On March 15th, the White House announced that it planned to vigorously combat copyright infringement. An interesting part of this announcement was the White House’s proposal to step up efforts to combat so-called “illegal” video and audio streams. These illegal streams generally allow people to view live TV via a feed on the internet, allowing, for example, out of market sports fans to still watch their team’s games. Some websites even allow users to stream movies and pay-per-view TV. In the announcement, the White House proposed that Congress pass a law to clarify that infringing copyrights through streaming is a felony. This proposal comes after the US seized the domain names of popular streaming sites, ATDHE.net and channelsurfing.net. This action did not actually accomplish much, however. The US only seized the domain names, and the websites were able to resurface with new domain names not registered in the US and therefore not subject to US jurisdiction. Nevertheless, this announcement and the seizures are a warning that the administration plans to crackdown on illegal streams and prosecute the people responsible for these illegal streams.
The proposal to make copyright infringement through streaming a felony will encounter some complex line drawing problems. The proposal specifically asks Congress to “clarify that infringement by streaming, or by means of other similar new technology, is a felony in appropriate circumstances.” This phrasing puts the onus on Congress to figure out what “similar new technology” is and what “appropriate circumstances” are. For example, a poorly worded statute could kill products such as the Slingbox. The Slingbox is a product that essentially attaches to a cable box, allowing the user to stream his home cable via the internet. Each user has his own username and password and can only access his Slingbox, so it is essentially a DVR that you can access over the internet. Sloppy statutory drafting could accidently outlaw this product and others similar to it.
Legal issues aside, cracking down on illegal streams may not be good public policy. First, it may be impossible to stem the tide of illegal video streams, as many of the websites are not based in America. Moreover, if the administration succeeds in killing illegal streams, people displaced from these sites would likely turn to torrents, which offer the same content, just not live. Many torrent websites, such as The Pirate Bay, are foreign companies – registered in the Seychelles, for example – and the US government might not be able to reach them. The White House should also be worried about the public sentiment against a severe crackdown. The RIAA garnered a lot of negative attention for pursuing severe sanctions against copyright violators, and it may have partly lead to the record companies losing their grip on the music industry. Further, it is unclear how much these illegal streams actually hurt copyright holders. The networks that produce the content of these streams actually gain viewers through illegal streams, which could garner more advertising fees and, in the long run, more subscribers. In fact, CBS March Madness On Demand, which legally streams NCAA Basketball Division I tournament games for free, had 8.3 million unique viewers during the 2010 tournament. ESPN has similarly capitalized on the streaming market through its ESPN3 offerings, although only users with certain ISPs can access ESPN3. The only difference between these streams and an illegal stream is the copyright holder’s disapproval. Illegal streams had a part in making companies provide these innovative streaming services, and given time, might spur further technology growth. Finally, people who do not have access to legal versions of the shows they wish to watch might drive a lot of the demand for illegal streams. For example, many European soccer games are not shown on American TV, and many popular soccer shows, such as Match of the Day and Sportschau are not available on American TV. Some niche sports, such as college hockey, might only be available in certain areas through online streams. Expats who are Michigan football fans might not be able to view Michigan football games without streams. Disabling access to these streams will not make viewers happy and might trigger a minor backlash against the administration. Nevertheless, the administration seems poised to combat these illegal streams and protect copyright holders, for better or for worse.
Though illegal streaming sites may appear to be wild geese, it may benefit consumers in the long run for the government to pursue them and shut them down. The Web promotes openness and sharing by design, but as more and more content is digested exclusively through its channels, producers will need to draw revenue form their online efforts.
Illegal, free alternatives (or alternatives without ads) can easily dampen the desires of companies to digitize their content and to make it available. Free online versions increase business if they encourage consumers to switch to paid versions of apps or TV services, as in the “freemium” model of Hulu Plus. However, as the traditional and profitable channels disappear (e.g., NYT print edition), the online edition ceases to “push” consumers to a monetized channel, and can simply result in a company making little profit for a business which costs a lot to run.
It seems to me that the world of digital distribution is at an impasse. Quality content costs money, but people don’t seem to be willing to pay for it, particularly for news. The Web allows for much greater access, but at the cost of difficult monetization for producers. I would prefer all media to be available online, and I value the Web’s openness, but there need to be enforceable rules against illegal streaming. If a free website can undercut any content producer’s offering, the Web will simply be a race to the bottom.