Content Piracy Isn’t A Victimless Crime

Content Insider #708-1 – Not Free

“I’m the good guy here. I told them this could happen if they didn’t prepare. Did I get a “Thank you”? No, I got crucified. But, they wouldn’t listen.” – Thomas Gabriel, “Live Free or Die Hard,” 20^th Century Fox, 2007

We like IP (Internet Protocol) because without it there would be no streaming content industry.

Without IP, we’d be limited to:

Watching what was on appointment TV on the day, time they showed it
Going out every evening to Blockbuster – yes, they’d still be alive … for something
Waiting for the postal person to deliver our red envelopes of DVDs
“Letting” our overly bright son beat us at chess … again

Yeah, that’s about it!

Instead, we have a gazillion entertainment choices right at our fingertips from our six streaming services – four subscription, two free (ad supported).

And since going to a movie in a theater has been restricted, we’re still able to watch some super tentpole productions rather than wait for them to come to the giant screen mid-next year.

We also dislike IP because it makes it too easy for people to illegally watch the creative work of filmmakers … and they’re perfectly happy doing it!

Back in the old DVD days, some folks developed a cool chunk of DRM (digital rights management) software on the discs that let you watch the film but not copy the content.

The software would do a handshake with the player and in microseconds, they would exchange information to validate that the player was authorized to play the movie and you could sit back and be entertained.

It was foolproof!

You guessed it.

First, discs weren’t even out for a week before some kids had figured out how to tap into the code to rip off copies. They ingeniously (you have to begrudgingly admire them) tapped into the authorization code at just the right milliseconds when it was unprotected between the two units and BAM! he (or she) could rip a perfect copy.

Then, they’d load it to their pirate site for people to download and watch without paying a cent.

Okay, just like pirate sites today, they also got something free with their free download … malware.

It gave the site owners access to all of the individual’s personal information as well as an open back door for “future use” but hey, watching it was “free.”

It was – and is still – a great business model for cyberthieves.

Pirate sites draw people in with free access to premium video entertainment that, thanks to IP technology, is as good as the original.

In return, the cheap user “gives” the pirates access to their personal data and system to use for DDoS (distributed denial of service) attacks on companies and organizations, cryptocurrency mining or to simply to use their CPU cycles.

Yes, the hunt for free entertainment has been around for as long as the first kid snuck into the Nickelodeon, but it took the Internet and IP to make it into a big business.

According to an industry report late last year:

126.7 billion viewings worth of US-produced TV episodes are pirated every year
Over 17 million stream-rippers were identified in 2018
70,000 US jobs a year are lost due to music piracy
There were more than 106.9B visits to pirate sites back in 2017
TV shows are still the most-popular content pirated
24percent of the global bandwidth is used to download copyrighted material
The movie industry loses $40-$97.1B a year to piracy

But…

It took the pandemic to turn it into a really big business that people around the globe began to legitimatize and rationalize it as a good thing.

New Norm – As the pandemic spread around the globe and people sheltered in place, they watched whatever content that struck their fancy. Pirated content suddenly became “acceptable.”

Earlier this year, dot.LA reported that four major studios lost $100M in 23 days as pirates ripped off six tentpole productions.

Britain’s Muso reported that US film piracy was up 41 percent during the last week of March, compared to the same period the month before.

Last year, the US Chamber of Commerce reported that TV and film pirates cost the industry up to $71B annually.

Victims – While watching pirated content may appear to be no big deal, it really is. Pirating video stories represents the loss of billions of dollars of income to content producers and distributors.

Not even considering the lockdown this year (which literally drove people to find some kind of entertainment on their big screens), Digital TV Research projected that piracy would come in at about $60B this year.

According to Internet Matters, parents who had previously downloaded illegal content for their kids got serious about it during the lockdown.

Six out of 10 (56 percent) said they downloaded content illegally in recent months and more than a quarter of them (27 percent) were perfectly comfortable in doing it and one in five (18 percent) felt it was perfectly safe to do.

Throw in sports – hey it’ll come back – and you’re talking about $230B.

Stolen Dance – The showing of ESPN’s Michael Jordan’s Last Dance film by Netflix gave subscribers an opportunity to watch it on their service while millions saw no harm in watching a pirated free copy.

Without in-person sports attendance, online viewing has been off for football, basketball, baseball, tennis, hockey … well, you get the point.

It just didn’t have the same excitement.

But when the word got out that unreleased episodes of the Netflix-ESPN The Last Dance highlighting the Michael Jordan era with the Chicago Bulls, free stuff sports fans couldn’t get online fast enough.

Allan McLennan, chief executive of PADEM Media Group explained, “A number of marketing ‘professionals’ around the country have attempted to legitimize video pirating by claiming its really part of the studio’s marketing budget. We not only disagree, we feel these – and other – educators should be disturbed with the fact that sadly, in many ways, people are getting comfortable with piracy.

“Pirates carry out their activities for a variety of reasons, such as financial, malicious, fame-seeking etc.,” he continued. “It has become so professional in its representation that it’s hard to tell if it’s not a real offering, so many ‘subscribers’ don’t know they’re watching pirated content. Then, there are those who gravitate to that content – and others who condone it – that unfortunately reinforced the idea that content theft is somewhat okay.”

It’s Out There – People wouldn’t go into a store and steal a copy of a film to take it home to watch but it is almost “normal” for folks to find/watch a pirated copy on social media. And, of course, the sites get paid because marketers want to reach their target audiences.

McLennan noted that piracy has become such a non-victim crime that 90 percent of the illegal streaming is done openly.

He pointed out that pirate sites today aren’t located in the sinister back rooms of the dark web where you have to download Tor, use a VPN and navigate in the swamps of the internet.

Instead, much of it exists in the open on social media sites like Facebook and YouTube.

“Because of this, it’s being perceived as an open trade,” McLennan said, “If the industry simply undertook a modest degree of piracy protection, it could have a profound impact on content protection and, more importantly, could have a positive impact on financials for studios, content owners and filmmakers.

“There are globally strong anti-piracy companies such as NAGRA that have been working to change this perception with tremendous security software and hardware solutions; and they’re making a difference,” he added.

Global Issue – Countries with the greatest volume of new content production are also the leading concentrations of film piracy.

Most people like to believe that pirate viewing is done by “them, over there.” You know, people in third world and poor countries; but that’s far from the truth.

The highest volume of pirate downloads and viewing are done by people in highly industrial countries with the US dubiously earning top honors followed by China. Great Britain captures the fifth position.

“The time to act is now while streaming consumption is up,” said McLennan. “But content production and delivery are difficult and expensive. Every participant in the content industry is under tremendous pressure to create new content and optimize their profits.

“That means studios, content owners and streaming service providers are recognizing the need to seriously invest in and pursue a more aggressive program of IP protection,” he emphasized.

In other words, all we have to do is make it more difficult for people to consume pirated content and then we’ll reduce the illegal downloads and increase legal consumption.

Several years ago, when Britain blocked access to The Pirate Bay, there was a negligible effect on pirated viewing.

However, when they blocked the next 18 and then the next 53 sites, legal streaming consumption increased … significantly.

Even when Nickelodeon owners figured out where some of the kids were sneaking in to watch a movie, some smart kid(s) found a new, better, more fun way to get in free.

The same is true in our IP-driven world. Pirates will find a new way to circumvent content protection.

This is especially true in today’s global marketplace where different countries have different views on what content deserves to be protected. In addition to NAGRA, companies such as Cisco, Verimatrix, Irdeto, Inside Secure, Viaccess-Orca and Divitel are also bringing new and proven services to address the ever-growing problem

If we plug the holes in the right countries/locations, who knows, the industry may have a chance to repeat John McClane in Live Free or Die Hard when he said, “Don’t worry, we’ll have plenty of time to get to know each other when I visit you in prison.

Andy Marken – andy@markencom.com – is an author of more than 700 articles on management, marketing, communications, industry trends in media & entertainment, consumer electronics, software and applications. Internationally recognized marketing/communications consultant with a broad range of technical and industry expertise especially in storage, storage management and film/video production fields. Extended range of relationships with business, industry trade press, online media and industry analysts/consultants.