In September 2014, NetNames published a report titled Behind The Cyberlocker Door: A Report How Shadowy Cyberlockers Use Credit Card Companies to Make Millions. It accused New Zealand-based cloud-storage site Mega of being a “cyberlocker” and profiting from “content theft”.

Mega reacted angrily to the report, branding it defamatory and warning of further action.

This morning Mega revealed it had commissioned international law firm Olswang to critique the NetNames report, an interesting move considering the firm’s pedigree. In 2014 Olswang worked with the UK government’s IP advisor to publish a set of anti-piracy recommendations. They were later endorsed by the MPAA.

The report

“Olswang was asked to analyse the evidence and data used by NetNames in order to establish whether there was any factual basis for the claims. Olswang is renowned for its deep experience in the technology, media and telecoms sector,” Mega says.

The result is a 42-page teardown of the NetNames report, clarifying Mega’s business and legal practices while leaving the brand company with plenty of questions to answer.

“The NetNames report has been extremely damaging to Mega,” Oslwang begins. “Most notably, it has been relied upon by United States Senator Patrick Leahy to apply pressure to major payment providers and credit card companies to withdraw their services from those identified in the NetNames report.”

Allegedly infringing content

One of NetNames’ key claims is that the majority of the files stored on Mega are infringing. Olswang attacks both the claim and the company’s methodology.

Describing the analysis file sample as “inherently biased towards finding infringing content”, the law firm notes that only publicly available files were examined while the vast majority of files stored on Mega (encrypted and not publicly shared) were ignored.

“In September 2014, when the NetNames report was published, Mega had approximately 2.5 billion files stored on its servers. This means that the sample of files analysed represents just 0.00002% of the total number of overall files,” Olswang reports.

The law firm adds that NetNames took no steps to determine whether content was actually infringing. Instead, filenames were used as the lone indicator of illegality.

Business model

After holding NetNames to its own definition of an “illegal cyberlocker”, Olswang found no similarities with Mega, noting that the company’s business model is “entirely at odds with NetNames’ own description of those used by cyberlockers.”

Noting that Mega’s basic service is similar to those provided by many other major legitimate cloud-hosting providers, Olswang addresses NetNames’ claims that rogue cyberlockers limit download speeds in order to encourage users to pay to upgrade to higher speeds.

“Mega operates a bandwidth limit in the same way as other legitimate storage providers and does not limit download speeds,” the law firm notes.

And then to advertising.

“The NetNames report acknowledges that Mega does not host advertising and is therefore an ‘exception’ to the other 29 cyberlocker companies named. However it still categorizes Mega as a cyberlocker despite it being clear that Mega’s primary sources of revenue do not share any of the characteristics ascribed to cyberlockers. We therefore see no possible basis on which such a conclusion can be drawn,” the report adds.

Aggressive affiliate programs, which are considered by some to be one of the hallmarks of a rogue file-hosting site, are also tackled by Olswang in the clearest possible terms.

“The NetNames report estimates that Mega pays out $66,789 per month to affiliates. The source of this figure is unexplained, and it is entirely false. To date, Mega has not finalized any affiliate relationships and therefore has never paid any commission or retainer to any affiliate,” the law firm notes.

Legal

Of primary importance is whether Mega complies with the law, both locally in New Zealand and elsewhere internationally. The Olswang report highlights no deficiencies while noting that Mega’s policies are “fully compliant with the New Zealand Copyright Act 1994 and the equivalent intermediary liability regimes provided for in the US DMCA and European ECommerce Directive.”

The company takes down infringing content on demand and reports deleting 131,377 files in the first quarter of 2015, a figure representing just 0.003% of all files stored on Mega. Site users are subjected to a “5 strikes” regime, meaning that after five reports of infringement accounts are suspended.

“At the time of writing 29,290 user accounts had been suspended by Mega for this reason, comprising less than 0.16% of total Mega users,” Olswang notes.

Conclusion

“Having reviewed the NetNames report and undertaken analysis of Mega’s service, Olswang has found no evidence to conclude that Mega can be considered a cyberlocker, or that it knowingly, willingly or even passively assists in or condones wide scale copyright or other infringement,” the law firm writes.

“In summary, Olswang has concluded that the allegations in the NetNames report are highly defamatory of Mega and appear to have no factual basis whatsoever. The NetNames report contains numerous factual inaccuracies and methodological errors and draws conclusions that are entirely wrong.

“[All] of Mega’s characteristics are consistent with those of a legitimate cloud storage provider in the same way as Google Drive, Microsoft OneDrive, Apple iCloud, Dropbox and many other similar providers,” Olswang concludes.

Mega says it is pleased with the findings of the report and is now considering its legal position.

“It is quite clear from the comprehensive review conducted by Olswang that the assertions about Mega in the NetNames report are totally without foundation and are defamatory. We are now taking legal advice on this serious attack against Mega,” says Mega CEO Graham Gaylard.

“Olswang’s credentials on anti-piracy issues are impeccable, and their conclusions totally refute the allegations made in the NetNames report.”

Thus far NetNames has ignored requests for comment on the inclusion of Mega in its report. With pressure building as it now is, the company could soon be left with little choice.

The full report can be downloaded here (pdf).

Source: TorrentFreak, for the latest info on copyright, file-sharing, torrent sites and anonymous VPN services.

A few years ago Europe witnessed the largest piracy-related busts in history with the raid of the popular movie streaming portal Kino.to.

Police officers in Germany, Spain, France and the Netherlands raided several residential addresses, data centers and arrested more than a dozen individuals connected to the site.

The operation wiped out the largest unauthorized streaming portal in Europe and was praised as a massive success. However, new research from the European Commission’s Joint Research Centre shows that the effect on end users was short-lived and relatively limited.

In a working paper titled “Online Copyright Enforcement, Consumer Behavior, and Market Structure” researchers examined clickstream data for a set of 5,000 German Internet users to see how their legal and illegal consumption habits changed in response to the shutdown.

One of the main conclusions is that the kino.to raid led to a short-lived decrease in piracy, after which piracy levels returned to normal. At the same time, the researchers observed only a small increase in the use of legal services.

“While users of kino.to decreased their levels of piracy consumption by 30% during the four weeks following the intervention, their consumption through licensed movie platforms increased by only 2.5%,” the paper reads.

Based on the above the researchers conclude that if the costs of the raids and prosecution are factored in, the shutdown probably had no positive effect.

“Taken at face value, these results indicate that the intervention mainly converted consumer surplus into deadweight loss. If we were to take the costs of the intervention into account, our results would suggest that the shutdown of kino.to has not had a positive effect on overall welfare,” the researchers write.

Perhaps more worrying is the fact that Kino.to was soon replaced by several new streaming services. This so-called “Hydra” effect means that a landscape which was previously dominated by one site, now consists of several smaller sites that together have roughly the same number of visitors.

The researchers note that Movie2k.to and KinoX.to quickly filled the gap, and that the scattered piracy landscape would make future shutdowns more costly.

“Our analysis shows that the shutdown of kino.to resulted in a much more fragmented structure of the market for unlicensed movie streaming,” the paper reads.

“This potentially makes future law enforcement interventions either more costly – as there would not be a single dominant platform to shutdown anymore – or less effective if only a single website is targeted by the intervention”

One of the policy implications could be to advise against these type of large piracy raids, as they do very little to solve the problem at hand.

However, the researchers note that the results should be interpreted with caution. For example, it doesn’t include any data on offline sales. Similarly, back in 2011 there were relatively few legal options available, so the effects may be different now.

That said, the current findings shed an interesting light on the limited effectiveness of international law enforcement actions directed at piracy sites. Also, it’s the first research paper we know of that provides strong evidence for the frequently mentioned Hydra effect.

Source: TorrentFreak, for the latest info on copyright, file-sharing, torrent sites and anonymous VPN services.

One of the key aims of the now infamous SOPA legislation that failed to pass several years ago was the takedown of domains being used for infringing purposes. The general consensus outside of the major copyright groups was that this kind of provision should be rejected.

However, within the movie and music industries the spirit of SOPA is still alive, it’s just a question of how its aims can be achieved without giving alternative mechanisms the same name. Yesterday, during a hearing before the House Judiciary Committee’s Internet subcommittee, domains were firmly on the agenda.

One group in attendance was the Coalition for Online Accountability. COA’s aim is to improve online transparency and to encourage “effective enforcement against online infringement of copyrights and trademarks.”

No surprise then that its members consist of the Motion Picture Association of America (MPAA), the Recording Industry Association of America (RIAA), Entertainment Software Association (ESA) and the Software and Information Industry Association (SIIA).

COA counsel Steve Metalitz’s testimony called for domain name registrars to deal with complaints effectively.

Domains

“In recent months, there have been increasing calls from many quarters for domain name registrars to recognize that, like other intermediaries in the e-commerce environment, they must play their part to help address the plague of online copyright theft that continues to blight the digital marketplace,” Metalitz said.

“Under the 2013 revision of the Registrar Accreditation Agreement (RAA), domain name registrars took on important new obligations to respond to complaints that domain names they sponsor are being used for copyright or trademark infringement, or other illegal activities.”

However, according to Metalitz, registrars are not responding. The COA counsel said that the RAA requires registrars to “investigate and respond appropriately” to abuse reports and make “commercially reasonable efforts” to ensure that registrants don’t use their domain names “directly or indirectly” to infringe third party rights. But there has been little action.

“Well-documented reports of abuse that are submitted to registrars by right-holders, clearly demonstrating pervasive infringement, are summarily rejected, in contravention of the 2013 RAA, which requires that they be investigated,” he said.

As an example, Metalitz highlighted a Romanian-hosted ‘pirate’ music site using the domain Itemvn.com.

“By August of last year, RIAA had notified the site of over 220,000 infringements of its members’ works (and had sent similar notices regarding 26,000 infringements to the site’s hosting providers). At that time, RIAA complained to the domain name registrar (a signatory of the 2013 RAA), which took no action, ostensibly because it does not host the site,” he explained. A complaint to ICANN was also dismissed, twice.

It’s clear from Metalitz’s testimony that the MPAA, RIAA and ESA are seeking an environment in which domains will be suspended or blocked if they can be shown to be engaged in infringement. But the groups’ demands don’t end there.

WHOIS

WHOIS databases carry the details of individuals or companies that have registered domains and registrars are required to ensure that this information is both accurate and up to date. However, since WHOIS searches often reveal information that registrants would rather keep private, so-called proxy registrations (such as Whoisguard) have become increasingly popular.

While acknowledging there is a legitimate need for such registrations (albeit in “limited circumstances”), the entertainment industry groups are not happy that pirate site operators are playing the system to ensure they cannot be traced.

As a result they are aiming for a situation where registrars only deal with proxy services that meet certain standards on issues including accuracy of customer data, relaying of complaints to proxy registrants, plus “ground rules for when the contact points of a proxy registrant will be revealed to a complainant in order to help address a copyright or trademark infringement.”

In other words, anonymity should only be available up to a point.

In a letter to the Committee, the EFF warned against the COA’s proposals.

“As advocates for free speech, privacy, and liberty on the global Internet, we ask the Committee to resist calls to impose new copyright and trademark enforcement responsibilities on ICANN. In particular, the Committee should reject proposals to have ICANN require the suspension of Internet domain names based on accusations of copyright or trademark infringement by a website,” the EFF said.

“This is effectively the same proposal that formed the centerpiece of the Stop Online Piracy Act of 2011 (SOPA), which this Committee set aside after millions of Americans voiced their opposition. Using the global Domain Name System to enforce copyright law remains as problematic in 2015 as it was in 2011.”

Source: TorrentFreak, for the latest info on copyright, file-sharing, torrent sites and anonymous VPN services.

While in previous years people were simply grateful to have somewhere to host their own vides, these days a growing number of YouTube users rely on the site to generate extra cash.

Earning money with YouTube is now easier than ever, with some ‘YouTubers’ even making enough to invest in a mansion.

For others, however, the environment created by the Google-owned video platform is far from perfect, with complaints over the company’s Content ID anti-piracy system regularly making the news. Now YouTuber Benjamin Ligeri is adding his name to the disgruntled list.

In a lawsuit filed at the US District Court for the District of Rhode Island which lists Google, Viacom, Lionsgate and another YouTuber as defendants, Ligeri bemoans a restrictive YouTube user contract and a system that unfairly handles copyright complaints.

Ligeri says that he has uploaded content to YouTube under the name BetterStream for purposes including “criticism, comment, news reporting, teaching, scholarship, and/or research,” but never in breach of copyright. Nevertheless, he claims to have fallen foul of YouTube’s automated anti-piracy systems.

One complaint details a video uploaded by Ligeri which he says was a parody of the film The Girl With the Dragon Tattoo. It was present on YouTube for a year before a complaint was filed against it by a YouTube user called Egeda Pirateria.

“Defendant Pirateria is not the rightful owner of the rights to The Girl With the Dragon Tattoo, nor did the Plaintiff’s critique of it amount to copying or distribution of the movie,” Ligeri writes.

However, much to his disappointment, YouTube issued a copyright “strike” against Ligeri’s account and refused to remove the warning, even on appeal.

“YouTube, although Defendants Pirateria or Lion’s Gate lacked any legal claim
to any copyright to The Girl With the Dragon Tattoo, denied the Plaintiff’s appeal pertaining to his account’s copyright strike,” the complaint reads.

Ligeri says Viacom also got in on the action, filing a complaint against his “critique” of the 2014 remake of Teenage Mutant Ninja Turtles.

“A claim was made with YouTube on behalf of Defendant Viacom. Defendant Viacom does not have a legal or valid copyright to TMNT. Defendant YouTube allowed Viacom the option to mute, disable or monetize the Plaintiff’s Fair Use content,” Ligeri adds.

Although the fair use argument could be up for debate, in 2009 Nickelodeon acquired the global rights to the Teenage Mutant Ninja Turtles brand. Nickelodeon’s parent company is Viacom-owned Paramount Pictures.

“Content ID is an opaque and proprietary system where the accuser can serve as the judge, jury and executioner,” Ligeri continues.

“Content ID allows individuals, including Defendants other than Google, to steal ad revenue from YouTube video creators en masse, with some companies claiming content they don’t own deliberately or not. The inability to understand context and parody regularly leads to fair use videos getting blocked, muted or monetized.”

Noting that YouTube exercises absolute power through its take-it-or-leave-it user agreement, Ligeri says the agreement and Content ID combined result in non-compliance with the Digital Millennium Copyright Act.

“Normally, under DMCA, there would be a process where the reported content
would be removed for 10-14 days so any dispute could be resolved by way of notice and counter-notice,” Ligeri writes.

“Content ID and YouTube’s adhesion contract are not compliant with DMCA
because, at a minimum, the software’s algorithm fails [to] recognize when content may or may not be violating copyright.”

Ligeri says that rather than acting as a neutral party, YouTube favors larger copyright holders using Content ID over smaller creators who do not.

“This software and YouTube’s terms of use circumvent DMCA by creating a
private arbitration mechanism. Further, a party claiming copyright infringement has no burden of proof under this private arbitration mechanism,” he notes.

In conclusion, Ligeri is demanding an injunction which compels Google/YouTube to restore the content taken down via the allegedly bogus complaints and “otherwise comply with the DMCA.”

Ligeri also seeks declaratory judgments that he did not infringe the copyrights of the defendants and that YouTube’s terms of use are void on several counts, including that they ignore or fail to comply with the DMCA.

A claim for nominal damages of $10,000, ‘special’ damages of $1,000,000 plus unspecified punitive damages and costs conclude the filing.

This is not the first time Ligeri has personally targeted YouTube. In 2008 he unsuccessfully sued the company in an effort to obtain a 1/500th share in the revenue generated by the video site.

The self-styled “#1 Most Viewed YouTube Icon” also appears to enjoy representing himself. In addition to the current case his Linkedin profile describes him as a “human rights activist private litigator” with previous experience working in a public defender’s office for the criminally insane.

Source: TorrentFreak, for the latest info on copyright, file-sharing, torrent sites and anonymous VPN services.

To counter the ever increasing piracy threat a group of smaller movie studios launched a new coalition last month, the Internet Security Task Force (ISTF).

ISTF, which includes Voltage Pictures, Millennium, Bloom, Sierra/Affinity and FilmNation Entertainment among its members, is poised to be more aggressive than the MPAA.

Today the group unveils its first point of action. According to the group it’s time to end the voluntary “six strikes” Copyright Alert System, the voluntary anti-piracy agreement between the RIAA, MPAA and several large U.S. Internet providers.

ISTF presents data which reveals that the six strikes warnings are not getting the desired result, describing the system as a “sham”.

According to Millennium Films President Mark Gill his studio sent numerous piracy notices directed at ‘Expendables 3′ pirates under the scheme, but only a tiny fraction were forwarded by the participating ISPs.

“We’ve always known the Copyright Alert System was ineffective, as it allows people to steal six movies from us before they get an educational leaflet. But now we have the data to prove that it’s a sham,” Gill comments.

“On our film ‘Expendables 3,’ which has been illegally viewed more than 60 million times, the CAS only allowed 0.3% of our infringement notices through to their customers. The other 99.7% of the time, the notices went in the trash,” he adds.

As part of the Copyright Alert System ISPs and copyright holders have agreed to send a limited number of notices per month, so anything above this threshold is not forwarded.

ISTF’s data on the number of ‘Expendables 3′ infringements suggests that the Copyright Alerts are in fact less effective than the traditional forwarding schemes of other providers.

Cox and Charter, two ISPs who do not participate in the Copyright Alert System, saw a 25.47% decrease in reported infringements between November 2014 and January 2015. However, the ISPs who sent six strikes notices saw a 4.54% increase over the same period.

“These alarming numbers show that the CAS is little more than talking point utilized to suggest these five ISPs are doing something to combat piracy when in actuality, their customers are free to continue pirating content with absolutely no consequences,” Voltage Pictures CEO Nicolas Chartier notes.

“As for its laughable six strikes policy, would any American retailer wait for someone to rob them six times before handing them an educational leaflet? Of course not, they call the cops the first time around,” he adds.

While it’s clear that ISTF is not happy with the Copyright Alert System, they seem mistaken about how it works. Customers don’t have to be caught six times before they are warned, they get an educational notice the first time they’re caught.

The “six strikes” terminology refers to the graduated response scheme, in which customers face stronger punishments after being caught more times.

Interestingly, the filmmakers promote the Canadian notice-and-notice system as a better alternative. Since earlier this year, Canadian ISPs are obligated to forward infringement notices to their subscribers, and ISTF notes that it has been instrumental in decreasing piracy.

Since the beginning of 2015, Bell Canada has seen a 69.6% decrease in infringements and Telus (54.0%), Shaw (52.1%), TekSavvy (38.3%) and Rogers (14.9%) all noted significant reductions.

The data presented is collected by the monitoring outfit CEG TEK. This American company sends infringement notices paired with settlement requests on behalf of copyright holders, sometimes demanding hundreds of dollars from alleged pirates.

Needless to say, these threats may in part be the reason for the reported effectiveness.

In the United States, ISPs are currently not obliged to forward copyright infringement notices. Some ISPs such as Comcast do so voluntarily, but they also strip out the settlement demands.

ISTF hopes this will change in the near future and the group has sent a letter to the MPAA, RIAA and the major ISPs urging them to expire the Copyright Alert System, and switch to the Canadian model instead.

Source: TorrentFreak, for the latest info on copyright, file-sharing, torrent sites and anonymous VPN services.