Does video have a Napster problem?

As Hollywood adapts to online realities, video-sharing sites could soon face a day of reckoning.

Jim Kerstetter Staff writer, CNET News
Jim Kerstetter has been writing about the high-tech industry since the 1990s. He has been a senior editor at PC Week and a Silicon Valley correspondent at BusinessWeek. He is now senior executive editor at CNET News. He moved back to Boston because he missed the Red Sox. E-mail Jim.
Jim Kerstetter
7 min read
It was a heavy-metal drummer who provided the defining moment for the original Napster and peer-to-peer music networks.

In May 2000, Lars Ulrich, the bombastic drummer for the band Metallica, personally delivered a list of 335,000 screen names of people suspected of music piracy to Napster's Silicon Valley office. With that giant stack of names came the beginning of the end for freewheeling music exchange services.

Fast-forward six years. The new threat in Internet-enabled copyright infringement is centering on video. YouTube, the most trafficked of the video-sharing sites, has recently been asked to pull three videos--two skits from NBC Universal's "Saturday Night Live" and an American Airlines training bit--from its site owing to possible copyright violations.

But what's going on with YouTube, which promptly yanked the videos when NBC contacted it, pales in comparison to the growing legal concerns about video peer-to-peer networks. Increasingly, it's looking like movie and television producers are heading toward their own file-sharing showdown.

"I think there is a fast and loose game being played by many people who are aggregating video online and selling advertising on their Web sites. And I think that there will be a day of reckoning," said Steven Starr, chief executive of Revver, a site that lets people distribute their videos and make money off ads when people watch them. "I don't believe you can build a sustainable business on copyright infringement."

So far this year, more than 50 people in the U.S. have been sued for allegedly swapping copyright movies online using peer-to-peer networks, according to the Motion Picture Association of America. Last month, the MPAA sued five sites that allow users to search for allegedly pirated files. It also sued file-swapping software provider eDonkey and several newsgroups, and shut down the Razorback2 file-swapping site network in Switzerland.

The spate of suits raises troubling questions for TV and movie producers, who, as more and more consumers buy the Net pipes necessary to bring in and send out video files, are reaching a crossroads their counterparts in music hit six years ago. About 67 percent of Americans who access the Internet at home now do so with a broadband connection, according to Nielsen/NetRatings. That's up from 31 percent five years ago.

"I don't believe you can build a sustainable business on copyright infringement."
--Steven Starr, CEO, Revver

Couple that with the popularity of TiVo digital video recorders and even software for recording video on the PC, as well as easy-to-rip DVDs, and the technology is there for a vast amount of video piracy. That doesn't mean "The Lord of the Rings" trilogy will start flipping around the Net like Metallica's "Unforgiven" did six years ago. But it does mean that short clips such as funny "SNL" skits or favorite moments from "The Simpsons" are ripe for the picking.

Like Napster, services such as eDonkey and BitTorrent provide technology that allows users to search for and access files over a peer-to-peer network. With newsgroups, also called Usenet, the files uploaded are stored in pieces on the Usenet servers around the world and not on individual computer users' hard drives, like with peer-to-peer.

The services are having a big impact on the Net. More than 60 percent of Internet traffic is being taken up by peer-to-peer swaps, and about 60 percent of those swaps involve video content, according to recent data from network infrastructure company CacheLogic. Though it's difficult to estimate how much of that video is pirated, analysts say it would be naive to believe most or even a great portion of it is legal.

As the music industry found out in the late 1990s, once that pirated material hits peer-to-peer networks, it's impossible to put a lid on it. And cracking down on the networks can be a futile effort, because many of them operate underground or are run out of countries without strong copyright protections.

Representatives for eDonkey could not be reached for comment. But a BitTorrent spokeswoman extended an olive branch to the MPAA. "I think we can play in the sandbox together," said Lily Lin, director of communications for BitTorrent. "We're working with the MPAA about finding a model where consumers can get the digital content they want in a legalized way."

Def snack jam

Last November, BitTorrent announced that the studios had agreed to notify BitTorrent if anything in their search engine infringed on their rights. In turn, BitTorrent would promptly remove it, said Ashwin Navin, president and co-founder of the San Francisco company.

"Our hope is that they would replace that material with content that they would like to see distributed by our technology," Navin said.

BitTorrent itself has never been sued, said Lin, but so-called BitTorrent trackers have been targeted. Trackers are not operated by BitTorrent. A tracker is a Web server operated by an individual that serves as one of many hubs--or coordination centers--used by the BitTorrent file-sharing protocol. Like other peer-to-peer networks, files are typically not stored on the tracker but on computers that connect to it.

So what to do about it? If you're the MPAA, you sue and sue again. "In general, we look for people who are using technology to facilitate online piracy for people on the Internet to get illegal files," said MPAA spokeswoman Kori Bernards.

Despite all that legal activity, it's not all bad news for TV and movie producers. They have far better alternatives than the music industry did when it was doing battle with Napster. Apple Computer's iTunes Store, for one, didn't exist six years ago. Now "SNL" fans can buy many of their favorite segments for $1.99.

In addition, sites like YouTube and Google Video, which also posted the American Airlines video and was asked to take it down, have a legitimate purpose: allowing users to share their own videos. And they aren't pure replacements for TV programming the way peer-to-peer networks were a substitute for buying music.

"It's less Napsterization than it is a new clip culture," said Fred von Lohmann, a senior staff attorney with the Electronic Frontier Foundation. "You have to remember what Napster was about; people were getting for free what they should have been buying."

"It's less Napsterization than it is a new clip culture."
--Fred von Lohmann, senior staff attorney, EFF

So far, NBC has asked less than 10 sites, including YouTube, to remove more than 3,000 video clips the network says are copyright-protected and being distributed illegally. "We don't want to let anything slip through the cracks," said Julie Summersgill, a spokeswoman for NBC Universal. YouTube, she said, promptly responded.

But NBC is also trying to embrace the Net. The network created its own Web site where videos can be streamed for free, Summersgill said. By comparison, as much as the music industry complained about the peer-to-peer sites, it was several years before there was a significant legal alternative.

"We recognize that there is this demand from the audience to get this content and share it in new ways with people," Summersgill said. "But we must also balance that with protecting our copyrighted material."

Playing by the rules
The better-known video-sharing sites seem to have learned the hard lessons of their music predecessors. Julie Supan, senior director of marketing at YouTube, chafes at any comparison between her company and early versions of Napster.

"They were renegades, amateurs, kids straight out of college," Supan said. "They were in conflict with the music industry. We believe what we're doing is complementary."

YouTube executives argue that their site can act as a promotional tool for movie studios, TV shows and record companies. It appears some advertisers have been quietly seeding the site with ads, promotional content for TV shows and music videos. A video that re-creates the introduction to "The Simpsons" with live actors was posted on YouTube as part of a marketing campaign by U.K. broadcaster BSkyB. YouTube says the video has been viewed by 1.3 million people since March 3.

To ease doubts about the company's intentions, YouTube streams content to prevent someone from downloading a clip, producing a hundred copies and selling them, Supan said. The company maintains control of all video-clip links, which allows executives to remove any unlawful posts. The company has also given copyright holders tools to help them spot violations, Supan said.

YouTube has a fairly thorough "terms of use" agreement to protect itself. It says, in short, please don't post anything on this site that's copyright-protected. And if you do, you're on your own. "In our privacy policy statement we state that we will cooperate with U.S. state and federal law," Supan said.

In its landmark June 2005 decision (click here for PDF) in the Grokster lawsuit, the U.S. Supreme Court unanimously ruled that a company can be held legally responsible if it engages in "intentional facilitation" of copyright infringement.

Grokster and StreamCast, creator of the Morpheus file-swapping network, did just that because they profited by advertising and failed to take any steps "to diminish the infringing activity using their software," the justices decided.

In other words, as long as YouTube and similar video-sharing sites respond promptly to complaints of copyright violations--and don't encourage illicit activities--they may have relatively few legal worries.

Of course, language in user agreements that instructs people not to submit material that is copyright-protected only protects the hosting company if it takes down the material as soon as it is asked, said Richard Lehv, a copyright and trademark lawyer.

"The language doesn't protect them," Lehv said, "unless they put some teeth into it."

CNET News.com's Declan McCullagh contributed to this report.