The fight against illegal downloading: “If you can’t beat them…

Illegal content downloading continues to deliver a serious blow to the television and digital media industry. A recent study commissioned by Arxan indicates that piracy was responsible for nearly $800 billion in losses in 2014. Is there any hope for stemming this tide?

In an interview with Gizmodo Australia, Netflix CEO Reed Hastings downplayed the issue of VPNs, calling them a “small little asterisk compared to piracy.”

VPN (Virtual Private Networks)

Originally, virtual private networks (VPNs) enabled consumers to avoid sharing their personal data with Internet service providers (ISPs), protect their online transactions from unsecured networks or harmful sites, and provide an overall layer of encryption using a secure protocol. Now, however, people around the world are using VPNs to access Netflix's U.S.- based site as well as other American video platforms.

Are VPNs legal in Canada?

That said, VPNs are still a thorn in Netflix’s side, as it is bound to comply with licensing agreements in the various territories where it operates.

Full-blown piracy, however, remains a major concern for Hastings: “The VPN scenario is someone who wants to pay and can't quite pay. The basic solution is for Netflix to get global and have its content be the same all around the world so there's no incentive to [use a VPN]. Then we can work on the more important part, which is piracy.”

So are global licensing rights the solution to the piracy problem? In such a scenario, the use of VPNs would be relegated to their original purpose: securing personal data. As a result, users would no longer be required to resort to subterfuge to sign up for international streaming services, for which they are already paying a subscription fee.

This approach would also eliminate the problem of those who illegally download content simply because they have no other means to access it—an admittedly small fraction of the pirating community, says Hastings.

Give users what they want, instead of punishing them for going out and getting it

The television industry has not been as aggressive in responding to piracy as its music industry peers. As was pointed out in The State of the Canadian Program Rights Market 2014, “the TV industry has chosen a softer approach that shortens or aligns international windows and either monetizes the activity or redirects it to legitimate or legal activity. Whether the rise of OTT results in less piracy overall is difficult to determine, but reports indicate that online video piracy has seen a decrease in share since 2008.”

*** For more information: The BitTorrent Model  ***

Accordingly, the Global Internet Phenomena Report published by Sandvine in 2015 indicates that IP traffic generated by BitTorrent currently accounts for only 6.3% of total daily traffic, down 31% compared with 2008.

In Canada, the last stage in implementing the Copyright Modernization Act, namely the Notice and Notice regime aimed at consumers who download copyright-protected content, came into effect on January 2, 2015. According to CEG-TEK International, a U.S.-based copyright monetization firm, copyright violations have since dropped significantly: with a 70% decrease reported at Bell Canada and a 15% decrease at Rogers Cable.

These notices have been used informally for roughly a decade, but the new law introduced an official framework and the power to impose fines of up to $5,000. An Industry Canada spokesperson has nevertheless indicated that Canadians are not strictly bound to pay these fines, as the purpose of the law is to educate consumers about the illegal nature of their activities and the negative repercussions on content producers, not to institute punitive measures.

It is still very easy to download content illegally, despite the prevention and awareness efforts put in place by various stakeholders and government agencies. The growing availability of online video whets the public’s appetite for the “latest and greatest” content, and this in turn feeds the demand for pirated video.

The world’s most pirated TV series in 2014 was Game of Thrones, with 8.1 million illegal peer-to-peer downloads.

TorrentFreak, December 26, 2014

Internationally acclaimed content—including top-rated television series such as Game of Thrones and Oscar-nominated feature films—are popular targets for illegal downloading. The table below draws a link between Oscar nominations and the increased prevalence of piracy.

Turning plunder into profit

There are also some innovative strategies being put into place that actually take into account the public’s consumption habits.

For example, instead of trying to take down illegally uploaded content from YouTube, Canadian children’s content companies DHX Media and Nelvana are registering it as their own and collecting the corresponding advertising revenues from these platforms.

This is made possible through BroadbandTV, a Canadian-based firm that helps media companies protect their content and manage their copyright by tracking user download activity. BroadbandTV offers several options for dealing with copyright infringers. These include taking action to have the content removed or blocked, or placing advertising in the content and having the revenues filter back to the owner.

Narrowing distribution windows

“You can't beat free, but you can beat (piracy) with easy. Viewers who miss a film in theatres may jump at the chance to stream it.”

Rory O’Connor, Vice President of Services, Irdeto

On July 8, 2015, Paramount Pictures announced a deal with two of North America’s biggest cinema chains—AMC Entertainment and Canadian-based Cineplex—to start streaming newly released movies on demand two weeks after they leave theatres.

As for Netflix, it embraced an even more radical strategy this year by streaming a slate of original feature films. Crouching Tiger, Hidden Dragon: The Green Legend was released to IMAX theatres and streaming video simultaneously on August 28, 2015. The same strategy was employed for Beasts of No Nation, which debuted October 16, 2015.

Danielle Desjardins
Danielle Desjardins offers analysis, research and writing services for media and cultural enterprises through her company, La Fabrique de sens. Before that, she was director of planning for Radio-Canada, where she was responsible for strategic, corporate and regulatory matters for more than 20 years.
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