BitTorrent’s Ultra Music bundle asks fans to sign up for a newsletter to unlock additional content.

The first bundle released by BitTorrent comes courtesy of Ultra Music. Fans of dance music producer Kaskade will get a free MP3 of one of his tracks, as well as a trailer for the release of Kaskade’s upcoming tour DVD as soon as they download the torrent. An additional 10 minute concert video and an exclusive booklet can be unlocked by signing up for a Kaskade newsletter.

However, this is only one iteration of the bundle. Artists can also elect to use torrent bundles to directly sell additional content to their fans. From BitTorrent’s blog post:

“We don’t need another digital radio station. We don’t need another walled garden or standalone content store. We need ways to place value exchanges within the content itself – allowing these exchanges to travel freely, without barriers or limitations; allowing these exchanges to multiply as content is shared. Our goal is to move the interaction to where it matters; making it a property of the file, versus the distribution framework; giving artists real data about, and real access to, their fans.”

This isn’t the first time BitTorrent is trying to sell content to file sharers. The company launched a digital download store dubbed the BitTorrent Entertainment Network in 2007. The store featured DRM-protected movies from major Hollywood studios — and was largely ignored by the file sharing masses. BitTorrent eventually shut down the BitTorrent Entertainment Network at the end of 2008.

The company went through a bit or a rough patch in the following years, but has since recovered, and put a bigger emphasis on working with independent artists in recent months. Asked whether the company wants to take a cut when people start to sell their music or movies through bundles, a spokesperson told me that there are “no immediate plans for this.”

Piracy is exploding, and NBC is barely keeping up fighting back: That’s the message of the story, which details the work of the studio’s anti-piracy unit at length. Here’s the thing about that notion: It runs counter to some of the common narrative we’ve seen with regards to piracy in recent years. Piracy was supposed to be on the decline, we’ve heard time and again, with Netflix and others offering legal alternatives that are simply more convenient.

And there’s been numbers to back this notion up: In 2010, 19.2 percent of all residential U.S. Internet traffic during peak times was caused by P2P file sharing, according to traffic management company Sandvine. In the second half of 2012, that number was down to 12 percent. Netflix traffic, on the other hand, exploded during the same time.

So what’s going on here? Is piracy getting worse, is Netflix winning or is it all just business as usual? The answer probably depends on who you ask, but here are a few points worth considering:

• BitTorrent is still growing, just more slowly. Or in the words of Sandvine: “In absolute traffic level, BitTorrent has risen in volume by over 40%, but the application continues to exhibit a steady downward trend in overall traffic share.” That means people are still downloading growing amount of movies and TV shows via BitTorrent, but Netflix and others are just growing faster.
• BitTorrent’s not the only game in town anymore. Pirates have been using one-click file hosters and streaming sites hosted in countries with more legal flexibility for some time now, and streaming sites, especially, are starting to play an increasing role for TV show piracy.
• The world isn’t flat. Sandvine’s numbers in particular have shown a significant slowdown of file sharing in the U.S., but abroad, things look very different. The existence of release windows has in many countries led to a whole generation of TV viewers who watch U.S. movies and TV shows online, something that was echoed by the WSJ piece:

“Rick Cotton, general counsel of NBCUniversal, who oversees the company’s antipiracy unit, said piracy is a particularly big problem overseas. For example, he said that revenue for its Spanish home-entertainment unit declined 62% between 2009 and 2011, mainly because of piracy, and NBC shut it down.”

• Takedowns don’t equal downloads. That’s an important point that was somehow lost in the Wall Street Journal’s story. The number of takedown notices sent out by NBC isn’t exactly the best indicator for actual piracy levels. Sure, one could argue that the growing supply of pirated sources also indicates a growing level of demand for pirated content. However, the fleeting nature of piracy makes it hard to actually quantify any of this, in part because P2P file sharing works without hosted copies of content. It doesn’t really matter whether ten or a thousand sites link to the same torrent, shared by the same number of people — except if you want to send takedowns to all of these sites.
• Curious timing, anyone? The WSJ story remarked that studios hardly ever talk about their own anti-piracy efforts, but went on to say that “NBCUniversal gave the Wall Street Journal a rare peek inside the cat-and-mouse game its security team plays with suspected pirates.” Of course, one should note that NBC’s corporate parent Comcast just implemented a six strikes copyright enforcement scheme on its own broadband service last week. In light of that step, the story reads a bit like a plea for sympathy: Look, we had to step up our game because takedowns alone weren’t working!

So what’s the takeaway from this? For one, piracy is obviously alive and well, and it’s still a huge headache for studios like NBC. But Sandvine’s numbers also show that piracy’s growth can be contained, especially in markets with compelling legal alternatives. However, expanding these efforts is hard work that takes time, money and the will to change up some of Hollywood’s rules. Expect many more stories about piracy whack-a-mole in the meantime.

Image courtesy of Flicker user Steenbergs.

Case in point: Less than 15 percent of U.S.-based online video viewers use file sharing for their movies and TV show fix, according to Ericsson’s TV & Video Consumer Trend Report 2012 (PDF). Netflix on the other hand is used by around 55 percent. Hulu, websites of TV networks, iTunes and Amazon’s VOD offering are also more popular than piracy.

Compare that to Spain, where legal services are still in their infancy: Spanish online video users primarily access their shows and movies through “other means,” which likely stands for unlicensed streaming sites. File sharing is also hugely popular, and being used by more than 30 percent of all users. Licensed services on the other hand are far less popular, with none of them attracting more than 15 percent of all users.

So what should Hollywood do to fight piracy? One easy fix would be to license more content to Netflix and its competitors, and put up fewer restrictions on accessing this type of content.

However, in the U.S., the industry is actually moving into the opposite direction: Last fall, Fox began delaying access to its TV shows on Fox.com and Hulu.com for people who can’t authenticate themselves as subscribers of affiliated pay TV providers or Hulu Plus. It’s difficult to draw conclusions about the effect of these measures from Ericsson’s numbers, but it’s notable that both Hulu’s numbers and the use of TV networks’ websites went down when compared to 2011. Piracy and “other” means to access content on the other hand grew slightly.

It’s too early to tell whether the industry’s love affair with TV Everywhere is driving viewers back to piracy – but on a global level, the message seems clear: Instead of forcing countries to adopt ever stricter copyright laws, Hollywood would be well-advised to help services like Netflix and Hulu with their international expansion.

Photo courtesy of (CC-BY-SA) Flickr user Richard Masoner / Cyclelicious.

The judge’s ruling is significant because it rejects a controversial shortcut that a growing number of publishers and pornographers are using to target copyright infringers. In the bigger picture, the case may provide a clue into the ongoing delay in a long-awaited “six-strikes” deal between copyright owners and U.S. internet service providers.

Comcast stops a “shakedown”

In the Comcast case, a Caribbean-based holding company sought the names of subscribers it accused of sharing an adult video. The firm, AF Holdings, had obtained subpoenas in different states that required Comcast to supply the names of hundreds of these “John Does” based on their internet addresses.

AF Holdings sued Comcast for contempt of court after the internet giant told it to get lost by refusing to hand over the subscribers’ names and email addresses. In a court filing, Comcast said the subpoenas in question should be quashed because AF Holdings was abusing the legal system:

The plaintiffs have no interest in actually litigating their claims against the Doe defendants, but simply seek to use the Court and its subpoena powers to obtain sufficient information to shake down the Doe defendants.

According to Comcast, AF Holdings’ real agenda was to obtain the defendants’ email addresses in order to threaten and embarrass them into paying a settlement.

The court agreed with Comcast but did not provide written reasons. In a one-page order dated last week, the court wrote: ”The four subpoenas are quashed. Civil case closed.”

How the John Doe racket works

Comcast deserves credit for standing up for its subscribers but, unfortunately, they represent just a fraction of the tens or hundreds of thousands of Americans who are the target of similar intimidation tactics.

As Comcast points out in its court filing, lawyers for AF Holdings have filed 118 cases against over 15,000 “John Does.” But this is just the tip of the iceberg.

If you search federal court records for names like “Boy Racer,” “Patrick Collins LLC,” “Malibu Media” and other pornography-related corporations, you will discover thousands of other cases that are all pursuing a business model similar to that of AF Holdings.

The business model works like this: the pornography company files a copyright complaint against “John Does 1-150″ (where the John Doe names are to be filled in later). The complaint says computers that belong to the John Does are using bit torrent technology to share files and asks the court for a subpoena that requires an ISP (like Comcast) to identify the computers. The company then gets a court order like this:

The subpoenas shall be limited to providing Plaintiff with the true name, address, telephone number, email address, and Media Access Control address of the Defendant to whom the ISP has assigned an IP address

The John Does are now real people and the pornographers’ lawyers can contact them and demand a settlement. In some cases, the lawyers treat the order as a green light to begin a campaign of terror and embarrassment. Ars Technica, for instance, reported earlier this year about a rogue West Virginia lawyer who used outrageous methods to sue more than 22,000 John Does across the country.

The John Doe pornography cases smack of blackmail (one can imagine the settlement offers — “Mr. Smith, you can pay a $5,000 copyright fine to make this gay porn incident go away forever”) but that is just the beginning of the problem. There is also the question of innocent people getting swept into these indiscriminate lawsuits and facing threats, default judgments and more.

Worst of all, the John Doe-style litigation is now poised to go mainstream as not just pornographers but regular companies embrace it too. Publisher Pearson and its subsidiary John Wiley, for instance, are now suing thousands of John Does too.

The copyright concerns, however, are legitimate. John Wiley claims that tens of thousands of its “For Dummies” books are being downloaded without permission and it is probably telling the truth. The pornography industry too has a right to complain about unauthorized distribution of its movies. Like it or not, the law of the land grants the same copyright protection to Shakespeare in Love and Muffy the Vampire Slayer.

Content owners are entitled to protect their creations. Unfortunately, whatever efficiency the “John Doe” suits provide is simply not justified by the rampant abuse and legal disorder they produce. Comcast made the right decision to blow the whistle.

John Doe and “Six Strikes”

Comcast’s bold decision to stand up for subscribers comes at the same time that a “six strikes” copyright enforcement scheme was supposed to go into effect in the United States. The scheme is the fruit of a landmark agreement between content owners and ISPs who have reportedly agreed to take on a greater role in policing file sharing. Under its terms, repeat file sharers are to face an escalating series of warnings and penalties.

The deal, widely reported in 2011, was supposed to go into effect this year but the start date keeps getting pushed back. Recent reports predicted a July date but now that seems to receding too. In response to an e-mail query, a spokesperson for the Recording Industry Association of America wrote:

The dates set forth in the MOU are not hard deadlines but were intended to keep us on track to have the [Copyright Alert System] up and running as quickly as possible. No ISP plans to launch until we are confident that each of the key components of the program is ready and able to be implemented in a manner consistent with all of the goals of the MOU. We expect our implementation to begin later this year.

This is only speculation but the failure of “six strikes” (the RIAA disagrees with the terms, saying there is no “out”) to materialize may be tied to the tidal waves of John Doe lawsuits that are being unleashed across the land. Comcast and other ISPs, which are supposed to send emails to their own subscribers under the deal, may be wary of becoming associated with the more controversial tactics of AF Holdings and others. As a result, “six strikes” may be on hold until content owners or the courts solve the John Doe mess.

Comcast declined to comment on either the lawsuit or “six strikes.”

The French law with the funny acronym went into effect last year. It resulted in the creation of a large bureaucracy that has sent a reported  755,015 email warnings to those who take copyrighted content without permission. The warnings are supposed to be the first strike in a series of measures that culminate in citizens losing their internet connection — a prospect that has created great alarm but has not actually come to pass.

France’s former government claimed HADOPI reduced piracy by up to 66 percent but others questioned the statistics.

The Socialist party has long promised to revoke the measure altogether and the French press, where HADOPI has been a big deal, has already been speculating about when Hollande will actually kill the law.

In a report on digital issues confronting Hollande, French news magazine L’Express says HADOPI is the most important one and that the new president will implement a revised version of the law by 2013. In the meantime, the report suggests, the existing law’s enforcement measures will soon be suspended.

But at the same time, Hollande is beholden to the country’s powerful cultural interests. He has vowed to fight illegal distribution platforms that “distribute cultural content without participating in their financing.”

Overall, this suggests that the new French government will cease enforcement campaigns against individuals and instead target file-sharing websites as part of a nationalistic cultural campaign. The details — like much of Hollande’s plans for fixing France — have yet to be sketched out.

Meanwhile, the European Commissioner for a digital agenda has expressed discomfort with HADOPI-style punitive measures, and appears focused instead on creating more seamless licensing frameworks for content.

The United States, for now, is poised to go in a different direction with a “six-strike” regime set to go into effect this summer. The scheme is the result of a new collaboration between studios and ISP’s, and would result in a series of warnings and enforcement measures.

At the same time, copyright owners from publishers to porn studios have become more aggressive in using the courts to sue dozens of people at once through “John Doe” lawsuits in which a case goes forward and names are filled in later. Content owners have also been working with federal authorities to seize “rogue” websites.

Reports in the local media say that the country’s Ministry of Internal Affairs is looking to bring in fresh laws that would make service providers responsible for illegal filesharing between those using their networks.

According to Vedomosti.ru, the government is undertaking a consultation on the issue, and will report back towards the end of this month. If it goes ahead, the laws that criminalize the network could hit the statute books later this year.

The ministry is trying to document the “spread of illegal content in the local networks of Internet service providers,” Seralinov Jannat of the Ministry of Internal Affairs told Gazeta.ru.

According to him, each provider runs local file-sharing networks with which they are trying to attract users. Seralinov promised that the criminal penalties for the distribution of pirated movies and pornography to minors will affect not only subscribers, but also ISPs, but did not say how it would work precisely.

As the piece points out, it is the local filesharing networks that many Russian ISPs run that are really under scrutiny — services that officials claim allow subscribers to freely pirate and share material. This is a slightly different argument from cases that have happened in countries all over the world — such as Germany, Australia and elsewhere — which have generally ruled that ISPs are not liable.

In general, those providers accused of assisting infringement have argued that they are merely dumb pipes that push data around without discrimination. But in some countries, such as the U.K., ISPs are being co-opted (against their will) into tracking and punishing those believed to be illegal filesharers.

Still, it’s a significant move for Moscow to be making: Russia is now Europe’s largest internet market, and is growing at a rapid clip — yet still one of the cliches is that it’s a haven for crime and IP infringement of all kinds. Yes, Russia has a high incidence of online crime, and is home to a large cohort of internet fraudsters, plus the fuzzy legality of services like AllofMP3.com, a music download store which caused great consternation because it operated under a very particular interpretation of Russian law that most copyright holders thought was actually illegal.

But this has been changing over the last few years, as the country tries to legitimize itself in the eyes of other nations and organizations like the WTO.

That means the reaction of internet providers will be interesting to watch: will they shut down the offending networks, or make a stand?

In the UK, Ofcom has laid out areas that ISPs need to address to make it clearer to consumers how internet traffic is managed on those ISPs’ networks.

They included the requirement that ISPs will need to provide details to users on actual average network speeds, rather than peak speeds at optimal times; disclosure to users about when broadband speed may get intentionally reudced, for example, when a subscriber is using peer-to-peer downloading software (eg, BitTorrent); disclosure about any specific services that might get blocked.

In other words, the kind of information that ISPs should have been giving consumers for years already, but have not.

Although this sounds like bad news for ISPs, I actually think this can only be a good thing: some consumers will not pay attention to these details anyway, but those who do will have more information to make the right choice not about about which internet provider they choose to use, but also clarity on what kinds of services might be more difficult to use, and why.

ISPs should probably get on the case with this so that they can manage their messages well, before the regulator, probably more unflatteringly, does it for them: Ofcom says if ISPs do not start to disclose this information themselves, it will use its powers to “introduce a minimum level of consumer information under the revised European framework” that the UK accepted into law in May 2011.

Interestingly that very same European framework came up in a separate matter this week, when the European Commission named and shamed the 16 member countries that had yet to implement the new framework.

That framework (more details here) covers not only the kind of consumer information on broadband usage that Ofcom is now tackling in the UK, but also requirements for how users can switch mobile operators more quickly and easily, more requirements about safeguarding consumer privacy and details about growing infrastructure, including refarming radio spectrum to use it for wireless services.

The Commission says that it has now embarked on legal proceedings against 16 countries — Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, France, Germany, Greece, Hungary, Italy, The Netherlands, Poland, Portugal, Romania, Slovenia and Spain — that have to implement the rules, and will likely fine them for being late, although that can take years to work through the system so is perhaps not too much of a threat to those countries that have yet to do anything.

That list is a mixed bag: it includes both countries that you could classify as “mature” markets for broadband as well as those that are still at an earlier part of their growth and — in the case of some such as Greece, Italy, Portugal and Spain — have much more significant economic issues to worry about at the moment. Incidentally, the seven that have approved that framework include the UK, and those European rules are now providing the backbone to the regulations that Ofcom has now set out for UK ISPs.

In truth, it’s not all that surprising to see both France and Belgium on that list. For one, France has enacted some of the most stringent rules in Europe around the prosecution of private users based on their consumption of unlicensed media content, and is actually seeking to extend them. The so-called “Hadopi” law in France is a three-strikes-style system aimed at those who download illegal media files (eg free music or films that have not been licensed by their rights owners), and just the other day French president Nicolas Sarkozy said that he would like those rules extended to users who also stream such content.

Belgium, meanwhile, has been at the center of a heated legal case that people have been likening to the SOPA directives currently making their way through legal hoops in the U.S.

The specific case in question had to do with Belgian ISP Scarlet, which had been sued by Belgian content rights-holding group Sabam for allowing its subscribers to download unlicensed content on its network.

The case has been making its way through the courts for years already, but this now seems to be the definitive ruling: Sabam wanted Scarlet to implement a filtering system to block illegal content; but the court ruled that this would interfere with Scarlet’s business and also violates consumers’ privacy, based on the European directives that are being applied in the UK right now, and are being enforced by the Commission to implement elsewhere.

That seems to put an end to one way for rights holders to go after those who consume unlicensed, free content, but it doesn’t end the discussion altogether. According to the New York Times, the ruling does not affect whether ISPs can outright block certain sites on their network (as long as they tell consumers what they are) — as BT is currently being requested to do over the site Pirate Bay — or for specific violators to be cut off from their internet services (a la Hadopi).

That leaves the door wide open for years more of struggles between consumers, rights owners and broadband providers over the best way of making sure that when a song gets heard, or a film gets downloaded, someone, somewhere gets what’s coming to them.

The lawsuit filed last week in Manhattan federal court included a list of anonymous users and the titles they downloaded. The most popular title was Photoshop for Dummies, but other defendants opted for how-to books on calculus, home repair and day-trading. The downloads threaten the Dummies franchise which has sold more than 200 million copies since it was launched in 1991.

The case suggests that unauthorized file-sharing, which has long plagued the music and movie industries, is now taking a bite out of traditional book publishers as well. John Wiley claims that its Photoshop book, which retails for around $20, has been downloaded more than 74,000 times since summer of last year and that lost revenue from filed-sharing may harm its ability to publish and pay authors. The publishing industry has not been as litigious as other content sectors but that may now be changing.

“The problem affects book publishers as it affects all content owners, and with the growing popularity of e-books, various strategies to address illegal file-sharing, including litigation, will necessarily grow as well,” said Susan Kohlmann, a copyright expert at Jenner & Block in New York.

In this case, John Wiley sued 27 “John Doe” defendants residing in New York on the basis of their IP address — a number that identifies a given computer or router. The publisher is likely to replace the John Does on the lawsuit with the names of real people after it learns their identities from the downloaders’ Internet provider. Or it may simply go directly to the accused downloaders and ask for a settlement.

Content owners regard these type of lawsuits as a deterrent, but the tactic is a controversial one. Some argue the lawsuits are disproportionate to the alleged offense, while others note that an IP address does not establish who did the downloading.

On the other hand, John Wiley may feel it has no choice. The company’s reference book niche is already under threat from a growing number of web-based “e-how” resources, and the file-sharing trend could mushroom. Book files are easier to swap because they are much smaller than music or movie files, and new technologies have made it easier to scan and upload a book.

The John Does in the case traded the books on a Montenegro Ukraine-based site, called demonoid.me. The site shows a variety of copyrighted material still available for download, including ‘dummies’ titles such as “Business Ethics for Dummies” and “Sex for Dummies.”

The series began in 1991 with the publication of “DOS for Dummies.” John Wiley has since published more than 1,800 other titles in 30 languages.