Film Piracy Streaming Away From Downloads, Study Participants Say

In the second year of the Digital Citizens Alliance’s look at which sites are profiting from online piracy of films and TV shows, one big change was obvious. The traditional use of downloaded files is waning as people shift to streaming sites to watch pirated shows.

“The difference was marked,” said Medialink VP Mark Berns, who conducted the study both years for the Alliance. Berns and several others took part in a panel at today’s Digital Entertainment World conference previewing year 2 of the piracy review, which will come out in about three weeks. The Alliance, which is based in Washington, D.C., and substantially funded by the major studios, has focused on online piracy as one of its key interests.

This year’s study focused on about the same number of sites trafficking in pirated content, close to 600 both years, said Alliance Director Tom Galvin. Another big difference, however, is that the money they’re generating is being spread more widely, especially as big sites such as Pirate Bay have been shut down. As well, smaller sites increasingly are basing themselves in countries where there is little opportunity for law enforcement to take them down.

The panel’s participants did not put a dollar number on this year’s findings yet (last year, they estimated the sites made $227 million in profit from the pirated content), but they said profit margins are typically 80 percent to 90 percent for the sites.

“Now, anyone can create (a pirate site),” said computer security consultant Hemanshu Nigam of SSB Blue. “All you need is a server, and half the time it’s a hacked server. Law enforcement can take down a big site like Pirate Bay, but five more will pop up. Enforcement is thinking, ‘Where do I put my money?’ In the meantime, these numbers just keep going up. The threat metrics keep expanding.”

And the damage from online piracy can be substantial, and they pointed to Expendables 3, the film starring a baker’s dozen of aging action stars that was leaked online days before it was to hit theaters.

Millennium Films President Mark Gill, a panelist, said the film from his company has since been illegally downloaded more than 60 million times, battering the film’s box office returns. It is blamed for the bankruptcy of at least one of the film’s distributors, in Russia.

Gill said there are several ways to make a dent in the problem:

1) Shut off the access that sites have to advertising from big brands and the ability to get paid through credit card companies. While Pay Pal has done a good job in cutting off payments to illegal sites, other card processors have been much slower, Gill said. And big advertisers have been slower to block their brands from showing up on the ads that run on many of the sites than they should be.

2) Education about the risks and problems accompanying the sites. Berns said this year’s study found about one in three of the pirate sites had links that would install malware on visitors’ computers, compromising their systems and possibly exposing financial and other personal information.

3) A growing understanding among many consumers that it’s an issue that may affect them directly, instead of a far-away entertainment company.

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