Over the past decade there have been dozens of detailed reports researching the prevalence and effects of piracy.

With a wide array of results, it’s hard to draw uniform conclusions but as the research adds up, stable patterns start to emerge.

The Global Online Piracy Study, published by the University of Amsterdam’s Institute for Information Law (IViR) today, is an important contribution to this field.

The research is the result of extensive consumer surveys among 35,000 respondents, including over 7,000 minors, in 13 countries. Combined with similar data collected in 2014, it shows how online piracy habits are changing.

One of the main conclusions is that the number of online pirates is decreasing in most of Europe. This decline is visible in France, the Netherlands, Poland, Spain, and Sweden. Of all surveyed countries, only Germany saw a slight increase in the number of pirates.

In the surveyed countries across Europe, the piracy rate among Internet users is the highest in Spain, but this is topped by Brazil, Thailand, and Indonesia in the full sample.

Number of Internet users accessing content illegally

TorrentFreak spoke to Dr. Joost Poort, one of the authors of the report, who notes that pirates and legal users are largely the same people. In fact, roughly 95% of all pirates also consume content legally, and they typically spend twice as much as their non-pirating counterparts.

This doesn’t mean that pirates are rich, of course. In fact, the research shows that a higher per capita income is linked to a lower number of pirates per legal users. In other words, ‘poorer’ countries have relatively more pirates.

Lower income = more pirates

When people are asked about the reason why they pirate, the cost factor is also frequently mentioned. Pirating is free which is convenient for those who have little to spend. But does that mean that it also leads to a decrease in sales? Is piracy hurting revenues?

According to the research, there’s an overall negative effect of piracy on media sales. However, this doesn’t apply to minors. The latter makes sense, as that group has relatively little to spend anyway.

“This study confirms earlier studies in finding statistical evidence that illegal consumption of music, books, and games displaces legal consumption,” the report reads.

“However, the displacement coefficients are surrounded with substantial uncertainty. Separating these results between minors and adults suggests that displacement occurs for adults and not for minors.”

What’s also worth highlighting is that piracy doesn’t affect all media and entertainment types the same. It even benefits some revenue streams.

For example, the data suggest that every ten music albums pirated leads to three extra concert or festival visits. However, at the same time, it leads to a significant drop in physical album sales and digital downloads, while music streaming remains unaffected.

For video content, including movies, online piracy doesn’t appear to affect sales of physical copies or digital downloads. Here, however, cinema visits and online streams are severely impacted.

“For live concerts and music festivals, a positive sampling effect is found. For audio-visual content, no such sampling seems to occur for the cinema, which suffers from statistically significant displacement, as do digital streams.”

To give an illustration, the data suggest that ten downloaded movies would in general lead to four missed cinema visits.

While the research provides evidence for the negative effects of piracy, the authors don’t see any evidence that stricter copyright laws or enforcement against individuals are a good solution.

Instead, legal content providers should focus on making their work readily available for a good price.

“In terms of policy, obviously hunting down the industry’s largest customers is not the best of ideas. Rather, push for better availability, affordability, and findability of legal content. Affordability of large platforms in lower-income countries is certainly an issue,” Poort tells us.

“If you must do something in terms of enforcement, website blocking seems to be a much better strategy than going after consumers. There is some solid looking evidence for effectiveness in the UK.”

Finally, it is worth noting that this is a follow-up to a controversial EU-funded study. That report made headlines last year because the European Commission held it back. The latest version is funded by Google which had no such restrictions.

“This builds on the EU study that caught some traction because the commission was very reluctant to publish it. This time, Google financed it and respected our academic interests and independence so much better than the Commission did…,” Poort says.

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A copy of Global Online Piracy Study is available here (pdf).

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In many jurisdictions it’s common for those who commit wrongs online to be responsible for their own actions. In Germany, things haven’t been so straightforward.

Due to a legal concept known as ‘Störerhaftung’ (‘interferer liability’), a third party who played no deliberate part in someone else’s actions can be held responsible for them.

Perhaps unsurprisingly, this legal quirk has made itself known in a number of file-sharing cases where customers have used someone else’s WiFi to commit infringements.

While this was convenient enough for copyright holders (there was always someone to blame), it meant that few people wanted to operate open WiFi. This stood in stark contrast to the situation in many other EU countries where open WiFi networks are both ubiquitous and good for trade.

In 2016, the German government promised to do something about the problem by
ensuring places like cafes and hotels would exempt from costs for court proceedings when people use their infrastructure for things such as infringement.

In 2017, regulation was put in place to help facilitate greater access to open WiFi but the environment remained chilled. Despite assurances operators wouldn’t be prosecuted under German law, many believed that EU law might still hold them liable.

Last week, however, an important step was taken when Germany’s supreme court upheld the 2017 amendments to the Telemedia Act. The Federal Court of Justice (BGH) decided that the legislation is indeed compatible with EU regulations.

The case relates to an incident back in 2013 when a man challenged a company attempting to fine him for sharing a game online. DW reports that the IT worker had been running several open WiFi networks and Tor servers, one of which was used to download and share the game Dead Island.

In common with many copyright-troll style cases, game owner Deep Silver, a subsidiary of Koch Media, demanded that the man pay 1,000 euros to make a supposed lawsuit go away.

Acknowledging there should be a means for incidents of copyright infringement to be dealt with, the BGH found that WiFi providers can be told to prevent access to file-sharing services and even block entire websites, something which helps copyright holders prevent sharing of their works.

In 2016, in a case involving Pirate Party member Tobias McFadden, the European Court of Justice previously ruled that WiFi providers cannot be held liable for third-party infringements providing local courts or authorities can order WiFi providers to take measures to stop repeat incidents of infringement.

“[T]he directive does not preclude the copyright holder from seeking before a national authority or court to have such a service provider ordered to end, or prevent, any infringement of copyright committed by its customers,” the Court found.

The case ruled upon last week is now likely to head off to the European Court of Justice (ECJ) for a final decision.

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Protecting children in our society is one of the noblest things one can do. In both the physical and digital worlds, children need high-quality guidance.

While most of this support should come from parents and others closely involved with a child’s upbringing, groups like UK non-profit Internet Matters are there to provide advice when the adults around need help themselves.

This week the London-based group teamed up with the Mumsnet website to publish a guide titled “Internet safety and the dangers of digital piracy.” Perhaps unsurprisingly given recent trends, the report focuses on the apparent threats posed by “fully-loaded” set-top boxes running Kodi and similar applications.

“[I]f your children stream illegal content online, also known as digital piracy, it can expose them and you to cyber threats, disturbing pop-ups and unexpected harmful content,” the guide notes.

“The risks typically associated with digital piracy can take place on dodgy websites and preloaded streaming devices, sometimes known as Kodi boxes, but they can also occur through any number of illegitimate apps on mobiles, tablets or smart TVs.”

While some of the claims made in the guide are overly generic, it does make some very good points. Accessing content from illegal streaming sites rarely comes with the age restrictions available on services such as Netflix, for example, so parents should always be aware of the risks and act in a supervisory role.

“Explicit adverts may pop up and there’s no standard organization of age-restricted content, meaning 18+ films like Fifty Shades can sit right next to U-rated content such as Finding Nemo,” the guide notes.

The guide also correctly states that some fully-loaded devices can come with porn apps installed. Again, it’s the responsibility of the parent to ensure that their children aren’t left unsupervised to use such a device, particularly (given their child’s age) they were probably the one to buy it.

There are few complaints when it comes to the guide’s legal advice either. As part of the EU, streaming copyrighted content in the UK is illegal, as is marketing and selling pre-loaded devices configured for piracy. All ok so far, but then the guide mixes apples and oranges to spook the unknowledgeable reader.

“Whilst families haven’t yet been the target of police investigations, the consequences
of watching pirated content should be considered, both from a legal standpoint
and the inappropriate content children could be exposed to,” the guide notes.

“For example, a man was recently hit with an £85,000 demand for sharing his stream of a pay-to-view boxing match on Facebook with over 4,250 people.”

The kind of person who can get value from this kind of basic guide isn’t going to appreciate the differences between someone who streams to the public and someone who watches a stream at home. Simply reading “£85,000 demand” might be enough for them to throw their device in the trash (which may have been the intention), but perhaps we’re being a little bit picky here.

Statements like these, however, deserve no such leeway.

Like the majority of claims in the guide, this statement is offered without citing a source. So, we contacted Internet Matters to ask where this information had been obtained. Unfortunately (and despite having several days to do so) they didn’t respond.

The reason we asked is simple: we don’t believe either element of the claim is true. So, we approached some experts for their opinions. We asked two questions based on the precise wording of the Internet Matters claim.

1. Are pirate sites the most common source of malware infection? If not, what is the most common source/vector?

2. Does streaming pirated media put devices at direct risk of infection?

The first responses came back from respected security expert Mikko Hypponen from F-Secure.

“Pirate sites are not the most common source for infections, and it hasn’t been since the early 1990s. Today, the most common ways of getting infected are via malicious email attachments, browser plugins and extensions and web exploit kits,” he told TorrentFreak.

“Streaming pirated media is not a security risk, as long as the user does not install additional applications, browser plugins or codecs to stream.”

We also received a detailed response from Luis Corrons, Security Evangelist at Avast, who told us that the Internet overall is the most common source of malware, but websites are not the sole driver.

“If we look at some of the biggest malware outbreaks, like SQLSlammer, Blaster or the recent WannaCry attack, they all are network worms that have infected millions of computers without having to visit any webpage,” Corrons explained.

“The problem with pirate sites is that it’s hard to know who is behind them. If you visit YouTube or Vimeo, most people are familiar with their parent companies. But in the case of some obscure websites, there’s a chance they could have been built by cybercriminals looking to infect visitors, steal credentials and personal information.”

While it’s certainly possible that pirate sites can be a source of malware, Bogdan Botezatu, Senior E-Threat Analyst at Bitdefender, told us it is extremely difficult to assess the amount of malware on pirate sites, not least since many sites come and go on a regular basis.

However, he did indicate that when content from pirate sites is consumed via set-top devices, there’s less of a risk than when people access it via a web browser.

“Since these web services offer streaming through Kodi add-ons, the user never really get to interact with their home page, but rather with the Kodi dashboard. Most of these addons load content from [pirate] websites and stream it via Kodi. This dramatically minimizes the chances of the user interacting with rogue ads or deceptive links,” Botezatu explained.

So does Botezatu agree with Internet Matters when they claim that streaming pirated media itself “puts devices at direct risk of infection”?

“No, not directly, although I would not recommend anyone to resort to this,” Botezatu said.

“With extremely few exceptions where some vulnerabilities in the user’s video player could be exploited to run arbitrary code, media streaming is safe. I am unaware of any campaigns that use movie files for malware dissemination other than the Wimad Trojan back in 2012.”

The stance that streaming media is not inherently dangerous is shared by Corrons at AVAST.

“Streaming media does not pose any particular risk level of infection. It doesn’t matter if the media is pirated or not,” he said.

While it’s a bit of a shame that Internet Matters had to claim things that aren’t true to drive its point home, they’re by no means the only organization to do so.

Earlier this year, the Industry Trust for IP Awareness made a similar claim, noting that “Illegal streaming websites are now the number one propagation mechanism for malicious software as 97% of them contain malware.”

With assistance from Adam Kujawa, Director of Malware Intelligence at Malwarebytes, we debunked that statement back in February. It’s disappointing but not entirely surprising we’ve having to do so again several months later.

There are plenty of valid reasons for not letting kids loose with piracy-configured boxes, not least since they could see content that adults might prefer them not to. Notably, however, the exact same thing can be said about YouTube and Facebook, or even the Internet in general.

When anyone uses the Internet for anything there are security risks, so parents should always tell their kids to be cautious when they’re online, no matter what the device or content being consumed.

Surprisingly, the Internet Matters report – which has a strong focus on malware – doesn’t even mention installing anti-virus or anti-malware software to protect devices. Concerned parents should note that both can be obtained for free and are easy to install.

The Internet Matters guide (which despite the criticism does contain great advice on parental responsibility) is available here (pdf)

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Last year several major record labels, represented by the RIAA, filed a lawsuit against ISP Grande Communications accusing it of turning a blind eye to pirating subscribers.

According to the labels, the Internet provider knew that some of its subscribers were frequently distributing copyrighted material, but failed to take any meaningful action in response.

Grande refuted the accusations and filed a motion to dismiss the case. The ISP partially succeeded as the claims against its management company Patriot were dropped. The same was true for the vicarious infringement allegations, as the court saw no evidence that the ISP had a direct financial interest in the infringing activity.

The labels disagreed, however, and were not ready to let any claims go. In May they submitted a motion for leave to file an amended complaint including new evidence obtained during discovery. Among other things, they argued that Grande willingly kept pirating subscribers abroad, to generate more revenue.

While both sides were going head to head in court, the labels also attempted a peace offering. Court documents submitted this week show that the record labels offered a settlement agreement to the ISP two months ago.

Per the court’s scheduling order, Grande was required to respond to the offer within a month, but thus far a response has yet to come in. In a new status report submitted his week, the labels say they are still open to a settlement.

“Plaintiffs remain ready and willing to participate in a meaningful attempt to resolve the case without further litigation, including through a mediation, which Plaintiffs previously proposed to Grande and Patriot Media Consulting, LLC,” the labels write.

“Otherwise, if Grande and Patriot have no interest in discussing settlement, Plaintiffs will continue vigorous prosecution of this case to recover damages for Grande’s and Patriot’s extensive and harmful infringement of Plaintiffs’ copyrighted sound recordings.”

The details of the settlement offer remain unknown, but it’s likely that they will come at a cost for the ISP. Grande’s attorney informed the labels that more time was needed to prepare a thorough response, something the company also told the court this week.

“Due to the nature of Plaintiffs’ written offer of settlement, Grande notified Plaintiffs that it would require additional time to prepare and transmit its official written response.” Grande’s attorney notes.

The ISP now expects to have its response to the settlement offer ready next week. Given that it took nearly two months to reply, this will likely be more complex than a simple yes or no.

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The record labels’ letter is available here (pdf), and Grande’s response can be found here (pdf).

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