Why is a trafficker in pirated movies sailing to Hollywood’s rescue?
The following feature, excerpted in part from J.D. Lasica’s book “Darknet,” appeared in the May-June 2005 issue of Legal Affairs magazine.
TWO WEEKS BEFORE THE HULK OPENED AT MOVIE THEATERS in June 2003, the $150 million motion picture made an unauthorized debut in cyberspace. Universal Pictures had sent a videotape of the unfinished film to a New York advertising agency, where an employee lent the tape to a friend, a 24-year-old insurance underwriter, who digitized the tape and put it on an Internet movie-trading channel.
The work print lacked special effects and much of the movie’s soundtrack. After it was viewed online, negative word of mouth spread quickly, helping to doom the film at the box office despite a strong opening weekend.
The friend’s act of Internet piracy also ended badly. A security tag embedded in the movie identified its origins and gave him away. After the FBI arrested him, he pleaded guilty to one count of copyright infringement and was sentenced to six months of home confinement and three years of probation.
“His fingerprints were all over it,” said Bruce Forest, a prominent veteran of the Scene, the name insiders use for the movie-trading underground on the Internet. “It was like robbing a bank and giving your driver’s license to the teller.”
Despite anecdotes like the one about the Hulk fiasco, no one has proven that trafficking in movies online reduces revenue at the box office or the video counter. But as Internet connections become faster, computer hard drives larger, and compression technologies more efficient, movies are rivaling recorded music as a target for electronic file sharing. The film industry estimates that one in five teenagers have illegally downloaded a feature film. Between 400,000 and 600,000 movies are illegally traded online every day, studio executives said in recent Congressional testimony. About 17 million pirated copies of movies are floating around the Internet, according to the research firm BigChampagne.
Dan Glickman, chief of the Motion Picture Association of America, announced last November that Hollywood studios would file lawsuits alleging copyright violations against individuals who trade movie files on a large scale. “We haven’t suffered the damage that the music industry has,” he said, “but we needed some form of preemptive activity.”
Though file trading may cost studios income, it is not a commercial enterprise. Like computer hackers, Scene members say they don’t distribute movies for the money, but for the excitement of breaking rules and beating competitors in getting movies online first. Among the masters of the file-trading underground is Forest. He is a member of six movie piracy groups. He presides as a channel operator over 40 piracy channels on Internet Relay Chat, or IRC, a virtual meeting place on the Internet. Anyone with the password to his private website can access thousands of movie files but also songs, music videos, television shows, computer games, and software programs. His online hideout includes every song on the Billboard Top 100 over the last 40 years and, before they were showing in theaters, films such as The Aviator, Finding Neverland, and Ray.
Forest is the kind of copyright-flouting renegade who keeps many Hollywood titans and record company executives awake at night. But others sleep better as a result of his Darknet pursuits—because he is being paid to be a pirate by one of the largest entertainment conglomerates in the world.
FOREST OPERATES FROM THE BASEMENT of his suburban Connecticut home, a ranch house on a five-acre tract 40-odd miles northeast of Manhattan. None of Forest’s neighbors suspects that this bucolic town is home to the Prince of Darknet.
He begins each day at mid-morning, espresso in hand. The only sounds in his subterranean lair are the hum of small desk fans that cool his banks of 13 PCs, Macintoshes, and Linux computers. He typically remains in this high-tech command center until 5 a.m. Four cable modem lines connect him to the outside world. On an adjoining workstation, three monitors keep track of his private army of bots—automated programs that prowl the file-trading underworld. He scoots from machine to machine, checking e-mail and monitoring file-trading activity while occasionally scolding Cookie, his high-strung pit bull puppy.
As a precautionary measure, Forest always uses a “bounce” to disguise his computer’s location and Internet address. Rather than directly log on to piracy channels, he connects to a shell account through a computer in the Caribbean. If anyone tried to trace his whereabouts, the bounce would suggest that he was sipping mojitos somewhere south of St. Barts.
Before Forest ascended to Darknet prominence, he pursued a successful career in the music business. During a six-year stretch that began in the late 1980s, he produced more than 1,000 tracks and 24 platinum albums for Madonna, Whitney Houston, Bruce Springsteen, and other musicians, and the records combined sold more than 40 million copies. When he married his British-born wife, Mitzi, in London in 1991, their first dance was to a recording made for them by Elton John, who played the piano while Boy George sang. Forest eventually burned out on his job, stopped producing records, and began working with entertainment companies to create a strategy for distributing digital media online.
In 1997 Forest joined his first movie release group, a cluster of individuals who worked secretly and illegally to distribute digital goods in the Darknet. He started out as a “server,” a low-level position he compares to a Mafia hit man, though no one died as a result of Forest’s actions. A server is at great risk of criminal prosecution because he distributes illegal movie files on an open Internet address. But such yeoman’s work offers advancement in the Scene.
“It has taken me years to build up the trust and respect of my peers,” said Forest, who is in his mid-40s and has unkempt brown hair and a diamond stud in his left earlobe. “You can’t just show up on a channel and say, ‘Hi, I’m new here and I want some of your movies.’ They will laugh at you, and then they’ll ban you.”
ALTHOUGH RELEASE GROUPS FIRST APPEARED AROUND 1997, the Scene got a kick-start in October 1999 when a 15-year-old from Norway wrote a few lines of computer code that made it easy to pluck a Hollywood movie from a copy-protected DVD. A typical release group, bearing a name like Flair, Esoteric, or Opium, consists of anywhere from a handful to as many as 30 individuals, with an average membership of 15. Today there are an estimated 140 underground movie groups worldwide, up from 32 in 2002. When copies of Million Dollar Baby, or other major motion pictures, appear on the Internet days or weeks before their theatrical release, it’s almost certain that a movie release group was responsible.
Releasing a movie requires several steps that begin with getting a copy of it, preferably a good one, from a supplier. The preferred suppliers are editors, special-effects experts, and other post-production workers who can make copies of a master print, the sharpest version of a movie. Also well-placed are Academy of Arts and Sciences members—the people who vote for Academy Awards—and other viewers who receive “screeners” released on DVD before a film opens in theaters. Other suppliers include purveyors of compromised copies—employees of DVD pressing plants, who can get flawed discs discarded months before a DVD’s release, and movie theater employers, who set up a camcorder on a tripod and videotape films from a projection room.
The most common suppliers are people who sneak a camcorder into a theater and aim it at the screen. Though “screen cams” can produce images with jerky movements and shots of the back of patrons’ heads, excellent sound quality can be obtained by plugging into seat jacks designed for the hearing impaired. Movie studios have lately tried to thwart screen cams by arming movie theater attendants with metal detectors and night-vision goggles and engaging them as anti-Scene mercenaries.
The supplier passes the unreleased film to a contact in a release group or puts it on a drop site, a hidden server on the Internet. The movie is then sent to a ripper by overnight mail if it is on DVD or, if it is on a drop site, by telling the ripper to grab the file through a secure computer line called a virtual private network connection or VPN. The ripper (sometimes called a cracker) copies the movie’s raw video and audio files, and he or an encoder edits out the identifying marks that studios insert to track copies. The ripper also compresses the video file into formats suitable for downloading and viewing on a computer or television screen.
Next, a distributor places a file on one of 30 or so topsites—secure digital locations that can be entered only with a password. From there, couriers transfer the file to high-speed distribution servers, computers configured to share files. Finally, the channel operators announce the movie’s availability on individual IRC channels, setting off a feeding frenzy. Forest estimates that 1,500 IRC channels are devoted exclusively to movie piracy. The entire process usually takes two to three days—with handoffs often crossing international borders.
Much of this activity involves individuals working alone in bedrooms, college dorms, and offices. Few movie-group members have met each other in person. They are coordinated by administrators who buy hardware, network bandwidth, or shell accounts on the computers that distribute the movie; group leaders who set up the group; and donators who give groups equipment, bandwidth, facilities, or money in exchange for membership, community respect, and access to the group’s digital spoils at a “leech site.” Forest is a donator, having supplied computers and other equipment to various release groups on his dime. For tax purposes, Forest deducts all such donations from the income of his consulting business.
Once released, a title filters into Usenet news groups and web-based file-sharing services. The movie-piracy network is like a pyramid, with a few thousand members of the elite release groups at the top; 50,000 to 200,000 users who operate servers that store the digital goods; another 3.5 million tech-savvy users who swap files on IRC channels, news groups, and other sites; and, finally, hundreds of millions of people worldwide who use peer-to-peer file-trading networks such as Kazaa, eDonkey, and iMesh. The members of the release groups at the top of the piracy pyramid are young men (it is, says Forest, an overwhelmingly male enterprise) who generally share a conviction that everything should be up on the Internet. “Most release group members are guys in their late teens to early 20s,” said Forest. “But I know one guy in his 60s who does this, and I know a 13-year-old in junior high school who’s one of the best coders I’ve ever seen.”
THE PIRATES OF THE DARKNET are costing the motion picture industry untold billions of dollars, according to John G. Malcolm, the industry’s head of worldwide antipiracy operations. Whether the movie groups realize it or not, he said, commercial pirates in Asia take the stolen films off the Internet, burn them onto discs, and sell bootleg copies throughout the world. This hard-goods piracy alone costs Hollywood $3.5 billion a year in lost sales of DVDs and video compact discs, according to Malcolm. The motion picture industry seized more than 52 million pirated DVDs and VHS tapes worldwide during 2004. “I understand the encoding groups say they’re in it for the challenge and not the money,” he said. “But they’re very naïve to think they don’t damage our industry substantially.”
At Sony Pictures Plaza in Los Angeles, the executives who run Columbia TriStar Home Entertainment call Internet piracy the most pressing issue facing the home video industry. The company’s president, Benjamin S. Feingold, pointed out that the studios have already moved up the date of home video releases partly in response to piracy. Consumers can rent or buy a video four months after a movie’s theatrical release, while not long ago it took six months for a video rental to appear and a full year for a movie to be available for purchase. The studios also load DVDs with lots of extras—interviews, outtakes, discarded scenes, alternate endings—that are supposed to make Hollywood products more attractive than the pirated versions. The studios, he said, want to make the next generation of DVDs “an even more compelling proposition” while warning consumers that “downloading movies over the Internet is an illegal activity.”
Traditional antipiracy measures have had limited success. The FBI has busted release groups only to see them revive after brief periods of inactivity. The movie industry has filed lawsuits against file traders, created technology that makes DVDs difficult to copy, and persuaded the FCC to help curb piracy by, for example, requiring that televisions and similar devices recognize anti-copying signals embedded in digital programming. Still, piracy thrives, and growing frustration has forced some movie companies to seek help from people like Forest.
Forest came to the attention of industry executives in the mid-1990s, when he began to work with Hollywood studios and Internet portals that wanted to put digital music and movies online.
Today, he works both sides of the fence. While freely swapping movie and music files and keeping tabs on the illegal trading networks, he spies on the underground groups for his corporate client, a well known entertainment conglomerate that Forest declines to name for fear of losing his job.
“I guess you can call me a true double agent,” he said. “I lead a very comfortable double life.” Forest declined to say how much his client pays him.
When he negotiated his contract, Forest insisted on a hold-harmless provision that shields him from being held liable for downloading pirated movies belonging to the major movie studios. He also made clear to his client that he would not fink on anyone in the Scene.
Every two weeks, Forest writes a 200-page report for the entertainment corporation. He summarizes the activity on particular file trading services, identifies the movies that have been downloaded most frequently, and suggests strategies to protect the company’s intellectual property. He travels about once a week to Manhattan to discuss his findings with company executives.
His job is not to reduce Internet piracy but to keep track of it. Still, he says he has steered his client from antipiracy schemes that would have merely angered customers by, for example, preventing them from playing movies on portable devices. He has also stressed to his client that it must find ways to make money on the digital delivery of entertainment.
So far, though, his client and the rest of the industry have come up with few new ideas. “It’s an arms race,” he said, “and the other side is winning.”
FOREST CRADLED HIS KEYBOARD IN HIS LAP, navigated to an underground site, and located a pirated version of Kill Bill 2. “Want to see how easy this is?” he asked. In less than 10 minutes, he downloaded the bootleg movie to his hard drive and burned it to a DVD. He trekked upstairs to the multimedia room in his house, where an array of gizmos—TiVo, DVD player, VCR, network hub, broadband router, networked Xbox, and Playstation 2 module—sat atop a 55-inch Toshiba television. “Here is what Hollywood is up against,” he said. He plunked the DVD into the player. Moments later, a screen cam version of the Quentin Tarantino revenge flick barreled into action, with the FBI warning excised.
Forest’s message is this: Piracy is past being the province solely of geeky college students watching on computer monitors. Untold thousands of mainstream Americans download pirated movies to a hard drive, burn them onto DVDs, and watch them on television.
“The studios are providing no legal way for us to see new movies in our home, other than to wait several months and then watch it on pay-per-view or drive to Blockbuster,” he said. “It’s not good to steal movies, but file sharing is a symptom of people who want their music and movies digitally.”
To profit from the growing demand for digital entertainment, Forest and three partners have created the Jun Group. Their business strategy is to persuade musicians, independent film producers, and others in the entertainment business to use file-trading networks such as Kazaa to promote and distribute their works to tens of millions of people.
The Jun Group is starting with musicians. The firm matches bands with corporate sponsors, which cover recording costs, and uses its connections in the file-trading underground to put the band’s songs on Internet channels. Last year, the firm matched its first client, a Los Angeles-based rock group called Kevin Martin and the Hiwatts, with a corporate sponsor—Cadbury Schweppes’s Snapple Beverage Group—which paid to record the group’s single in exchange for an advertisement that ran whenever the song was downloaded from the Internet. The Jun Group got three million people to download the band’s song in a few weeks.
Forest believes that a similar approach—getting corporate sponsors to pay production costs in exchange for advertising seen by millions of file traders—will work with motion pictures, particularly independent films that don’t get much support from major distributors. If nothing else, he said, the approach will get people thinking about profitable alternatives to the movie industry’s failed policies against online piracy. The industry, said Forest, is under the sway of “people who want a legal or technological solution, when the only lasting solution is cultural. Right now the culture is telling my 10-year-old daughter that music and movies are free. That’s wrong.”
But change does not come easily, even in the Forest household. Bliss, Forest’s daughter, prizes the little black folder that holds the two dozen pirated movies her father gave her. Does she see anything wrong with watching pirated movies before any of her friends can watch the legal versions?
“Nooo,” she said.
But doesn’t the great American piracy conversation begin at home?
Forest considered this. As Bliss skipped off, he said, “I’ve discussed it with her. I know it sounds hypocritical, but I get copies of those movies for my work, so why shouldn’t she watch them? She’s a bright kid; she understands what I do for a living.” He paused. “She’s much more into clothes and dressing up than she’s into computers or collecting songs. She’s just a normal all-American kid.”