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Initial Project Statement

Internet piracy is a worldwide phenomenon that seems to have no end. Is there a solution? Is it a good or a bad thing? We will be taking a deeper look at internet piracy by talking about what internet piracy is, and the most popular forms that internet piracy can take. We will also be discussing what is being done to prevent it and the laws associated with it. Lastly, we will talk about the devastating effects on the different industries, mainly the music and movie industry.

Internet Piracy

[1] Are you an internet pirate?


What exactly is internet piracy? Essentialy internet piracy is class of copyright infringement and Motion Pictures Association of America (MPAA) specifically defines internet piracy as the downloading or distribution of unauthorized copies of intellectual property such as movies, television, music, games and software programs via the Internet [2]. For example, movie studios may send away DVD screeners for award consideration while the movie is still being shown in theatres and internet users (pirates in this case) could potentially get their hands on this release via the internet and download it. These pirates can not claim they own the rights to the movies they are downloading because the movie has yet to be released to the public for sale. Basically downloading any sort of media which belongs to some one else without reimbursement for that download is considered internet piracy and this phenomenom is growing at a very rapid pace, with MPAA studios losing an estimated 2.3 billion in movie revenues in 2005 [2][3].

Does this mean downloading is illegal? Not necessarily. Many legal methods are present for downloading various media off the internet, including movies, music, games, computer software, etc.. Online stores such as iTunes allows internet users to legally download copyrighted material because users are paying for the product and the appropriate proceeds make there way to the copyright holders. In fact, this method of purchasing media is actually more efficient as it reduces production costs (ie. making a hard copy of a music CD) and is more convenient for the customer, utimately satisfying both the producer and consumer. Furthermore, an internet user may hypothetically download media via a primarly pirated source, such as P2P networking or torrents, if that user already purchased the original copy of that media via a legal method. This phenomenom is known as "backing up" media and is a major presence under which numerous sites and other media outlets operate on, claiming they are merely providing access to media files which the user already owns. This "loop-hole" renounces the owners of such outlets, such as media sharing websites, from potential copyright infringement.

Internet piracy laws are different across the globe. For instance, copied music can be legally shared in Canada, provided it is not sold, but the same policy does not hold in the United States [8]. Therefore, the problem of internet piracy is a very complicated one and perhaps a complicated solution is what is needed to end it, or at the very least bring it under control.

Piracy Mediums

P2P Networking

[4] Users collectively host files.

Over the last decade the single most popular class of internet applications has been P2P ("peer to peer") networking, according to About.com. The main idea behind this sort of network is that it is decentralized and the files shared over the network are dispersed among all its users [5]. In this sense no singular location is responsbile for housing pirated files, thus making it both hard to place blaim of copyright infringement on a particular person/group and even more difficult to prevent the sharing of a particulat file because it is mirrored at so many locations.

Napster was the first P2P file sharing program that successfully connecting millions and millions of users to one another and laid the groundwork for numerous other P2P networking programs to come. However, Napster was a centralized network, and thus A&M Records was able to successfully win their case against Napster in court and shut Napster down. Initially this victory was seen as the end of piracy via P2P networking, but it only led to the creation of more clever P2P applications, such as Kazaa and eDonkey, both which applied decentralized approaches and other measures placing liability on all of its users, instead of the application creators themselves [6].

However, with all users acting as both clients and hosts of files on the network, privacy is vastly reduced. For instance, popular P2P client Kazaa has been known to distribute "hidden" attached applications along with their main program. Such programs include a "wake-up" switch which would allow the owners of Kazaa to turn on computers belonging to their users and using them to host their files and excess computing power to run applications for other users [7]. Furthermore, spyware is distributed alongside many P2P file sharing programs, further compromising the users internet security.


Torrents are a new form of peer-to-peer (P2P) sharing [9], which means that users connect to each other directly to send and receive files. There are several benefits of this new type of P2P file sharing which makes it appealing to internet users seeking pirated material.

Torrent sharing works through "swarming and tracking", where users download small bits of files from several different web sources simultaneously. "Swarming" involves breaking large files into hundreds of smaller 'bits', then sharing those bits across a 'swarm' (a group of computers who are simultaneously sending or receiving the same file). A "Tracker" is a central server that manages the BitTorrent file transfer process and helps users connect to a swarm. A "Seed" is a computer with a complete copy of a BitTorrent file [10].

Some of the pros of BitTorrent include its overall speed, cost and authenticity. BitTorrent is faster than downloading a large file from a single source because it avoids bottlenecking. It filters out corrupted files so you are downloading what you actually wanted, and a person can use BitTorrent sharing for free[11]. Conversely, BitTorrent does have it's flaws. While it is easy to find current, more popular files because of the large seed and user base, older and more obscure items are difficult to find because there may not be any torrent seeds of the file on the net.

Streaming Websites

Streaming technologies allow for transfer of data that will be delivered to the viewer in a steady stream in near real time [12]. Streaming allows data from a file to be opened and viewed while the remaining portion of the file is still transmitting. This technology has become very popular because it allows viewers to watch movie and video content directly off a website.

Several websites have utilized this user-friendly technology to broadcast copyrighted material. Internet users are able to access television episodes, music, music videos, and movies that are still in theatres on such streaming websites. It is legal to stream content for yourself to view somewhere else. Streaming it for everyone to view, however, is called broadcasting or distribution and is against the End User Agreement (EUA) and copyright laws[13].

File Sharing Websites

There are websites on the internet which provide a medium for file transferring directly on their sites. Users are able to upload and download files directly on such a site for little or no cost. There are 2 types of sites that offer this medium, known as FTP sites and Warez sites. FTP (File Transfer Protocol) [16] Sites allow users to upload and download files directly on a site. FTP sites are commonly used by software pirates because they usually support anonymous login and are efficient at transferring large files [14]. Warez sites are usually used to distribute commercial software. Crackers will break the software’s protection and then share illegal copies of the software online [15].

Auction Site Piracy

This is when people sell illegally burned copies of CD or DVDs or software on an online auction site, such as Ebay. [36]. This is getting to be a big problem and the Business Software Alliance has just shut down over 18000 sites, selling goods worth over $22 million. [37].

Piracy prevention techniques

"We're not antitechnology--we want technology to be smart enough to stop people from stealing our stuff,"

Ron Wheeler, senior vice president of content protection at the Fox Group [17].
Prevent Piracy[18]

While in the past, the distribution of the pirated software was limited to physical copy spread, today this need is eliminated by enhance network transfer rate and simplicity of access. Java bytecode and Microsoft’s intermediate Language are example of platform independent formats that is used for official allocation of the software and these formats can simply be reverse contrived and operated to bypass license checks. As well as, the algorithmic secrets can easily be stolen by the programmers, which enable them to achieve an edge on the competition by minimizing the production time. Statutory damages is an example of legal consequences followed by software piracy that costs up to 150,000 for each program copied [19]. However, frequently, users that unintentionally purchase and use an illegal piece of software are being fined instead of people that are responsible for piracies; because it is often hard to detect a deceitful programmer that has taken advantage of a trade secret [20].

To corroborate that conglomerates are not using unauthorized software, organization such as the Business Software Alliance (BSA) [19] performs inspection. However, the unidentified software pirate or immoral programmers are not identified by auditing. Diversities of hardware and software techniques have been projected to limit software piracy. While the hardware based approaches provide a higher level of security, there are more expensive for the software vendor and more discomfited for the user. Tamper-proof hardware and dongles are two examples of hardware based approaches. Cheaper and lower level of protection are code obfuscation, software tamper-proofing, and software watermarking that are examples of Software- based solutions [20].

Tamper-proof (hardware based)

Tamper-proof hardware provides a protected context and/or data storage to prevent piracy. The software performs in a secure environment that unable the pirate to achieve admission to the software and obstructs it from detecting the performance of the software. The tamper-proof hardware requires all the users to have this system and that brings additional cost which is one of the problems associated with this system [20].

Dongle (hardware based)

A dongle is a device that is dispersed with the software and control of it verifies the ownership of the software. The output of a secret function is calculated by a dongle that is connected to an I/O port. The software questions the dongle regularly and if the incorrect output is the result of the question, the software responds appropriately. There are two disadvantages associated with the use of dongles. Cost of the dongle and the sharing of a dongle with software over the internet is unfeasible [20].

Code obfuscation (software based)

Code obfuscation is a technique that protects the original functionality but through alterations make the application more complex to comprehend, which assist in the hindrance of reverse engineering. By obscuring the readability and understand ability of the program, recreating of the program will be less costly for the attacker than to reverse engineer the program [21].

Tamper-proofing (software based)

Tamper-proofing that is a software based technique uses different methods to prevent the modification of the program. License check program is an example of that that operates to ban the user from utilizing the software after a specific date. Tamper- proofing technique that does not allow modification, obstruct the user from removing the licence check and the software fails, if the license check is removed [20].

Watermarking (software based)

Unauthorized redistribution of software is prevented by Watermarking technique. Software watermarking which is executed in a similar way as media watermarking consists of a process which embeds a unique identifier into images, videos and audio by initiating errors unnoticeable to the human ear[22].To protect the software from illegal copying software publisher use digital rights management. Copy-protection techniques based on physical tokens are common forms of prevention [23]. However watermarking is less unmistakable to Digital rights management [22].

The watermark must be set in through methods other than the errors introduction, as the success of the software is dependent on the functionality of the software. A unique identifier is set into a program by the watermarking software. Watermark allows for a copyright notice when watermark exclusively appoint the author of program. However, watermark is a fingerprint when the legal purchaser of program is identified. The use of a secret key is one of the main important features of a watermarking system. The watermark merges into the program invents a new program through the use of the key [24].

Watermarking is either dynamic or static, which is a report of watermarking algorithms. The order series or the constant pool table in a Java application to insert a watermark, are features of an application that are accessible at compile-time and are used by static watermarking algorithms. Alternatively, to embed and identify the watermark, information is congregated during the completing of the application that a dynamic watermarking algorithm relies on. Easter egg watermarks, data structure watermarks, and execution trace watermarks are three extinctive techniques of watermarking [24]. In order to verify the effectiveness of static system versus dynamic algorithms, some researches are being in progression. Up until now it is known that diverse information is used by algorithms to embed the watermark [20].

Intellectual Property Law

International IP Law

Copyright laws have always existed but have weak international standards. The WIPO (World Intellectual Property Organization) established in 1967, is a specialized agency of the United Nations. It works towards developing an accessible IP system that will reward creativity and innovation while at the same time keeping the general public happy. This is obviously not an easy task in an era of increasing reliance on knowledge. Especially when accessibility to IP is necessary in order to stay competitive economically in globalized markets. Some strategic goals listed in the 2008-2009 program and budget where: Promoting a Balanced IP System and Realizing Its Development Potential, Progressive Development of International IP Law and Greater Efficiency of Management and Administrative Support Processes, among others.[38]

Canadian IP Law

In Canada the laws that do exist are out of date and need to be reformed. Canada has been working with the WIPO in order to change the existing laws. These reforms where expected by the organization in 2007, however any type of legislation has yet to be passed [45]. Canada's passive attitude towards reforming it's copy right laws have resulted in the US group IIPA (international Intellectual Property Alliance) wanting to black list Canada which would earn it a spot with the likes of Russia and China among the top piracy nations of the world [41].

The maximum penalty for being convicted in Canada today is a $1 million dollar fine, a 5 year jail term, or both [44]. If caught using pirated software the person with the rights to the product can stop you from using it immediately or can request money equivalent to the amount lost up to $20,000 for each individual program copied. This is in addition to being prosecuted by the government [39].

In terms of the ISP's, under the law as of right now they are not liable for the information that is being transferred through their networks. The subscribers can only be identified by their IP address, which is strictly numeric. An amendment proposed by the Canadian government was to still leave the ISP's as not being responsible for the file transfers through their networks, however if the ISP was given a notice by the rights holder to the material that was being pirated they would then have to forward the note to the subscriber and keep a record of all relevant information to the case. including the actual identity of the infringer [42].

American IP Law

On the other hand, the United States are and example of a country that has been much more active in it’s law reform on IP theft. Recently in 2008 president Bush passed a bill that at first increases resources for the department of justice programs to help fight IP theft. It was then moved from the department of justice to the executive branch, signifying how important IP protection is to the US. This bill is basically putting more FBI agents on the IP team to go after IP criminals. Infringers will also be subject to much harsher civil and criminal punishment [43].

How and Who Does Internet Piracy Affect?

Entertainment Industry:


Music is the most pirated thing on the Internet and according to a June 2005 report by Organization for Economic Co-operation and Development, Canada had the highest per capita rate or unauthorized file swapping in the world. [25]. Despite the many legal alternatives such as iTunes, many people are still choosing to download music and movies illegally, as 95% of all music downloaded are still being done illegally. [28]. Another factor attributing to the declining CD sales [29] is that people are just burning CDs from friends and not buying their own copy. And why would they, “when they can just easily get free music with a click of a mouse?” is many people’s logical thinking. A survey of a wide range of success of musicians, from newly formed garage bands to the musicians at the top of the music charts, most agreed that although downloading should be illegal, they are actually embracing the Internet, so they can reach more fans. [35].

It may be easy to jump to conclusion that Internet piracy is the primary cause for the declining sales. [27]. But researchers at Harvard University and the University of North Carolina don’t agree that Internet piracy is to blame. They tracked the sales of 680 albums over 17 weeks and came to the conclusion that Internet piracy is not to blame. They argue that not everybody who downloaded music would have bought the music if downloading was not available. So although there is a huge number of illegal downloads, not every single one of those would have contributed to CD sales if there was not way to obtain music illegally. [34].


The entertainment industry is one of the fastest growing economic sectors in the United States and the effects of Internet piracy are not subtle. In 2005, the entertainment industry lost $18.2 billion globally. It is already a risky business to get into, as writers or producers or whoever, won’t know for sure the outcome of their product, so if they know that their material will just end up being pirated, if it is reducing the incentive for people to continue to write more scripts or make more movies, etc. In the United States alone, it employs 750,000, from actors to everybody like make up artists and choreographers, so if Internet piracy continues to increase each year, it might have devastating effects. [26].

It is also a global phenomenon. The Indian film industry loses $4 billion each year and 800,000 jobs due to piracy. [32]. It is also a huge problem in China, where $2.7 billion was lost due to piracy in 2005. [31].

PC Games

Although PC games sales has been declining, it is not necessarily due to piracy. Companies such as Microsoft focus more time and effort and money on their XBOX consoles rather than their PC games so of course their PC games sales will be weak. Also attributing to the declining sales is that there is an increase in number of websites where you can legally download games. [30].

Software Industry

According to the software industry, which included Microsoft, Apple and Adobe, they estimated that they had lost $408 million in lost sales in 2002 and that 39.4% of all business applications were unlicensed. [33].


Does internet piracy have a postive or negative effect on the copyrighted media it infringes? According to the MPAA internet piracy squanders billions of dollars from movie revenues on a yearly basis [2]. However, the arguement can also be made that numerous consumers who may have not initially paid to see a particular movie in theatres, may do so because they liked the pirated version of the film they downloaded and watched on their computer. Furthermore, starting musicians are able to put their music on the internet for virtually no cost, giving them valuable exposure to the public and, which may launch their careers. It can't be fully disregarded, however, that the MPAA and the movie industry would make more money without pirated versions of their movies being leaked onto the internet. Where does this leave us? Quite simply internet piracy helps certain copyright owners, such as small-time bands, while harming others, such as big-time artists (Kanye West, Madonna, etc.). One thing is certain, however, and that is that internet piracy needs to be regulated because at the moment it is out of control [3].


Rajwinder Gill

Kayla Twomey

Maral Safarzadeh

Meng-Chin Lee

Graham Bartlett