Hacker Extortion Attempt Falls Flat Because Netflix Actually Competes With Piracy

from the sound-and-fury,-signifying-nothing dept

A hacking group calling itself TheDarkOverlord (TDO) has tried, and failed (so far) to extort Netflix and several other companies after stumbling onto a server of unreleased content. TDO was apparently able to compromise the servers of an audio post-production company by the name of Larson Studios. Among the content acquired from the hackers were ten episodes of the as-yet-unreleased new season of the popular Netflix show "Orange is the New Black," which isn't supposed to see full release until June. Outside of some free advertising in the news media and some wasted calories, the group's efforts don't appear to have culminated in much.

At first, the hacking group tried to extort the post-production company, which didn't go very well. The group claims that Larson originally agreed to pay 50 bitcoin (around $67,000) to prevent the release of the compromised content, but then didn't follow through on the payment after a December 31 deadline. TorrentFreak claims they were shown a copy of a contract purportedly signed by Larson Studios, but the group claims that while the contract was printed, signed, scanned and returned to them, Larson got cold feet about paying up.

The hacking group then shifted its attention to trying to get Netflix to pay up to avoid public release of the episodes. After apparently getting no initial response from the giant streaming company, the hacking group announced on Twitter it had leaked the first episode in the new, as-yet-unreleased fifth season of "Orange is the New Black" on BitTorrent networks:

When Netflix didn't respond to that, the group proceeded to release ten episodes of the show's 13-episode season, and an already deleted message via Pastebin claiming Netflix would lose significantly more money if the company didn't pay up:

"It didn’t have to be this way, Netflix. You’re going to lose a lot more money in all of this than what our modest offer was. We’re quite ashamed to breathe the same air as you. We figured a pragmatic business such as yourselves would see and understand the benefits of cooperating with a reasonable and merciful entity like ourselves."

Netflix's response to the entire affair? A giant..."meh":

“We are aware of the situation. A production vendor used by several major TV studios had its security compromised and the appropriate law enforcement authorities are involved."

That's a notably calmer and more reasoned response than you usually see from traditional Hollywood operations after a leak (read: pouting, crying, lawsuits, hysteria and face-fanning). In large part because Netflix knows that it's extremely unlikely that users are going to cancel their Netflix subscription just because of an early, partial leak of the show's upcoming fifth season. That, in turn, is largely because Netflix's flat-rate, relatively-inexpensive pricing model provides enough value that users don't find piracy to be the superior alternative (read: they successfully compete with piracy).

Its ambitions quashed by Netflix's apathy, the hacking group is apparently moving on, and says it plans to now target other companies (ABC, Fox, National Geographic and IFC) whose content was also found on the compromised server:

Outside of some short-lived infamy and a few spoilers, it doesn't seem likely that any of the group's efforts will amount to much of anything.


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  • identicon
    Anonymous Coward, 3 May 2017 @ 6:30am

    thedarkoverlord? Sounds like someone who never grew out of his edgy 13 year old phase.

    reply to this | link to this | view in chronology ]

  • identicon
    Michael, 3 May 2017 @ 6:31am

    Hacker: "Pay me $60,000 or I am going to advertise for you!!!!"

    Netflix: "..."

    Hacker: "That's it! I'm starting my advertising campaign!"

    Netflix: "...umm...ok."

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 4 May 2017 @ 10:00am

      Re:

      It will be interesting to see how many sign up just to be able to watch the last three episodes of that season, not to mention previous seasons...

      reply to this | link to this | view in chronology ]

  • icon
    PaulT (profile), 3 May 2017 @ 6:57am

    "That, in turn, is largely because Netflix's flat-rate, relatively-inexpensive pricing model provides enough value that users don't find piracy to be the superior alternative (read: they successfully compete with piracy)."

    I'd expand on this in several ways:

    1. Part of the reason why they compete with piracy is that it's simply easier. The gap has lessened somewhat, but one way I found to introduce people to using Netflix instead of piracy was to demonstrate it. Find a torrent site, find a rip of the required quality, wait for it to download, see if your player supported the codec... or click a button, wait a few seconds and it starts playing.

    True, this advantage has become somewhat eroded where streams rather than torrents have become a popular avenue, but as long as a title is on Netflix, it's hard to say that piracy has any advantages if you're already a subscriber. The pricing, wide device compatibility, international availability of its own content and other factors play a part, but the ease of use is the part that keeps people with them, I think.

    2. The Netflix model doesn't care if someone watches a pirated version of the show, so long as they continue subscribing. In order for them to lose money as a direct result of the leak, someone would have to either a) watch the pirated version and cancel their subscription as a direct result or b) watch the pirated version and decide not to subscribe when they were going to previously. For the 5th season of an established show, both of these scenarios are unlikely.

    3. Even if it were likely, the Netflix model doesn't depend on a single title. They have successfully leveraged a wide range of content that appeals to a wide range of people, so while a single title may attract them in the first place, it's unlikely to be the thing that keeps them there. People cancelling the service simply because they caught up on OITNB a little earlier than expected is extremely unlikely, as is a large number of people only subscribing for the new season every year. Most people will stick around for reasons unrelated to this show.

    It's nice to see this. While other companies throw fits the moment it seems that someone may see their stuff without paying directly, Netflix has built the fact into their model. For all the false claims that the community here are pirates, that's all we've really been saying. You cannot eradicate piracy, it has always been an issue, so accept it and build your model around reality.

    I can only imagine how annoyed the guy must have been when Netflix basically told him "upload it we don't care"!

    "Its ambitions quashed by Netflix's apathy, the hacking group is apparently moving on, and says it plans to now target other companies (ABC, Fox, National Geographic and IFC) whose content was also found on the compromised server"

    "it doesn't seem likely that any of the group's efforts will amount to much of anything"

    Let's hope so. But, I'm betting that the reaction of at least one of those companies will act as a marked contrast to what we're seeing here.

    reply to this | link to this | view in chronology ]

    • identicon
      mx, 3 May 2017 @ 10:54am

      Netflix

      Netflix wins because I'm simply not going to look for Netflix content anywhere else. Netflix downloads aren't virus infested.

      reply to this | link to this | view in chronology ]

    • icon
      Eldakka (profile), 3 May 2017 @ 8:29pm

      Re:

      Parts of point 1 are only valid for someone who already has a subscription and does not have the appropriate software already installed.

      If you use the appropriate products there is no 'searching' for the torrent (or NZB). There are products out there where you just enter the TV series you want, and your preference(s) on quality, and they will automatically download each new episode, or an entire season, as it appears online, you don't have to go searching for them. You can even get it to send out notifications - email, IM, to Kodi - each time it has completed a download. So once set up, if you leave it on 24x7, it'll just go fetch the episodes for you, download them while you are in bed, at work, or watching other shows, and then tell you when it's done.

      Also, unless something has changed in Netflix recently, it is a streaming service. Which is another way of saying watching it while it downloads, then deleting itself immediately afterwards. A streamer may not know that's what's happening, but technically that is what happens in the background. Which means you have to do download it every time you watch it. If, for example, it's a 4k 1-hour (well, 43-minute) TV episode, say 3GB in size, if you watch it 4 times (say u watch it, then the partner, kids, housemates, again when friends are over, etc) you have to download it each time, using up in this example 12GB of data for what should have been a one-time 3GB download. Sure, it might not matter if you are on a truly unlimited plan, but those seem to be disappearing quickly in favor of metered plans, and have truly high-speed broadband (above 50Mbps) so you don't interfere with others using the connection, but those are available in pretty limited areas nationally.

      I know people who HAVE Netflix subscriptions, but still use software such as above described for automatically downloading 'pirate' versions of what is available to them on their Netflix subscriptions, because they find it easier and more convenient to have a copy of the episode locally, saving quota and bandwidth.

      reply to this | link to this | view in chronology ]

      • icon
        PaulT (profile), 4 May 2017 @ 12:27am

        Re: Re:

        As to your first set of points, they're taken but they really don't represent what the average mainstream viewer will be doing.

        "Also, unless something has changed in Netflix recently, it is a streaming service"

        Recent updates to Netflix apps allow you to download and store titles so you can watch them offline.

        "I know people who HAVE Netflix subscriptions, but still use software such as above described for automatically downloading 'pirate' versions of what is available to them on their Netflix subscriptions"

        I really don't, but then I live in country that's not filled with ISPs trying to rape their customers with caps and bandwidth charging, etc. It makes no difference to me if I download something or stream in 4K on a loop. But, even so, if they're subscribing to Netflix they're already paying for the content, so have at it.

        "they find it easier and more convenient to have a copy of the episode locally, saving quota and bandwidth."

        Which only works if you watch each show multiple times. If you only watch it once, you're not saving anything. I'd also note that you're also deliberately skewing viewing figures. Netflix don't use estimates, unlike traditional media, they know exactly how many people are watching, how many times, where they leave off if they stop, etc. Pirating instead of using Netflix skews the data so they think they have less viewers, thus are less likely to renew those shows, etc. You might have reasons to want to withhold that data or think that your group is too small to make a difference, but that's something worth considering.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 May 2017 @ 7:02am

    But everybody knows you can't compete with free!

    reply to this | link to this | view in chronology ]

  • icon
    SirWired (profile), 3 May 2017 @ 7:08am

    You gotta love that "contract"

    "The group claims that while the contract was printed, signed, scanned and returned to them, Larson got cold feet about paying up."

    Perhaps these folks need to better familiarize themselves with some of the basics of contract law, like how a contract to pay for criminal extortion doesn't even deserve the word "void".

    More like: "So worthless, we mourn the pointless sacrifice of the few grams of tree pulp it took to print it, the defenseless pen ink, and the innocent electrons used to transmit it." They might as well have signed it "Mick E. Mouse, Esq."

    reply to this | link to this | view in chronology ]

    • icon
      Arthur Moore (profile), 3 May 2017 @ 7:35am

      Re: You gotta love that "contract"

      Oh, that contract was extremely valuable. It let the company stall for quite a while.

      The original deadline was Dec 31, and it's already May. Early leaks become less valuable the closer the media is to public release, especially if there's more work to be done by the production company.

      Also, all this communication they had with the hackers would probably be extremely useful to law enforcement.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 3 May 2017 @ 7:40am

      Re: You gotta love that "contract"

      Almost more importantly, neither group can even show up in court to get the contract enforced. The hackers would get arrested if they tried, and the company doesn't know the identity and location of the hackers to go after. The contract could be the most airtight contract in history and it still wouldn't benefit either party.

      reply to this | link to this | view in chronology ]

  • icon
    Ninja (profile), 3 May 2017 @ 7:29am

    Who would have told you can compete with piracy eh? The MAFIAA is creating their own demise by charging prohibitive fees on their content. Netflix decided the best course of action was to produce their own content and eventually be able to ditch the MAFIAA. Just another one of their (the MAFIAA) frequent bad moves that just haven't killed them because they still have copyright to protect their failed business model.

    reply to this | link to this | view in chronology ]

    • identicon
      Wendy Cockcroft, 4 May 2017 @ 5:38am

      Re:

      Where's My_Name_Here? I've seen neither hide nor hair of him in the comments. Could it be that he's flat out wrong about how copyright is the only way to make money from content, and that we are all a bunch of evil pirates? Eh?

      I'm waiting.

      reply to this | link to this | view in chronology ]

  • icon
    orbitalinsertion (profile), 3 May 2017 @ 7:33am

    This overlord is utterly hilarious. "We will destroy you! We are reasonable criminals. Be a shame if something happened to that show of yours. Uh, we will destroy someone else!"

    reply to this | link to this | view in chronology ]

    • icon
      Bamboo Harvester (profile), 3 May 2017 @ 7:59am

      Re:

      I thought it was ridiculous because Netflix doesn't insert commercials. No loss to them if a season is put up on torrent sites.

      Hell, many of the complete season torrents of popular shows, and all of the Netflix Original Series torrents are FROM Netflix - there are dozens of filters out there to capture Netflix streams to disk.

      ABC, NBC, et al DO insert commercials. If the dweeb isn't caught first and does have some of their popular shows, it could get interesting.

      reply to this | link to this | view in chronology ]

  • identicon
    Machin Shin, 3 May 2017 @ 7:55am

    "It didn’t have to be this way, Netflix. You’re going to lose a lot more money in all of this than what our modest offer was. We’re quite ashamed to breathe the same air as you. We figured a pragmatic business such as yourselves would see and understand the benefits of cooperating with a reasonable and merciful entity like ourselves."

    That has got to be one of the funniest things I have read in a while. Sounds like the kind of temper tantrum you would expect from a two year old after their mother told them they can't have the candy bar. "your a big bad meany pants and I don't like you anymore"

    I mean seriously, how screwed up do you have to be to think you can shame someone for not paying extortion money?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 3 May 2017 @ 8:50am

      Re:

      More than that, it's the fact that the group apparently smoked some high-end crack and ended up using the RIAA's inflated figures when calculating damages...

      reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 3 May 2017 @ 5:42pm

      Re:

      Yeah, 'you should be ashamed of yourself for not folding to our attempted extortion attempt' has got to be the funniest thing I've read this week.

      Between that, their laughable claims as 'reasonable' and Netflix's response there is just so much to enjoy here.

      reply to this | link to this | view in chronology ]

      • identicon
        Wendy Cockcroft, 4 May 2017 @ 5:42am

        Re: Re:

        Which was, like, totally pragmatic! LOL!

        I mean, ignoring extortioners works, and understanding how the market works has proven effective. Good luck to Netflix.

        What's absolutely killing me here is how Sony or Universal would have been wetting themselves and handing over money — if they could figure out what Bitcoin is. I can imagine Chris Dodd lurking round the back of a sleazy motel with a brown paper bag clutched in his pudgy hands.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 May 2017 @ 8:15am

    What kind of hacker sends a contract?

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 May 2017 @ 8:22am

    Holy shit! Ten upcoming episodes of a Netflix show are on Pirate Bay! Guess I can cancel my Netflix subscription.

    - Said No one ever

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 3 May 2017 @ 9:01am

      Re:

      Especially when it is only 10 of 13 episodes. I don't know about anyone else, but missing the last few episodes of a TV shows season would drive me crazy.

      reply to this | link to this | view in chronology ]

    • icon
      orbitalinsertion (profile), 3 May 2017 @ 9:02am

      Re:

      While true and valid, others apparently have no qualms whatsoever of paying large amounts of money, and losing potential sales, over gatekeeping and control. These extortionists probably don't examine much closely, but they assumed (not without reason) that such behavior is universal. They just happened to pick the wrong first target because it looked fatter.

      They also may have been wrong as to how their other targets might choose to exert control. They may pay a lot more elsewhere, but pay the extortionists nothing.

      I don't think reasoning is their strong suit.

      reply to this | link to this | view in chronology ]

  • identicon
    Rich, 3 May 2017 @ 9:00am

    I don't like an extorted contract is legally binding, is it?

    reply to this | link to this | view in chronology ]

  • icon
    Mononymous Tim (profile), 3 May 2017 @ 9:54am

    Better luck next time?

    It's nearly time to play another round.

    And 442 people liked that? ..After FAILing miserably the first time? If at first you don't succeed, try, try again!

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 May 2017 @ 11:38am

    End result: the NEXT season of orange is the new black gets even MORE viewers as people 'sample' the released content.

    In fact if Netflix is clever, fuck this group RIGHT up the ass and release it all NOW on Netflix and Youtube...for free to everyone.

    They then have nothing at all of value, not even the finale episode.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 May 2017 @ 12:26pm

    I have to admit, I was a little confused when I first read about this attempted black-mailing. I didn't see how it could work. Then it turned out I couldn't see how it could work because it couldn't really work.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 May 2017 @ 7:28pm

    The group is ashamed to breathe the same air as Netflix? Well I am ashamed to breathe the same air as people who use extortion to obtain money.

    reply to this | link to this | view in chronology ]

  • identicon
    Zem, 3 May 2017 @ 8:03pm

    So I went down to the lake with a bucket and took some water. Muahaha now everyone must pay me for water!.

    Who the hell does Liza think she is, telling me there is a hole in my bucket.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 4 May 2017 @ 5:21pm

    Absolutely no sympathy for Netflix and its MAFIAA friends.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 5 May 2017 @ 12:51pm

    Netflix Focuses Piracy Takedown Efforts on “Orange is The New Black” Leak

    Netflix is trying to limit the visibility of the "Orange is The New Black" leaks by sending takedown requests targeted at various websites. The leak is significant enough for the video streaming service to direct one anti-piracy vendor to focus specifically on copies of the leaked files.

    https://torrentfreak.com/netflix-focuses-piracy-takedown-efforts-on-orange-is-the-new-black-le ak-170505/

    reply to this | link to this | view in chronology ]

  • icon
    Derek Kerton (profile), 8 May 2017 @ 11:21am

    The Usual Response Is YOU Get F-ed

    "That's a notably calmer and more reasoned response than you usually see from traditional Hollywood operations after a leak (read: pouting, crying, lawsuits, hysteria and face-fanning)."

    Please, let's not forget the most damaging normal response:

    lobbying for more obtrusive, privacy-invading, and rights-subverting "Intellectual Property" laws and protections.

    reply to this | link to this | view in chronology ]


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