Vendors of pirate streaming boxes have become a prime target for anti-piracy groups in recent years. 

One of the key players in this area is the Alliance for Creativity and Entertainment (ACE), the anti-piracy partnership between Hollywood studios, Netflix, Amazon, and more than two dozen other companies.

Last October, the organization filed a lawsuit against Dragon Media Inc, a seller of Kodi-powered set-top boxes that stream a variety of popular media. The company’s owner, Paul Christoforo, and reseller Jeff Williams were listed as defendants as well.

Following the lawsuit Dragon Box temporarily stopped its sales. The company later decided to change its business model, moving from a Kodi-addon platform subscription-based services. First, it moved to “BlendTV” and a few months later to “My TV Hub.”

However, none of these were legal options either, according to ACE. A few weeks ago the rightsholders asked the court to intervene but, before it could, the parties agreed on a settlement, as reported here last week. 

Initially, no details about the nature of the settlement were released, but a proposed order that was just submitted in the California federal court shows that the defendants agreed to a rather significant damages award.

“Judgment shall be entered against Defendants and in favor of Plaintiffs on Plaintiffs’ claims of copyright infringement, and damages shall be awarded to Plaintiffs in the amount of US $14,500,000,” it reads.

In addition to paying damages, the defendants are permanently prohibited from infringing the copyrights of ACE members. This includes operating and offering the Dragon Box for sale, as well as offering BlendTV, My TV Hub, or similar subscriptions. 

ACE spokesperson Richard VanOrnum welcomes the consent judgment, characterizing it as an important victory. 

“Today’s legal victory is another significant and positive step in reducing online piracy and supporting creators around the world. ACE is pleased the agreement will ensure the immediate shutdown of the illegal Dragon Box system.

“The theft of creative content is a pervasive threat to the dynamic legal marketplace for movie and television content, and ACE will continue its global efforts to advance creativity,” VanOrnum adds.

Whether the defendants will be able to pay the $14.5 million has yet to be seen. It will, however, act as a stark warning to other box vendors. At the time of writing, the official Dragon Box website redirects to a website selling CBD oil and related products.

This is the second major streaming box settlement for ACE. Last year it made a similar deal with TickBox TV, which agreed to cease its activities and pay $25 million in damages.

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A copy of the proposed consent judgment and permanent injunction is available here (pdf).

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Anyone old enough to have enjoyed music before the dawn of the Internet will probably have recorded music from the radio.

Armed with C60 or more capacious C90 cassettes, it was a tradition in many countries to press play and record when the local chart shows were airing, thus capturing the pop hits of the day.

The resulting recordings were deliberately peppered with DJ chatter to reduce their quality but for many, this was the first step in enjoying music on repeat and on demand, without buying original vinyl.

These days music platforms are much more advanced but a service offered over the past few years by Germany-based ZeeZee presented a new take on these old traditions.

Users of ZeeZee.de were able to make requests to the service to provide music tracks for download. However, instead of licensing tracks like Spotify might, for example, the service scanned online radio stations while ‘listening’ out for the tracks to be played. At this point ZeeZee would record them before offering the user the opportunity to download.

This activity attracted the negative attentions of record labels in Germany, Universal Music in particular. As far back as 2014, the music giant discovered that the album Mit den Gezeiten by local band Santiano (which had been a number one hit) was being offered for download by ZeeZee.

Refusing to cease-and-desist out of court, in November 2014 the label filed for an injunction and damages at the Regional Court of Hamburg. During December 2016, the Court found in favor of the plaintiff and ZeeZee was ordered to stop its activities.

The case went to appeal but the outcome remained the same. In a ruling handed down by the Appeal Court of Hamburg earlier this month, ZeeZee was found to have acted illegally and to have no defense under Germany’s private copying exception.

The Court found that while users had requested the tracks, it was ZeeZee that fetched and reproduced them, later making them available for download. The infringing copies, therefore, had to be attributed to ZeeZee, not the end users of its service, in line with the limits on private copying highlighted in a 2017 ruling by the Court of Justice of the European Union.

The decision was welcomed by local music industry group, BVMI.

“Another clear signal from a German court: Anyone wishing to derive personal gain from another’s content by hiding behind the private copy rule must be prepared to be unmasked and suffer the legal consequences,” said René Houareau, Managing Director Legal & Political Affairs at the BVMI.

“A business model which does so is not in line with current laws. As the court states, ‘tapping’ internet radio stations in order to provide customers with an apparently free-of-charge copy from an unknown source, is specifically not covered by the private copying exception.”

On November 22, 2018, the Higher Regional Court of Munich reached the same conclusion in a case against stream-ripping service MusicMonster.fm, which also recorded tracks played on online radio stations to provide content to its customers.

The case, brought by Sony Music, also ended with a declaration that the service cannot rely on the private copying exception so is both unlicensed and illegal.

In Germany, exceptions for private copying attempt to balance the freedom to copy content with the right of rightsholders to get paid. While levies cover copies made at home for personal use, it’s now clear that sites like ZeeZee and MusicMonster need to obtain licenses to operate legally.

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Last year a coalition of Canadian ISPs and movie industry companies called for a Canadian site-blocking regime. This plan triggered a fair amount of pushback.

Law professor Michael Geist was among the most vocal opponents. He warned of potential overblocking and feared that VPN services could become the next target.

“Once the list of piracy sites (whatever the standard) is addressed, it is very likely that the Bell coalition will turn its attention to other sites and services such as virtual private networks (VPNs),” Geist wrote.

The site-blocking scheme was eventually rejected by the Canadian telecoms regulator CRTC. However, it turns out that professor Geist’s warning wasn’t as far-fetched as some claimed.

Bell Canada Enterprises (BCE), which is both a media company and one of the largest ISPs, did indeed ask Government to take action against certain VPN services. This wasn’t done as part of the site blocking plans but in Bell’s recommendations on the NAFTA negotiations in 2017.

This submission wasn’t made public at the time. However, the Wire Report (paywall) obtained a copy through an Access to Information request, which reveals that Bell requested a ban of some VPN services.

“The Canadian cultural industry has long been significantly harmed by the use of virtual-private-network (VPN) services, which facilitate the circumvention of technological protection measures put in place to respect copyright ownership in other jurisdictions such as Canada,” the submission read.

The language appears to be focused on VPNs which are used to bypass geo-blocking efforts. For example, when Canadians use a VPN to access the US version of Netflix, which may have a larger content library.

This harms Canada both economically and culturally, Bell warned the government. The company, therefore, hoped that these VPNs would be outlawed under the NAFTA trade deal.

“Canada should seek rules in NAFTA that require each party to explicitly make it unlawful to offer a VPN service used for the purpose of circumventing copyright,” the submission clarified.

Among other things, this would confirm that it’s  “a violation of copyright if a service effectively makes content widely available in territories in which it does not own the copyright due to an ineffective or insufficiently robust geo-gating system.”

The recommendation didn’t make it into the new trade deal between United States, Mexico and Canada Agreement (USMCA). However, it clearly shows that VPNs are seen as a problem by rightsholders and that a ban on these type of services is considered.

Interestingly, this isn’t the first time the issue has been brought to the attention of the Canadian Government. In 2015, officials from the Department of Canadian Heritage mentioned  “copyright infringement using VPNs” as one of the emerging issues.

For now, there is no sign that problematic VPNs will be outlawed anytime soon. But, since Bell and others continue to push for site blocking, it wouldn’t be a big surprise if ‘infringing’ VPNs remain on the radar as well.

Bell is still hoping to get site-blocking implemented in Canada. The company has called for this as part of the ongoing copyright review and the broadcast and telecom review. Considering this recent push, professor Geist warns that a possible VPN ban is still something to be wary of.

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Over the past decade, various entertainment industry groups have lobbied hard for tougher anti-piracy measures.

The harder it is for people to download something through unofficial channels, the more revenue will flow to the creators, the argument goes.

However, a new study by Indiana University researcher Antino Kim conducted together with colleagues from the University of Texas-Dallas and the University of Washington, suggests that this is not always the case.

The findings from their economic impact model are published in the latest edition of the MIS Quarterly Journal, in an article titled  “The ‘Invisible Hand’ of Piracy: An Economic Analysis of the Information-Goods Supply Chain.”

According to their analysis, piracy limits the pricing power of both the creator and the retailer. This reduces the impact of double marginalization, which occurs when creators and retailers both add significantly to the price of a product.

Because piracy is seen as a form of “shadow competition” the price of a product, such as an HBO cable subscription, is pushed closer to the economic optimum. At that optimal price point, everyone is better off, including the broader economy.

“When information goods are sold to consumers via a retailer, in certain situations, a moderate level of piracy seems to have a surprisingly positive impact on the profits of the manufacturer and the retailer while, at the same time, enhancing consumer welfare,” Kim and his co-authors write.

“Such a win-win-win situation is not only good for the supply chain but is also beneficial for the overall economy,” they add.

The researchers mention Game of Thrones piracy as an example. The TV-show is widely known to be the most pirated series in history but HBO is not going to extremes to stop the public from sharing these episodes, which may be a good thing.

Following the logic of the paper, the threat of piracy keeps the price of HBO cable subscriptions down. Neither HBO (creator) nor the cable and satellite TV operators (retailer) are overcharging, despite their relative monopolies. This means a better price point and more legitimate consumers.

The authors of the article note that creators and retailers don’t have to encourage piracy all of a sudden. However, turning a blind eye to it may be in their own best interests in some cases.

“The implication is simply that, situated in a real-world context, our manufacturer and retailer should recognize that a certain level of piracy or its threat might actually be beneficial and should, therefore, exercise some moderation in their anti-piracy efforts,” the researchers write.

“This could manifest itself in them tolerating piracy to a certain level, perhaps by turning a blind eye to it. Such a strategy would indeed be consistent with how others have described HBO’s attitude toward piracy of its products,” they add.

The findings are based on an economic model which is limited to retailer sold information goods. Piracy doesn’t always have a positive effect but this research shows that it can help keep market prices balanced, which is an intriguing conclusion.

It highlights a positive aspect of piracy that has been overlooked before are certainly something for companies and governments to be aware of then they consider future anti-piracy measures.

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Russia has firmly established itself as one of the leading countries utilizing site-blocking to counter content considered unfavorable by the state or corporate interests.

Many tens of thousands of platforms are blocked for many reasons, from the promotion of terrorism to copyright infringement. Every week new sites are added to the country’s national blacklist which local ISPs are required to frequently check in order to prevent their subscribers from accessing forbidden platforms.

Given that blocking is supposed to reduce piracy, new research from Russian anti-piracy company WebKontrol throws up a few interesting angles on this online war.

For example, the company says that in 2017, the number of torrent sites offering content to the Russian market sat at around 1,300. However, last year – in the face of overwhelming blocking measures – that number grew to around 2,000.

In 2018, torrent sites accounted for just over a fifth of the ‘pirate’ market (streaming platforms dominate with more than 70%) but due to multiple links to the same content appearing on most platforms, torrent links accounted for around 40% of the available links to pirated material.

Further underlining the importance of torrents, despite a smaller share of the market, the company reports that in 87% of cases, the first public copies of premiere titles appeared on torrent sites first, before spreading out to other platforms such as streaming and hosting sites.

“According to WebKontrol’s, data, out of various website types, the number of streaming resources had increased by 2% – from 69% to 71% [2017 v 2018] – which placed the streaming websites in the leading position,” the company told TF.

“The share of torrent-trackers has also increased by 3% – from 19% to 22%. At the same time, the analysts have noted that the number of link sites and cyberlockers went down from 5% to 3%, and from 6% to 3% respectively.”

In 2017, the number of pirate sites offering content to Russian audiences dropped by 10% but in 2018, WebKontrol detected a 43% increase, amounting to an additional 9,500 sites. But despite this bad news, overall piracy appears to have dipped slightly, with the huge increase in sites put down to site owners’ responses to Russia’s aggressive blocking system.

“The overall traffic of pirate sites is decreasing notwithstanding the fact that the number of such sites is growing rapidly. Presumably, the main reason for this is the newly created mirror sites,” WebKontrol CEO Olga Valigourskaia informs TorrentFreak.

“Administrators of the pirate resources tend to create mirror sites as quickly as possible after their original domains are blocked. Rights holders, on the other hand, instantly block these mirrors using an administrative procedure, so there is no chance for these sites to gain any significant traffic. Some pirates simply stop creating new mirrors after a few blocking procedures.”

Meanwhile, Russia is further investing in site-blocking with the introduction of a new system. Telecoms watchdog Roscomnadzor reports that to date, 660 large telecoms operators have switched to a new mechanism which allows sites to be blocked more efficiently.

“The new mechanism allows service providers to receive data from the Unified Registry [national blacklist] for only updated or changed entries instead of downloading the entire data set,” Roscomnadzor reports.

“Earlier tests have shown that the time taken by operators to reduce access to prohibited resources is reduced from 30–40 minutes to 4–6 minutes.”

Adoption of the new system is not mandatory but given the importance of site-blocking to the Russian government, ISPs are being encouraged to make use of it in order to “increase the effectiveness of measures taken to limit access to illegal resources.”

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