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Is It Safe?
Posted Oct 1, 2002 Print Version     Page 1of 3 next »

For many intellectual property owners, the perceived potential for piracy and loss in Web- and disc-based content distribution dramatically outweighs the profit. Much of that may change as copy protection schemes grow more sophisticated, and content owners learn how to make the Web work for them. But what options are available now for keeping content safe?

October 2002|Copy protection has taken on many forms since Hollywood studios began fighting the villainous VCR back in the 1970s. While few will argue that content providers shouldn't be fairly compensated for their efforts, defining what's "fair" has perhaps become the biggest challenge. Copying an audio CD and handing it off to a friend to check it out is okay. Doing the same with a CD-ROM is not okay. Doing it with a DVD is worse, and retrieving anything copy-protected off the Internet without permission makes you not only criminal, but contemptible. And how many of us who use the Internet frequently can honestly say we're unimpeachably above such contempt?

Of course, the Internet isn't entirely a loss leader for would-be protectors of copyrighted content, but for many intellectual property owners, the potential for profit is dramatically outweighed by the perceived loss. Much of that may change in the coming years as the Internet becomes more sophisticated and content companies learn how to make it work for them. But what options are available now for keeping content safe on disc and Web?

Even today's most highly publicized copy protection triumphs are arguably hollow victories. Consider the two biggest headline-grabbers in the piracy/fair use wars of the last half decade: Napster and DeCSS. While Napster, for all practical purposes, disappeared almost two years ago, its founders cashed in big in the Bertelsmann buyout, and even as their successors, such as AudioGalaxy, are slowly, painstakingly silenced, new, peer-to-peer sites sharing the same files quickly rise to take their place.

Meanwhile, in a surprising move announced mid-summer, Eric Corely—notorious publisher of the DVD-cracking DeCSS code—announced that he would not appeal the rulings by the New York District Court and the 2nd Circuit Court of Appeals that put his 2600 Magazine Web site out of business. The ruling says he violated the 1998 Digital Millennium Copyright Act when he posted links to code that unlocked digital copyright protections on DVDs. The code, written by a Norwegian teenager who said he wanted to be able to write a software DVD player for the open-source Linux operating system, remains widely available in various guises that users can quickly download. And unfettered peer-to-peer video sharing accomplishes much the same sort of unlicensed distribution that DeCSS was attacked for enabling. And the protection of DVD content isn't even foremost in the minds of the entertainment industry these days, as they look ahead to digital television and broadband, and the evolving structure of the post-DVD world of high-definition content distribution, and seek to future-proof—via restrictions on future recording devices—their copy protection capabilities.

It's hard to say definitively which way the tide is turning, but the law seems to be on the side of content providers here, even though the waters remain murky. Freedom of speech is still something few want to challenge. But obviously, the Internet is changing our definitions of freedom of expression and fair use, and will continue to do so as technology further outpaces our means of intellectual property protection.

Whatever their (mis)fortunes on the Web, technology companies have enjoyed some success in fighting disc copy protection in the streets: March 2002 saw the first-ever publicized bust of DVD-R pirates in the Bronx, New York, and the LAPD nabbed a similar piracy ring in Long Beach in July. While these busts brought down relatively small operations, they appear for now to be proportional to the problem in the U.S. Piracy overseas, however, particularly in Asia, continues to run rampant. While there is a thirst for American culture, there is also a distaste for perceived American greed, so until these attitudes change, would-be protectors of copyrighted content will continue to wage an uphill battle.


Software piracy grew from 37 percent in 2000 to 40 percent in 2001 around the world, according to the Business Software Alliance's (BSA) seventh annual survey on global software piracy. "In the seven years that we have conducted this study, this is the first time piracy has increased two years in a row. This is particularly disturbing in light of the fact that more and more software companies are moving their distribution systems to the Internet," says BSA president and CEO Robert Holleyman. Vietnam, China, and Indonesia topped the piracy charts although in the last year we've seen minor percentage declines there. North America continued to be the region with the lowest piracy rate at 26 percent, up one percentage point from 25 percent in 2000. However, North America accounted for the third-highest piracy dollar losses, totaling $1.9 billion, down from $2.9 billion in 2000. That decline can be deceiving. BSA attributes it to the strong U.S. dollar relative to local currencies and to lower software prices.

The Recording Industry Association (RIAA) says they were more successful in busting up illegal operations in 2001 than they were in 2000. Raids on more than 230 distribution operations and more than 145 manufacturing operations led to the seizure of 2.8 million unauthorized CD-Rs. Raids aside, the RIAA says the music industry loses more than $1 billion per year from the illegal activities conducted in the world's four leading pirate marketplaces: Brazil, China, Russia, and Mexico. Not including losses resulting from Internet piracy, the sale of pirate recordings exceeds $4.2 billion worldwide.

The Game Industry

Ric Hirsch, senior vice president for intellectual property enforcement at the Interactive Digital Software Association (IDSA), says the new game platforms and software boast more rigorous copy protection than their predecessors. "That being said, part of the curse of creating a successful platform, is that it increases the incentive to crack copy protection," Hirsch says. "Playstation2 has already been cracked, and it appears to be happening for Xbox. Organized groups make it their business to cut through copy protection systems and put them up on the Internet on the first day of release of any new game software. While most people are stymied by the copy protection, real professionals will figure out the copy protection nine times out of ten."

As for piracy outside the United States, Hirsch says, the criminal justice systems in other countries don't work as well as in the U.S, but they also have problems that rank higher on their priority lists, like chronic unemployment.

What about the Internet and peer-to-peer sharing? "The Internet creates a worldwide street corner for people to offer pirate versions of games or anything else," Hirsch says. "As for peer-to-peer sharing, that is not much of a problem for the game industry as yet. Game files are much larger than music files. There are efforts to compress these files and make them smaller by stripping out certain elements, but that begins to degrade the games. However, I know we'll have to address P2P at some point."

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