Monthly Archives: March 2016

Rightscorp Blames VPNs and ISPs For Drop in Revenue

rightscorpMore than ten years ago when it became clear that piracy might never be stopped, anti-piracy outfits began to pursue alleged infringers for cash settlements in a bid to turn file-sharing into profit.

One of the most prominent companies employing this model today is US-based Rightscorp. By leveraging ISPs’ tendency to forward infringement warnings to users, Rightscorp attaches settlement demands to DMCA-style notices. When these reach the user they are currently invited to pay around $30 or face a potential lawsuit.

How many notices the company sends out is unclear but it’s likely to be millions overall, since according to the company’s most recent filing around 230,000 people have settled. It sounds like it should be a lucrative business but ever since the company was incorporated in 2010 the numbers haven’t added up. Indeed, Rightscorp’s latest filing, its 2015 Annual Report, indicates a crisis at the company.

The report begins with a positive, noting that in September 2015 Rightscorp entered into a representation agreement with Sony/ATV Music Publishing LLC. But that’s where the good news ends.

During the year ended December 31, 2015, Rightscorp generated revenues of $832.2K. That’s down 10% ($98.5K) when compared to the $930.7K generated in 2014. Not a great start and gets worse.

To begin, all of those revenues aren’t for Rightscorp to keep. The total is split with rightsholders, roughly 50/50, meaning that in 2015 Rightscorp paid almost $439K to its copyright holder partners, down from the $465.3K paid out in 2014. Sadly for Rightscorp the $392K in revenue left over isn’t enough to make ends meet, not by a long way.

In 2015 the anti-piracy outfit burned through more than $1.67m in wage and related expenses plus $216.3K on sales and marketing. Also causing problems are the costs mounting up due to various legal battles (1,2,3). In all, Rightscorp spent more than $951K on legal proceedings in 2015, up from $465K the year before.

When combined Rightscorp’s general and administrative expenses were close to $4.5m in 2015, up almost $737K on the previous year. As a result the company recorded a net loss of $3.43m, up from the $2.85m net loss recorded in 2014.

Furthermore, the company’s precarious position is only underlined with the revelation that 72% of its revenues are attributable to just two rightsholder customers, with one alone accounting for 58% of revenues.

While it’s fairly obvious that this model isn’t currently working, there seems to be no light at the end of the tunnel. Not only are Rightscorp’s costs going through the roof but its revenues are falling too, despite the company’s insistence that piracy is as prevalent as ever.

So how does Rightscorp explain the drop in settlements achieved? Well, this is where it gets interesting.

According to the company’s annual filing there are three key reasons, including an unwillingness by Internet service providers to forward Rightscorp settlement demands to their customers. If that is the case then the anti-piracy outfit has a huge problem, since without that mechanism it cannot cheaply contact alleged pirates with an offer to settle.

But while the ISP dilemma is clear, the other reasons provided by Rightscorp for falling revenues are less so.

The anti-piracy outfit additionally blames “changes in the filesharing software intended to defeat detection of copyrights being illegally distributed.” For a company specializing in anti-piracy technology this statement is terribly uninformative and gives the impression of a riddle designed to confuse.

So, since there have been no real changes in the way BitTorrent software operates since its inception, the truth must lie elsewhere. Reading between the lines this seems likely to be a reference to people using anonymizing techniques (VPNs, proxies etc) which make it impossible for Rightscorp to track them down. Not a good situation for shareholders.

Oddly, the language used by Rightscorp to explain the third reason behind its drop in revenues in no more clear. Blaming “the shutting down of some filesharing network infrastructure” for achieving fewer settlements, the company gives no hint as to what that might mean, especially since according to them file-sharing traffic is only on the increase.

With file-sharers seemingly hiding, ISPs passing on fewer notices, coupled with Rightscorp’s inability to control its costs, it seems unlikely that the company has much of a future.

“Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing,” the company concludes.

28% of Piracy Takedown Requests Are “Questionable”

google-bayIn recent years copyright holders have overloaded Google with DMCA takedown notices, targeting links to pirated content.

These requests have increased dramatically over the years. In 2008, the search engine received only a few dozen takedown notices during the entire year, but today it processes two million per day on average.

Copyright holders have used this increase to call for tougher anti-piracy actions from search engines and other intermediaries, claiming that the current system is broken. For its part, Google is concerned that the continued increase may lead to more mistakes.

This week, researchers from Columbia University’s American Assembly and Berkeley published an in-depth review of the current takedown regime, with one study zooming in on the millions of takedown requests Google receives every week.

Using data Google provides to the Lumen database, the researchers reviewed the accuracy of more than 108 million takedown requests. The vast majority of these, 99.8%, targeted Google’s web search.

According to the researchers their review shows that more 28% of all requests are “questionable.” This includes the 4.2% of notices in which supposed infringing material is not listed on the reported URL.

“Nearly a third of takedown requests (28.4%) had characteristics that raised clear questions about their validity, based solely on the facial review and comparisons we were able to conduct. Some had multiple potential issues,” the researchers write.

Among the “questionable” takedown requests are those that target websites that have been shut down over a year ago. As shown in the figure below, rightsholders such as NBC Universal continued to target websites such as Megaupload.com and BTJunkie.org long after they were gone.

“A few senders—generally targeting unauthorized file-sharing sites—continued to send requests targeting links that led to long-defunct sites, calling into question the checks they do to keep their automated algorithms accurate,” the researchers write.

Reporting dead sites

defunct

Other questionable notices were improperly formatted, included a subject matter inappropriate for DMCA takedown, or had potential fair use issues, among other things.

Joe Karaganis, co-author of the report and vice president of Columbia University’s American Assembly, informs TorrentFreak that the often automated notices are problematic because the increase in volume makes human review rather impracticable.

“The problem with automation isn’t that it gets stuff wrong. Human senders turn out to be even worse on average. It’s that automation scales the process up in ways that has made meaningful human review difficult or impossible,” Karaganis says.

“With notice sending robots talking to notice receiving robots, the step of actually looking at the targeted content often drops out of the equation. The main contribution of our study is to go back in to look at the targeted content and make those human judgments,” he adds.

The result of the high number of “questionable” takedown notices is that Google likely removes more content than it should. The company currently acts in response to 97.5% of the takedown requests, which means that the vast majority of the questionable notices are honored.

“At a minimum, Google takes a very conservative approach to these issues and yes, probably over removes content,” Karaganis says.

“They are not special in this regard. Given the risk of high statutory penalties if a service rejects a valid notice, most if not all of them err on the side of takedown. Some just categorically take down 100% of the requests they receive.”

The researchers include several policy recommendations on how the current takedown process can be improved. Among other things, they suggest making it more difficult for senders to issue questionable notices without risk.

In addition, they warn against the “notice and stay down” and automated filtering mechanisms copyright holders frequently call for, as these may increase the potential for abuse while hurting due process.

The report, first highlighted by the Washington Post, is very much in line with the position Google has taken thus far.

In that regard, it is worth highlighting that the research is in part funded by Google, who will undoubtedly deploy it in future lobbying efforts, much like the copyright industries do with the research they fund.

Google won’t have to wait long before it can put the study to use, as the U.S. Government is currently running a public consultation to evaluate the effectiveness of the DMCA’s Safe Harbor provisions. This includes issues around automated takedown requests and potential abuse, and the deadline for comments expires tomorrow.

Copyright Does Not Protect the Klingon Language, Court Hears

klingonEarlier this year Paramount Pictures and CBS Studios filed a lawsuit against the makers of the Star Trek inspired fan film, accusing them of copyright infringement.

The dispute centers around the well-received short film Star Trek: Prelude to Axanar and the planned follow-up feature film Anaxar.

The project is an idea from Alec Peters who started working on it half a decade ago. The short film turned in to a massive hit and quickly raised more than $100,000 through crowdfunding, and the follow-up feature raised another $638,000 on Kickstarter alone.

That’s a serious budget for a fan-art project and the success prompted the attention of both Paramount Pictures and CBS Studios, who filed their complaint at a California federal court last December.

Among other things, the Star Trek rightsholder claimed ownership over various Star Trek related settings, characters, species, clothing, colors, shapes, words, short phrases and even the Klingon language.

This week, Axanar productions and Alec Peters responded to the allegations put forward in the complaint (pdf). According to the makers of the fan film, several of the allegedly “infringing elements” are not protected by copyright to begin with.

In their reply the filmmakers argue that words and short phrases such as names, titles and slogans can’t be protected. This includes the popular phrase “beam me up” as well as several Star Trek related names.

“…the names Garth of Izar, Soval, Richard Robau, and John Gill are not protectable, and neither are the words Andorians, Tellarites, Romulans, Axanar, Archanis IV, Q’onoS, Nausicaa, Rigel, Andoria, Tellar Prime, Vulcans, Klingons, Terra, Starship Enterprise, Starfleet, Federation, Starships, Stardate, and Federation or the short phrase ‘beaming up’,” they write.

In addition, Axanar productions points out that Paramount and CBS can’t claim ownership of the Klingon language, which is nothing more than an idea according to the defendants.

“The Klingon language itself is an idea or a system, and is not copyrightable,” they write.

“The mere allegation that Defendants used the Klingon language, without any allegation that Defendants copied Plaintiffs’ particular expression of that language, is therefore insufficient to state a claim for copyright infringement as to any protected element.”

Vulcan comparison

klingoncomp

The defendants continue by stressing that the use of the Vulcan appearance and the Heat-Ray Phaser weapons are not unique to Star Trek. They are common appearances in nature and / or have been used in fictional works before.

“Vulcan appearance: a species with ‘pointy ears’ is not original to Star Trek, and has appeared in many fictional fantasy works depicting imaginary humanoid species predating Star Trek, including, but not limited to, vampires, elves, fairies, and werewolves, as well as in many animals in nature.”

“Phasers are also known as Heat-Ray weapons, which have existed in science fiction since H.G. Wells’ ‘War of the Worlds’ in 1898,” the complaint notes.

Besides the questions Axanar raises over the copyright protections, they also argue that the allegations aren’t specific enough, since it’s not specified which exact copyrights have been infringed.

“While Plaintiffs allege that they own ‘more than 700’ Star Trek television episodes, a dozen motion pictures, and four books, they still fail to specify which of those copyrights Defendants have allegedly infringed,” the write.

As a result, Axanar Productions asks the court to dismiss or strike the copyright claims in question.

Creative Content UK Aims to Re-Educate Book Pirates

books-3-smallWhile the UK continues its aggressive pursuit of those who run or even facilitate access to sites offering copyright infringing material, its efforts to deal with consumers of pirated content have been painfully drawn out.

With the provisions of the Digital Economy Act now somewhat of a distant memory, using force to deal with Internet subscribers has been largely overtaken by plans to re-educate the masses.

To that end the government-funded, rightsholder-supported Creative Content UK (CCUK) initiative has been trying to gather momentum since its somewhat subdued debut in December last year. Though various PR campaigns the project hopes to change the public’s attitude towards Internet piracy.

Currently CCUK is running “Get It Right from a Genuine Site”, a campaign that hopes to deter people from using sites like The Pirate Bay in favor of licensed services that ensure that creators are properly paid.

The campaign has been largely inoffensive and quite colorful thus far but has struggled to achieve mainstream exposure. However, the latest video in the “Get It Right” series hopes to change that with a properly “grown up” attempt at reaching out to would-be pirates.

Featuring bookseller Nic Bottomley and his real-life book store ‘Mr B’s Emporium Of Reading Delights’, this Bookseller Association-supported video is a somewhat refreshing and calming anti-piracy short that’s a million miles away from “You Wouldn’t Download“.

Located in the beautiful city of Bath, the Emporium is a classic UK book shop and the video begins with its owner’s memories of repeatedly reading the Roald Dahl classic Fantastic Mr Fox. It’s warming stuff and a welcome change from the aggressive threats featured in other campaigns.

book-1

From the moment it begins it becomes clear that the aim of this short is to encourage the viewer to empathize with Bottomley, who together with his wife has built up a really decent book business over the past 12 years. And it works.

Bottomley’s tone is superb and doesn’t sound ‘preachy’ at all, and it’s genuinely nice to hear a little about what it’s like to run his shop and help out customers. But of course, that’s only possible if the public spends money with him and by extension, those writing the books.

“You know that when you buy a book from a high street book shop, or a book or an ebook from a legitimate website, that the creator of that content, in other words the writer of the book or ebook, has been properly rewarded for their work,” Bottomley tells the viewer.

book-2

But while it’s easy for those who grew up with mountains of real books to have the utmost respect for what Bottomley has achieved, it’s questionable whether his story will resonate so clearly with the ‘downloading generation’. Real books and real book shops are indeed beautiful, but increasingly digital downloads are taking over, with products like Kindle Unlimited (the Netflix of books) a more attractive proposition for those on the go.

Still, it’s hoped that booksellers of all kinds will get behind the initiative and spread the word that supporting writers (and sellers) is the right thing to do.

“We need to help the creative community to invest in creating more of content, and the development of new artists and writers and ideas as a result,” says Bookseller Association CEO Tim Godfray.

Finally, it will be interesting to see to what extent publishers, writers and book sellers will be supported when UK Internet service providers finally begin to send out warnings to alleged pirates in the months (years?) to come. The scheme has already been hugely delayed and thus far there has only been discussion of music, movie and TV show downloaders being targeted.

Also problematic is the manner in which ebooks are shared online. While torrents are the preferred method for larger files, books are much more likely to be distributed via hosting sites and forums. This kind of sharing cannot be tracked, so the education component is even more critical for the book sector.

Instagram Sued for Failing to Remove Copyrighted Photo

instaWith hundreds of million of active users, Instagram is often asked to remove copyrighted material being shared on its servers without permission.

If rightsholders submit a takedown request, Instagram swiftly takes the infringing content down. At least, that’s what it is supposed to do.

A new lawsuit filed in a California federal court suggests that Instagram’s takedown procedure is not always as effective as it should be.

This week Wisconsin-based photographer Jennifer Rondinelli Reilly filed a complaint (pdf) against Instagram in which she accuses the service of hosting or linking to one of her works without permission.

The work in question is an image of red lips and a microphone, which was registered at the U.S. Copyright Office in 2013. The image in question is used on several occasions, including in the profile below.

One of the alleged infringing uses

rondin

After discovering the unauthorized use of her work the photographer sent Instagram dozens of DMCA takedown requests. However, according to the complaint Instagram failed to take action in response.

“Reilly sent DMCA notices to Instagram regarding the Infringing Uses on January 26, 2016, January 27, 2016, January 28, 2016,” the complaint reads.

“Reilly never authorized the Infringing Uses,” the complaint states, adding that the images are still present on the site. “Instagram has not removed or disabled access to the Infringing Uses.”

At the time of writing several of the reported images have been removed. However, the profile picture shown above is still present and the same is true for other copies of the image on Instagram.

To resolve the matter, Reilly requests a permanent injunction against the service, as well as statutory damages for the alleged losses she has suffered.

This is not the first time the photographer has gone after a social network. A few months ago she filed a similar lawsuit against Twitter. This case was dismissed not much later, but it’s unclear if both parties reached a settlement out of court.

A few weeks ago Reilly also sued Buzzfeed for copyright infringement and the case is still ongoing.