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Piracy 3.0: The Good, the Bad and Kodi (Guest Column)

The Good: Blockchain Joins the Fray

When Hollywood filmmaker Jeremy Culver releases his next movie – the romantic indie comedy “No Postage Necessary” – in June, he will take title to having the first feature distributed with the help of blockchain technology.

As Culver put it in a press release announcing his movie, “There are many advantages to blockchain distribution, including immutable proof of intellectual property rights, transparent royalty payments and, since all data on the blockchain is resistant to duplication, we can now envision a world where films are no longer pirated.”

Blockchain, for the uninitiated, is a trusted, open-ledger distribution process. Once transactions are recorded they become easily verifiable and permanent. No single party controls the information. No intermediaries are needed. Communications happen via peers maintained by a network of computers instead of a central node.

As Hollywood warms to the technology’s potential to develop a new, secure and decentralized distribution path, many big companies and startups are looking to make its “frictionless” micropayment models work for entertainment and media by reducing costs, increasing speed and transparency with a simple and automated transactional process.

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The Bad: Not So Fast

As is often the case with new technologies, some of Hollywood’s blockchain proponents are proposing a solution in search of a problem. While it could be useful in battling some distribution inefficiencies confronting the industry, it is ineffective as an anti-piracy tool.

That’s because humans are analog beings. Our brains cannot process digital signals, at least for the moment, anyway. To be viewed, the digital signals delivered over the internet to your television must be converted into analog in order for your eyes to see it and your ears to hear it.

And if I can see it, I can copy it. Remember, it only takes one copy to become a million copies on the internet. By the time the audio and video are digitally transmitted to a television or movie screen through blockchain or other technologies, it is simply too late to prevent a film from being copied and widely distributed on the internet.

In its ongoing battle against piracy, Hollywood employs both content protection technologies and anti-piracy measures. Many confuse the two terms.

While there is some overlap, content protection deals with delivering differentiated business models to consumers and protecting content against theft. Content is encrypted and can only be viewed when certain conditions are met. In its most basic form, conditional access and DRM (Digital Rights Management) are content protection technologies. For instance, if I pay my monthly bill, my cable service remains turned on. If I rent a movie, a DRM license triggers a 48-hour window for me to watch it. These measures, however, are primarily designed to keep “honest people honest.”

Once the content has been stolen and made available on the internet, anti-piracy measures kick in encompassing both legal and technological solutions. Studios use a variety of anti-piracy tools, ranging from takedown notices to playback control. The latter utilizes a highly effective standalone technology – an audio watermark – that is embedded within content and detected by devices to identify and prevent the playback of illegal content. (Disclosure: One company which I consult for, Verance, licenses playback control products.)

The Ugly: Kodi and Next-Gen Streaming Boxes

These measures, particularly playback control, will need to come into play even more now that new, legitimate set-top boxes are flooding the market that can be quickly and simply converted to provide access to stolen movies and TV shows.

Welcome Kodi, which takes piracy to a whole new level. Let’s call it “Piracy 3.0” – after the earlier eras of Piracy 1.0 for discs and Piracy 2.0 for p2p/torrents – by offering an open-source streaming media player giving users a simple, easy-to-use media center to organize and access all of their digital media content.

As a media center application, there is nothing illegal about Kodi software, which provides plug-ins for you to add YouTube and other OTT channels. Regrettably, however, there are also downloadable add-ons that take advantage of Kodi’s open-source platform. They enable users to get free access to copyrighted live sports, pay television series such as “Game of Thrones,” along with unlimited Hollywood movies and television shows.

To make matters worse, the piracy-enabling add-ons are fairly easy to install and use – made even easier by the abundance of YouTube instructional videos showing you exactly how to install them. One notable example is “Exodus,” an add-on that gives you access to all new movies and TV shows. It is an app that locates versions of the movie or television content for which you are searching across thousands of global Internet servers. Looking for 1080p? 5.1 surround sound? No problem.

Take-downs of these add-ons are especially ineffective because they are not “channels” streaming content in the traditional sense. Rather, they are pirate directory services to provide only Internet links. Get rid of one “channel” and there are 10 more just like it with the same exact links.

All of this has allowed the live TV piracy business to blossom into a multi-billion dollar industry. Want to pay below-market rates to cheaply see “The Walking Dead?” “Stranger Things?” “The Handmaid’s Tale?” No problem.

There are even pirate organizations that promise to sell you access to reliable, high-quality illegal servers via Kodi at prices far less than using legitimate U.S. services like Sling TV and PlayStation, or a VPN elsewhere in the world. According to a report released by Sandvine, 6.5% of U.S. households are stealing live TV service, costing service providers $4 billion in revenue per year.

What, if anything, can be done to stop proliferation of Kodi software/boxes? In official published guidance, the U.K. government declares legal streaming devices become “illicit” when sold “fully loaded” or “jailbroken.” At that point, the streaming devices are considered to be illegal and cannot be distributed or sold without violating copyright. Since only five people in the U.K. were arrested last year for selling fully loaded Kodi boxes modified to stream subscription football matches, the ineffective measures have proven to be no problem for those looking to obtain cheap pirated content.

Prophets or Profits?

That leaves just one card left for the industry to play as user interfaces become easier to navigate in the new Kodi era of Piracy 3.0: playback control. Against this backdrop, the ecosystem comprised of premium subscription, pay TV and live sports providers, and the smart TV makers that depend on their IP to help drive sales, can collectively respond by doing nothing and waiting for a new generation of piracy to emerge; continue to pursue shiny new but false anti-piracy prophets like blockchain technology; or try out a less sexy but reliable alternative which, over the past decade, has resulted in actual profits.

Mitch Singer, formerly Chief Digital Strategy Officer of Sony Pictures Entertainment, is an industry media and technology consultant.

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