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A New Kind of Anti-Piracy Scam?

Turns out it is possible to make money from having your products pirated. You put them out there yourself, and then sue anyone who takes them.

This is what, allegedly, is happening between a U.S. pornographer, a German anti-piracy organisation, and a firm of UK lawyers. Here’s how the scam—allegedly—works. The pornographer cuts a deal with the anti-piracy group to distribute about 300 of its movies. The anti-piracy group uploads them to peer to peer networks like e-Donkey, KaZaa, BitTorrent, etc.

People download them. Then the lawyers come in. They go to the ISP and demand names and addresses of downloaders. Then they send them nasty letters demanding £500 for "copyright infringement" or, else the likelihood of facing a high court action. Most pay up. Many have no idea what they’re talking about.

How do we know all this? Well, there’s a great piece on it by TorrentFreak, who explains it in some detail. The screenshot above is taken from what purports to be a contract [PDF] between the pornographer, John Stagliano, and the German anti-piracy group, DigiProtect. The document states clearly:

To achieve the purpose outlined in clause 1, LICENSOR grants DIGIPROTECT the exclusive right to make the movies listed in Appendix 1 worldwide available to the public via remote computer networks, so-called peer-2-peer and internet file sharing networks such as e-Donkey, Kazaa, Bitorrent, etc. for the duration of this agreement.

DigiProtect then sought and obtained a court order demanding that UK ISPs reveal

the name and postal address ("personal data") of the registered subscriber or subscribers to each of the Respondents' internet account or accounts that were assigned to the internet protocol address listed in Schedule 1 hereto, on the dates and times shown therein and which relate to the Respondents.

The rest—that the lawyers have been hired to essentially blackmail perceived downloaders--seems to be based on assumption. Techdirt has a good account here, and concludes:

In other words, it's quite clear that this has nothing to do with preventing content from getting on file sharing networks. Instead, they're specifically putting it there themselves, apparently hoping to get it as widespread as possible, in order to send out the threat letters more widely, so they can collect on the "settlements" from people scared that they're about to get sued. It's hard to see how that's not a massive abuse of copyright law.

Interestingly, the Guardian piece linked to above, which indicates the extent of the lawyers’ blitz, does not refer to the involvement of the copyright holder (the pornographer) or the suspicious looking contract. This is odd, since the article—the most recent on the topic, posted on Saturday—does refer to a Southampton-based law firm, Lawdit, which is charging clients £50 to fight the demands.

Neither does Lawdit refer to the leaked document in its own advice on the matter, made public on November 19. The lawyer involved is Michael Coyle, who has offered free legal representation in the past on a somewhat similar case.

The lawyers’ firm involved on behalf of DigiProtect is none other than Davenport Lyons, which has something of a reputation in this field.

Needless to say, knowing the IP address doesn’t indicate that the person in whose name it’s held is going to be the one downloading the file in question. Indeed, if there’s any illegality involved, it’s very unlikely someone would use their own Internet connection to do so. More likely they’d use a public connection or piggyback an unsecured WiFI connection.

The lesson: Secure your WiFi network. And don’t pay up if you got one of these letters and you didn’t do anything. If you did, find a lawyer who’s keen to pursue the possibility that this is not a simple case of an aggrieved copyright holder trying to recover its due, but someone who intentionally seeded P2P networks with its content in order to make a killing.

Serial Number Killers

I’ve been mulling the issue of registering and activating software of late, and while I feel users generally are less averse to the process of having to enter a serial number or activating a program before they can use it than before, I think there’s still a lot of frustration out there.

And I know from clients that it’s a balancing act between upsetting users and not encouraging those who seem unable or unwilling to pay to have a free ride.

It seems to me to boil down to this: Users who have paid for software expect to be able to use it out of the box. It would be like taking a bread maker home and having to call the manufacturer before you can start making bread.

What’s more, customers shouldn’t have to cope with silly technical problems that aren’t their fault. The example above is from my efforts to test Adobe’s latest version of Acrobat. The initial installation failed, and now it’s blocking the legitimate serial number it previously accepted—on the same machine. I still haven’t found a way around this problem, so my ardour for things Adobe has diminished a little.

The problem is that it’s fixable. I can yell at Adobe and hopefully I’ll get another serial number. But that’s not going to happen now—when I need it. It’s going to happen in 24, 48, 72 hours’ time. By which time I may feel like a mug for buying the software in the first place.

Here’s a possible solution: An automated temporary serial number that will work until a proper serial number can be available. This could be delivered online—say, a bot on IM, where you enter the serial number that’s not working and get issued a temporary one that does. Or a product could come with two serial numbers, one a permanent one and one a backup one.

Once customer service comes online and fixes the problem, the emergency serial number can be deactivated. As it lasts only for, say, 48 hours it would be relatively worthless to pirates. It will also push software companies to ensure they get back to frustrated customers within the allotted time or risk further wrath.

Either way, software manufacturers have got to make it easy for users to get around the limitations, and frailties, of the registration and activation process. Users should never be left in the lurch for even an hour if they’re a legitimate customer. It’s up to the software companies to address this issue. Perhaps something like this already exists, but if not I think an emergency serial number might be an answer.

Piracy Helps Some Countries Grow

One can only imagine Bill Gates' discomfort: Standing silently as the Romanian president told the world that pirated Microsoft software helped his country become what it is:

Pirated Microsoft Corp software helped Romania to build a vibrant technology industry, Romanian President Traian Basescu told the company's co-founder Bill Gates on Thursday.

"Piracy," Reuters quoted him as saying during a joint news conference to mark the opening of a Microsoft global technical center in the Romanian capital, "helped the young generation discover computers. It set off the development of the IT industry in Romania." True, but as Reuters points out, 70 percent of software used in Romania is pirated and salesmen still visit office buildings in central Bucharest to sell pirated CDs and DVDs.

(And to be fair to the prez, he did actually call piracy "a bad thing", according to another report by the AP, and said that "became in the end an investment in friendship toward Microsoft and Bill Gates, an investment in educating the young generation in Romania which created the Romanians' friendship with the computer.")

Actually I've long had the sneaking suspicion that (a) this is true. In places like Thailand, Indonesia, Malaysia, Philippines etc, the impressive and attractively priced range of pirated software available raises local savvy and interest in computing. When you can buy 100 software titles for the price of a Coke, what's not to like? And this brings me to (b): the likes Microsoft, I suspect, actually don't mind this situation too much, or at least may not hate it as much as they say.

I'm not the first to suggest this: Microsoft knows it can't sell legit copies of Windows or Office to every user in these places. So it gives away what it can, or at least sells at a steep discount, to youngsters. Businesses it tries to wrestle to the ground. The rest it writes off. Sure, it would be great if lots of people bought legit copies, but better that younger people are getting hooked on it, rather than to the opposition (Linux, Ubuntu etc.) One day they'll pay.

I've often wondered, for example, whether folk like Adobe and Microsoft actually aren't at cross purposes. Sure, they're both members of the Business Software Alliance, but whereas Microsoft know that it's better to get a nation hooked on Windows even if it's on pirate copies than to crack down and plunge it into the hands of the Open Source brigade, for Adobe it's a different story. No one is really going to buy a copy of Photoshop ($400-$700), so the idea of getting them hooked doesn't really count. Better to crack down as hard as possible, so those few who really do need it cough up. Better 10 legit copies sold now than 100 possible sales later.

Is that why Bill didn't say anything?

Are You a Pirate?

In my town piracy, I suspect, is the norm. But in an effort to to see whether that's true, and how that compares to other places, I've launched a survey, which I hope you, dear reader, will take a few minutes to complete.

It's entirely anonymous, I'm not connected to the industry, and I have no intention of kowtowing to anyone, except perhaps my wife.

The questions are kind of designed to find out how widespread consumption of pirated content is and where, if any, the moral boundaries lie.

Thanks in advance for any time you spend on it. Feel free to pass it on to a friend. If you'd like to be added to a list of exclusive Loose Wire Surveyors, with the chances of free prizes and glory, drop me a line.

Needless to say, the irreverent tone of the survey is not meant in any way to condone or encourage piracy or the consumption of pirated materials. And this survey has been created using entirely non-pirated software. So there.

Oh and if you came here by mistake looking for pirate outfits, you can buy 'em here. (No the survey isn't sponsored by them, although that's a great idea.)

Playing the Software Pirates at Their Own Game

In the last post I prattled on about how Microsoft et al didn’t get it when it comes to dealing with piracy. So what should they do?

I don’t know what the answer is, but I’d like to see a more creative approach. After all, these pirates have an extraordinary delivery mechanism that is much more efficient than anything else I’ve seen. Why not try an experiment whereby a user who buys counterfeit software, either knowingly or unknowingly, has six months’ grace period in which to ‘activate’ a legitimate version? This could be done online by a key download and a credit card. No big software downloads — prohibitive in a country where Internet speeds are glacial — and no shipping (time-consuming, and often not possible from most suppliers). Instead, a downloaded widget would scour the program the user wants to ‘activate’, check its version and integrity (I’m not talking values here, I’m talking software) and install whatever patches are necessary (hopefully done without need for a full upload.) After that, the software is legit.

Software vendors would argue that this encourages piracy. I would argue: if the user can’t buy a legitimate version of your software in the country they live in, either online or offline, should they just not use your software? Or

Secondly, I would argue that this approach is not far removed from the shareware try-before-you-buy approach whereby users get to play with software for free for 30 days or so before buying. Of course, if they want to, the user could just not pay and continue using the software. But I suspect that they weren’t the kind of customer who was going to pay anyway, so you can hardly count them as lost business.

Lastly, it may be possible to use this approach to disrupt the economics of the pirate software network by embracing the shareware model. Instead of restricting distribution of your product, you flood the market with shareware versions of your software, allowing users a grace period in which to try out the software. If users can find trial copie of OneNote or PhotoShop or whatever free in every computer shop they visit, why would they bother buying a dodgy pirate copy that may or may not work? Sure, the free version needs paying for at some point, but that’s the point. The piracy market exists in part because people don’t have access to legitimate software — certainly not the range of legitimate software — in these places.

OK, that’s not always true. There will always be pirates, and there will always be people who buy from pirates, even if the legitimate software is available next door. But I suspect a lot of people who buy pirate software buy it to experiment, to try out software. Indeed, someone living in a place like Indonesia is likely to be familiar with many more software programs than someone living in a non-pirate-infested country. It’s not that these people want this software desperately, nor that they would buy it all full price if they had to. They buy it because the price is so low, they may as well buy it and try it. Do they keep it installed? In most cases, probably not. But the calculation for Microsoft et al should be: How many of these people would buy this software if, after trying it, they liked it?

Finding the answer to that question will give you an idea of the real losses Microsoft and co are incurring in lost business. It should also make them realise that not doing a decent job of making their software readily available in a place like Indonesia — at a price that reflects the purchasing power of the local consumer — is creating this highly efficient, but highly parasitical economy in pirated software. If they can reach their customers through that economy, or bypass it with widely available shareware versions of their programs — then they may stand a chance.

The Tilted Software Piracy Debate

Software piracy is a tricky topic, that requires some skepticism on the part of the reporter, though the media rarely show signs of that in their coverage. Here’s another example from last week’s Microsoft press conference in Indonesia, one of the prime culprits when it comes to counterfeit software:

JAKARTA (AFP) - Software piracy is costing the Indonesian economy billions of dollars each year and is stymieing the creation of a local information technology industry, a Microsoft representative said.

There is some truth to these statements, but it’s not really what Microsoft is interested in. First off, is it really the Indonesian economy that’s suffering because of piracy? One could argue the Indonesian economy is largely built on pirated software, as a kind of subsidy (like gasoline, which was until recently heavily subsidized.)

Secondly, when did Microsoft ever support the creation of a “local information technology industry”? That’s not their job — and I don’t blame them — but why hide behind this kind of argument? (Interestingly, there’s a lively Linux development community in Indonesia, but I’m not sure that’s what Microsoft is talking about here).

Some 87 percent of computer software on the market in Indonesia in 2005 was pirated, Microsoft Indonesia's Irwan Tirtariyadi said citing a study from the Business Software Alliance, an organisation representing manufacturers.

That’s probably about right. It’s huge. It’s hard to find a company that doesn’t use pirated software. You can buy pretty much every program ever written, and I don’t know of a single person who uses a computer and who doesn’t buy pirated software. This is not to condone it, but I also only know of about half a dozen shops in a city of 12 million people which actually sell legal software. And forget buying online: Most companies won’t ship to Indonesia.

Lax law enforcement and widespread corruption contributed to Indonesia clocking in with the fifth highest rate of software counterfeiting in the world, he said, after Vietnam, Ukraine, China and Zimbabwe. "I've heard when police come to a shop (selling pirated software) it is closed. Basically information is leaking and this is an indication of the quality of law enforcement in action," Tirtariyadi said.

This is part of the problem, it’s true. The malls are full of shops openly selling pirated software, often on the ground floor near the entrance, with policemen patrolling by. When a raid is planned, everyone knows about it, the shops quietly shut, cover their wares in tarpaulins and keep their heads down for a day or two. (Sometimes it’s hard to tell whether the imminent raid is from the police or some Islamic group cracking down on the counterfeit DVD stores, which often sell software too.)

Tirtariyadi told a gathering of foreign reporters that if piracy dropped by just 10 percent, it would add 3.4 billion dollars to the economy, according to figures cited by the International Data Corporation.

Could someone please explain to me how that figure came about? To me it sounds suspiciously as if the argument is based on a false premise: That everyone who buys pirate software would pay full price for legitimate software if there was no alternative. Let me think about that: $3 for brand new software — often a collection of software — against $50–500 for the same thing, in a country where half the population earn less than $2 a day. I don’t think so.

Counterfeiting also inhibited an "inventive culture" and the development of a strong local information technology (IT) industry here, he said. "Some students like to create new software but three months later they find it's pirated," he said.

True, there is definitely an inhibiting factor. I wrote a year or so ago about a guy developing a machine translation program which wasn’t bad, but which required him to spend at least half his time developing anti-piracy features in the software. But I still think this is a disingenuous argument. Let’s face it: Microsoft (and Adobe, and all the other BSA big boys) are mainly interested in quashing piracy of their products and building up their market share; I don’t see much sign of Microsoft actually nurturing this “local IT industry”.

Indonesia, Southeast Asia's largest economy, has less than 100 IT companies, whereas neighboring Singapore, with a far lower rate of piracy, has between 400 to 800 such companies, he added.

This is not a useful comparison. Singapore is a highly developed country and one of the world’s technology hub. Though, interestingly, it’s not really a locally creative industry, with the exception of a couple of big names.

All this makes me realise that Microsoft et al still don’t get it. Piracy is massive; they’re right. But you don’t deal with it by sponsoring misleading press conferences and well-telegraphed police raids.

Microsoft, Pirates Keys and SP2

There seems to be some confusion about who will be able to install the Windows XP Service Pack 2 (SP2) so I thought I would get it from the horse's mouth. Microsoft hasn't done itself any favours by backtracking on public statements, but here for what it's worth is their official position as of today:

We expect that nearly all Windows XP users, running genuine or pirated Windows, will have access to the security technologies in SP2. The same customers that were blocked from installing SP1 - those that have used a small set of legacy pirated product keys - will be blocked from installing SP2.

The same customers that were blocked from installing SP1 - those that have used a small set of legacy pirated product keys - will be blocked from installing SP2. Although SP2 checks for the legacy pirated product keys that SP1 checked for, we are not expanding the list with this release, and most of the pirated keys it checks for are no longer being used. We want to make sure that the broadest number of people has access to SP2. The nature of malicious attacks on computer users is constantly changing and we will continue to evaluate how we deal with security updates for pirated versions of Windows to best protect our genuine Windows customers.

So now you know. I asked for a bit more detail on these pirate product keys, and while I don't have a list, Microsoft has this to say:

There is a set of legacy pirated product keys that was blocked for installation of XP SP1. These keys have been blocked from service packs and Windows Update for many years and we believe are no longer being used by pirates. Users with the legacy pirated product keys who attempt to access Windows Update to get SP2 continue to be notified that they cannot access Windows Update and [are] provided similar information via the "How to Tell".

Finally, when can we expect SP2?

Microsoft Windows XP SP2 has been rolled-out-to-manufacturing (RTM) and will be localized into 25 different languages over the next two months and distributed to system manufacturers, enterprise customers and consumers through downloads, retail distribution, free CDs, and on new PCs. The easiest way for most customers to ensure they receive SP2 when it releases in their language is through enabling the Automatic Updates (AU) feature in Windows XP today. Customers who enable AU now will receive the latest security updates for Windows XP along with updated installation software that will optimize the download experience of SP2 and all other updates to Windows XP. We expect to roll out SP2 through AU to approximately 100 million over the next two months.

OK, so now you really do know.