And They Thought Napster Was Bad

Remember that scene in the Wizard of Oz when our heroes are making their way through the forest chanting "lions, tigers, and bears, oh my! . . . lions, tigers, and bears, oh my!" Well, the movie business is apparently chanting "hackers, pirates, and peers" as they work their way through the digital media jungle. A new report released online last week details just how scary the future may or may not be for the Hollywood suits.

The study, written by media consultancy Viant and titled "The Copyright Crusade," is an extensive inquiry made earlier this year to assess the potential impact of Internet file-sharing capabilities on the business models of copyright owners and holders. Over the course of the study, project leader Andrew Frank and his associates say, they explored the tensions that exist, or may soon exist, among peer-to-peer start-ups, pirates, and hackers; intellectual property companies; established media channels; and "unwitting consumers" caught in the middle.

The report explains the context for the battleground that has emerged and calls upon the various players to consider "new, productive solutions and business models that support profitable, legal access to intellectual property via digital media." As Frank puts it, "Piracy is not going away despite the decline in Napster usage."

Among the report's findings: On-demand distribution of media has arrived before many of the companies producing the content are ready for it. "This creates an opportunity for other entities to satisfy global demand where legitimate content is thus-far scarce and traditional distribution practices irrelevant."

It is also noted: that the digital copyright debate is playing out in five distinct theaters: legal, tactical, economic, educational, and architectural. "While intellectual property organizations appear to have legal and economic advantages in the digital copyright debate, cryptographically distributed databases (or CDDs) present a new kind of challenge to copyright owners. CDDs are de-centralized, prevent identification of their sources, and can be built from existing content and infrastructure."

And what about that hacker and pirate threat? The report states that "while much media attention has focused on the sharing of music files, our traffic measurements estimate that between 300,000 and 500,000 feature length films are currently being traded across diverse Internet channels each day. Approximately 22% of these files are traded via Internet Relay Chat, or IRC. There are roughly 1500 channels on IRC devoted to the sharing of feature films. These channels alone play host to approximately 70,000 simultaneous users."

What can the industry do? Viant suggests that content owners try to leverage new distribution channels, including peer-to-peer file sharing, by adopting an end-to-end content management infrastructure that packages and secures digital media for on-demand delivery. Frank notes that the large number of illegal trades doesn't necessarily mean the movie industry is losing substantial money, however. While "The Matrix," for example, is one of the Internet's most downloaded movies, its success at the box office and with DVD sales remain impressive.

Also outlined in "The Copyright Crusade" are pirated "wildfeeds," such as the Star Trek: Voyager finale Endgame, which appeared on a piracy channel a week before its legitimate broadcast. But in the end, the report finds that the digital copyright wars will be won by the rights holders because "copyright law is fundamentally well-established and rests on a solid history of precedents. With the disappearance of venture funding that many peer-to-peer upstarts need to finance their operations, they are in an extremely weak position to mount any kind of campaign, legal or otherwise." Also, Viant says that the coming year will see a wealth of new content service offerings, which will test a variety of distribution and payment models that "with proper marketing, are likely to generate considerable consumer enthusiasm."