Turning the tide
New strategies are urgently needed to counter
the surge in online video piracy
� Movie theft
� TV piracy
� Peer-to-peer networks
� Digital copyright
Freedom,, licence or piracy?
Every day of the week, up to 8 million users across North America and Europe connect up to free online services that let them share movies and TV shows.
It may be illegal under most countries� copyright laws, but that doesn�t stop them. Another few million video pirates are doing exactly the same thing every day in developing markets with high internet usage, such as China and India. That�s an awful lot of sales slipping down the drain. One person freedom to pirate is another person�s loss of royalty revenue. Piracy hits the box office takings for new movies and directly
threatens other important revenue streams, such as DVD sales and rentals and a whole range of TV rights. For the Hollywood studios, these other outlets typically represent the lion�s share of a film�s takings. And for TV companies, losing audience share to the Internet has an immediate impact, hitting viewing figures and lowering advertising revenue. It�s hard to be precise about the total losses sustained by content owners. But there�s no doubt that they are substantial already and still growing fast. These days, Hollywood�s annual revenues are between $60 and $70 billion, with only a fraction � a little under $10 billion � coming directly from traditional cinema releases. How to combat online piracy is now, quite literally, the $64 billion
question.
An accelerating trend
Broadband is here to stay, with over half of all home Internet connections in the US. According to Nielsen//NetRatings, 95 million Americans now have broadband Internet access at home. And over 35 million of them already use the Internet to download
music or video. The situation is much the same in other countries. After all, in broadband terms the US is far from leading the pack. Broadband penetration rates are significantly higher in many non-US markets, and both Europe and the Asia Pacific region represent larger total numbers of subscribers. At the same time, another key barrier to video file sharing � overloaded servers and slow transfers � has been overcome by some ingenious new software originally devised for quite a different purpose. BitTorrent was designed by a well-meaning technologist to allow open source software to be offered for download without landing people with huge bandwidth bills. Now BitTorrent is being used to make the copying of films and other entertainment material quick and easy, by allowing the downloading to be shared out, as a distributed process, across an ad hoc network of users� PCs. With the help of this new generation of file sharing software, peerto-peer traffic has become the biggest thing on the Net, accounting for 60% of all Internet usage. Video now takes the lion�s share of this. From a standing start as little as five years ago, video downloads have overtaken music downloads and carried on growing at an extraordinary rate.
Quick release
Many people have quickly become used to the idea that new music is available online as soon as it goes on sale in the shops, or even before. Now we�re seeing the same thing happening with video entertainment. Films are generally accessible online within a couple of days of their initial release. Copies of the retail DVD are available long
before the legitimate product hits the High Street. And each year sees leaks of copies of the award �screeners� that are sent out to enable Oscar and Golden Globes voters to judge all the nominated films � potentially handing pirates early access to many of the biggest movie releases. Hit television shows are often online and available for download even faster. Thanks to the three-hour time difference between the
US East Coast and California, a TV program scheduled for broadcast across the nation at 8pm prime time can be copied in New York and available to download online a full hour before it goes to air in Los Angeles. And the process gets easier all the time. Technologies like RSS (Really Simple Syndication), which originally became popular
through blogging and newsfeeds, have been co-opted to offer users automatic downloads of new content through BitTorrent. With the right software, a user can leave a home PC to scan a feed of new releases and download anything that matches a set of keywords. This means that new episodes of TV shows can be found
and recorded without the user lifting a finger. Home downloaders can wake up and enjoy a new South Park or Desperate Housewives with their cornflakes. In parts of Asia, streaming TV is already common. Chinese sites like PPLive and PPStream offer hundreds of channels to users worldwide. Viewers who want to watch Chelsea versus Manchester United can see it free, as PPLive streams Premiership football via Asian channels that receive the match unhampered by broadcasting restrictions.
Slipping out of control
At best, losing control of your content � and seeing other people illegitimately profiting from it � is pretty irritating. But there�s a lot more to it than that. Content owners� business models rely heavily on staged release schedules, carefully phased across different platforms and different international markets. The income available from sources like pay-per-view and premium TV channels depends crucially on the ability to sell exclusive windows when a new show or a film is guaranteed not to be
available to the public through other platforms. But how real can that exclusivity be when file sharing technology makes early releases available to anyone? How easy is it going to be to command large fees when much of this key content is accessible online, completely free? Release schedules are already contracting in response to the
threat. But managing this is a fine art, and one that offers no hope of a long-term solution. At some point, the familiar, established business model simply breaks down.
Cultural evolution
As the Internet and downloading have moved into the mainstream, the culture around them has changed. File sharing is no longer a cottage industry run by students or computer nerds in their spare time. While there are still many small networks of friends getting together to share content, the larger services operate on an industrial scale, with millions of users. The most prized releases are often quick to find their way from
the Internet onto the streets and markets of the physical world, where organised crime is happy to reap large profits. Culturally, we are at a crossroads. Large sections of the population are getting the download habit. Many of these generally law-abiding people recognise that sharing copyright content is illegal, but most believe it is the operators of the file sharing services who should be held responsible. Individual
downloaders seldom show any signs of remorse about their modest role at the bottom end of the food chain. While older consumers are accustomed to going to the cinema
and paying for content � and may not understand file sharing anyway � a whole generation of young adults is growing up with different habits and very different values.
Legal confusion
In a global market for content, today�s regulatory frameworks are unhelpfully complicated and wildly inconsistent. For example, downloading copyright files is definitely illegal in America, but permissible for certain media in South Korea.
Korean law was changed recently to decriminalise personal downloading of music files, though civil actions for breach of copyright may still be possible. In practice, of course, the pirates seek to protect their operations by taking advantage of national differences. Complex international structures are set up with individuals, companies, servers and bank accounts all located in different jurisdictions. This immediately makes enforcement action awkward, timeconsuming and very expensive. Perhaps unsurprisingly, people are confused about what is and what is not legal. Even the pirates themselves sometimes genuinely believe they are operating within local laws.
Mounting a disruptive defence
Technologies are continually evolving. New software releases make file sharing more efficient and harder to disrupt. Pirate services relocate, change and regroup to evade enforcement action. When one file sharing portal closes, another opens. As download volumes and user numbers grow, it seems inevitable that content owners and law enforcement agencies are doomed to stay one step behind. Nevertheless, content owners and industry bodies are already taking various steps, some of them quite ingenious, to disrupt the pirates� activities. Besides working with criminal authorities and taking enforcement action in the courts, these defence strategies can include practical, technical moves aimed at disrupting the operation of illicit file sharing networks. One technique that has been used recently is called �spoofing�. This
involves �poisoning the well� by releasing incomplete or corrupted copies of the material, so that illegal filesharers can never be quite sure whether they will get the whole of a movie, a TV show or even a song. Casual downloaders will quickly become frustrated if they keep downloading material that turns out to be unusable. But the more sophisticated and determined operators have their own ways of sidestepping this kind of problem. Spoofing may deter the man in the street, but it is not going to stop the criminal gangs whose goal is to get their hands on one complete and good quality copy of a new movie, for example. Once they have achieved this, they will quickly burn off hundreds of illicit DVDs for sale on eBay or other auction sites and in
the world�s bazaars and street markets. Another tactic copyright holders have used is to infiltrate tame computers into the spontaneous networks known as BitTorrent swarms and deliberately broadcast bad data that will slow down everyone�s download speeds. Disruptive tactics like these are useful for buying time and helping to slow the growth in illegal file sharing. But they aren�t ever going to solve the problem.
Commitment is the key
Content owners need to have reliable sources of up-to-date information about what�s going on. They need to know what technologies are being used and how they are evolving, which services are distributing the most content and how recent court rulings are affecting the legal environment. As far as possible, they will also want to know how their own content is being affected, and how the broader picture is
shaping up. This kind of intelligence helps the individual content owner build up a realistic picture of the piracy landscape. As well as helping focus defensive efforts, it lets management see the scale of the problem and understand the level of resources
that is likely to be needed to tackle it. Dealing with piracy is bound to be expensive, as any serious defence needs to target it at every level. The right information will identify the key individuals running the busiest services, where enforcement action and disruption can have the greatest impact. But bringing a few high profile
cases against smaller private sites, and even against some members of the public who are downloading for their own use, can have a ripple effect that reaches far beyond the initial action.
Where possible, content owners need to identify and target the original release groups that first make content available on the Internet, rather than the networks that help distribute it further down the chain. Getting reliable information about these clandestine operators isn�t easy, but it isn�t impossible either. Cutting off the head
of the beast can have tremendous impact, across whole countries and continents.
Most importantly, content owners need to keep going, steadily and remorselessly. One-off actions will only make a limited impression, and the effectiveness of eterrence fades remarkably quickly. Content owners need to demonstrate the will and intention to fight the whole war, not just a few showpiece battles.
Listen to the music
In the end, dogged defence can only do so much. Content owners need to learn from the experience of the world�s record companies, which eventually progressed beyond a disruptive strategy towards positive goals. With over a billion songs downloaded at a few cents each from Apple�s iTunes, the music industry has shown the way. Yet, even with this example in front of them, the film and TV industries are moving slowly. They are starting to show enthusiasm for the idea of Internet delivery, but they are still looking for the right business model. Some US TV networks, including ABC and NBC, have now started selling episodes of popular shows through iTunes, targeting the early-adopter consumers who have already bought video iPods. Shows like The Office, Battlestar Galactica and the inevitable Desperate Housewives are available for $1.99 an episode, with a discounted �Season Pass� for anyone who wants the whole series. The experiment seems to have been successful, and has apparently led to
increased viewing figures for some shows when they appear in their normal slots in the television schedules. At the same time, AOL has begun offering its British
customers the ability to download films to rent or buy, in a new partnership with Universal Pictures. Taking this kind of approach seriously must involve investigating the legitimate uses of technology (including revolutionary and potentially threatening ideas like BitTorrent) to sell and distribute content. It also means thinking laterally, accepting that old business models have to change and working out radically new ways to maximise revenues across many platforms and many geographical regions in this new environment. On a broader front, it means fighting a determined campaign
for the hearts and minds of consumers, using public relations to educate the public about the scale and consequences of piracy and spelling out its unsavoury connections with brutal gangsters whose other lines of business often include drugs,
money laundering and human trafficking.
A battle that must be won
In the long run, the most avid consumers of downloaded movies and TV are exactly the people who will feel most pain if the film and TV industries can�t adjust to the new situation. Do movie fans really want to see the supply of blockbusters dry up because the Hollywood studios cannot risk big budgets without a reasonable chance of a proportionate return? Do viewers want humdrum television channels that steer
clear of their favourite dramas and sports events because they cost three times as much to produce as makeover shows and studio discussions? Whatever content owners and governments do now, piracy isn�t going to go away. But what happens next is largely in their hands. With the right kind of comprehensive and wellthought-
out strategy, there�s every chance that the great majority of users will eventually decide to choose � and pay for � legitimate content.
Get the .pdf at: http://www.envisional.com/pdf/Piracy.pdf |
