Tag Archive: piracy


MPAA Costs Hollywood More Than US BitTorrent Piracy

Filed Under: Peer2Peer News by Ernesto — Leave a comment
November 22, 2011

mpaaThe movie industry claims that piracy is costing them billions of dollars a year.

Luckily for Hollywood, many Americans choose to consume their online media through legal services such as Netflix. In fact, there are now so many that the total Internet traffic generated by Netflix has outgrown that of BitTorrent.

This made us wonder – what would happen if all movie-downloading BitTorrent users made the switch to Netflix? What if movie piracy via BitTorrent disappeared?

Before we crunch some numbers we have to say that the model we use relies on a lot of assumptions. However, we try to keep these in favor of the movie industry to maximize their potential ‘profits’. We obviously chose Netflix as a BitTorrent replacement because it comes closest to what ‘pirates’ want.

What’s the ‘value’ of BitTorrent piracy?

What we’re going to do is determine the amount of Internet traffic movie and TV related BitTorrent downloads generate in the US. Since the file-sizes of Netflix and BitTorrent downloads are about the same, we then compare this traffic to what Netflix is generating now. Assuming a linear relation between revenue and traffic we can then “guess” how much extra money would come in if all BitTorrent users switched – and paid.

Step 1: How much BitTorrent traffic is movie/tv related?

The first assumption we’re going to make is that all BitTorrent traffic is unauthorized. This is of course not the case, but we’ll leave that debate for another time.

If we then take a look at one of the more recent reports on the BitTorrent ecosystem, often cited by the MPAA, we see that 35.2% of all torrents are movie related. Another 12.7% are TV-related. For the purpose of this thought experiment we are going to forget about Hulu and other free services and add TV to the ‘pirate traffic’ mix.

The total percentage of video torrents is then 47.9%.

Since we’re comparing traffic we have to adjust for the file-size of videos compared to all other content on BitTorrent and the actual popularity of the files. This is nearly impossible to estimate precisely , but several reports show that movie and video are downloaded the most by far. So we’re going to set the total amount of infringing BitTorrent video traffic at 85%, which is probably on the high end.

Step 2: How does BitTorrent traffic compare to Netflix traffic?

The next step is to see how much of total Internet traffic 85% of all BitTorrent traffic actually is.

A recent report from the Canadian company Sandvine shows that in the US 16.5% of total Internet traffic on an average day comes from BitTorrent. Since BitTorrent traffic goes both ways (upload and download), 8.75% of this is downstream traffic. This means that a little under 7.5% (85% of 8.75) of all Internet traffic in the US is video downloads over BitTorrent.

The same Sandvine report shows that 23.3% of total Internet traffic an average day comes from Netflix. More than 95% of this traffic is downstream, so we can set Netflix downloads at approximately 22.5% of all US Internet traffic, which is three times as much as BitTorrent’s video download traffic.

Step 3: How much revenue would these pirates generate on Netflix?

Here comes the interesting part. What would it mean in terms of revenue if ALL BitTorrent traffic moved to Netflix?

If we assume that BitTorrent and Netflix users consume roughly the same amount of content (again an assumption favoring the movie studios), then this is an easy calculation. Netflix would generate a third more revenue. Based on the shareholders report of the last quarter of 2010 (where most of the torrent stats in this article are based on) this translates into $198 million additional revenue for Netflix.

Based on more recent stats contained in Netflix’s third quarter filing of this year, the increase in revenue would be $266 million for that quarter.

Step 4: How rich would Hollywood become?

It’s clear that according to our (very unrealistic) calculations Netflix would greatly benefit from the sudden disappearance of BitTorrent piracy. The next step is to see how Hollywood would be impacted. Since most licensing deals are fixed and not based on usage, one could argue that the movie studios wouldn’t benefit at all. However, that’s not much fun.

So let’s look at the licensing deals that were in place already and determine Hollywood’s added profits based on that, assuming they would be more flexible.

In the whole of 2010, Netflix paid the movie studios $181 million in licensing fees according to the shareholder reports. If we add a third to that, Hollywood would have “made” roughly $60 million extra. Salient detail, the yearly budget of the MPAA is higher than that.

In recent months the movie studios have exponentially increased Netflix’s licensing costs, but still the added profits for the movie studios will be nowhere near a billion dollars. No, getting rid of ALL BitTorrent movie and TV piracy appears to have a ‘relatively’ small effect, even if all pirating BitTorrent users signed up for a Netflix account.

What does this mean?

Nothing. It’s a simplistic attempt to put a number on BitTorrent piracy in the US.

It shows that even when you assume that 90% of all US BitTorrent traffic is dedicated to video piracy, the added revenue for Hollywood in 2010 would have been less than the amount they paid to the MPAA. That is, if all BitTorrent users switched to Netflix.

The real added revenue if BitTorrent disappeared would of course be a fraction of this, as not everyone would start paying.

We don’t want to draw too many conclusions on this simple thought experiment, but it’s something to consider, especially when ISPs are expected to dedicate millions of dollars in resources to send BitTorrent users warning letters early next year. Not to mention the negative effect of the censorship bills that have been proposed recently.

Is it really worth all that?

Source: MPAA Costs Hollywood More Than US BitTorrent Piracy

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“Shoot the Pirate” Copyright Campaign Descends Into Real Violence

Filed Under: Peer2Peer News by enigmax — Leave a comment
November 12, 2011

According to figures from the Recording Industry of South Africa (RISA), artists and the recording industry lose millions to music piracy every year, a claim echoed by the RIAA and every other RI-XX group in their respective homes worldwide.

Last month a man in South Africa was arrested and discovered to be in possession of logins and passwords which he used to download products directly from Sony Music Entertainment’s computer systems. But it’s when items like these are burned to disc and sent out onto the streets that the real action begins.

The Creative Workers Union of South Africa, a group of music and TV company representatives, warned on Sunday that their piracy fight is really getting out of hand. Perhaps not such a surprising claim when one learns that their current nationwide anti-piracy campaign – and this isn’t some sort of a joke – is called ‘Shoot the Pirate‘.

Creative Workers Union of South Africa president Mabutho “Kid” Sithole said that people involved in the campaign had already received death threats with one label owner being forced to hire bodyguards. Sithole says that artists are so angry the government must quickly intervene to prevent another “Soweto Uprising“, a reference to a series of protests in 1976 that brought 20,000 students onto the streets and resulted in 176 deaths.

While Sithole’s projections hopefully prove to be an over-dramatization, claims that the police aren’t helping led several artists supporting “Shoot the Pirate” to take to the streets last week to confront the pirate vendors. It didn’t go well.

A brawl ensued which at its height involved artists, vendors and police, who reportedly beat up the artists’ supporters. The protesters then moved on and had another brawl with more pirates at another location.

Gospel artist Lusanda Mcinga was arrested along her son who reportedly had to have 10 stitches in his head, an injury sustained after he allegedly attacked a pirate. Mother and son appeared in court on Monday.

David du Plessis, operations director at the Recording Industry of South Africa, said there’s not much they can do about the problem.

“As long as there is a market for it, there will be piracy,” he said.

But despite the mess and the difference in the physical piracy world described above and the one being fought on the Internet in the West, the same old propaganda and claims of lost sales still exist.

Only last week the manager of rising star “Zahara” said that piracy was “destroying our game” and despite hard work “at the end of the day we do not get anything.”

Zahara is on TS Records, a label run by ‘TK’ – the man who had to hire bodyguards due to his support of the Shoot the Pirate campaign.

“The people have spoken! It has never happened before that a newcomer sells 100,000 units within a few days,” he said in September commenting on Zahara’s “unthinkable” success.

On or offline, the problem is the same. Piracy will never be stopped or, it seems, the sales of good music in spite of it.

Source: “Shoot the Pirate” Copyright Campaign Descends Into Real Violence

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Piracy May Boost Sales, Judge Concludes

Filed Under: Peer2Peer News by Ernesto — Leave a comment
November 2, 2011

Anyone who says that piracy is only helping or hurting content creators is wrong.

Piracy has a different effect in each unique case. Not only does it differ between the gaming, music, book and movie industries, but also between the relative popularity of the artists and the characteristics of their audiences.

As we’ve pointed out repeatedly in the past, there are plenty of cases where piracy may have a positive effect on sales. Research has shown that “pirates” are the music industry’s best customers, something EMI’s new music boss Douglas Merrill confirmed earlier this year.

“For example, there’s a set of data that shows that file sharing is actually good for artists. Not bad for artists. So maybe we shouldn’t be stopping it all the time. I don’t know,” Merrill said at the time.

Merrill’s conclusions are quite unique coming from a music industry boss, but he is certainly not alone. The same conclusion was reached by people in the anime and book industries in recent months.

The conclusion that piracy is not detrimental to sales has not gone unnoticed by the courts either. In a recent ruling in Spain a local judge noted that it’s impossible to determine the damages a seller of pirated copies had caused, because it’s unclear how many people would have bought the products for the original price.

“It is not possible to determine the damage and corresponding compensation due to loss of benefits to the rightsholder, for the simple reason that customers of pirated copies of music and movies, when making the purchase of pirated copies, externalize their decision not to be customers of music and movies as originals, so there is no profit that could have been gained.”

“In other words, those customers either buy a pirated copy at a low price or they don’t buy an original at a price between 15 and 20 Euros,” the judge added.

On the contrary, instead of hurting the income of copyright holders piracy may actually boost sales, the judge noted.

“In any case, reversing the legal argument, it is conceivable that a customer, after hearing or viewing the pirated copy, may decide to purchase the original, finding it to their taste, so that the sale of pirated copies, far from harming, benefits the market for original items.”

“I declare that there is no harm for which compensation is required,” the judge concluded in her verdict.

Although there are several studies and anecdotes that arrive at a similar conclusion, this is the first time that a judge has brought this up in a verdict. And rightly so.

In a time where people’s rights are stripped to protect the interests of a few multi-million dollar entertainment industry companies, a more realistic, balanced and independent look at the “real” consequences of piracy in individual cases should be encouraged.

Source: Piracy May Boost Sales, Judge Concludes

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Digital Monopolies A Bigger Threat Than Piracy, Says Miramax CEO

Filed Under: Peer2Peer News by Ernesto — Leave a comment
October 4, 2011

pirateIf we believe the words of the MPAA and RIAA, piracy is the root of all evil resulting in billions of dollars in losses every year.

However, not all of the big players in the entertainment business subscribe to this theory. During the MIPCOM conference where movie and TV moguls gather, Miramax CEO Mike Lang and Netflix chief content officer Ted Sarandos touched on the subject of piracy. Both appeared to have a rather positive stance towards the issue.

Lang, whose company today debuts the Blu-Ray version of the cult classic Pulp Fiction, emphasized that people don’t necessarily want to pirate, as long as they get what they want. “Innovate or die,” should be the motive of entertainment industry companies, where it’s key to listen to customers.

“Piracy has not been the bigger issue for our company,” Lang noted. “I think all consumers at some point in their life , whatever market of the world, don’t want to pirate. They really don’t.”

“Maybe not college kids, but ultimately over time they do not want to pirate, and that the way to react to that is to offer legitimate and great service for them,” he added.

Responding to a question from the audience, Miramax’s CEO talked about the lessons he learned from the music industry. Interestingly, Lang disputed that piracy is the main problem for the music industry.

“Why everyone does focus on piracy, for the music industry, what’s really interesting is that it’s not the biggest issue for the music industry,” he said. Lang explained that the change to digital music and the lower price tags that come with it shouldn’t be discounted.

Netflix chief content officer Ted Sarandos agreed on the effect of lower prices and said that “Walmart changed the music industry more than Napster.”

Another problem, related to the pricing issue, is the emergence of digital monopolies such as the one Apple has in the digital music business. This threatens the music industry more than piracy, Miramax’s CEO suggested.

“Apple is the strongest company in the music industry because there was not enough competition, and still to this day there is not enough competition. As an industry it can’t then influence, packaging, merchandising – all the things that are vital,” Lang said.

“As an industry – the movie industry – we have to be very cognisant of that. That’s why we did our deal with Netflix, and why we also did our deal with Hulu. We want multiple players to be successful.”

Sarandos also learned his lesson from watching the music industry struggle with their digital strategy. “When consumers tell you what they want, give it to them. Figure out a way to give it to them, because they will figure out a way to get it.”

Or in other words. Don’t blame piracy for everything, but innovate – or die.


Miramax CEO Mike Lang and Netflix chief content officer Ted Sarandos

Source: Digital Monopolies A Bigger Threat Than Piracy, Says Miramax CEO

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Music Piracy Continues to Decline Thanks to Spotify

Filed Under: Interweb Newz, Peer2Peer News by Ernesto — Leave a comment
September 28, 2011

spotifyWhen Spotify launched their first beta in the fall of 2008, we branded it “an alternative to music piracy.”

Having the option to stream millions of tracks supported by an occasional ad, or free of ads for a small monthly fee, Spotify appeared to be serious competitor to music piracy. Data just released by the Swedish Music industry appears to support this theory.

Through quarterly surveys researchers have polled the music consumption habits of thousands of Swedes between the age of 15 and 74, and in their most recent report they find that music piracy continues to drop.

Since 2009 the numbers of people who download music illegally has decreased by more than 25 percent, and over the last year alone it dropped by 9 percent. The data further suggests that this downward trend is caused by the availability of improved legal services such as Spotify.

When Spotify opened up to the public early 2009, it took only three months before the number of Spotify users had outgrown the number of music pirates. In the months after that the number of downloaders continued to decline while Spotify expanded its user base.

playing in Spotify..riaa spotify

Streaming services such as Spotify are now the most popular way to consume music. More than 40 percent of the participants in the survey now use a music streaming service, compared to less than 10 percent who say they download music legally.

About 23 percent continue to pirate music, but this number is dwindling.

“The long-term trend is a sharp increase in legal streaming while we see a reduction in illegal file sharing and downloading,” Music Sweden’s CEO Elizabet Widlund said commenting on the results.

“When 800,000 Swedes are willing to pay for streaming music, there is clearly a market for more legal players in the digital music market. We encourage diversity of music services as it will provide better conditions for both those who create music and those who listen to it,” she added.

Looking at the motivations for people to switch to legal services, participants in the survey cited “the range of music that’s released” as the primary reason (40%). Other explanations were the absolute increase in available music (30%), and the fact that legal services have become cheaper (24%) and simpler (24%).

Although the above is certainly good news for the music industry, it has to be noted that the ‘change’ to legal services is ‘fragile.’ The survey shows a slight change in the ongoing trend during the second quarter of 2011, exactly when Spotify announced that its free service would have some new limitations.

Although this change motivated some (15%) to sign up with a paid Spotify account, the majority (31%) said they would leave Spotify to turn to other streaming services, like YouTube, or file-sharing sites.

There is no doubt that, unlike music industry bosses have claimed in the past, there are indeed ways to compete with free. However, time is needed to find the right balance between giving music fans what they want, and secure a healthy revenue stream.

Source: Music Piracy Continues to Decline Thanks to Spotify

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