“An Estimate of Infringing Use of the Internet”

“An Estimate of Infringing Use of the Internet”: "

Envisional, a Brit research firm specializing in protection against piracy, counterfeiting, and other intellectual property appropriation, was commissioned by NBC Universal to make An Estimate of Infringing Use of the Internet (Jan. 2011).

The report was released this week by ITIF, with a commentary by Daniel Castro on the Innovation Policy Blog titled Online Piracy Remains Intractable Without Government Action:

The top line finding is striking: an estimated 23.8 percent of global Internet traffic is attributable to copyright-infringing content. The number is staggering. In the offline world, this would be as if almost a quarter of the traffic on our highways was made up of criminals shipping counterfeit or illegal products. For policymakers this report should serve as a much needed wakeup call that the problem of digital piracy has not abated and demands a response on par with the magnitude of the situation

[N.B. Actually, 23,8% is low because Envisional excluded all porn, 'the infringing status of which can be difficult to discern.' But it is a truth universally acknowledged that there is a lot of porn, and a lot of that is infringing.]

The idea that the P2P world is one of kumbaya sharing is humbug. From the Report:

An examination of eDonkey, Gnutella, Usenet and other similar venues for content distribution found that on average, 86.4% of content was infringing and non-pornographic, making up 5.8% of all internet traffic.

Castro adds:

The Russian MP3 sites highlight another important aspect of online piracy—the reason piracy and counterfeit websites remain a serious problem is because they are profitable businesses. A new study published at the ACM International Conference on emerging Networking Experiments and Technologies (CoNEXT) looked at the publishers of copyrighted content on BitTorrent and found that “a very small fraction of publishers (~ 100) is responsible for a significant fraction of the published content (67%) and even more significant fraction of the downloads (75%).” The authors look further at the contributions of the publishers and find three distinct groups: fake publishers, altruistic publishers, and profit-driven publishers. Profit-driven publishers are responsible for roughly 30 percent of the content and 40 percent of the downloads on BitTorrent.

Castro recognizes that no enforcement system that relies on one-by-one lawsuits against individual consumers can work, and notes:

The private sector has an important role to play here as well. As ITIF described in a report over a year ago, many techniques can be used to make online piracy sites less profitable, including by 1) reducing their potential audience by blocking infringing websites; 2) cutting off their revenue by restricting access to financial transaction providers and ad networks; and 3) making it more difficult and expensive to upload illegal content (by using content identification software on file hosting websites). Some companies have made small, but positive steps, in achieving this without government action. For example, Google announced that it has started restricting some piracy-related search terms from its auto-complete feature and pledged to respond to DMCA takedown requests within 24 hours. However, clearly more needs to be done and all of the stakeholders in the Internet ecosystem, including government, need to work together to reduce online infringement.

The issues are by no means one-sided, and concerns about domain-name seizures and the proposed COICA bill are legitimate. No perfect solution is possible. A major difficulty, though, is that the free culture movement is applying a “precautionary principle” to protection proposals – if they can conceive of a problem, however improbable or limited, then the proposal must be rejected.

Even worse, the free culture movement casts the dispute as a zero sum contest in which content creators and content consumers are enemies, and what either gains, the other must lose. This is simply not so, since they are partners in developing institutional structures for content creation and distribution, and the market is the greatest institution ever devised to enable this partnership.

The good news is that the adults seem to be taking over as the stakeholders in the Internet are increasingly aware that this is a joint problem, and not a Hobbesian war of all against all. No one knows the optimum path, but one principle should be to minimize the role of government and maximize the role of the private actors.

Realistically, protecting against piracy and counterfeiting must be seen as a cost of doing business, and most of the responsibility and cost must lie with the affected parties. This is true in the physical world, where most protection is undertaken by owners, with the level calibrated to the risk and loss factors, and the government is basically a back-up to these private arrangements. Burglary is illegal, but people still install locks and alarms, and hire private security.

So it should be in the cyberworld, where the participants are best able to make the trade-offs and allocate the costs by contract, with legal rules providing default options against which the parties can bargain.

See the large version of the chart at page 56 0f the Envisional Report.

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