Content Pirates Sail the Web

More than 11 million HBO subscribers watched each episode of Game of Thrones in 2012, but another 3.7 to 4.2 million were able to watch the same shows without paying a cent. They were watching pirated versions of each episode that were made available by companies specializing in distributing digital content for free without paying the owners and creators of that content for using it. Television shows, music, movies, and videogames have all been plundered this way.

Such “content pirates” have sailed the World Wide Web since its earliest days, but today they are bolder, faster and better equipped than ever. The antipiracy and security firm Irdeto detected 14 billion instances of pirated online content in 2012, up from 5.4 billion instances in 2009.

Pirated content threatens television industry profits, much of which comes from subscription fees on cable channels like HBO and USA. Viewers watching pirated versions of shows are less likely to pay for cable subscriptions or to buy movies or rent them from services such as Netflix. According to one estimate, pirated content costs the U.S. economy $58 billion a year, including theft of content, lost entertainment jobs and taxes lost to federal and state governments.

The explosion in pirated TV shows and movies has been made possible by faster Internet speeds. Longer videos can be downloaded within minutes from peer-to-peer networks and online cyberlockers. A great deal of illegal content, including live sports, is also available through instant streaming. Online ad networks also help finance piracy by placing ads on sites that traffic in unauthorized content. A summer 2012 study commissioned in part by Google found that 86 percent of peer-to-peer sharing sites depend on advertising for income.

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One of the biggest content pirate sites is The Pirate Bay, based in Sweden, which offers free access to millions of copyrighted songs and thousands of copyrighted movies. The Pirate Bay uses BitTorrent file-sharing technology, which breaks up large computer files into small pieces so they can zip across the Web. In April 2014, The Pirate Bay had over 6.5 million registered users and was the 87th most trafficked site in the world. There have been many legal efforts to shut it down, but The Pirate Bay finds ways to keep going.

What can be done to stop this pirating? Google adjusted its search algorithm to obscure search results for sites with pirated content. NBCUniversal uses armies of automated “crawlers” to scour the Web for unauthorized videos and also applies “content recognition” technology to its programming, which it then passes on to video sites like YouTube to help block illegal uploads. NBC sends out digital snapshots of its shows to YouTube and other video sites to prevent users from putting up copyrighted shows. The five major Internet service providers, including NBC’s parent company, Comcast, initiated an alert system which notifies users suspected of piracy and results in progressive penalties, including slowed Web access in some cases. Digital content owners are taking much harder stance with advertising networks and payment platforms supporting piracy to encourage them to close down ad-funded pirate sites.

New products and services have made pirated content less attractive. High-quality content now can be streamed for a small fee to both tethered and mobile devices. Apple’s iTunes made buying individual songs inexpensive and easy, while new subscription-based services such as Spotify and Rhapsody have attracted 20 million paying subscribers. Netflix and other video services offer access to movies and television shows at low prices. Right now content pirates are still sailing, but new and better ways to listen to music and view videos may eventually put them out of business.

Sources: Jack Marshall, “More Ad Dollars Flow to Pirated Video,” Wall Street Journal, May 7, 2014; Adam Nightingale, “Will 2014 Be the Year of IPTV Streaming Piracy? RapidTVNews.com, accessed April 11, 2014; www.alexa.com, accessed April 10, 2014; Christopher S. Stuart, “As TV Pirates Run Rampant, TV Studios Dial Up Pursuit,” The Wall Street Journal, March 3, 2013; “Pirate Bay Sails to the Caribbean,” I4U News, May 2, 2013; and L. Gordon Crovitz, “A Six-Strike Rule for Internet Privacy,” The Wall Street Journal, March 3, 2013.

The prevalence and brazen activities of “content pirates” described in the chapter-opening case show that technology can be a double-edged sword. It can be the source of many benefits, including the ability to share and transmit legitimate photos, music, videos, and information over the Internet at high speeds. But, at the same time, digital technology creates new opportunities for breaking the law or taking benefits away from others, including owners of valuable intellectual property, such as music, videos, and television shows that are protected by copyright law.

The chapter-opening diagram calls attention to important points raised by this case and this chapter. Content pirating has become rampant because of opportunities created by broadband communications technology and the global nature of the Internet. Various policies and technology solutions have been put in place to put a stop to content piracy, but the practice still prevails. New technology-based products and services that make online content purchase and downloads very quick and inexpensive may eventually provide a solution.

This case illustrates an ethical dilemma because it shows two sets of interests at work— the interests of people and organizations that have worked to develop intellectual property and need to be rewarded versus those of groups who fervently believe the Internet should foster the free exchange of content and ideas. As a manager, you will need to be sensitive to both the positive and negative impacts of information systems for your firm, employees and customers. You will need to learn how to resolve ethical dilemmas involving information systems.

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