Secrecy and Darkness Surround Mysterious $900m Piracy Report

Anti-piracy reports that are commissioned by the entertainment industries are suspicious by definition, but the mystery that surrounds a recent study goes far beyond that. Despite being widely covered in the press, no journalist has actually seen a copy of the report. Even worse, the company that produced the in-depth report was registered only four months ago, and appears to be carefully hidden from the public.

Image is Loading....To convince the government that harsher anti-piracy legislation is needed, a coalition of Australian entertainment industry outfits – under the umbrella name Australian Content Industry Group (ACIG) – commissioned a study on the economical impact of Internet piracy. Although by itself this is nothing out of the ordinary, the lack of transparency and shadiness that surrounds it is stunning.

In late February the report in question was first mentioned in a speech by Attorney General McClelland, who was speaking at a conference on future directions in copyright law. At the time the public were not yet aware of the report’s existence. Journalists too remained in the dark.

The same could be said for the Australian Content Industry Group. The copyright coalition, which doesn’t have a public website, was virtually unknown at that point also. The group consists of a variety of entertainment industry outfits, most prominently Music Industry Piracy Investigations (MIPI), but until then had only appeared in a few recent government consultations.

That’s some background on the report, now let’s fast forward two weeks.

On March 6th, Australian newspaper The Age published a series of articles on Internet Piracy. Interestingly enough, the aforementioned report was at the center of the series that quickly made headlines. In particular the hit piece “Nation of unrepentant pirates costs $900m”, written by freelance journalist Neil McMahon, was picked up by dozens of other news outlets.

Curious about this seemingly influential report that dominated the headlines last week, we decided to take a good look at the company that conducted the research — Sphere Analysis. However, this was easier said than done.

Like the Australian Content Industry Group, Sphere Analysis doesn’t seem to have a web presence. With no website and no employees, not even a single reference to the company could be found. How could this be? Wouldn’t it be logical that such a big report would be written by a renowned company?

To us it seemed a little suspicious to say the least, so the first question that came to mind was: Who are behind Sphere Analysis?

With help from the Pirate Party, we found that Sphere Analysis is a business name registered to the ‘Sphere Property Corporation’. This company, which again has no web presence, appears to operate in the real-estate business. Not the type of business you’d expect to write an analysis of Internet piracy on the Australian economy.

Interestingly, ‘Sphere Analysis’ was registered less than four months ago, which means that immediately after it was registered they got this major contract. So who are these people?

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To find out more about the company, calls were made to several numbers associated with Sphere Property Corporation but again without results. All calls went to so-called ‘virtual offices‘, where either the company name didn’t ring a bell, or where the person who answered the line was not allowed to give out information.

Additional research eventually led us to an alleged employee of Sphere Property Corporation, Phil Nott, who lists himself as a Real Estate Consultant on Linkedin. No other employees were found and Mr. Nott has two Linkedin profiles, each with just one connection.

Aside from dealing with real estate, Sphere Property Corporation also seems to be connected to the investing company Sphere Capital Advisers and the recruitment business Sphere Associates.

None of the above companies has a website of course, so that’s pretty much where our Sphere Analysis trail ended.

Now that our interest in the report had been pushed even higher, we wanted to know how Sphere Analysis concluded that illicit movie, music and games downloads cost the industry $900 million a year as well as 8,000 jobs. Aside from a few key figures quoted in The Age article, the full report was unfortunately nowhere to be seen.

But we were not the only ones left in the dark. The journalist who wrote the original article for The Age confirmed to us that he wasn’t provided with the full report either. His article was based on information he was given by ‘someone’ he didn’t want to name without permission.

In an attempt to get a copy of the report, we then began emailing several outfits that fall under the Australian Content Industry Group, but without a response. In addition the Australian Pirate Party submitted a Freedom of Information request to the Attorney General’s office, but that is still being processed.

So here we are. After a week of sending emails, making phone calls, and digging through all kinds of information we were unable to get our hands on the full report. On the contrary, the mystery surrounding the report is even greater because of the vagueness surrounding Sphere Analysis.

This is worrying, especially when the Attorney General clearly indicates that it influences future legislation. The Pirate Party, who helped us in our quest for information, agrees.

“Where such reports or studies direct the policy direction of our governments, there is a democratic imperative that the information is made available transparently, that the methodologies are sound and adequately reflect reality,” said Pirate Party’s Rodney Serkowski.

“The Age article inferred that the Attorney General was basing the government’s policy direction on these research figures. This is a very, very shaky foundation for public policy — especially when there is a growing consensus that the institution of copyright requires radical structural reform, lest it becomes irrelevant,” he added.

And then there’s the issue with hiring the brand new and unfindable Sphere Analysis to conduct such an important report.

“This study, carried out by a virtually unknown entity with access only being granted to one journalist is highly dubious, even for the copyright lobby. Any study that gets reported as fact should be made available to the general public. The fact that it is not casts a question over its contents,” said Pirate Party’s Simon Frew.

So, will Sphere Analysis step forward immediately with a full copy of this apparent policy-setting report either to us or another news outlet? Is transparency the way forward or are we to blindly accept spoon-fed ‘statistics’ from faceless groups, regurgitate them as fact, help build credibility where none has been earned and then work the whole thing into law? That can’t be the way forward.

Update: Just to illustrate that we’re not the only one who question these practices, here’s a comment from researcher Guy Cranswick.

“In my capacity as a researcher I requested the report from one of the organisations in the so-called copyright alliance but no reply has come which is very suspicious because normally these organisations are very happy to send their expensive studies to known researchers and other media contacts.”

“As no one has see this report it goes to the core of journalistic credibility that a paper such as The Age could have published news about this uncorroborated survey.”

Piracy is Theft? Ridiculous. Lost Sales? They Don’t Exist, Says Minecraft Creator

The “piracy is stealing” argument raises its head in the media every week and is on the lips of anti-piracy outfits and copyright holders every day. To them, every unauthorized copy is a lost sale and another small dent in the company spreadsheet which, when added to a million others, will destroy it bit by bit. To the maker of Minecraft, however, its an opportunity. Piracy is theft? You must be kidding. Lost sales? They don’t exist.

Image is Loading....A quick look at the stats for the still-in-beta PC game Minecraft reveals a very healthy business indeed. At the time of writing the game has 4,880,757 registered users of which 1,469,513 (30.1%) have bought the game. In the last 24 hours alone, 36,618 people registered for Minecraft.

But while virtually all other game developers would be complaining about a near 70% of their market being eaten away by parasites who could not care less about the gaming industry or the fate of those who work so hard for their entertainment, Minecraft creator Markus “Notch” Persson sees the situation rather more optimistically.

Speaking during the closing session yesterday at the Independent Games Summit, Notch dismissed the notion that piracy is the same as stealing, or ‘looting’ as incoming MPAA chief Chris Dodd framed it this week.

“Piracy is not theft,” he said to those gathered in San Francisco. “If you steal a car, the original is lost. If you copy a game, there are simply more of them in the world.”

With this kind of reasoning one could be forgiven for thinking that Notch has pirate sympathies but since he’s a self-confessed member of the Pirate Party, that stance comes as no surprise.

“There is no such thing as a ‘lost sale’,” he added with a philosophy so Pirate-aligned it could be happily transcribed directly into any of their press releases. “Is a bad review a lost sale? What about a missed ship date?”

Notch was expected to talk about piracy for 5 minutes at GDC but in the event only managed about 3 minutes, describing the experience as “the scariest thing in a long time.” But while he may have only utilized 60% of his available time, he appears to have packed in value and left people wanting more, which coincidentally is his game developers philosophy too.

“If you just make your game and keep adding to it, the people who copyright infringed would buy it the next week,” he told those in attendance.

While anti-piracy zealots would insist that Minecraft has a 70% piracy or “lost sale” rate, Notch steadfastly sees his cup as rather more full than the raw percentages of his sales data may suggest, particularly by those viewing them from the perspective of an outdated business model. Indeed, despite this ‘pro-piracy’ stance, Minecraft’s position continues to improve.

Back in September last year the game had 658,429 registered players, that’s an increase of 4,222,328 in less than 5 months.

Currently 1,469,513 (30.1%) people have handed over money – in September that was 155,521 (23.62%) so its clear things are headed in the right direction. In the 24 hour period we examined in 2010, 4,910 people had bought Minecraft. Yesterday 10,381 did so.

“Piracy will win in the long run. It has to,” said Notch last year. “The alternative is too scary.”

If making truckloads of money is scary to Notch, he must be terrified right now.

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Hosting Company: Anti-Pirates Stole $138,000 In Kit & Hijacked Our Email

After seizing back equipment wrongfully seized by Dutch anti-piracy group BREIN, the owner of the servers which previously housed a huge warez topsite has spoken out. With claims that BREIN ruined his business, the man from Costa Rica says that the anti-piracy group stole $138,000 of his equipment and hijacked his email accounts. He will now pursue the matter with the police.

In January, Dutch anti-piracy outfit BREIN targeted one of the Internet’s largest warez piracy topsites. The site, known as Swan, was taken down by hosting provider WorldStream and in a cosy arrangement the company handed over the servers to the anti-piracy group with no legal oversight.

This week, with the support of Solv Advocaten, one of The Netherlands’ top law firms, server owner Alejandra Transporte SA, a small South American hosting provider that had nothing to do with the topsite, managed to get their servers back. Unlike BREIN, Alejandra Transporte did so through the legal system, obtaining authorization from the Court of Haarlem.

Now in an interview with Webwereld, Alejandra Transporte boss Craig Salmond has been explaining how the actions of BREIN have “ruined his business” by “stealing” $138,000 worth of his equipment.

“BREIN – with the active participation of WorldStream – effectively killed my business,” said Salmond. “My equipment was stolen and the keys to my reputation.”

Salmond said that Alejandra Transporte is a small ISP that takes the privacy of its users very seriously and says the facilities offered are similar similar to those provided by renowned bullet-proof hoster PRQ in Sweden. The manner in which Alejandra Transporte can accept payments from customers to maintain their privacy is also innovative.

“Customers can transfer money through Western Union but also, for example through a deposit at different poker sites,” Salmond explains. “So we reach people who do not have access to services such as PayPal or for privacy reasons do not want to use it.”

But of course, in January Alejandra Transporte went offline thanks to BREIN and WorldStream. Salmond says that when he called WorldStream, they refused to tell him anything, instead referring him back to BREIN.

“[WorldStream] are actually responsible for this,” Salmond told Webwereld. “WorldStream has a contract with me, I entrusted them to take care of and manage my property. They have grossly violated my trust and given my servers away.”

Disputing BREIN’s claims that they seized 12 of his servers (they took only 8), Salmond says that to know exactly how much capacity they had, BREIN must have gained illegal access to the machines. Furthermore, in correspondence with Salmond, BREIN themselves indicated that they somehow had acquired what is described as “a temporary account” on the servers before they were seized, leading to accusations that BREIN could have easily uploaded any material they liked, thus contaminating the investigation.

And the accusations don’t stop there.

Salmond says that following the seizures he could no longer access some GMail accounts since their passwords had been changed. He attributes this to BREIN having hijacked the accounts.

“What BREIN and WorldStream have done, can not be tolerated,” said Milica Antic of Solv lawfirm who are representing Salmond. “My client sees this as theft of his property. He has also suffered enormous financial and reputational damage.”

This case again appears to highlight the perils of copyright-supporting outfits such as BREIN – who have no official authority – carrying out investigations in a manner more fitting of governmental bodies such as the police or the courts.

Just this week the case against two administrators of the FileSoup BitTorrent site was thrown out. FACT – another Hollywood-backed private anti-piracy group with confusions as to the extent of their powers – had conducted their own investigations into the site but the evidence proved worthless to a criminal case and was dismissed.

And BitTorrent’s Oscar Goes To…

In a few days the Oscar winners of 2011 will be announced, including the award for the best movie of last year. Before Hollywood starts to celebrate, we take a look at the nominees in the Best Picture category to see which film would win if every download on BitTorrent counted as a vote.

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This coming Sunday, Hollywood’s biggest stars will walk the red carpet into the Kodak Theater for the Academy Awards ceremony.

In anticipation of the glamorous Oscar night, we enter the dark side of the movie business to find out which of the nominees in the Best Picture category gets the vote from BitTorrent users. In other words, which of the nominated films was downloaded the most on BitTorrent.

After crunching the numbers, taken from thousands of publicly available torrents, this awards race turned out to be an easy win for Inception. With a staggering 13,780,000 downloads Christopher Nolan’s movie was the clear winner.

The runners up for Best Picture based on the number of downloads are The Social Network and Toy Story 3 with 8,630,000 and 6,620,000 downloads respectively. Although these numbers are interesting, we have to note that the comparison is affected by release dates. Not all of the nominated films were released on BitTorrent at the same time, resulting in a bias towards older releases.

That said, there is a strong indication that Inception would remain the favored Oscar nominee among BitTorrent users if they were allowed to vote for a movie.

BitTorrent indexer BTarena has been running an Oscar poll for the last three years where visitors can vote for their Oscar favorites across various categories. In this poll, which went live just a few days ago, Inception is also in the lead with 33 percent, followed by 127 Hours and Toy Story with 12 percent each.

Aside from picking the Best Picture, BTarena visitors can also pick their favorites in the other categories. Currently, James Franco (127 Hours) is leading the Best Actor category while Natalie Portman (Black Swan) is leading as the Best Actress with half of all votes.

The founder of BTarena told us that he decided to start the Oscar torrents project after the OscarTorrents site went down in 2007. “Oscar winners should be voted on BitTorrent too, right? Not only by a few Hollywood people,” he said.

The big question, however, is what all these downloads and votes are actually worth. Except for the bragging rights, they seem to hold little predictive value.

Last year, half of the voting visitors of BTarena chose Avatar as their favorite, while the Academy members picked The Hurt Locker. In terms of downloads District 9 was the big winner on BitTorrent in 2010, so Nolan and the Inception crew shouldn’t get too excited.

In terms of Box Office revenue Inception has little to complain about though. With $823,576,195 in worldwide revenues the millions of downloads on BitTorrent didn’t get in the way of a healthy profit.

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