Thursday, September 2, 2021

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Software Piracy Triggers Innovation, Research Finds
Ernesto Van der Sar, 02 Sep 10:21 PM

wondows-piratePiracy presents a major challenge for companies across different sectors, including the software industry.

Many copyright holders stress that piracy hurts their bottom line. This could lead to less output and innovation. However, research has shown that this isn't always the case.

Previously, studies have found that piracy doesn't reduce the number of new films being made. Similarly, piracy doesn't slow down music output or innovation either. In fact, it may actually encourage innovation.

Piracy Shock and Innovation

This idea is supported by a new working paper published by the US Patent and Trademark Office (USPTO). The research was carried out by Wendy Bradley, Assistant Professor at SMU Cox School, and USPTO economist Julian Kolev.

The research looks at the effect of the "piracy shock" that was introduced when BitTorrent was first launched 20 years ago. The then-new file-sharing technology made it much easier to pirate software and was swiftly embraced by millions of people.

This 'natural experiment' is used to measure how large software companies changed their research and development (R&D) budgets in the following years. By comparing companies that face more piracy risks to those with a lower risk profile, the overall piracy effect is estimated.

According to the researchers, the launch of BitTorrent is ideally suited to measure the effect of piracy. Its introduction in 2001 was sudden, the technology is ideally suited for software piracy, and it wasn't notably interrupted during the sample period which ends in 2007.

BitTorrent Piracy Triggered Innovation

The overall results suggest that companies that are more at risk from piracy appear to innovate more following the launch of BitTorrent.

"We find that rising piracy increases subsequent R&D spending, copyrights, trademarks, and patents for large, incumbent software firms," the researchers write, suggesting that the piracy shock pushed firms to innovate more.

"Firms in our sample exhibited a strong rise in innovative activity following the piracy shock, but they also shifted their IP strategies to pursue a more diversified portfolio through increased filings of copyrights and trademarks."

Translating these findings to hard figures would suggest that a 10% increase in piracy leads to a 2.8% increase in R&D spending.

innovation

Subscriptions

The research doesn't look into specific types of innovation. However, it mentions that in more recent years the subscription model has been embraced by an increasing number of software companies.

This includes software giants such as Microsoft and Adobe, whose software has been pirated millions of times in the past.

Interestingly, this subscription model has its own drawbacks. The paper mentions "subscription fatigue" as a risk, one that also applies to movie streaming platforms. Too many subscriptions could eventually drive people back to pirate sites

What About Revenue

Today, more than twenty years after BitTorrent was invented, piracy levels remain high. However, initial data suggest that software companies have been able to increase revenues through new products and other innovations.

"While firm performance is outside the scope of this study, initial estimates show firms in our sample experienced significant increases in both revenue and profit after the piracy shock," the paper reads.

"Our findings suggest that strategies encouraging new product development and a continuous commitment to innovation may offset the negative effects of digital piracy in certain industries."

Finally, the researchers stress that while BitTorrent's launch is described as a piracy shock, the technology itself is not to blame. It's a file-sharing technology that can and is used for legal purposes as well.

A copy of the working paper is available through the USPTO website and SSRN. It should be noted, however, that the views expressed in the paper do not necessarily reflect official positions of the Office of the Chief Economist or the U. S. Patent and Trademark Office.

From: TF, for the latest news on copyright battles, piracy and more.

'Fraudulent' DMCA Circumvention Takedowns Target Prominent Websites
Ernesto Van der Sar, 02 Sep 12:03 PM

cautionOver the past few years, copyright holders have asked Google to remove billions of links to allegedly pirated content.

Most of these DMCA notices point to infringing material but occasionally mistakes are made, which can do serious harm. Even worse, the DMCA is also abused by scammers for personal gain.

Over the past weeks, we have seen a new wave of suspicious takedown requests. These notices are not standard DMCA notices but point out links that supposedly bypass DRM restrictions, which violates the DMCA's anti-circumvention policy.

Google handles these 'Section 1201' notices outside of the regular takedown system, which means that they're not listed in the public transparency report. However, they are sent to Lumen's takedown archive, where we spotted dozens of these dubious takedowns.

"Video Industry Association of America"

Two weeks ago we saw several notices that listed the "United States Copyright Office" as the sender, supposedly acting on behalf of the "Video Industry Association of America." At the time, the Copyright Office confirmed that these were sent by an imposter.

In recent days we have seen several similar notices and this time the Video Industry Association of America is listed as both the sender and the copyright holder. However, plenty of questions remain.

First of all, we're not aware of any legitimate organization that calls itself the "Video Industry Association of America." But even if we were to believe that, the takedown request itself is rather confusing, as this example shows.

russian

The 'American' organization starts one request off in Russian and finds it hard to construct proper English sentences. In another notice, it complains of sites and apps that circumvent the copyright protection of streaming services, while classifying these as "software cracks."

Things get even more problematic when we look at the URLs that are reported. While these include tools such as DVDFab and YouTube-rippers, which some rightsholders see as problematic, various legitimate sites are targeted as well.

Targets Include Verizon, The Verge, and Quora

For example, this notice includes the homepages of Internet providers such as Spectrum, Xfinity, and Verizon, as well as the news sites Wired, The Verge, USA Today, and Techradar.

bogustakedown

In some cases, the notices list articles that explain how people can download content from streaming services such as Netflix. However, those mostly point to legal options, such as this Wired article about Netflix's offline viewing feature.

This is just the tip of the iceberg. We have also seen Engadget, CNBC, CNET, and many other news sites targeted. Even Quora, PureVPN, and Pinterest can't escape the wrath of the Video Industry Association of America.

quora

Legitimate Sites Removed from Google

The good news is that Google took no action in response to most of these takedown requests. However, not all sites were that lucky. The smaller news outlets Fossbytes.com, Techloot and Robots.net had their homepages wiped from Google's search results.

fossbytes

TorrentFreak spoke to Fossbytes' co-founder Adarsh Verma, who said that these claims damage the publication's reputation and lead to a reduction in traffic.

In addition to Fossbytes' homepage, an article explaining how people can legally download videos from Netflix has been removed from Google's search results as well.

Google is Aware of the Problem

Fossbytes reported the issue to Google, which informed the site that there is no official counter-notification process for these anti-circumvention takedowns. As such, the URLs remain deindexed for now.

"There is no formal counter notification process available under US law for circumvention, so we have not reinstated these URLs," Google replied, requesting a detailed explanation from the site.

The response above comes from an email Fossbytes shared with TorrentFreak. This reveals some interesting details that are not available in the Lumen database, including the name, email address, and geolocation of the 'Video Industry Association of America' representative.

As can be seen above, the sender is actually located in Russia and identifies itself as "Wolf Fang," which isn't a typical name, not even in Russia. The email address, which we won't publish, comes from Gmail and references another animal's fangs.

Google is Aware of the Problem

Speaking with TorrentFreak, a Google spokesperson says that the company is aware of the fraudulent activity and is taking action.

"We are aware of these fraudulent notices. We have a number of mechanisms in place to detect abuse, and are always making improvements to our approach. Our transparency efforts are designed to help third parties, including journalists, identify these types of issues, and when they come to light, we reinstate URLs as appropriate," Google says.

Based on Google's response, it seems likely that Fossbytes, Robots.net, and other wrongfully flagged sites, can expect their links to reappear in Google's search results eventually.

For now, it remains a mystery who's behind these notices. It wouldn't surprise us if the "Video Industry Association of America' is actually a direct competitor of the stream-ripping and DRM circumvention tools that are reported.

This is a strategy we have seen several times in the past. A competitor targets URLs from competing apps and sites, so their own site will end up higher in Google's search results.

In this case, however, the person in question is drawing quite a bit of attention, by adding hundreds of perfectly legitimate URLs to the takedown requests.

From: TF, for the latest news on copyright battles, piracy and more.

 
 
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