Monthly Archives: May 2015

U.S. Looks North of the Border for Anti-Piracy Inspiration

Hollywood is the envy of the world when it comes to making movies. In terms of protecting them once they are made, though? Well, we might need to start looking to the Great White North for our anti-piracy ideas, as a new program in Canada proves to be rather successful in curbing infringing activity.

 

After just a few months in operation, the new Canadian notice system is showing drops in piracy between 50-70 percent on some of the country’s most popular network providers. The system is rooted in Canada’s Copyright Modernization Act, through which ISPs can be required to deliver copyright infringement notices to customers when they themselves are made aware of infringing activity.

Closing the loop between the makers and monitors, the firm behind the initiative – and posting these impressive numbers – is Los Angeles-based rights corporation CEG TEK International.

The results in Canada are all the more surprising because of the mixed results typically associated with notice-based systems, whether they come via ISPs or directly from rights holders.

We all know the limitations of the U.S. DMCA system, whereby rights holders flag infringing content links to the sites that host them, only to see a new link pop up with the same content and the original poster rarely taken to task for the act.

Also common are systems based on infringement “strikes,” where an ISP does notify the infringing party and/or those who access the content. But a strike system is based on escalating warnings and has generally proved too lenient, both here at home, and abroad in countries like France and the UK. The French law in particular, known as HADOPI, was reversed in 2013 after its more severe punishments were poorly enforced and users frequently found a way around the system.

So what makes the Canadian notices system more successful than those that have gone before it?

It is still early days, but it seems the threat of financial penalties are a key motivator in changing behavior north of the border. More importantly, these are not the mind-boggling fees that we saw in the early days of piracy litigation. Rather they are more manageable fines for non-commercial copyright infringement, which give the recipient pause for thought without coming across as a draconian measure.

Even with the maximum cap at $5,000 for these fines, those going out to ISP customers are significantly less. Ranging from the low to mid-hundreds of dollars, the price is not financially crippling for the user but certainly send a message that, even when it can be easily accomplished, content theft remains a crime.

Reports Reveal Global Piracy Fueled By U.S. Advertising Income

Piracy sites around the world continue to profit from U.S. advertisers of all sizes, according to new reports released this month by Incopro (report link) and the Digital Citizens Alliance (DCA – report link).

The former reveals that 88 percent of all income from content theft in the European Union (EU) is based on advertising revenue, while the latter from DCA confirms that global piracy sites still make more than $200 million every year from the ads they display to users.

 

Incopro studied the top 250 piracy sites used in the EU to come up with their headline figure. With almost 9 out of 10 of those sites relying on advertising as their primary source of income, it’s clear that ad money is the main reason for site owners to engage in content theft. In-demand music, movies and games yield more search traffic, which in turn yields more page views and clicks that translate to advertising income.

The DCA report provides more detail about what’s going on under the surface of the advertising ecosystem to allow this to happen.

Good Money Still Gone Bad follows up on the organization’s 2014 report, which valued the revenue from ads to piracy sites at $227 million. The new figure is slightly reduced, yet still in excess of $200 million and failing to show the substantial decrease that actions against global piracy should have yielded.

Global piracy ad funding infographic

 

With regular raids against such sites around the world and major action against leading players like The Pirate Bay, we should expect to see fewer piracy sites for advertising funds to flow into. Although larger sites made up a smaller percentage of the overall sample in this year’s report – and 40 percent of those from the previous study were no longer present – the overall revenue from content theft remained remarkably durable.

A large part of this comes from new sites entering the fray, particularly video platforms engaged in live-streaming. This occurs in real-time and can be very hard to track and shut down in the moment, which is obviously when broadcasting a live event is most profitable to pirates. The recent Mayweather-Pacquiao fight provided a troubling example of this, particularly on new (and ostensibly legitimate) platforms like Meerkat and Twitter’s Periscope. With the incentive to make money from ads and new, poorly regulated platforms through which to do it, it’s clear to see that initiatives against global piracy will need to cast a wider net in the coming years.

Taken together, these two reports provide a clear view of the ad-funded piracy problem. Incopro has shown that advertising is the key incentive for pirates to run their sites, while the Digital Citizens Alliance reveals the types of sites that are springing up and the big U.S. brands that are indirectly funding it.

Cutting off this supply of “bad money” and returning it to the pot for legitimate content sites will be a crucial part of the next moves to tackle global piracy. We can continue to play whack-a-mole with content takedowns and site raids, which is satisfying in the moment but ultimately a short-lived victory as other sites pop up to replace them. Remove the financial incentive, however, and we’ll see how many sites are willing to take the risk of running a site based on stolen content.

In Africa, Questions Over Connectivity and Content

While we often hear complaints that U.S. Internet access speeds lag behind countries like South Korea, Japan, and parts of Europe, it’s easy to forget that some areas of the world have little or no access to the online resources we take for granted.

 

In the global broadband speed league, countries in Africa lag far behind those on other continents, for example, and that’s only counting those consumers who can actually get connected in the first place.

That lack of connectivity is a driving force behind initiatives like Google’s Project Loon and Facebook’s internet.org, which operate under the banner of altruism – delivering the Internet to those without the means or infrastructure to access it – but do offer clear benefits to the companies behind them. As Microsoft experienced for many years with Internet Explorer antitrust accusations, any attempt to be the sole portal through which a high proportion of consumers access the web is viewed dimly by regulators.

Highlighting that fact, questions have been raised in recent months about the intentions of internet.org in India, and whether Facebook is violating net neutrality by creating what many see as its own “walled garden” of Internet activity. Telephone companies are heading up this criticism, concerned that their services will be undermined by this low-cost alternative.

In Africa, by contrast, regulation is not as extensive as India, and the market for connected technology less developed. This leaves plenty of wiggle room for Facebook to insert itself as a primary provider of connectivity, with all the boosts that brings to its user base in countries across the continent.

But the question remains, is this a true connection to the Internet or just a window to Facebook’s take on what the web should be?

The company will, of course, argue that some connection is better than none, and they might be right. Even so, further issues arise when copyright enters the equation, as the continent has a significant piracy problem and Facebook is a part of that. Where as in North America we don’t really associate the main social networks with copyright infringement (early issues with Twitter’s Periscope service notwithstanding), links to unlicensed song downloads are frequently posted by bloggers in countries like Nigeria, where piracy is reportedly more common than legitimate music services.

If Facebook’s version of a connected world is going to become a reality, they clearly have questions to answer about the extent of that connectivity and the content that they allow to flow through it. It will be a tricky balancing act between providing wider access while restricting the availability of content that infringes international copyright. It must also convince existing providers and regulators that this type of service doesn’t give Facebook, or any other dominant Internet company, a backdoor monopoly to online access in countries where there are still large segments of consumers to win.

Stepping back for a moment, however, what many see as a concern could easily be turned into opportunity.

If legitimate content services partner with initiatives aiming to bring connectivity to new areas, good habits can be formed early on and piracy alternatives pushed to the margins of online access. Where as pirates got the jump on legal platforms in more developed markets – think Napster serving up music downloads years before Apple launched iTunes – those who provide reliable connections to get new users online can learn from those lessons and present legal content options to them from day one.

The race for Internet providers to enter developing markets is well and truly underway and, as always, the fight to protect copyright and curb piracy will be right behind it.

How “Going Global” in New Zealand Hurts Legitimate Internet Providers

Last month we examined the issue of Internet providers in New Zealand being warned by the country’s broadcasters to take action against subscribers who use virtual private networks (VPNs) to get around geographical licensing restrictions. With these services, viewers around the country can access and view website content that might otherwise be restricted to other nations or regions.

Although this can sound harmless enough on the surface, when it comes to valuable content like movies, television, and music, there’s every chance it could mean the difference between business and bankruptcy for legitimate Internet providers in New Zealand.

 

Once you delve deeper it becomes clear just how intentional this practice is at a business level, not one driven by individual users. Several non-facilities based telecommunications companies – i.e. those with no central offices to pay for or networks to maintain – from New Zealand are engaged in the resale of broadband connections to residential subscribers. On its own this is of course a legitimate business model, much in the same way that non-network mobile providers in the U.S. make use of the main carrier networks to repackage and sell cellular services.

It’s the next step that has the major telecoms providers and rights holders up in arms, and with good reason.  As this article on Tech Policy Daily explains, the resellers are attempting to gain market share by bundling a DNS geo-block defeating mechanism into their broadband services. Essentially, they’re saying to customers that they can provide them with a way around those pesky viewing barriers, or “legal regional licensing agreements” to those of us who have some degree of respect for creative rights and control of content.

Where this particular article departs from fact is in suggesting that there is any argument that these non-facilities based resellers are promoting. One look at the marketing literature from these companies, or even the comments from those in charge, shows exactly where their intentions lie.

Take Slingshot, for example, who make no bones about their “Global Mode” sales pitch:

Slingshot Global Mode Plan

This marketing push is enough to assure customers that they will gain access to overseas content services such as Netflix simply by signing up with services like Slingshot.

What’s more, the offering is pitched in such a way that it makes it sound like this level of access is not only legitimate, but something they should expect from all providers. When those who have invested in networks, offices, and content licensing agreements specific to their country fail to offer such a global service, it perversely reflects badly on the legitimate provider, rather than the likes of Slingshot who are skirting the rules and riding on the infrastructure of other businesses.

The bottom line is that established and respected service providers spend more than US $300 million every year for rights to the content they bring to New Zealand. Add this to the cost of providing a variety of traditional and Internet-based services to customers, with all the infrastructure and capital costs that brings, and it’s a significant investment in bringing that content to the country in the many ways viewers and listeners want to consume it.

While there may be some lag between release windows, the fact is that legitimate services are constantly evolving to meet customer demand and the licensing agreements in place ensure that creators are rewarded for each new market in which their work succeeds. This is the basis for continued revenue to the most in-demand creative talent, wherever it is in the world, and a keystone incentive to keep production flowing. Free riders, in this case the businesses who trade on the back of other providers’ networks and promote unlicensed content as a competitive advantage, only detract from that carefully constructed ecosystem.

An important point to note is that this is a battle against unfair business practices, not taking legal action against individual consumers who pursue their own viewing practices. John Fellet, CEO of Sky New Zealand, confirms this point, explaining that “this is a business-to-business issue; it’s about creating a fair playing field.”

When resellers are able to contribute little but gain a lot in terms of market share, it reduces the incentive for those providers with a major capital investment in the country, like Sky New Zealand and Telecom New Zealand, to continue bringing licensed programming from overseas and, more crucially, investing in home-grown creative talent. In that scenario the large American services like Netflix have an easier time dominating, even if they their revenue streams are diluted by geo-dodging, as they cut by far the biggest slice of the global pie.

In the long term this inhibits innovation and limits production diversity, which is exactly what customers want, and how free-riding resellers play on their trust to promote access to content that hasn’t been paid for.