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September 24, 2014

Smelly Lockers: A True Story of Pirates

  Heartland Institute

The Digital Citizens Alliance recently released a report that is troubling if somewhat unsurprising.  The report documents that intellectual property piracy continues, that it is big business and that cyberlockers play a substantial role in enabling the criminal activity.

Not to be confused with cloud computing, cyberlockers are “online services that are intentionally architected to support the massive distribution of files among strangers on a worldwide and unrestricted scale, while carefully limiting their own knowledge of which files are being distributed.”   But the inducement to criminal behavior goes well beyond simply building a tool that facilitates such activity. As the report explains, the typical cyberlocker business model includes receiving funds from multiple sources. One stream of income is derived from people who want to view stolen movies and pay a fee to access a cyberlocker site to do so. But to attract those subscription fees the cyberlocker needs content and so “people who post popular files are often paid by the cyberlocker through affiliate programs that reward users when their uploaded content is accessed.”

One could easily imagine a similar business model where the content was owned by the person posting it, perhaps seeking to gain a greater audience for that artist’s music, movies or photography. But in the case of the typical cyberlocker there is no such good intent. In fact, it’s just the opposite. With business models built to skirt the laws, the site owners try to ignore that rampant illegal behavior is taking place on their platform.

Another factor sets cyberlockers apart from cloud computing as the report states, “Personal storage and access are not the purpose: indeed, files not accessed for a period of time are deleted by most cyberlockers, and individual file synchronization among a user’s devices is not offered.” Cloud computing companies seek customers who will store their files online, and in fact the consumer understands they are paying precisely to have storage for their files. The transient nature of cyberlocker “storage” adds to the concern that in fact such business models are not at all for file storage, but rather are intended for file churning, quick use and removal of stolen material.

Most cyberlockers also demonstrate their apparent true nature in their resistance to following their own rules regarding repeat rights holder infringement on their sites. Such willful ignorance makes it hard to discern how the site is acting in good faith and as a responsible part of the Internet ecosystem. The point is further driven home as the report reveals that “the overwhelming bulk of files found on cyberlockers are infringing. Searches by NetNames for infringing materials stored on legitimate cloud services found negligible amounts of content.”

Cyberlockers, like many Internet sites, also make money by selling advertising. However, most does not appear on the Web site itself but rather is served up on a file download or during the streaming of videos. So cyberlockers generate revenue when their users download or use stolen property. In fact, they receive more than half of their revenue from advertising served up from a small number of advertising networks. The profit generated by these ads is quite substantial, in part driven by the household name brands that end up being advertised on these sites. Given the minimal start up and operating costs, and that the content the sites are “selling” is stolen from artists and creators, any income results in abundant profit.

Cyberlockers, as they attract, are designed, and then by willful ignorance, condone theft are little more than a planned attack on the Internet ecosystem. The entire ecosystem needs to respond. Success in the digital world is achievable when all parties understand that they cannot stand on their own, that in fact an economically thriving digital ecosystem requires good faith cooperation, within the bounds of the law, and with an eye towards what is best for the broader ecosystem. In other words, the distributed nature of the Internet is a fundamental part of its design, and no one entity, whether private sector or government, can control it so stakeholder cooperation is imperative for the success of all.

Pirates, mere thieves of artists and creators' inventions, have at the moment found a new place from which to operate – their own smelly lockers.


 

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