Wednesday, March 31st, 2021

Time	Event
1:31p	Pirate Streaming Site Revenue Down, Despite Audience Growth & Innovation In 2019, BREIN, the MPA and ACE teamed up to take down Moonwalk, a pirate CDN system that provided back-end services to large numbers of pirate streaming sites. Moonwalk’s business model was of particular interest since, in addition to providing back-end services, it also supplied huge volumes of pirated content, including more than 26,000 movies and 10,000 TV shows to around 80% of Russian streaming sites. In the wake of the enforcement action, more ‘pirate’ CDNs shut down but these were not the only players in the market, with others remaining operational. Jolly Roger’s Patrons and Beyond Last summer, cybersecurity firm Group-IB published an interesting report into the activities of players in the ‘pirate’ CDN market, detailing how platforms including Collaps, HDVB, and VideoCDN, offered an all-in-one solution by providing content, advertising and embedded video players to pirate sites. Today, the company follows up with a new report titled “What Makes Jolly Roger Sad”, revealing that revenues for pirate entities in the video space are down for the third successive year. In 2017, revenues for players in the pirate video streaming sector were estimated to be around $85m, reaching a peak in 2018 at $87m. In 2019, the year that BREIN, the MPA and ACE took legal action against the major players, the market took a significant hit, with revenues down 27% to around $63m. In 2020, the revenue generated by streaming platforms contracted again, albeit by a smaller amount. With a 7% drop when compared to the previous year, revenues stood at an estimated $59m. According to Group-IB, several factors were at play. “Online pirates were not quite successful in fully restoring the video content database after the elimination of the CDN big three. After Moonwalk, HDGO, and Kodik were shut down, the geographical scope of pirate CDNs has been quite limited, with three locations: the Netherlands, Lithuania, and Russia (Mnogobyte/ZeroCDN),” Group-IB explains. “Furthermore, they have lost the advertising profits and found themselves in a competition for viewers with legal online streaming platforms which were able to increase their audience during the pandemic.” Boost For Legal Streaming Platforms, Pirates Continue to Search Citing research carried out by TMT Consulting, Group-IB says that during the height of the coronavirus pandemic in 2020, the number of people using legal streaming services reached 63 million viewers, an increase of 17% over the previous year. This led to legal streaming services generating revenues of around $365.7 million. However, even with this increased interest in legal supply, pirates were still keen to find content for free, with search engines such as Yandex (90% of traffic) proving a popular port of call. “The number of searches in popular search engines in Russian for free trending movies and TV shows on illegal websites has also grown,” Group-IB notes. “The figures show a 12% increase compared to 2019, amounting to 11.8 billion search queries (compared to 10.5 billion in 2019). The number of searches for illegal content rose to a record-high 1.4 billion intentions in April 2020. At times, servers streaming illegal content failed to deal with such a high influx of viewers.” Pirate Services Take Revenue Hit But Continue to Innovate Following the removal of Moonwalk, HDGO, and Kodik from the market, plus increased pressure from financial institutions and regulators, Group-IB observes that advertisers began to show less interest in the pirate market. In 2020, the average CPM (cost per mile) fell by 16% to $5, down from $6 a year earlier. The replacement ‘pirate’ CDNs also failed in their efforts to properly fill the gap in the market left by the ‘Big Three’. According to Group-IB, even when the content offered by the current eight largest CDNs is added together, they only manage to offer around 50% of the content offered by Moonwalk, HDGO, and Kodik. That being said, pirates didn’t stand still. In 2020, Group-IB says that pirates innovated by integrating CDNs with fully automated streaming services. “The first mass prototype was the Cinemapress script and about 400 pirate streaming services were based on it. In April 2020 Cinemapress was replaced by Yobobox with its 250 domains discovered so far, which — unlike its predecessor — is entirely free and integrated with Collaps, one of the largest CDNs,” the company notes. Another innovation involves techniques to reduce the effect of ‘pirate’ links being deleted from search engine results as required by the country’s anti-piracy memorandum. While millions of infringing links are being deleted by search engines such as Yandex as part of the agreement, which in theory should make pirated content harder to find, pirates are adapting. “Experts’ biggest worries are tied to the fact that in 2020 Russian-speaking video pirates learned to quickly detect the links eliminated by the anti-piracy memorandum, to generate duplicates in real time (using alternative URLs), and use mutating links (scripts for automatic changing of paths in links) resulting in a decreased effectiveness of countermeasures,” Group-IB notes. Both Legal and Illegal Services Have Increased Their Audiences Another interesting detail in Group-IB’s report is that, while pirate sites are less profitable and legal services are doing better than ever, pirate sites are still growing their audiences. “In 2020 both legal and illegal streaming platforms significantly increased their audience but failed to get the maximum benefit out of it”, says Dmitriy Tiunkin, Head of Digital Risk Protection Europe at Group-IB. “We witnessed pirates recover from the three largest CDNs being shut down. Pirates are restoring their technical capacity and increasing opposition to copyright owners. Some digital pirates use mutating links, domain changes, and decentralized CDNs to bypass the anti-piracy memorandum, thereby undermining attempts of manual regulation and anti-piracy techniques that were relevant several years ago.” ‘What makes Jolly Roger sad. The state of video piracy in Russia’ can be found here. From: TF, for the latest news on copyright battles, piracy and more. (Comment on this)
5:51p	Russian Operator of YouTube Rippers Must Face Piracy Claims in US Court The major record labels believe that YouTube rippers are the most significant piracy threat on the Internet. These sites, which can be used for a variety of purposes, are used by some to convert free YouTube videos into MP3s. The Legal Battle Thus Far Three years ago a group of prominent music companies took the operator of two of the largest YouTube rippers to court. The labels, including Universal, Warner Bros, and Sony, accused FLVTO.biz and 2conv.com of facilitating copyright infringement. While many foreign site operators choose not to fight back, Kurbanov dug in his heels. With help from a seasoned legal team, he filed a motion to dismiss arguing that US courts don’t have jurisdiction over a Russian site operator who conducts his business outside of the US. Initially, the district court agreed with this defense, dismissing the case. However, the record labels successfully appealed, and after Kurbanov’s petition at the Supreme Court was denied, the case is now back at a Virginia district court. Remaining Question The Court of Appeals for the Fourth Circuit previously determined that Kurbanov purposefully directed activities at Virginia. This means that the district court only has to decide whether it is “constitutionally reasonable” to sue the Russian site operator there. In an order released yesterday, US District Court Judge Claude Hilton concludes that it is indeed reasonable to continue the case in Virginia. As a result, Kurbanov’s motion to dismiss is denied. In his opinion, Judge Hilton considers the burden of litigating a complex lawsuit on foreign soil, agreeing that this burden is indeed great because of the geographic limitations. “Defendant Kurbanov resides in Rostov-on-Don, Russia, more than twenty hours by plane from the Eastern District of Virginia. Defendant does not have a visa to visit the United States, and the nearest U.S. embassy for him to obtain one is a twelve-hour drive from his home,” Judge Hilton writes. Burden is Substantial, Not Unreasonable While the court agrees that the burden is substantial, it’s not necessarily excessive or unreasonable. The extensive litigation history suggests that the operator can still fight the case through his US-based legal team. “Judging from the many filings defense counsel has made in the present case, Defendant appears to maintain satisfactory communication with his counsel. There is nothing to indicate defense counsel could not adequately represent Defendant’s interests in the United States going forward.” Virginia’s Interest In addition, Judge Hilton stresses that Virginia has an interest in resolving this dispute. The Court of Appeals for the Fourth Circuit found that Kurbanov had “plentiful” contracts with the state, noting that his sites collected data from more than 1.5 million visitors in the state. Citing earlier jurisprudence, the court adds that Virginia also has an interest in ensuring that copyright law is properly enforced. “Though the claims at issue in this case do not arise under Virginia law, Virginia maintains ‘an interest in ensuring that the nation’s copyright and trademark laws are not violated within its borders,’ lest the state become a safe haven for intellectual property infringement,” Judge Hilton writes. Motion Denied, But Case Continues Based on these arguments the motion to dismiss is denied. This means that after three years, the case is likely to move ahead on its merits. The ruling is good news for the music companies, who will get their chance to defeat the YouTube rippers in court. However, based on how Kurbanov and his legal team have fought this case thus far, this could prove to be quite a challenge. — A copy of US District Court Judge Claude Hilton’s memorandum opinion is available here (pdf) From: TF, for the latest news on copyright battles, piracy and more. (Comment on this)

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