Stealing Is Believing
After hearing so much about how easy it is to be a video pirate, we asked our Shirley Brady to become one—for research purposes only, of course. Her verdict: It's true, cable and broadcast shows are readily available online, and it's surprisingly easy to download them. What cable should do about this is not so easy. By Shirley Brady A computer geek I'm not, but on my first try and without help I was able to watch Comedy Central's The Daily Show With Jon Stewart on my home computer. The scuttlebutt was that BitTorrent.com is the best way to illegally download TV shows—and my Internet-savvy friends were right. The Web's most popular and free software for trading video, games and other larger-than-MP3-song files, BitTorrent is the property (now that's ironic) of a San Francisco-based company. It's privately held and perfectly legal. Heck, it even warns users against downloading copyrighted material. The FAQs on BitTorrent's website helped me find other Torrent-tracker sites, where I located a Daily Show episode I'd missed. One click and it was downloaded within minutes. And while I took small bytes, it's possible to gulp down an entire season of shows just as easily. It takes just one person (a "seeder") to upload a video file onto a tracker site before it's swiftly divided into pieces (or "torrents") and distributed by many file servers in different countries. Using this group- and peer-based system is the fastest way to distribute and download files among the millions of file swappers around the planet. Don't think cable networks haven't noticed. "We've certainly seen shows and programs that we've generated appearing within hours on some of the Torrent aggregator sites," says Alistair Hamilton, a VP in Turner Networks' R&D group and Turner's in-house peer-to-peer expert. "What can we do about it? That's a tougher nut to crack…but we are certainly putting a lot of effort into that across Time Warner." And there's honor among video thieves. TV episodes that are swapped online are stripped of their commercials before they're uploaded, an unwritten obligation of video pirates. But that doesn't exempt ad-free premium cable nets. Pirates who wanted to catch episodes of Showtime series The L Word could—on countless websites. "We closed over 257 [websites] that were retransmitting copies of the show," says Showtime EVP Mark Greenberg. " While not everyone who uses peer-to-peer systems like BitTorrent, Kazaa and eDonkey is downloading TV shows, at any given time some 10 million people globally are using them, Los Angeles-based measurement firm BigChampagne says. As for BitTorrent specifically, Torrent-related activity accounted for 30% of worldwide Internet traffic last year, the U.K.-based online monitoring firm CacheLogic estimates. The Implication for Cable: Video's Napster Ease of use and BitTorrent's ability to move huge files are just two reasons why cable networks and operators are worried about having their lunch eaten by online pirates. Sanford Bernstein analyst Craig Moffett mentions others: "[BitTorrent] strips away intellectual property rights, undermines future revenue streams from syndication and DVD sales and vaporizes advertising income. And for good measure, it blows apart the `bundle' of programming that has been the cornerstone of every multichannel media business. And it represents a huge capacity burden for [broadband] network operators." He concludes: "There's virtually nothing positive that can be said about BitTorrent, at least from a media company's perspective." Moffett's right, but BitTorrent has actually given some TV networks an idea about combating online piracy. How TV is Fighting Back: Turning P2P Legal Some networks are trying to co-opt video pirates by setting up their own P2P systems that would make downloading legal and, in theory, profitable. It's not quite that simple, however. Disseminating their own content using an ad-supported or paid model like what Apple has done for music downloads with iTunes would put programmers in competition with their affiliates, unless they can strike the kind of revenue-sharing model that RealNetworks crafted with Comcast (which does not disclose the terms of its deals). "VOD is a start, but cable operators, studios and programmers need to start experimenting together much more aggressively to deploy more content to customers and look to the iTunes model as an example of how customers are willing to pay," says Patrick Knorr, general manager of Kansas-based cable operator Sunflower Broadband. Fox Facing Down Pirates Fox seems most serious about creating a P2P-based business. Fox Interactive Media division head Ross Levinsohn was promoted from head of foxsports.com in July to do more than shop for popular Web properties with Rupert Murdoch's millions. One of his priorities is to harness the peer-to-peer file-swapping technologies used to download the company's film and television properties, which are hot targets for pirates. To that end Fox is looking at creating a youth-skewing portal to tap into 18- to 34-year-olds' love affair with peer-to-peer technology. Such a service could offer clean downloads (corrupted files are the bane of the downloader's existence) plus sneak peeks and behind-the-scenes video to, say, the teen users of MySpace.com. "As a short- and medium-term distribution technology, [peer-to-peer] is very exciting to us, and we're watching and talking and negotiating a lot of potential content delivery options," says Fox SVP of content protection Ron Wheeler. Fox is talking to partners about creating a business around P2P, he confirms. But this may not be easy. To appeal to young Web surfers, networks will need to brand their P2P services in a way that doesn't shout Big Media, Showtime's Greenberg says. He notes Apple made legal downloading cool with iTunes through hip branding and marketing and ease of use. It even convinced kids to pay per tune. Now that Apple's long-rumored video iPod is finally coming, carrying hit series like ABC's Lost and Desperate Housewives, legal and paid downloading of TV should likewise become cool among some (though of course, not all) P2P-ers. "The question of the video side [of peer-to-peer] is how big a business can this be and how scalable can this be," Greenberg notes. "We need to feel comfortable with the security of the signal so it doesn't end up on these pirate video sites—and that the people who have access to it are doing so legally. If we can do all of that, then we'll have found a way to be successful." The MSO's Role in Stopping Pirates Make no mistake, the goal of cable and broadcast networks alike is to stamp out the kind of illegal P2P activity that I engaged in a few weeks ago. But part of the problem is that video piracy is like terrorism—it's global. It's also not quite as simple as good guys vs. bad guys. For example, while Fox and Disney want cable operators to distribute their hit shows, they're not shy about pointing out it's the broadband pipe of these same cable operators that enabled an estimated 150% increase in illegal peer-to-peer video file swapping last year. Showtime's Greenberg also has to deal with the dual nature of cable's broadband pipe. "Now that bandwidth's getting bigger, it creates both an opportunity on one side, but at the same time we need to protect our signal and our content," he says. "How do we make it work for the industry and for consumers?" So far Fox has convinced at least one MSO to agree to make anti-piracy protection part of a cable carriage renewal agreement, Fox's Wheeler says. "One of my key tasks here at Fox," he says, "is to ensure that we have discussions in our affiliate negotiations with our distributors about what more they can and should be doing to protect our content." His goal? "Basically to starve the P2P networks and make it that much harder and more inconvenient for people to upload content from their cable systems…we have had some success, though not as much as we'd like." Disney also has had some success getting anti-piracy protection written into affiliate contracts. As part of its package of linear networks and broadband brands for Verizon's FiOS TV launch in Keller, Texas, last month, Disney got the telco to contractually agree to reprimand illegal downloaders who steal Disney content from networks such as ESPN and SoapNet. Verizon promised to send warning notices that an offender must cease and desist; if not, he or she will be cut off or face legal action. New Disney CEO Bob Iger hailed the anti-piracy clause as "a big step" and "a breakthrough" at a Goldman Sachs analyst meeting last month. "We think that this isn't necessarily the only solution in terms of combating piracy, but [it's] one great way to do it, particularly when it comes to peer-to-peer sharing," he said. "It is one that the rest of the industry should really pay heed to and hopefully follow, because I think it will go a long way." Time will tell. P2P Goes Overseas to Flaunt U.S. Law A victory of sorts against video piracy came in June, when the U.S. Supreme Court ruled that websites such as eDonkey, Kazaa and Grokster enable and endorse theft of digital content. That decision forced U.S.-based P2P services to either become legit and work with copyright holders and charge users (as BitTorrent and eDonkey say they will start doing) or face being shut down, as Napster was in 2001. Their other option: Pack up and move overseas, where P2P activity flourishes. Offshore website ThePirateBay.org claims to be the largest Torrent-tracker site in the world and flaunts its disdain for U.S. law on its home page (click on "legal threats"). Maryann (who refuses to give her last name), a musician in Australia, says she uses MyBitTorrent.com to download new episodes of Showtime's The L Word and ABC's Desperate Housewives as soon as they are broadcast in the U.S. "Neither is available in Australia, so why should I wait until they get here, or until they come out here on DVD?" she says. —S.B. Top Downloads How rampant is illegal P2P sharing? During the week ending Oct. 18, an average of 191,083 U.S.-based Web surfers per day used peer-to-peer networks to illegally download CBS' CSI, according to BigChampagne Online Media Measurement. Click here to get the latest U.S. stats on illegal downloading of TV programming. —S.B.