Tag: piracy

Cyberattack Effect in China Reveals Flaw in Piracy Logic

This month, computers around the world fell victim to what experts have called the largest cyberattack on record. Known by its name “WannaCry,” the ransomware* assault went global sending cyber-defense teams into hyperdrive trying to protect systems as vital as hospitals, banks, and telecommunications in Europe, Asia, and the U.S.  One notable consequence of the attack, as reported in The New York Times on May 15th, was that Chinese businesses, public institutions, and universities were especially stymied in responding to the threat for one simple reason:  software piracy.

Paul Mazour, writing for The Times, cites a 2015 study revealing that 70% of the software installed in Chinese computers is not licensed, noting later in the article that use of unlicensed software and other media is so embedded in the culture that many citizens don’t even know it’s illegal.  Clearly, when major institutions, including large corporations and one of three state-run telecom companies are implicated, we get the idea.

The “WannaCry” attack targeted older Windows operating systems, and because the Chinese make such widespread use of unlicensed versions of Windows, the unsupported software lacked the updates and patches that would have at least helped mitigate the effects of the assault. And because so many computers were unprotected, this facilitated a much wider and faster spread of the virus. Granted, there are broader aspects of this story, including China’s supposed desire to build a domestic alternative to Microsoft. But taken in isolation, this incident strikes me as a cautionary tale, albeit a stodgy and maternal one.

Imagine if everyone did it. 

Yeah, it’s an ancient, parental finger-wag; but it is also a basic concept that copyright advocates have been trying to explain to the pirating public for years.

In the same way that China’s high volume of piracy left so many users extra vulnerable in this security context, there is likewise a tipping point at which a certain volume of piracy in any market will end, or dramatically curtail, new production of the works being pirated.  Based on one very typical comment I read this week, though, it seems that people are still confused about the contrasts between a black market and a legal one.

The Verge published a story about the arrest and current status of alleged Kickass Torrents founder Artem Vaulin, and I won’t comment on that still-developing case at this time. But the reason I mention it is that the comments section, not surprisingly, shifts from the report itself to the broader subject of piracy and everything that’s wrong with Hollywood, and the usual litany of complaints.  This observation from one anonymous poster caught my attention, not because I want to pick on him/her, but because it is exemplary of familiar themes:

“As much as Netflix, Spotify, iTunes/AM etc. are combating piracy and being fairly succsessful [sic] at it I can’t help but feel it’s a sub-par experience. The constant exclusivity deals, every corporation with hit TV show pushing their streaming service, and the most ridiculous of all, geo-blocking, in their effort to get more out of consumer they end up being a great advert for piracy …”

So, here’s a simple truth in response to that:  no legal market will ever compete with a black market. Doing business legally, even making older libraries of works available, has costs considerably higher than running a piracy site.  If the piracy advocates are waiting for the day when every creative work ever produced is available worldwide for a single, low-price subscription before they’re willing to stop pirating, they might as well at least stop banging on about the subject. Because it ain’t gonna happen.

Maybe this fact alone seems like justification for many to pirate, but those who think this way need to remember that a black market doesn’t produce a damn thing. Pirates trade in illegally-obtained works that other investors, large and small, have spent trillions to produce.  Because legal consumption of works in many markets is greater than illegal consumption, the margin of difference is sufficient enough to mask much of the damage when viewed from a broad perspective. But that doesn’t mean damage doesn’t occur. It’s like a basic principle of ecology; nothing looks wrong for a while until suddenly everything is wrong all at once.

Smaller, independent creators tend to feel the effects of piracy more acutely than big, corporate producers who have the scale and depth to treat piracy (to an extent) as a cost of doing business; but this does not mean the effects are nil. The Chinese scramble to protect systems running unsupported software reveals that there is always a tipping point when self-interest becomes self-destructive.  If enough consumers opt for a black market because, as the cited commenter says, the legal market is “a sup-par experience,” the truly lousy experience will come when production of new works grinds to a halt.

Yes, there is competition among producers. That’s what happens when people invest millions of dollars hoping to make something the market will like.  This competition necessitates exclusive deals, windowing, marketing, and even the dreaded geo-blocking.  This last item may seem incomprehensible to many consumers, but it is actually a manifestation of the way in which many independent film productions are financed.

In fact, eighty film directors in Europe (i.e. not Hollywood executives) just signed a petition urging the EU not to adopt a digital single market approach because this would adversely disrupt the way in which their films get made. The petition, published this week ahead of a forum to be held at the Cannes Film Festival next Monday, contains the following statement:

“More than ever, the territoriality of copyright needs to be maintained: this principle ensures high level support for artistic creation in Europe, helping the most fragile filmmakers and European co-productions. Enshrining this principle underwrites the exclusivity of rights and the financing of works.”  [Emphasis added]

It’s all well and good to sit at a computer, know exactly nothing about how products like motion pictures are financed and produced, and pontificate on the theme that “Hollywood should learn from the pirates, and until they do, I’ll keep pirating.” But this is untenable logic, not only in Hollywood, but especially for the thousands of works that are produced far from Hollywood. And the only reason these delusions persist is that—for now anyway—the legal market remains larger than the illegal market.  But there is always a tipping point, even if nobody can tell you exactly where it is.

*Ransomware locks up files on a computer and demands that the user pay the hacker(s) to restore access.

12 Things You Could Still Do If SOPA Had Passed

photo by tomasmikula

Because today is the five-year anniversary of “Blackout Day,” the day millions of users were suckered into doing the internet industry’s bidding for no good reason, the always-relevant BuzzFeed offers us a missive published by the organization ReCreate Coalition called “12 Things You Can Do Because Congress Protected Internet Freedoms,” by which they mean backed off the passage of SOPA/PIPA on January 18, 2012.

But there’s something magical about the twelve things listed; it’s kind of like a palindrome in that it is also a list of things you would still be able to do if SOPA/PIPA had passed. Let’s not equivocate on this matter.  I mean not one of the activities mentioned was in any way threatened by SOPA/PIPA.  And you know how we know this? Because those bills didn’t expand rights or restrict exceptions like fair use under the copyright law. If you engage in any or all of the listed activities and actually infringe a copyright, you’re just as potentially liable right now as you would be if those bills had passed. For reasons known perhaps only to the folks at ReCreate, they chose the following:

1. Share puppy videos instantly to Facebook.

2. Post a breaking news clip on Twitter.

3. Review a new restaurant on Yelp.

4. Comment on an article at a news outlet like Deadspin.

5. Use Wikipedia for that history paper on Alexander Hamilton…

6. Post a funny meme to Reddit.

7. Save a healthy recipe on Pintrest…

8. Repost a motivational quote on Instagram.

9. View and share family photos on Flickr.

10. Write a political opinion blog on WordPress.

11. Post a manequin challenge on YouTube.

12. Listen to a podcast on SoundCloud.

None of these actions inherently requires the use of copyrighted works. Some are actually hard to fathom how such a use is even implied. For instance, it’s pretty tough to share your own family photos and infringe a copyright, which suggests the ReCreate folks really put their A-Team on this little project.  But, don’t kid yourself.  If your political opinion blog includes the publication of a copyrighted photograph used without permission, you’re exactly as liable right now as you were before anyone even heard of the acronym SOPA.  Those bills were aimed at foreign-based, enterprise-scale pirate site operators and required substantial, costly evidence to enforce. It would not have been legally possible for rights holders, under SOPA, to give any more of a damn about private videos and restaurant reviews than they do right now.

The remedies provided by SOPA/PIPA were based on existing practices already used by courts when providing injunctive relief—all of which have been applied in various cases, and all without destroying the internet, the First Amendment, or your ability to “share puppy videos instantly on Facebook.”  Since 2012, sites have been shut down, URLs delisted, and credit card services denied to various types of bad actors; and yet the web keeps humming along in all its mannequin-challenging, motivational-quoting, and funny-meme-making glory.  The anti-SOPA campaign was one of the most effective fake news stories of all time, and celebrating the anniversary of being fooled is well…you finish the thought.

I assumed the buzz in BuzzFeed referred to current events, but perhaps it’s a literal reference indicating that any party, no matter how stoned they are, is free to publish any nonsense they cobble together via their platform. So, I guess we should add a thirteenth item to the list that would also, sadly, still be kosher in a world with SOPA & PIPA:

13.  Click-bait bullshit could still pretend to be information.

Box Office Revenues Say Little About Piracy

Once again the MPAA has announced a profitable year for American motion pictures, and once again some of the usual suspects have seized upon this announcement to declare the studios hypocrites for ever saying that piracy causes real harm to the industry. Certainly, it’s easy enough to keep writing this same, careless article all the time. Cory Doctorow cobbled together a 100-word jab for BoingBoing; TorrentFreak reported essentially the same premise with a little less snark; and Ruth Reader managed to tap out this little sneer on Mic.com, complete with obligatory reference to SOPA, under the unforgiveably misleading headline The Movie Industry Just Admitted Piracy Isn’t Curbing Its Massive Profits.  

I know this may be hard to imagine, but the question of piracy’s harm to the filmed-entertainment industry overall is considerably more complex than a measurement of how the top-grossing motion pictures are doing at the box office.  But before expanding on this subject (again), let me repeat the following theme as a matter of principle:  Whether piracy siphons $100 or $100 million out of the legitimate market, it’s money that belongs to the people who do the work. Sadly, this is not a sufficient rationale for many, so we have this silly conversation instead, speculating about how innocuous piracy is or isn’t.

The annual report released by the Motion Picture Association reveals worldwide box-office sales of $38.3 billion, up 5% from 2014.  And that’s good news.  But the only thing we can actually  conclude from the information in this report is that audiences around the world—and especially in Asia-Pacific—are going to theaters in numbers large enough to make the big movies profitable regardless of piracy. This isn’t all that revelatory, of course—unless you actually thought nobody would go to the theater to see the new Star Wars—but to the the above-named pundits and their ilk, these revenues appear to make the studios out to be Chicken Littles.  How can they be so aggressive about piracy when they’re clearly doing just fine?  But if anyone took the time to look at the report and to learn something about the whole industry, they could not justifiably jump to the conclusion that piracy is fundamentally harmless.

Ruth Reader notes that MPAA CEO Chris Dodd, in an address to CinemaCon this week, stated that the industry projects a $1.5bn estimated annual loss at the box office due to piracy.  This number may seem negligible next to $38 billion, but it’s worth noting that this estimate applies only to US box office, which makes the number considerably more significant relative to the $11.1 billion in sales for the US and Canada.

But assuming the $1.5 billion is accurate and still seems trifling to some readers, let’s look at it from a slightly different perspective that considers all of the 708 films included in the report.  Of these, 561 films were non-MPAA member, independent features.  And let’s imagine that 10% of that $1.5 billion could have been divided among the best 100 of those indies. That would be $1.5 million per movie, which any independent filmmaker will tell you can be life-and-death money.  In fact, Adam Leipzig of CreativeFuture used exactly that expression in this article when he noted the conservatively estimated $1.83 million the film Boyhood lost to piracy last year.  Of course, we cannot definitively say where money not spent might have gone, but by the same logic, it doesn’t make sense to blithely assume that because Jurassic World and Inside Out did great, piracy isn’t an issue across the broader market.

The fact is we can’t know exactly how much is lost due to piracy, but we can conservatively project that a relevant portion of the illegal market would be recaptured if piracy did not exist. Out of a universe of hundreds of millions of pirate site visits every month, if just 20 million consumers worldwide were to switch from illegal home-viewing channels to legal ones and spend just $13/month on filmed entertainment, that would add up to about $8 billion per year. And to put that in perspective, the top 25 grossing films of 2015 earned about $6 billion at the box office.  Or spread $8 billion across 500 idependent titles, and it would be $16m in sales per title.  I’m not suggesting revenue spreads evenly like that; of course it does not. But that’s the point. The top-grossing products may consistently earn enough to overwhelm the effects of piracy, but the smaller products—indie features, TV programs, documentaries—which operate on smaller margins are naturally going to be affected more acutely by any loss.  In fact, producer Martha De Laurentiis recently made a pretty good case for saying that piracy may have played a role in cancelling the popular series Hannibal.

Still, I realize that the pundits’ main premise, however unexamined it may be, is that the studios are the big whiners who want to fight piracy, and the studios are the ones who seem to be doing well.  But even if that logic were sound, readers should not be fooled into thinking it’s exclusively the studio execs who have a problem with piracy.  They’re just the ones who make the headlines, the ones who have the resources to try to address piracy, and the ones who are the most frequently vilified in this context. The indie filmmaker who loses money to piracy feels quite strongly about the issue, too; she just doesn’t have the muscle to do much about it.  As such, the indie filmmaker’s best hope for mitigating large-scale piracy is the costly effort being made by the studios. This is one of many reasons why “fans” cannot presume to separate the individual filmmakers from the major companies; they are co-dependent in a variety of ways.

Finally, while the temptation to bash the studios on the piracy issue will remain SOP for the lazy reporter, at least the peanut gallery might consider its own hypocrisy when criticizing these companies for producing exactly the films that consistently top the Most Pirated lists year after year.  Of the few words Cory Doctorow could be bothered to share with us on this subject, he spent some of these accusing the studios of clinging to “high-risk tentpole economics”.  In other words, the studios’ making money with tentpole films is grounds for calling them hypocrites about piracy, but then the studios should also be lambasted for making tentpole films, which is partly a response to piracy.  I know I’ve raised this issue before, but a threat of any loss in value to any commodity will drive investors to safety.  So, if you promote piracy and at the same time blame investors for producing the kind of big-spectacle fare that can earn revenue in spite of piracy, you kinda sound like you don’t know what you’re talking about.