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Freedom,, license or piracy?
Every day of the week, up to 8 million users across North America and Europe connect up to free online services that let them share movies and TV shows.
It may be illegal under most countries' copyright laws, but that doesn't stop them. Another few million video pirates are doing exactly the same thing every day in developing markets with high Internet usage, such as China and India.
That's an awful lot of sales slipping down the drain. One person's freedom to pirate is another person's loss of royalty revenue. Piracy hits the box office takings for new movies and directly threatens other important revenue streams, such as DVD sales and rentals and a whole range of TV rights.
For the Hollywood studios, these other outlets typically represent the lion's share of a film's takings. And for TV companies, losing audience share to the Internet has an immediate impact, hitting viewing figures and lowering advertising revenue.
It's hard to be precise about the total losses sustained by content owners. But there's no doubt that they are substantial already and still growing fast. These days, Hollywood's annual revenues are between $60 and $70 billion, with only a fraction ? a little under $10 billion ? coming directly from traditional cinema releases. How to combat online piracy is now, quite literally, the $64 billion question.
An accelerating trend
Broadband is here to stay, with over half of all home Internet connections in the US. According to Nielsen//NetRatings, 95 million Americans now have broadband Internet access at home. And over 35 million of them already use the Internet to download music or video.
The situation is much the same in other countries. After all, in broadband terms the US is far from leading the pack. Broadband penetration rates are significantly higher in many non-US markets, and both Europe and the Asia Pacific region represent larger total numbers of subscribers.
At the same time, another key barrier to video file sharing ? overloaded servers and slow transfers ? has been overcome by some ingenious new software originally devised for quite a different purpose.
BitTorrent was designed by a well-meaning technologist to allow open source software to be offered for download without landing people with huge bandwidth bills. Now BitTorrent is being used to make the copying of films and other entertainment material quick and easy, by allowing the downloading to be shared out, as a distributed process, across an ad hoc network of users' PCs.
With the help of this new generation of file sharing software, peer-to-peer traffic has become the biggest thing on the Net, accounting for 60% of all Internet usage. Video now takes the lion's share of this. From a standing start as little as five years ago, video downloads have overtaken music downloads and carried on growing at an extraordinary rate.
Quick release
Many people have quickly become used to the idea that new music is available online as soon as it goes on sale in the shops, or even before. Now we're seeing the same thing happening with video entertainment.
Films are generally accessible online within a couple of days of their initial release. Copies of the retail DVD are available long before the legitimate product hits the High Street. And each year sees leaks of copies of the award "screeners" that are sent out to enable Oscar and Golden Globes voters to judge all the nominated films ? potentially handing pirates early access to many of the biggest movie releases.
Hit television shows are often online and available for download even faster. Thanks to the three-hour time difference between the US East Coast and California, a TV program scheduled for broadcast across the nation at 8pm prime time can be copied in New York and available to download online a full hour before it goes to air in Los Angeles.
And the process gets easier all the time. Technologies like RSS (Really Simple Syndication), which originally became popular through blogging and newsfeeds, have been co-opted to offer users automatic downloads of new content through BitTorrent.
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