Digital lockers a growing piracy concern

Fri Jan 20, 2012 9:27pm EST
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By Joseph Menn

SAN FRANCISCO (Reuters) - Digital storage services like Megaupload, which was accused of criminal copyright violations on Thursday, play a small but growing role in a broader piracy problem that continues to evolve and dog the entertainment industry.

Some 3 million Americans every month used Megaupload, which is among the largest digital lockers, the Recording Industry Association of America (RIAA) said. Other entertainment executives said that number surged when other sites popular with digital pirates, such as LimeWire, were taken down.

"When we look at piracy behavior and uncompensated theft of music, a significant portion of consumer behavior migrates toward these locker sites" after shutdowns, said Victoria Bassetti, a music industry consultant and former anti-piracy chief at record label EMI.

"Anecdotally, when we have pre-release leaks, the first week there is a massive amount of consumer trade that goes directly to Megaupload's door."

Peer-to-peer systems like BitTorrent, which have little central coordination and are harder to stop, still have about three times as much usage among consumers as digital lockers, said NPD market researcher Russ Crupnick.

Only about 3 percent of the U.S. Internet audience relied on digital storage for legitimate purposes or piracy in the third quarter, he said.

Megaupload and its ilk may be a bigger factor in video piracy because movies take much longer to download via peer-to-peer networks, Crupnick said. Digital lockers allow anyone to upload, store and distribute links to most forms of electronic content.

The U.S. Justice Department released an indictment Thursday accusing Megaupload's founders and other officers of criminal conspiracy, arguing that they encouraged copyright violations and in some cases copied protected content themselves. Four people involved with the site were arrested in New Zealand.   Continued...