Online Piracy Remains Intractable Without Government Action

The Internet generates a lot of traffic. Cisco reports that this year global IP traffic on the Internet is expected to exceed 21,000 petabytes per month (a petabyte is about 1 million gigabytes) and the total volume is expected to increase by almost one-third every year. At the per-connection level, Cisco found that the average broadband connection generates almost 15 GB of Internet traffic per month. So what is all this traffic? And how much of this traffic is being used for legitimate content and how much is being used for piracy?

To answer this question NBCU commissioned a new study conducted by Dr. David Price, the Head of Piracy Intelligence for Envisional (and released at an ITIF event today) that paints a vivid picture of the current size and state of online piracy. The top line finding is striking: an estimated 23.8 percent of global Internet traffic is attributable to copyright-infringing content. The number is staggering. In the offline world, this would be as if almost a quarter of the traffic on our highways was made up of criminals shipping counterfeit or illegal products. For policymakers this report should serve as a much needed wakeup call that the problem of digital piracy has not abated and demands a response on par with the magnitude of the situation.

The Envisional study goes on to detail specifics about the current state of Internet piracy. Among the highlights are the following:

  • Copyright infringing use of BitTorrent accounts for 11.4 percent of global Internet traffic
  • Copyright infringing use of cyberlockers (like RapidShare and MegaUpload) account for 5.1 percent of global Internet traffic
  • Copyright infringing use of other P2P networks like eDonkey and Gnutella account for 5 percent of global Internet traffic
  • Copyright infringing use of video streaming sites (like Megavideo and Novamov) account for 1.4 percent of global Internet traffic
  • Copyright infringing use of Usenet accounts for 0.9 percent of global Internet traffic

Piracy rates vary somewhat from region to region. In the United States, Envisional estimates that 17 percent of Internet traffic is infringing content and approximately 9 percent of that is associated with BitTorrent (the remainder being associated with cyberlockers, streaming video, and other file sharing sites).

The study also looks at the amount of infringing content on various platforms, such as P2P, cyberlockers, and video streaming sites, and provides a detailed breakdown by file type. For example, 63.7 percent of all content on BitTorrent is non-pornographic material that is being shared illegally (the vast majority of the rest is pornographic of undetermined copyright status).

The Envisional study builds on the work of other network monitoring companies who have studied bandwidth usage including Sandvine, Arbor Networks, Cisco and iPoque. The report includes an interesting section which provides a critical analysis of the major studies from each of these companies, comparing the methodologies, notable findings and limitations.

The findings from Envisional are on par with other studies. Cisco Visual Networking Index (VNI) research from 2010, for example, estimates that peer-to-peer traffic (P2P) is about 25 percent of global broadband traffic, a decrease from 38 percent in 2009. In absolute terms, Cisco estimates that P2P traffic is still growing; however, a greater percentage of traffic is now attributable to online video.

While these studies focused on bandwidth, we also know that online piracy has a significant impact on the U.S. economy. While difficult to measure, it is estimated to have created losses of approximately $22 billion in 2005. This digital theft harms artists, both the famous and struggling, who create content, as well as the technicians—sound engineers, editors, set designers, software and game programmers—who produce it. Piracy also ultimately hurts law-abiding consumers who must pay higher prices for content, enjoy less content or relatively lower quality content, or pay higher prices for Internet access to compensate for the costs of piracy. And of course piracy affects more than just the content industries. When one in every four bits of Internet traffic is infringing content, piracy has a negative impact on the Internet experience of every user.

Part of the reason for such rampant digital piracy is that users have easy access to pirated content. High-quality Hollywood movies are routinely available for download on filesharing sites the same day (if not before) these movies are released on DVD. Users searching for a recently released movie will easily find dozens of links to illegally download the movie or watch a video stream. For example, the first five search results on Google for “Watch Inception Online” are all for links to watch the movie illegally, rather than linking to a legitimate service like Amazon Video on Demand. Takedown is difficult for these websites because the content will simply be re-uploaded. Many users may also not even realize the website they are using is offering illegal content. Russian music sites like Legalsounds.com and MusicMP3.ru provide a veneer of legitimacy to unsuspecting customers who think they are paying for discounted music.

The Russian MP3 sites highlight another important aspect of online piracy—the reason piracy and counterfeit websites remain a serious problem is because they are profitable businesses. A new study published at the ACM International Conference on emerging Networking Experiments and Technologies (CoNEXT) looked at the publishers of copyrighted content on BitTorrent and found that “a very small fraction of publishers (~ 100) is responsible for a significant fraction of the published content (67%) and even more significant fraction of the downloads (75%).” The authors look further at the contributions of the publishers and find three distinct groups: fake publishers, altruistic publishers, and profit-driven publishers. Profit-driven ublishers are responsible for roughly 30 percent of the content and 40 percent of the downloads on BitTorrent.

Of course, the government is not completely powerless against online infringers. In 2010, the Department of Justice and the Department of Homeland Security’s Immigration and Customs Enforcement (ICE) launched a joint effort dubbed “Operation In Our Sites” to take down infringing websites. While some questioned the effectiveness of the initiative, the impact has been substantial. As ICE director John Morton describes:

“Of great interest, and frankly unanticipated, was the collateral impact of this enforcement action. According to industry analysis, 81 other sites that had been offering pirated material voluntarily shut themselves down. In my many years in law enforcement, I have not seen that type of deterrence. Indeed, we were advised that seizing these domain names would be the proverbial Whac-a-Mole game with new ones popping up faster than we could obtain court orders. That did not occur and while two of the original domain names seized did reemerge in another form, the vast majority did not and two months ago, we seized one of the two that had been resurrected and was offering pirated movies again. It has not reemerged since.”

Still the magnitude of the problem today indicates more needs to be done. And the U.S. government has significantly less power to go after websites outside its jurisdiction than it does domestically. This is one reason why legislation, such as the Combating Online Infringement and Counterfeits Act (COICA) which gives law enforcement new tools for going after Internet pirates, holds significant potential for making an impact on this problem.

The private sector has an important role to play here as well. As ITIF described in a report over a year ago, many techniques can be used to make online piracy sites less profitable, including by 1) reducing their potential audience by blocking infringing websites; 2) cutting off their revenue by restricting access to financial transaction providers and ad networks; and 3) making it more difficult and expensive to upload illegal content (by using content identification software on file hosting websites). Some companies have made small, but positive steps, in achieving this without government action. For example, Google announced that it has started restricting some piracy-related search terms from its auto-complete feature and pledged to respond to DMCA takedown requests within 24 hours. However, clearly more needs to be done and all of the stakeholders in the Internet ecosystem, including government, need to work together to reduce online infringement.

Most people understand that Internet piracy is a problem, but do not appreciate the size and scope of the challenge. How much bigger will it need to get before policymakers start listening?

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About the author

Daniel Castro is a Senior Analyst with ITIF specializing in information technology (IT) policy. His research interests include health IT, data privacy, e-commerce, e-government, electronic voting, information security and accessibility. Before joining ITIF, Mr. Castro worked as an IT analyst at the Government Accountability Office (GAO) where he audited IT security and management controls at various government agencies. He contributed to GAO reports on the state of information security at a variety of federal agencies. He has a B.S. in Foreign Service from Georgetown University and an M.S. in Information Security Technology and Management from Carnegie Mellon University.