The Virtual Theft Real Repercussions

Published Date: 02 Nov 2017

Virtual Theft – Real Repercussions

Spending a few dollars today could save you millions in the long run or even save you from spending time behind bars. Internet piracy is crime that is easily committed and is assumed to be virtually impossible to track, but these common misconceptions are a few reasons more and more piracy teams are facing thousands to millions of dollars of fines and even jail time. The reason these crimes continue is the lack of education on the repercussions, therefore the purpose of this paper is to enlighten readers on what is to follow if they continue on this path and why it is time to stop virtual theft before it leads to real consequences.

This paper will start by giving a brief overview of peer to peer file sharing, along with the advantages and disadvantages. Then it will discuss the economic impacts of this technology and how it has negatively affected the economy. Following that, it will discuss past law suits that have risen from peer to peer sharing and how it has affected the guilty party’s lives. Lastly, common misconceptions surrounding this technology will be deliberated.

Overview

Brief Background

The early beginnings of internet piracy are associated with one name, Shawn Fanning. After hearing from his friends about how they had trouble finding music they enjoyed, Fanning starting developing a concept of software that would allow him and others to share music files by searching for the music in the software itself (Taylor, 2002). This software relied on friends sharing among each other and fittingly the phrase P2P or peer to peer was developed (Tyson, 2000). Shortly after, BitTorrent was created by Bram Cohen in April of 2001; after being frustrated by slow download speeds of P2P programs, Cohen developed his own protocol, building on Fanning’s work. Before Cohen, file sharing between peers was a one to one interaction, the BitTorrent protocol differs from this by allowing users to download from multiple peers and besides relying on one individuals internet speed (which could be slow if multiple people are downloading from them) it takes a piece of the file from multiple sources, greatly speeding up the process (Cohen, 2003). Currently, BitTorrent is the number one file sharing platform.

Advantages

An advantage of internet piracy is that artists, directors, actors and actresses become essentially more famous. People that had no interest in the movie, or would not buy the c.d. may watch the movie or listen to the music simply because it is free. Then if that person liked it, there is more of a chance that they will go watch the next movie in theaters, buy the DVD or Blu-ray when it came out, or even go to the artist’s concert and buy their merchandise.

Another advantage is there are sites that offer legal ways of downloading the things the average person would pirate off the internet. These legal ways, the consumer still pays for the content, but pays much less and receives the content on demand. "Video-on-demand services supported by top film distributors, such as MovieLink, are expected to introduce services later this year. Consumers can already buy and rent movies over the Internet for computer viewing from a handful of legal sites, such as Intertainer, SightSound, and CinemaNow, which offer films as rentals to viewers who pay-per-view or as monthly subscribers (Levack, 2002). Levack quotes, "When you are pirating a file you never really know what you are getting. It can be mislabelled, it can be incomplete, and it can even be a virus." They are hoping the risk of security threat is high enough to draw customers to pay for it.

Disadvantages

One of the many disadvantages of internet piracy is the fact that people are not paying any money for the movies, music or software. The profit is greatly impacted and the cost to produce the material remains the same. This essentially costs the producer of the pirated material the difference, and makes it very hard to decide how successful the material was with the public. Most artists, actors and actresses are very against internet piracy because it is impacting the amount of money they earn. According to the Directors Guild of America, Spain Italy and France are the three most impacted countries when it comes to retail revenue losses in Europe (2008) due to piracy "375,000 [is the] number of jobs lost each year because of piracy, costing American workers $16 billion in earnings" (DGA, 2010).

Possibly the most important disadvantage to individuals that otherwise only seem to be affected by the advantages of internet piracy, by illegally downloading music, movies or software you are breaking the law and are at risk of being caught and charged with copyright infringement (Cheunga, 2013).

Economic Impacts

The creative industries have frequently expressed concern that they can't compete with freely available copies of their content. Competing with free is particularly concerning for movie studios, whose content may be more prone to single-use consumption than other industries such as music. This issue has gained renewed importance recently with the advent of new digital video recording and distribution technologies, and the widespread availability of Internet piracy.

Statistics

Peer to peer file sharing is responsible for 27-55% of all global internet traffic and 22% of bandwidth daily, while 98.8% of this traffic is copyright protected. Logically, if even half of the people stopped downloading illegal software, it would free up 13-27% of internet traffic and 11% bandwidth allowing for faster browsing for everyone.

If you look at music alone, the average iPod contains $800 worth of fraudulent songs (Bender, 2009); looking at the iPod touch alone, Apple sold 46.5 million from 2007 to the first quarter of 2012 (Cheng,2012), which amounts to $37.2 billion worth of stolen music files. These losses don’t just affect the record producing companies, the people at the top will remain at the top, the workers underneath are the ones that suffer. Approximately 71,000 jobs are lost every year in the US alone from internet piracy, which amounts to $2.5 billion in earnings. The total economic impact is approximately $12.5 billion for the US alone, which most torrent host’s don’t realize. Majority of illegal piracy teams are out to make an impact against large corporations, but what they fail to see is that these corporations lay off employees much lower in the rankings to try to balance the books. Additionally, 70% of all torrent downloaders find nothing wrong with the process, they see that they are getting something they need for free, but fail to realize the impacts of their actions. The impacts from their actions are not limited to economic losses, sometimes the host or even the downloader is affected personally.

Past Lawsuits

RIAA vs. Napster

The Recording Industry Association of America sued Napster, the online, peer-to-peer file sharing service that allowed millions of computer users to score free, copyright music (Bailey, 2000). Napster founder Shawn Fanning won rock-star celebrity with the service, but music-industry heads were spinning. So, the RIAA sued Napster and all of its financial backers in federal court in San Francisco. The outcome eventually defined the rules of online, peer-to-peer file sharing networks.

According to Cheunga (2013) a federal judge and an appeals court in San Francisco both ruled in 2002 that Napster was liable for contributory or vicarious copyright violations, because it was allowing millions of users to download music for free. Napster eventually shut down and went bankrupt, later re-emerging as a legitimate, online music service. With a bankrupt Napster unable to pay the large sum of financial damages, the industry turned to the transnational German media conglomerate Bertelsmann. Bertelsmann paid millions of dollars to settle the claims. The media concern agreed in 2006 to pay the world’s largest label, Universal Music Group, $60 million to settle the allegations. EMI got an undisclosed amount in 2007, and Warner Music Group settled that same year for $110 million (Cheunga, 2013). The Napster case closed its final chapter in August 2007, when Bertelsmann agreed to pay the National Music Publishers Association $130 million to settle the remaining copyright claims.

Microsoft vs. TorrentFreak

Kestas Ermanas and his company TorrentFreak is currently in ongoing court battle against Microsoft. The action against Lithuania’s largest BitTorrent site, which is in the top 10 of the most visited websites in the country, has been approved by the US headquarters of the software giant. According to Ernesto (2010), the defendant and his company are accused of facilitating copyright infringement of Microsoft’s Office 2003 and 2007 through their involvement with the BitTorrent tracker. Together with local anti-piracy outfit LANVA, Microsoft has requested 107 million Lithuanian litas ($43 million) in damages at the Vilnius Regional Court (Ernesto, 2010).

FBI vs. IMAGiNE

In 2011 the notorious IMAGiNE movie piracy group was dismantled by the FBI. The group had been releasing large numbers of movies onto the Internet, many of them still playing in theaters, and this had attracted the attention of the MPAA who launched an investigation (Sandoval, 2012).

According to Sandoval (2012) Members of IMAGiNE were arrested and charged with several counts of criminal copyright infringement, and one by one they have been receiving their sentences. In November 2012, Sean Lovelady of California, a moderator with the group, received a 23 month sentence. In the same month Willie Lambert of Pennsylvania, an administrator, received a 30 month prison sentence (Ernesto, 2012).

An even tougher sentence was handed to 53-year-old group sysop Gregory Cherwonik of New York. He was jailed for 40 months by Virginia District Court Judge Arenda Allen and ordered to pay $15,000, but even that hefty punishment was surpassed by sentencing of Jeremiah Perkins. In the U.S. District Court in Norfolk, Perkins – a sysop with IMAGiNE – was sentenced to a record-breaking five years in federal prison and ordered to pay $15,000 restitution. After his imprisonment ends Perkins will be subjected to a further three years of supervised release and will be banned from possessing "any electronic device with the capability or reproducing and distributing copies of copyrighted materials." (Ernesto, 2012)

From the last two examples it is apparent that internet piracy though peer to peer sharing eventually leads to a lengthy court battle at the end of which a large cheque is due. Evidently, unlike Napster which had financial backing from a much larger company, Torrent Freak, like the majority of other torrent hosting teams, lacks the financial backing needed to survive such a lawsuit. Besides monetary ramifications, jail time is also a factor that must be taken into account when deciding to commit internet piracy, as IMAGiNE can Cleary vouch for.

Misconceptions

There are two common misconceptions surrounding illegal peer to peer file sharing: "they can never find me" and "I am just downloading, not hosting myself". Significant amounts of the time, these statements are true, but there a constantly growing population that is getting caught and penalized for these actions.

"They Can Never Find Me"

By sitting at home hiding behind a computer, people believe committing theft is okay, but as companies are getting frustrated with their products being stolen they turn to internet service providers (ISP) for help. The companies are starting to ask the ISPs for data regarding which of their clients has illegally downloaded their products; under court order the ISPs have to hand over this information. With the proof from the ISP, the companies then sue the individual for copyright infringement. ISP’s are also taking action themselves, a number of ISPs are starting to block sites that host and track torrents to prevent their clients from engaging in this illegal activity.

Another program that is designed to catch torrent hosts is Logistep. Logistep searches torrent sites for illegal uploads and instantly contacts the host, since IP’s are open to see for all once you host or download a torrent. This program has been seeking out copyright infringers in file-sharing networks by the tens of thousands in recent years, supplying the evidence used in countless lawsuits against individuals that were oftentimes settled out of court for hundreds, if not thousands, of dollars per downloaded movie or album. These lawsuits have been most prevalent in Germany and the U.K., but rights holders recently adopted similar techniques to go after BitTorrent downloaders in the U.S.

Lastly, other pirating teams will turn you in to save themselves as crime has no honour. As discussed earlier, IMAGiNE was caught by the FBI, but they were actually turned in by a rival piracy group that the FBI threatened to prosecute unless they helped track down the members of IMAGiNE. So, it is safe to say in such a career choice you can’t really trust anyone.

"I’m just downloading not uploading…"

Just because you aren’t hosting, doesn’t mean you are safe. In the case of Microsoft vs. TorrentFreak, Microsoft proceeded to sue 106 other individuals for illegally downloading their copyrighted software. Another example of this is the illegal download of movies The Expendables and The Hurt Locker. The producers of these two movies sued a combined total of over 48,000 people for the illegal download of the DVD. The purpose of these lawsuits is to obtain the personal details of the alleged downloaders, and use this information to negotiate a settlement offer ranging from a few hundred to a few thousand dollars. This scheme was pioneered in the US by the law firm Dunlap, Grubb & Weaver, aka the U.S. Copyright Group (USCG), but recently it has been replicated by several other lawyers across the country (Jinyoung, 2012).

Summary

From the examples and history provided, it is evident that internet piracy or virtual theft is as real as any other crime. Piracy groups are slowly being taken apart and are not only receiving fines, but jail time as well; is that something you want to go through? It is also clear that producers are targeting downloaders along with the hosts, so no one can claim just because they aren’t putting the content up that they are safe. Companies have found ways to track illegal distribution of their products and will not take it lying down anymore, so now might be a good time to get out while you still can. As you finish reading this, take time to recap your past decisions and put some thought into deciding your future ones as they may save you from spending time behind bars.