Online Piracy Grows, Reflecting Consumer Trends

Netflix, Amazon downloads did not slow online piracy, study found.

Successful pay-for-play subscription plans, such as Netflix and Amazon, have not curbed widespread piracy of copyrighted content, according to a study by British brand protection firm NetNames.

Successful pay-for-play subscription plans, such as Netflix and Amazon, have not curbed widespread piracy of copyrighted content, according to a study by British brand protection firm NetNames.

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 A new study found that illegal file-sharing websites have grown more popular since 2011, and entertainment industry officials say online piracy is so widespread that they use it to track consumer trends.

According to the new study released on Tuesday by British brand protection firm NetNames, approximately 432 million unique Internet users worldwide "explicitly sought" copyright-infringing content during January 2013. In the regions of Europe, North America and Asia-Pacific, the study found that approximately one quarter of Internet users in those regions sought infringing content during January, which increased by 10 percent since November 2011. The study was funded by NBC Universal.

"While legitimate services have come along like Netflix, the piracy world hasn't stood still," said David Price, director of piracy analysis at NetNames. "People are infringing all kinds of content, including films, television, music and games. Over 300 million people infringed copyright at least once. That's an enormous number of people. It just shows how embedded this particular activity has become in people's lives."

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Sen. Orrin Hatch, R-Utah, said this growth of online piracy damages the ability for artists and creators to profit from their content including movies, television and music, which in turn damages reinvestment in new, job-creating projects. Hatch spoke on Tuesday during an event unveiling the study hosted by the Information Technology and Innovation Foundation.

"The problem of online piracy is real, and it's weakening our economy," said Hatch, a co-chairman of the International Anti-Piracy Caucus.

Sen. Sheldon Whitehouse, D-RI, also said during the event that online piracy will grow and "become more complicated" as mobile devices get more successful at delivering content.

"More needs to be done," Whitehouse said. "While the financial toll may be unclear we can safely bet that it is significant."

The seizure of file-sharing website MegaUpload in 2012 stunted online piracy use, the NetNames report found. BitTorrent is now the most popular website used to download pirated content in Europe and North America, while in the Asia-Pacific region direct download websites are the preferred option to access copyright-infringing content.

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Because online piracy is so popular, legitimate video-streaming websites are studying their illegal file-sharing adversaries to compete with them. When Netflix debuted its video streaming service in the Netherlands, the company's Vice President of Content Acquisition Kelly Merryman told Dutch website Tweakers that it monitors file-sharing platforms to help determine what TV-series the company buys, according to a report by the New York Times. Netflix CEO Reed Hastings told Tweakers in a previous interview that some illegal file sharing "just creates the demand" for content that is available on legal download platforms, according to the New York Times.

"Netflix is so much easier than Torrenting," Hastings said.

Sandra Aistars, executive director of the CopyrightAlliance, said that while piracy damages the ability of creators to profit from their projects, members of her organization watch online piracy platforms to track what content is popular with consumers and what file-sharing distribution models are successful.

"There has perhaps been some learning in that regard, useful intelligence," Aistars said during the event on Tuesday.

The Obama Administration has supported voluntary agreements between companies including Google, Microsoft and AOL to halt funds that reach piracy Web services.

This private sector solution is a departure from the broader Stop Online Piracy Act (SOPA) anti-piracy legislation that was defeated in Congress in 2012 following outcry from Internet users and technology companies including Google. The legislation would have targeted strict penalties at websites for being linked with copyright-infringing material, which critics including Google claimed would curtail free speech.