15 year olds smoke marijuana or hash, 11% has participated in a fight and 15% admits they have stolen something from their school.

Unsurprisingly, the most common type of illegal behavior among the group is (illegal) downloading. An overwhelming majority of the surveyed kids (69%) admitted that they have downloaded copyrighted material in the past year. Even more so, 29% reported that they use filesharing applications to download music and movies illegally, every day. However, it is worth pointing out that while bullying, stealing and vandalism might be considered a crime and therefore warrant the attention of the police, personal-use file-sharing is a civil infringement, and does not.

The Finnish news article which reported on the survey resulted in an massive response from readers. A spokesperson from the Finnish pro-piracy group Piraattiliitto told TorrentFreak: “There is an almost unanimous call from the readers to legalize private filesharing. The overwhelming change in the national opinion from anti-piracy to pro-piracy is somewhat surprising, even for us at Piraattiliitto.”

The Finnish copyright lobby on the other hand, says it is ‘alarmed’ at the outcome of the survey. It wants to see new laws that would allow copyright holders to force ISPs to pass their threatening emails to the alleged filesharing customers. The consensus among the readers, however, seems to be that, instead of turning millions of people (including 69% of 15 year-old kids in Finland) into law-breakers, copyright laws should be changed to allow casual piracy.

Source: Piracy Rampant Among Finnish Youth

Ashwin Navin leaving BitTorrent Inc.

His position as president of BitTorrent never held Navin back much. With quotes such as “iTunes DRM Inspires People to Pirate Content,” he was very clear about his attitude towards digital rights management for example. Still, he often found himself in an awkward position, where he had to please the average BitTorrent user, but also the big Hollywood studios.

Now Navin has quit his job at BitTorrent Inc, we decided to do an exit interview, hoping he can speak a little more freely. “My BitTorrent tenure certainly didn’t feel like four years,” was the first thing Navin told TorrentFreak. “But time flies when working among good people, world-changing ideas, and great fun! What attracted me to BitTorrent in the first place, and what is still inspiring to this day, is its ability to provide people true digital freedom.”

Indeed, the BitTorrent protocol provides freedom, but that is also why the entertainment industry is hesitant to adopt it. They don’t want freedom for consumers, but they do want to maintain their cash flow. Nevertheless, one way or another, BitTorrent provides the entertainment industry with a whole new set of tools, something with which Navin seems to agree.

“For its direct and indirect benefits, I believe BitTorrent sits among the handful of important technology breakthroughs such as the printing press, broadcasting, and the Internet itself. Why? Today’s publishing technology – like blogs, BitTorrent, and video sharing sites for example – quite directly forge a level playing field for creativity,” Navin said.

“Indirectly, these tools force large media companies to realize that there is no longer scarcity or a stranglehold on distribution that locks people out of self-expression. Anyone can speak to the world in any format, without filters. Freedom of Speech has never been so available to the masses. How these large corporations respond to this fundamental realization will benefit many many millions of people–creators and consumers alike.”

Navin hits the nail on the head here. BitTorrent is a great technology with a lot of potential. The thing the entertainment industry has to do, is find a way to leverage it. Listening to consumers instead of trying to shut them up would be a good place to start. The Internet has put the consumer in control, and it’s time for the copyright holders to realize this. Or as Navin puts it:

“The free flow of information and entertainment over the Internet doesn’t diminish the relevance of high value, professional entertainment at all. It does force the publishers to be more quality conscious (make fewer flops, and more hits). And the great cardinal sin in this era would be to withhold your content in exclusive deals or to be too precious with your creation. Now’s the time to be more promiscuous with your distribution strategy than before: be everywhere at once, wherever there are eyeballs you can count.”

“In the previous era, there was a lot of forgiveness when 3 or 4 companies owned every road to the consumer. Publishers could produce a crap movie or TV show and get away with it. But when there are millions of ways to get to the user, or in other words, millions of “channels” to choose from, the best entertainment presented in the most frictionless format always wins.”

So, Navin argues that piracy leads to less crap. The entertainment business now has to make stuff people actually want to listen to or watch. Unfortunately for them, it is getting harder and harder to influence and direct consumers to see things the way they want to. Information is more free than ever before and consumers have a choice now, and that will not go away. It’s up to Hollywood to take the next step, and compete with piracy.

Source: Piracy Leads to Less Crap says BitTorrent Co-founder