With the time we spend discussing the scourge of DRM that has invaded the video game industry for some time, it can at times be easy to lose sight of those in the industry who understand just how pointless the whole enterprise is. There are indeed those who understand that DRM has only a minimal impact on piracy numbers, yet stands to have a profound impact on legitimate customers, making the whole thing not only pointless, but actively detrimental to the gaming business. Studios like CD Projekt Red, makers of the Witcher series, and Lab Zero Games, makers of the SkullGirls franchise, have come to the realization that focusing on DRM rather than focusing on making great games and connecting with their fans doesn't make any sense.
And now we can add Polish game studio Flying Wild Hog to the list of developers that get it. The makers of the recently released Shadow Warrior 2 game have indicated that it basically has zero time for DRM for its new game because it's entirely too busy making great games and engaging with its fans. On the Steam forum, one gamer noticed that SW2 did not come with any embedded DRM, such as Denudo, and asked the studio why it wasn't worried about piracy. Flying Wild Hog's Kris Narkowicz replied:
“We don’t support piracy, but currently there isn’t a good way to stop it without hurting our customers. Denuvo means we would have to spend money for making a worse version for our legit customers. It’s like this FBI warning screen on legit movies.”
In a follow-up statement to Kotaku, Kris went even further.
“Any DRM we would have needs to be implemented and tested,” KriS explained to Kotaku. “We prefer to spend resources on making our game the best possible in terms of quality, rather than spending time and money on putting some protection that will not work anyway.”
In other words, the studio could spend time, money, and resources chasing around a white horse in the belief that it was some kind of anti-piracy unicorn, but doing so would be business-stupid. Instead, the studio has chosen to focus on making its game as great as it possibly can while choosing not to implement software within it that might harm that great experience for legitimate customers. Other staff at the studio essentially acknowledged that not including DRM on the game might result in some lost number of sales, but that the cost to the game and legitimate customers made it so that those lost sales didn't matter as much.
They’re banking on the quality of their game earning them enough money to counteract the lack of money coming in from people who’ll just steal their game. “We also believe that if you make a good game, people will buy it,” they said. “Pirates will pirate the game anyway, and if someone wants to use an unchecked version from an unknown source that’s their choice.”
It's always refereshing to hear when a game studio chooses to shrug off the understandable anger that must come along with finding that others are pirating its product to instead focus on what the best course of action for the business actually is: making the best product it can. Altruism doesn't run uniformly through the gaming public, but there are more than enough gamers willing to pay for quality games to make up the difference. It's not a perfect scenario from an ethics standpoint, but given that the alternative is arguably ethically worse in that it almost always carries with it a negative impact to paying customers, this is as good as it gets.
The US Chamber of Commerce is somewhat infamous for its dishonest and misleading claims about copyright, which are often so ridiculous as to be laughable. But, even then, I wasn't expected the following:
If you can't read that, it's a tweet from the US Chamber of Commerce's "Global IP Center," stating the following:
Millions watched the presidential #debates on illegal streams. The harmful #piracy trend must end
And it links to this Forbes article (adblock blocker warning) presenting some data on how many people watched unauthorized streams.
The tweet is ridiculous (as is the article, but we'll get to that...). First of all, the presidential debates are an important part of our democracy and understanding who will be leading our country in another few months. The idea that you need copyright to put that on is ridiculous. Second, partly because of what I wrote in the first sentence, the debates are available in a variety of places for free -- including TV and streaming on the internet via both YouTube and Twitter. For free. Third, there are no commercials and no fees associated with the debate -- again because of the importance of civic engagement. Who is actually "harmed" by people watching the debate through unauthorized streams? Why is this "harmful"? Why must this "end"?
Or, as Parker Higgins points out, "warning that piracy could lead to participation in democracy" is particularly ridiculous -- but I guess that's how the US Chamber operates.
Normally I don't acknowledge trolls but that's the literal Chamber of Commerce. Warning that piracy could lead to participation in democracy
Now, back to the original article at Forbes. It's just as ridiculous. Written by Nelson Granados, apparently an actual professor at Pepperdine, it seems to pull off a press release from a company called "VFT Solutions" which is a company that (no joke) claims to use its "patented technology" to "protect your intellectual property." So, yeah, you have an idea of where this is coming from:
VFT is trying to popularize a term it appears to have made up entirely, called "nano-piracy," and Granados falls for it, hook, line and sinker.
VFT Solutions tracked 420 live streams of Sunday’s debate and recorded 22 million views. This includes accessing legal streams from media sources like the New York Times and Fox News, which streamed the debate on live-streaming platforms. But it also includes massive views of illegal streams. According to VFT’s CEO, Wayne Lonstein, “Perhaps what is most interesting is that 41% of these views were from illegal live-streams, also known as nano-piracy.” That’s about 9 million nano-pirate views, and this is just a sample.
WTF is "nano-piracy"? What does that even mean? Hollywood has been complaining about streaming piracy for ages, so there's nothing new here. Granados then admits that the debates were available for free basically everywhere, but doesn't immediately realize how ludicrous it is to then call this "piracy" (nano or otherwise). Instead, he just jumps to fretting about what this will mean for copyright holders. Really.
Why are viewers watching these debates on illegal live streams despite having plenty of free legal options? What does this signal for copyright owners who expect to get paid for their content?
It signals nothing. It signals that people use the internet and they look for the most convenient way to watch the debates for their personal situation. And that's a good thing. It's good that the debates aren't sponsored or filled with commercials and that they're widely available. That's a good thing for democracy. Piracy and copyright have nothing to do with this.
Does the US Chamber of Commerce and real-life professor Nelson Granados honestly think that without copyright no one would have the incentive to put on or stream Presidential debates?
Of course, the pivot is to claim that, well, okay, maybe this is okay for the debate, but gosh darnit, if they can do that for the debate... why, they could do that for other content too!:
Live-streaming the presidential debates in platforms like Periscope and Facebook Live is great for politics, but it should also raise a big red flag about the emerging threat that nano-piracy on these same platforms poses for artists and entertainers.
Yeah, but that's been going on for ages, since well before the debate. The use of it for the debate is actually a good sign, showing how interested people are in civic engagement and understanding what the candidates for President are talking about. Why would anyone complain about it other than to (1) sell some stupid "service" or (2) push a ridiculous argument about "harm" from this kind of streaming.
Within the current system, where copyright holders have to request the take-down of every single piracy source, it has been an uphill battle to keep up with download piracy infringers. Nano-pirates are making things worse, with the aggravated fact that live streams leave less trace than downloads. Ironically, illegal live-streaming of the presidential debates is rampant, so hopefully the winner will be motivated to take matters into his or her own hands.
Did you get that? Because so many people watched the presidential debate, this professor thinks that whoever wins the election should crack down on people getting to watch the debate.
This feels like a parody, but unfortunately, it appears to be real.
While the industries that dominate digital products generally aren't great at recognizing the true nature of the threat of piracy to their businesses, it seems to me the video game industry is better at this game than most. Whereas the movie and music industries are dominated by a great deal of fists pounding tables, some game developers have for some time recognized that piracy might actually be an opportunity in wolf's clothing, if they would only try connecting with these potential customers and ingratitate themselves to this wider potential audience. Still, because this idea that should be easily portable to other industries is so rarely entertained by those other industries, it's worth pointing out the ongoing examples of how gaming companies combat piracy by being awesome and human.
One such recent example is the story of how PM Studios, makers of Playstation Vita game SUPERBEAT: XONiC, reacted to a discussion on Reddit's r/VitaPiracy/ thread detailing how to pirate the game. The game developer decided to jump into the comments themselves with the following:
We feel honoured that you enjoy our game SUPERBEAT XONiC so much, we would like to invite you to take this opportunity to purchase it on sale at the Playstation Store.
You can enjoy the original game and show support to the team for just $15.99 (60% off), no Playstation Plus required!
This, quite simply, is how it's done. Rather than flying into a rage, which would be somewhat understandable on a thread designed specifically to show how to play the game without paying for it, PM Studios decided to treat those on the thread with respect, even thanking them for trying out the game. This acknowledgement that some percentage of piracy is comprised of those wanting to see if they'll like a game before buying it, combined with simply ignoring those that pirate without any intention of ever buying the game, and wrapped up at the end with a link to where the game can be bought while on sale, was met with enthusiastic responses in the comments.
And not only that. PM Studios stayed in the thread and had a relatively lively but respectful debate about how it views piracy, the harm of piracy, and describing its status as a small team just looking to make great games. In other words, rather than simply screaming about piracy, it connected with its potential customers in a respectful way. In the end, several comments came to the defense of PM Studios.
[–]DidntEvenReddit 5 points 3 days ago*
For a small team making Xonic it really is a way to keep the developers on the payroll post-release and keep in mind this is a third party exclusive game on the fucking vita to begin with so the margins are already against them. I have no idea why you would equate the practices of AAA publishers to PMStudios or why you wouldn't want to support them. You're not sticking it to the big corporate man by fucking over a small studio like this
One imagines that this kind of thing builds up goodwill amongst potential buyers of PM Studio games. Some of the comments on the thread state as much. It won't do anything with the pure-pirate folks out there, but, then again, nothing will. Worrying about those that were never going to buy the game would have been wasted time and energy. Instead, the developer chose to try to win over those that might indeed want to support its efforts.
Here's hoping PM Games gets the positive reinforcement needed to confirm that this kind of thing is the right way to deal with piracy. And that other studios are paying attention, as well.
It should be quite clear by now that DRM is a fantastic way for video game makers to keep people from playing their games. Not pirates, though. No, those folks can play games with DRM just fine, because DRM doesn't actually keep piracy from being a thing. No, I'm talking about legitimate buyers of games, who in example after example after example suddenly find that the games they bought are unplayable thanks to DRM tools that work about as well as the American political system. And yet DRM still exists for some reason, as game makers look for some kind of holy grail piece of software that will turn every past pirate into a future dollar sign.
This search for the perfect DRM continues, as we have just the latest story of DRM gone wrong. This story of the Street Fighter V DRM, though, is a special kind of stupid because it was put in place via a software update release, meaning that a game that worked perfectly one day was bricked the next.
The doodad was announced on Thursday shortly before the update rolled out. Capcom called it “an updated anti-crack solution (note: not DRM) that prevents certain users from hacking the executable.”
They continued, “The solution also prevents memory address hack that are commonly used for cheating and illicitly obtaining in-game currency and other entitlements that haven’t been purchased yet.”
This DRM that Capcom insisted wasn't DRM apparently set off anti-virus software for a ton of legitimate customers, triggered warnings from Windows security software, caused PC crashes for others, and even killed one person's new puppy. Okay, that last one didn't actually happen, but the rest did, and it's the exact sort of thing that DRM shouldn't do: screw those who actually bought the game. On top of that, it seems the update gave the game a rather deep level of access into any PC it was installed on, leading some to warn others off from buying it entirely.
As a result of the backlash, Capcom rolled back the DRM via another update pretty quickly, but one has to wonder just how many potential customers were lost in the meantime and how that number compares with the number of potential pirates that were turned into paying customers during that same time period. It would take more imagination than I have to dream up a version of reality in which the latter outnumbered the former, making this attempt at DRM a complete bust.
But, then again, they're all busts, really. So why are we wasting our time with DRM still?
It's well-known that the big studios and the MPAA like to indoctrinate movie theater employees into believing that there's a horrible menace of people trying to pirate movies in the theaters, and that in some cases, they even hand out money to employees who "catch" pirates in the act. In general, all this really does is make it less enjoyable to go to the movies -- and sometimes leads to elderly patrons being ejected from theaters because some kid is totally sure she's pirating the film she's watching.
And the latest example is even more extreme, where private security forces apparently decided to assault a couple of Toronto women they falsely accused of pirating a showing of The Magnificent 7. One of the women, Jean Telfer, says she actually decided to leave the film early because she found it too violent. Apparently the idea that a pirate probably wouldn't be leaving in the middle of a film didn't occur to the geniuses Sony Pictures had specifically hired to "guard" the showing. So they tackled Telfer. Really.
Halfway through the film, Telfer decided to leave because she found the movie to be too violent.
“When I left the theatre I heard someone yelling behind me, ‘Sir! Sir!’ I didn’t think much of it,” said Telfer.
“Out of nowhere I felt someone grab me from behind. My reaction [was] to get this person off of me. Unfortunately it did escalate and he did somehow get on top of me.”
Bizarrely, despite all of that, the guy who tackled her never told her why and then just let her go. But when her friend, Elaine Wong, also went to leave, the experience was a bit different.
Wong, unaware of what had happened to her friend, left the theatre shortly after to find Telfer.
Wong said a guard approached her and little explanation was given except that the security guards had been watching them all night and that something on the guards’ heat sensor guns had gone off. She added that they attempted to search her bag.
Wong noted that they left right before the action really started, and if they were trying to pirate a movie, you'd think they'd "wait until a lot of people start dying." Eventually both Telfer and Wong were told to remain with security until the police arrived -- though after a while when no police arrived, they were apparently let go. The two did decide to file a police report of their own, arguing that they had been illegally assaulted by security at the theater.
In some tweets, Wong notes that they demanded to search her bag, and also demanded to know why they were leaving early -- as if that were some sort of "sign" of piracy in action (though she refers to the guy as being from Disney, the news reports say he was hired by Sony).
None of them are cops. None of them have search warrants. Barry from Disney demanded to know why we were leaving before the movie ended.
It's not like many of us haven't been saying this for years: but fighting piracy through greater copyright enforcement doesn't work. It's never worked and it's unlikely to ever work. A year ago, we released our big report, The Carrot or the Stick? that explored at a macro level what appeared to lead to reduced levels of piracy -- enforcement or legal alternatives -- and found overwhelming evidence that enforcement had little long-term impact (and a small short-term impact), but that enabling legal alternatives had a massive impact in reducing piracy. This should sound obvious, but it was important to look at the actual data, which backed it up.
The researchers say that in order to compete with unlawful file sharing (UFS), easy access to information about the benefits of legal purchases or services should be given in a way that meets the specific benefits UFS offers in terms of quality, flexibility of use and cost.
The team looked at the extent to which the unlawful sharing of music and eBooks is motivated by the perceived benefits as opposed to the legal risks. Involving almost 1400 consumers, the research explored people's ability to remain anonymous online, their trust in the industries and UK legal regulators such as Ofcom, and their downloading behaviour.
It's a very different approach to our own research, but the conclusions remain almost identical. In short, the researchers found that for people who really "trust" regulators, then the threat of punishment was effective. The problem, however, is that not that many people actually trust regulators. That leaves officials with two choices: increase trust in regulators, or... figure out ways to incentivize more legal, innovative alternatives. And, of course, one way to destroy trust in regulators is to support policies like expanding copyright enforcement.
Co-author Dr Piers Fleming, from UEA's School of Psychology, said: "It is perhaps no surprise that legal interventions regarding UFS have a limited and possibly short-term effect, while legal services that compete with UFS have attracted significant numbers of consumers.
"Our findings suggest that it may be possible to diminish the perceived benefit of UFS by increasing risk perception, but only to the extent that UFS is considered emotionally, and users trust industry and regulators. Increasing trust in industry and regulators may be one route toward encouraging UFS to be considered in emotional rather than rational terms. However, given the limited impact of risk perception upon behaviour, a better strategy would be to provide a desirable legal alternative."
So, that's common sense and two very different studies with very different approaches -- all suggesting the same thing. And yet, politicians, regulators and legacy industry folks still insist that ratcheting up enforcement is the way to go. What will it take for them to actually follow what the evidence says, rather than continuing with faith-based copyright policies?
Today is "International Talk like a Pirate Day." While it's a lot of fun to act like a pirate, drink rum and catch up on Errol Flynn movies, piracy is also a serious issue with real economic and legal significance. As electronic devices become an increasingly ubiquitous part of our lives, the content we consume has moved from analog to digital. This has made copying – as well as pirating – increasingly easy and prevalent.
Adding fuel to the flames of this rising "pirate generation" has been the content industry's recalcitrant and often combative attitude toward digital markets. Piracy, and the reactions to it, has had an immense impact on the daily lives of ordinary Americans, shaping their digital experience by determining how they can share, transfer and consume content.
As soon as electronic storage and communication technology was sufficiently developed, digital piracy became accessible. Whether it's a song, movie, video game or other piece of software, you could suddenly reproduce it without having to steal it off a shelf or obtain any specialized machinery to counterfeit it. Additionally, if you wanted to listen to an mp3 of the latest Britney Spears album on your computer, there weren't many lawful options. This led to a surge in online piracy and helped foster a culture of online file-sharing.
The music industry historically has a reputation for being hostile to, or at least slow to embrace, digital markets. Yet there were also some major artists who were early innovators in the space.
Before Spotify or iTunes, there was BowieNet. This music-focused internet service provider launched in July 1998 and gave users 5MB of space to create and share their own websites, content and chat. On BowieNet, according to Ars Technica: "[f]ans could get access to unreleased music, artwork, live chats, first-in-line tickets, backstage access, tickets to private, fan club-only concerts." David Bowie saw the potential to help his fan base access his content and discuss it in a social way in the early days of the internet, before Facebook or Myspace. He remarked at the time: "If I was 19 again, I'd bypass music and go right to the internet."
Bowie wasn't the only early music pioneer of the internet. Prince was also an early unsung hero. In the early 2000s, he created NPG Music Group, later Lotusflow3r. He even won a Webby Lifetime Achievement Award in 2006. Unlike BowieNet, NPG and later Lotusflow3r provided releases of full albums.
As musicians and users were experimenting with new ways to share content on the internet, the United States was working with other World Intellectual Property Organization (WIPO) member countries to create the most comprehensive "digital" update to the Copyright Act. In 1998, President Clinton signed into law the Digital Millennium Copyright Act, which implemented U.S. WIPO treaty obligations, as well as several other significant titles (including the Vessel Hull Design Protection Act – which pirates of the nautical variety might care about). Of particular importance were the sections providing for "safe harbor" (Sec. 512), which protected service providers from infringing content generated by their users, and "anti-circumvention" (Sec. 1201), which was meant to stop pirates from hacking digital rights management (DRM) and similar restriction technologies.
Unfortunately, while the system worked when isolated incidents of infringement occurred on largely static web pages—as was the case when the law was passed in 1998—it is largely useless in the current world where illegal links that are taken down reappear instantaneously. The result is a never-ending game that is both costly and increasingly pointless.
While lawmakers were hard at work trying to find ways to quell online piracy, the courts weren't taking a nap. Indeed, going back to the 1980s, there were important judicial fights that would set the stage for how content would be handled on our electronic devices.
The U.S. Supreme Court's 1984 Sony Corp. of America v Universal City Studios Inc.decision coined what is known as "time shifting," referring to a user's ability to record a live show using the Betamax to watch it later. The court's decision set the precedent that a manufacturer would not be held liable for any contributory negligence or potential infringement where they did not have actual knowledge of infringement and their devices were sold for a legitimate, non-infringing purpose. As Justice John Paul Stevens wrote in the majority opinion:
One may search the Copyright Act in vain for any sign that the elected representatives of the millions of people who watch television every day have made it unlawful to copy a program for later viewing at home, or have enacted a flat prohibition against the sale of machines that make such copying possible. It may well be that Congress will take a fresh look at this new technology, just as it so often has examined other innovations in the past. But it is not our job to apply laws that have not yet been written.
But not everyone was so enthusiastic. Jack Valenti, former president of the Motion Picture Association of America said in a congressional hearing two years prior [regarding VHS technology]:
We are going to bleed and bleed and hemorrhage, unless this Congress at least protects one industry that is able to retrieve a surplus balance of trade and whose total future depends on its protection from the savagery and the ravages of this machine.
The 9th U.S. Circuit Court of Appeals would take another approach in 2000s A&M Records v Napster. The court affirmed the district court's ruling that peer-to-peer services could be held for contributory infringement and vicarious liability. Even though their service merely facilitated the exchange of music as an intermediary, they were on the hook. Judge Marilyn Hall Patel wrote in the district court's ruling:
…virtually all Napster users engage in the unauthorized downloading or uploading of copyrighted music; as much as eighty-seven percent of the files available on Napster may be copyrighted, and more than seventy percent may be owned or administered by plaintiffs
Napster lodged several defenses, including fair use, but the most important (in lieu of the Sony decision) was the concept of "space-shifting," referring to the process of a user converting a compact disc recording to mp3 files, then using Napster to transfer the music to a different computer. Patel concluded Sony did not apply, because Napster retained control over their product, unlike Sony's Betamax, which was manufactured and sold, but not actively monitored.
The courts would continue ruling in a similar manner as other peer-to-peer services found themselves in the courtroom. At times, users would be targeted. And in the 2003 case of In re: Aimster, the pirates' bluntness for wanting to bring the music industry to its knees did not help the situation
What you have with Aimster is a way to share, copy, listen to, and basically in a nutshell break the law using files from other people's computers…. I suggest you accept aimster for what it is, an unrestricted music file sharing database – (posted by zhardoum, May 18, 2001)
Naturally with all of the music-sharing services were being shut down, the pirates found a new way to connect, share files and shape the industry. Which brings us to BitTorrent and websites like The Pirate Bay and Swepiracy. Torrenting does not require a central server, does not require direct streaming from one peer to another and the host does not contain any full file contents. All of the content received is from other users.
Sweden brought Pirate Bay to trial for both civil and criminal penalties. Per E. Samuelson, the site's attorney, lodged the now-famous (and familiar, for U.S. copyright scholars) King Kong defense:
EU directive 2000/31/EC says that he who provides an information service is not responsible for the information that is being transferred. In order to be responsible, the service provider must initiate the transfer. But the admins of The Pirate Bay don't initiate transfers. It's the users that do and they are physically identifiable people.
The defense was unsuccessful. Which brings many questions to mind for future cases — how will courts begin to rule with such complex systems of file transfer as fragmented torrents? Targeting users is widely unpopular, especially in the United States, where statutory penalties range from $750 to $300,000 per willful infringing use and $200 to $150,000 for non-willful infringement.
Efforts around the world have continually been made to combat piracy. But maybe it's time we take a fresh look at the market. As the Copia Institute observed in a recent report, whenever there are new ways to share content legally, users ultimately respond by employing those technologies.
On this International Talk like a Pirate Day, let's take a moment to remember the pirates and how they have helped shape the internet era. While CD sales and digital downloads may be declining, new streaming services are on the rise (vinyl records are also doing remarkably well). The digital revolution has, indeed, changed how we consume and access our music. It has given us access to (nearly) everything, through services like Spotify and Apple music, at a reasonable price and with unparalleled convenience.
From the consumer's perspective, you now carry hundreds of hours of music on your phone and listen to it whenever you want – no need for one of those bulky CD binders. The slot where the CD used to go in your car is now an auxiliary cable jack.
From an artist perspective's, these are new challenges that require adaptation. Particularly in the case of music licensing, our pre-existing laws are unnecessarily complex, cumbersome and antiquated. However, innovative technologies and services are not to blame. Instead, we should seek new and equally innovative ways for artists to be compensated through more direct and transparent payments (such as Ujo).
While our copyright laws are far from perfect, we still have substantial freedom to remix, repurpose and share creative content online in a social context. This is essential to online free expression, digital commerce and the proper functioning of the internet itself. As additional discussions in Congress and in the courts move forward, let's make sure we keep it that way.
The Indian film industry has long had a complicated relationship with piracy. After all, India's Bollywood regularly produces the most films of any other country in the world (it's often neck and neck with Nigeria). That seems to be a sign that the market is pretty healthy. After all, filmmakers keep telling us that piracy is going to destroy their reasons for making films... and yet here's a market that's making tons and tons of films (many of which are excellent). And, as we've noted in the past, the film studios in India are making lots of money, in part because they're competing effectively against piracy. And, then you even have some Indian filmmakers who recognize that piracy helps spread the message of their films to a wider audience.
And yet... because it's (oooooh! scary!) "piracy," there will always be some who freak out and come up with bad ideas. Apparently, one of those bad ideas is now the law. After already putting in place dumb site blocking laws that force ISPs, under court order, to block access to sites deemed hubs of infringement, the Indian government now says that getting around one of those blocks (hi there, VPN user!) is a criminal act that could get you three years in jail.
"What are you in for?" "Me? I used a VPN to access Archive.org."
So why is the Indian government doing this kind of thing, despite everything noted in the first paragraph about the thriving and successful Indian creative industries? Perhaps it's because of absolutely bullshit articles like this one at "The News Minute" claiming that Indian films gross $2 billion, but piracy makes 35% more. I found that article because well-known copyright maximalist, Canadian lawyer Barry Sookman, happily tweeted the link. But you have to be pretty bad at understanding copyright law if you think it's a good article. After all, it struck me as odd for the headline to note that "piracy" makes more money than the Indian film industry. And that's because it's not true. Yes, the article starts out by claiming it does:
India's film industry, said to be the largest globally with some 1,000 movies produced each year, earns around $2 billion from legitimate sources such as screening at theatres, home videos and TV rights. But with $2.7 billion, piracy earns 35 per cent more, and a way out has proved elusive.
Where is this $2.7 billion coming from and where is it going? And if it were really true that piracy "earned" so much more money, uh, then shouldn't the Indian studios embrace piracy and start making that money for itself? But, of course, the answer is that that's not what's actually happening. It's just how the terrible reporter at The News Minute confusingly explains things, and copyright lawyers like Sookman happily retweet because it fits into his narrative. But you have to dig deeper into the article to find out that the $2.7 million "earned" by pirates is actually just the made up number of the value of movies downloaded.
"The infringing copies appear online within few hours of a film release," Singh told IANS, and added: "The Indian film industry loses around Rs 18,000 crore ($2.7 billion) and over 60,000 jobs every year because of piracy."
You see, here they're now calling the $2.7 billion "losses." Because that's a made up number that the industry wants you to believe it would have made if piracy did not exist. But that's not money "earned" by piracy. And pretending it is is incredibly dishonest. After lots of hand-wringing and whining about evil pirates, finally, at the end of the article, you have someone who speaks sense, filmmaker Anurag Basu, who recognizes the way you beat piracy is by competing with it:
"Piracy is working because people can buy a (pirated) DVD for Rs 100 and a whole family can watch it. We have to offer that kind of entertainment at that price. It has to be as easy to get an original DVD as it is to get a pirated one," he said.
But, instead of doing that, the government is buying into ridiculous claims about pirates "earning" more money, and thus they're now trying to criminalize merely accessing a website that they've banned for having infringing material. Websites like the Internet Archive and Vimeo.
Over the past few months, the legacy recording industry has coalesced around a new talking point -- a so-called "value gap" between different kinds of music services. In particular, the phrase is used to attack YouTube and to claim that it's somehow unfair that the ad rates and money made from the ad supported YouTube is much lower than purely subscription services. This has lead to the repeated false claim from the RIAA and others that revenue from vinyl records is more than from ad supported streaming.
Unfortunately, this value gap phrase has caught on in certain circles -- including over in Europe where the European Commission has mentioned it as it puts in place plans for copyright reform. Tragically, and incorrectly, EU officials have started referring to reasonable intermediary liability protections and other things as a "loophole" within copyright law that somehow allows platforms to "unfairly benefit." It allows them to claim that they're just trying to "level the playing field" when that actually means tilting the playing field heavily in one direction.
The claim that this difference is “unjustified” or somehow “unfair” should be challenged. The music industry’s revenues have
always differed depending on the sources (i.e. the sales of sheet music and phonograms, live performances, radio and TV
broadcasts). Online services have become additional sources of revenue, with different business models and technologies
generating different incomes – reflecting the current situation in the offline world.
And that's true, but even that underplays the reality of the situation -- which is that there are good reasons for differentiation here. It's not just about differences in sources, but differences in how people consume music and the money that changes hands reflects that. Terrestrial radio is free and ad supported -- and it's an easy low-barrier entry point for people who aren't necessarily huge music fans. Then as you travel up the ladder of musical fandom, and people get more committed, they may use a subscription service, or have their own locally stored music.
Sacquet further points out how the ideas that the EU is apparently considering would create a massive disaster for internet services that provide platforms for music:
Among the potentially very harmful measures considered by European policymakers to solve this “value gap” is the “clarification”
of the right of “communication to the public” – i.e. both user and online hosting services would be “communicating to the public”
each time a user is uploading a content online. Online platforms, today only indirectly liable for copyright infringement, would
become directly liable. All online hosting services would de facto fall outside of the scope of the liability protection
regime of the E-Commerce Directive.
Such a measure would have far reaching consequences.
Firstly, it could cause online services to shut down their upload and sharing services, thereby chilling innovation.
Secondly, this would severely restrict users’ freedom to impart and receive information, something that policymakers have
struggled to grapple with in the past.
Thirdly, it could cripple the growth of the digital economy – when the purpose of the Digital Single Market is the exact opposite.
But, perhaps even more importantly, is that it would end up harming the very musicians clamoring for such a solution. We're still in the very early days of figuring out how music services should best work online. The whole concept of the "value gap" and "leveling the playing field" really are all about deciding that there is "one true business model" for all music services to live under, and EU technocrats (heavily pressured by the legacy recording industry) are going to tell the world what that is. That's a recipe for disaster not just for the tech sector, but the very musicians who rely on these services to make money today.
Most importantly, they will completely lose out on the differentiated ways in which fans enter the music ecosystem. When you have a one-size-fits-all model, it pushes towards a world where the vast majority of casual music fans are left out, in a misguided effort to try to force more money out of stronger music fans. Years ago, music economist Will Page pointed out that the industry was wrongly focusing on share of wallet that they were able to extract from people, rather than trying to expand the population that was listening to music and contributing to the music ecosystem in some way. That is, there's a large percentage of the population that doesn't support the music ecosystem in any way. They don't subscribe to anything. They don't go to concerts. They're casual music listeners at best. And there's a real opportunity to offer low barrier entry points to those people, allowing them to "move up the ladder" to become bigger and bigger music fans.
But you lose all of that with a forced "level playing field." The "value gap" is not a value gap at all. It's simply showing differentiated pricing to help bring in more casual music fans and create new opportunities going forward. So the end result here would be not just harming technology companies and leading to fewer services with less innovation, but, even worse, a significantly smaller population of music fans who are willing to support the industry -- and the ones who remain will be getting squeezed harder and harder by the industry, eventually probably shoving many of them out of the market as well.
The talk of a "value gap" is not only misleading and wrong, but it's dangerous. And it's dangerous to both internet services and musicians -- which shouldn't be a surprise because, despite all the rhetoric, the two are pretty closely aligned in their overall interests.
For many years now, the MPAA and the various studios that make it up have filed various lawsuits against various internet platforms for not waving a magic wand and making piracy disappear. This also appears to be their big complaint against Google, which has bent over backwards trying to appease the industry and it's still not enough (of course, that may be because what the industry really wants from Google is money, not stopping piracy). But now the shoe is somewhat on the other foot as Sony Pictures is being sued for failing to stop piracy. Really.
The case stems from the infamous Sony hack from a year and a half ago, where all of Sony Pictures' emails were released onto the internet. Possibility Pictures is suing Sony claiming the hack created a breach of contract in its failure to stop piracy of its film, To Write Love On Her Arms (TWLOHA), a 2012 movie starring Kat Dennings, based on the true story of the struggles a woman went through leading to the founding of her charity (which goes by the same name as the movie). While most people focus on the emails from the hack, it should be noted that before those emails were released, the hackers released some pre-release films... including TWLOHA. And that, Possibility claims, is a breach of Sony's contract.
Reading through the full filing, the key breach appears to be of Section 16.7 of the contract, which includes an "anti-piracy authorization" stating:
So that's kind of amusing, since the clause is clearly designed to give Sony the power to send out threat letters and takedowns and use DRM and other such stuff -- but Possibility is basically turning it around on Sony and arguing that its failure to stop piracy shows that it did not use "appropriate technical measures." I'm not sure a court will go for this kind of judo move in flipping the anti-piracy authorization clause around to suggest that it puts certain contractual requirements on Sony Pictures, rather than simply authorizing it to do certain things as the language is clearly designed to do.
The lawsuit goes on and on about all of the great marketing plans Possibility had for the film (Justin Bieber's mother was going to tweet about it!), but apparently that was all ruined when the hackers, whoever they were, leaked the film. It also highlights Sony's earlier security problems, focused on the famed PSN hack, even though that's an entirely separate subsidiary from Sony Pictures. And then it spends a lot of time pointing to reporters who pointed out that Sony Pictures' computer security was abysmal. That's true... but it's not clear that's against the law. Basically, this lawsuit is mostly "Sony incompetent" and then "because of that our contract was breached."
Possibility then tries to show damages from the leak of the film.
The direct and proximate result of the foreseeable and avoidable Data Breach just four months prior SPWA's planned release of the Picture was an extreme dilution of the otherwise viable market for Plaintiff's Picture. The November 2014 Data Breach resulted in the unauthorized release of the Picture on multiple sites worldwide and destroyed the audience demand for the Picture. Following the Data Breach and worldwide pirated release of the Picture, SPWA abandoned the social marketing plans and lost all interest in promoting and marketing the Picture since it was otherwise available for free as a result of its failure to maintain adequate security of the Network. As an isolated sample of the damage caused the anticipated video-on-demand ("VOD") revenue stream of the Picture, note that in the first six days alone following the Data Breach, the stolen Picture master was downloaded-for-free a reported 19,949 times (an average rate of over 3300 illegal, revenue-free downloads per day).
So... a few things on this. First, downloads don't equate to lost sales, generally speaking, so the attempt to suggest that here without further evidence is pretty silly. Second, less than 20,000 downloads is... kinda weak. It certainly suggests there wasn't much interest in the film in the first place. Third, the idea that there's no market for a movie that's available for free online is easily debunked by the numerous movies that do quite well at the box office and in the home video market despite also being pirated online.
However, the more interesting bit is that this puts Sony Pictures in the fairly awkward position of potentially having to argue that piracy isn't really that damaging to a picture. I'm guessing that Sony Pictures and the MPAA want no part of that argument ever being filed in a court, because it will boomerang back to hurt them.
Either way, the filmmakers are demanding almost $9 million:
The amount of that revenue for which we seek payment, less amounts paid to date, is $8,738,331...
For a movie that not that many people seemed interested in?
Separately, Possibility notes that Sony pointed out that there's a binding arbitration clause in their contract, and Sony has already said that if there's a dispute it must be handled by such an arbitration setup. Possibility tries to get around this, but (unfortunately!) courts have tended to accept these binding arbitration clauses as valid.
If I had to put odds on it, I wouldn't give this lawsuit much of a chance of surviving. The attempt to turn an anti-piracy authorization clause into some sort of requirement to block piracy is a massive stretch. The mandatory arbitration clause is also a problem. Plus, the overall lawsuit is pretty weak. The claim itself is not very well backed up. Chances are Sony can get this tossed out quickly -- but it will be amusing to see if it has to argue that piracy isn't really that damaging. That would be fun.