The new war on internet piracy: illegal streams & Kodi boxes have reignited the fight
In the early years of the 21st century, music labels and film studios were in panic mode. The rise of convenient online file-sharing programs such as Napster threatened to shred revenues, allowing digital files to be duplicated and transferred between computers with ease.
The heavy metal group Metallica relentlessly pursued Napster in the courts and studios paid for widely mocked adverts that compared illegal downloads to stealing cars, loudly declaring: “Piracy is a crime”. Music industry revenues, which had been growing steadily in the Nineties, had gone into decline.
Hollywood’s worst nightmare was that this was just the start; that the ever-growing popularity of the internet would see illegal downloads branch out from a small and digitally-savvy slice of the population to the mainstream and that it would become so much of a social norm that the idea of paying for music or films would seem alien.
The industry’s fears were never really realised. The rise of legitimate MP3 downloads on iTunes, followed by streaming services such as Spotify, saw legal sources became a more convenient alternative to illegal downloads. In 2016, internet piracy in the UK hit its lowest level in years.
If the industry had not quite won the war against file sharing, it had at least appeared to gain the upper ground. The reality, as it turns out, may be quite different. A new wave of on-demand online piracy, in which stolen content can be easily streamed to a living room for free, may now threaten the creative industries in a way that illegal downloads never did.
According to figures from the Intellectual Property Office (IPO), the Government body dedicated to fighting copyright theft, the long decline in online piracy has been halted in recent months. For the first time in years, the number of people illegally accessing content online has flatlined at around 25pc.
The culprit, according to rights holders and intellectual property experts, is the rise of internet television boxes, modified to access an almost-infinite catalogue of live television, films and music on-demand.
Whereas internet pirates were once forced to patiently wait for their downloads at a computer screen, running the risk of opening virus-laden files, these so-called Kodi boxes, enabled by high-speed internet connections, can stream video in glorious high-definition on to a television screen. Improved mobile connections also mean smartphone owners can illegally access streams.
The rise of Kodi boxes and illegal streaming not only threatens music and film studios but, because they can broadcast instantly, it poses a challenge to the broadcasters who have shelled out billions of pounds for rights to television series such as Game of Thrones and, in particular, live sport.
In 2015, Sky and BT paid a record £5.1bn for the rights to screen Premier League football matches over three seasons, a sum that amounts to £10m per game. Earlier this year, BT renewed its exclusive rights to Champions League games in a £1.2bn deal, a hefty 32pc increase on the previous bill. The sums paid suggest surging demand for live football on television, but viewing figures paint a different picture.
Legitimate audiences for Premier League football fell by 12pc on average last season, according to figures from the Broadcasters Audience Research Board. In the Champions League, some matches fared even worse. The decline has seemingly correlated with a surge in interest for Kodi boxes, many of which easily allow pirated streams to be found for free.
According to BT, internet searches for “Kodi Box” increased by 143pc in the 12 months to November 2016. “The major problem is this change in technology, which has enabled someone to plug an internet TV box in to their broadband and television,” says Kieron O’Connor, the director general of FACT, the industry body for copyright protection. “It’s superseded the old ways, it’s exploded and it’s causing the rights holders problems because of the ease of use.”
There is one major difficulty with tackling Kodi boxes: they are not, in themselves, illegal. The software that runs on the television boxes was originally created as a way for owners of the Xbox games console to play their video files, and is an open system on which anything can be loaded, similar to a web browser. It is not until users install separate applications on top of it that they can access illegal material.
The software is maintained by the XBMC Foundation, an American non-profit consortium run by volunteers. Nate Betzen, its president, helps run it in between freelance jobs from his base in Kansas. He says the foundation has “no particular stand on piracy itself” but is no fan of the apps that enable it, which are often clogged with viruses and “cause a great deal of problems for people who try to use them”.
He says Kodi’s developers celebrate whenever illegal add-ons are taken offline but that the software’s open-source nature, which means its code is freely available online, make it difficult to ban them. “We’re sympathetic to [rights holders] but if we were to go out and lock the software, someone would just fork [copy] it,” he says.
A glut of cheaply imported Chinese Kodi boxes, pre-installed with apps that allow illegal access to Premier League games, pirated television shows and unlimited music, has seen their use skyrocket. Mr Betzen says the number of Kodi users has increased from around 7m two years ago to 30m today.
According to figures from the Industry Trust, an organisation to promote legal options, nearly two thirds of people who use illegal internet television boxes use it for live sport. Illegal streamers are also less likely to have a moral objection to it, with 31pc seeing it as legitimate compared to 8pc for downloads.
Authorities also find it harder to track streaming, since it involves real-time broadcasts that are often shut down shortly after an event. Nonetheless, broadcasters are now waging a war against illegal streaming. They have convinced Amazon, eBay and Facebook to stop selling Kodi boxes featuring illegal add-ons, an act that has been declared illegal by the European Court of Justice.
New powers granted to broadcasters by the High Court in March allow rights holders to force internet providers to block access to illegal streams instantly, a process helped by the fact that BT and Sky are both the dominant football broadcasters and major internet providers.
Advertisers such as gambling websites have also been pressured to blacklist illegal streaming websites, cutting off their primary source of income, while several of the biggest online sources of unofficial Kodi apps have been shut down following lawsuits in the US.
This year, the IPO opened a call for views on how it should respond to the rise in illegal streaming over internet television boxes.
FACT says it wants the law tightened to make it easier to punish suppliers of such devices, and the IPO will respond later this year. Industry sources say companies have learned their lesson from a backlash that greeted them when single mothers were served with bills of hundreds of thousands of dollars for illegal downloads.
“It’s much more effective to stop the supply,” says Mr O’Connor. “These are film fans, TV fans, football fans, we would much rather turn them into customers.”
The music industry succeeded in doing this by embracing streaming, which offered value and convenience with on-demand access. In the football world, where prices have exploded and many games are not on television, this may prove more difficult.
