Streaming via broadband and wireless networks is now the primary delivery method for video, audio, and other content. Copyright pirates have followed suit, deploying new hardware and websites that circumvent streaming services’ paywalls. Content creators have found some success asserting their copyrights through civil lawsuits, but a key ally in opposing large-scale, professional piracy—federal prosecutors—has been largely missing from that fight. Why? An unintended loophole in the Copyright Act imposes a lesser criminal punishment on infringement through streaming than on unlawful copying and distribution of digital downloads. It’s time to close that “streaming loophole.”
Rise and Impact of Unlawful Streaming
An October 2019 report noted that 46% of U.S. households subscribe to at least one streaming service. Covid-19 lockdowns have undoubtedly increased subscriptions. Data isn’t available for all services, but Netflix alone added nearly 16 million new subscribers in three months. Meanwhile, Hamilton hype helped fuel a rise in Disney+ sign-ups. It’s no surprise that subscription-service offerings dominate the recently announced 2020 Emmy nominations.
Content piracy has undergone a parallel evolution. “Kodi boxes,” slickly designed websites touting access to thousands of TV channels, and “subredits” full of hyperlinks for pirated streams are replacing torrent sites and other means of sharing illegal downloads. Streaming piracy shifted into overdrive during Covid-19 lockdowns, with illegal film viewing up 41% in the U.S., 63% in India, and 43% in the U.K.
Streaming piracy requires little financial investment and can generate huge profits. Before European police shut it down last year, one pirate service based in Spain yielded over €15 million in profits. As we noted in a 2018 post, infringement-device manufacturer Dragon Box claims to have sold over 250,000 units in a six-year period.
These criminal enterprises enjoy their profits on the backs of countless workers in the movie, television, music, and other content-creating industries. A June 2019 Global Innovation Policy Center report estimated streaming piracy caused TV and film studios over $29 billion in revenue and 230,000 lost jobs. Music industry revenues have continued their long slide, due in part to widespread “stream ripping,” the systematic conversion of lawfully streamed files to permanent digital files.
Multiple Tools Needed to Fight Streaming Piracy
Content providers have been moderately successful in Copyright Act litigation against streaming pirates. Alliance for Creativity and Entertainment (ACE), an industry coalition, settled lawsuits filed against the two makers of Kodi boxes, Dragon Box and TickBox, for $14.5 million and $25 million, respectively. The companies also agreed to disable the software that allowed device users to access pirated content online.
But much like the mythical hydra (and, for that matter, the Hydra organization made famous in Marvel movies), content creators have found that if you cut off one unlawful streamer, two (or many) more will take its place. For example, a Yahoo! Sports story notes that after the U.S. government seized 16 domain names of pirate sites, four belonging to First Row Sports appeared the following day at a new domain where the pirating continues.
For over a decade, U.S.-based content creators have sought a more potent threat of criminal prosecution to assist in their fight against streaming piracy. Government officials from multiple presidential administrations have also urged Congress to plug the Copyright Act’s streaming loophole. Those urging action include the current Register of Copyrights and the Justice Department’s Criminal Division and a Commerce Department task force during the Obama Administration.
The loophole is a product of a minor technological distinction and congressional inaction. Under the Act, when someone willfully downloads copyrighted content and permanently stores or shares the file, those actions constitute “reproduction or distribution” and can be prosecuted as a felony. Streaming, a process that involves accessing and viewing digital content over a period of time (but not downloading it), is considered an act of “public performance.” Infringement of a copyrighted public performance is a misdemeanor offense subject to much lower jail time and fines.
Since its passage in 1790, Congress has been updating the Copyright Act in reaction to new technology. Congress’s most recent amendments, completed in 1997, aimed at protecting digitized content that pirates were unlawfully downloading and distributing online. Slow internet-access speeds made streaming content nearly impossible, so streaming piracy wasn’t a problem in the 1990s. As a Regulatory Transparency Project analysis explains, “Congress expressed no intent to omit streaming from felony provisions. It is simply an omission based on historical happenstance.”
The conditions in America are ripe for continued expansion of entertainment-content streaming. Internet access will become even faster, and, at least for the foreseeable future, people will feel safer viewing entertainment from home than in theaters or stadiums. Universal Studios’ direct-to-streaming release of Trolls World Tour (which grossed $100 million in rentals), as well as Disney’s decision to put the Hamilton film on Disney+ are a sign of the times. So is AMC Theater’s agreement with Universal to allow that studios’ movies to start streaming a mere 17 days after theatrical release.
More streaming will mean more piracy. A Copyright Act amendment targeting large-scale streaming infringement won’t be a panacea in the fight against piracy, but penalties equal to those for illegal downloading could offer a very powerful deterrent.
Also published by Forbes.com on WLF’s contributor page.