The closure of popular Ukrainian illegal resources like Ex.ua, Fs.to, Torrents.net.ua, and recently Baltazar.org.ua under the anti-piracy campaign stirred up the public and generated lots of discussions. Perhaps, the hottest and informative ones, I had the honor to moderate within UATF, the event, which far exceeded the expectations this year, in terms of information richness. While the world was inventing new techniques, if not of victory over piracy, but of its relatively efficient containment, Ukraine rested with its laurels of “Top 1 Pirate” and just started joining the process.
One of the most common approaches, taken by Ukraine as well, is to ban resources (eg, The Pirate Bay case), but there appear mirror sites, and a server can be moved to somewhere in Tonga. Cooperation with advertisers may be successful, if the advertising market is consolidated, as in Sweden. It is still too early to speak of this in Ukraine. The cooperation with Google (search engine does not show pirate sites) has evidenced good results worldwide. The cooperation with Google is also maintained by Ukrainian companies like the Media Group Ukraine including means of search engines, as George Barzashvili, Director at Digital Screens, incorporated into that media group, commented to the Mediasat.
Engineering solutions significantly simplify and accelerate the work. The latest innovation is “watermarks” to mark content, which are unique for each user, so that the system would immediately find illegal content over the Internet and those who uploaded it. But they are still quite expensive, allow for just detecting pirates, and require working legislation. It is very important for anti-piracy to support legal services and to draw up the most convenient user scheme, which would be quick and possibly inexpensive to deliver content to the audience.
In the meanwhile, the representatives of legal services often complain that it is sometimes difficult to agree with the copyright holders. There is no secret that the traditional system of relationship with the copyright holders is rather intricate, slow, and inconvenient. And very often it is too expensive as well. Unreasonably high prices and difficulties in finding demanded content, all this triggers a piracy progression, and then the copyright holders, in turn, should ensure and update the control and anti-piracy system. This, of course, doesn’t justify the lawbreakers, and the option of how, where and when to sell and protect content is always kept by its holder. The question is how to do it in the most optimal and functional way. It is recommended to lay out the footpaths on the grass where people walk. The grass owner is authorized to lay footpaths where he pleases, but then he should be ready for this grass to be trampled (it does not change the rules “keep off the grass”, but does the grass owner feel better?), or he have to recruit security to guard the grass across on shift basis. After all, it is probably easier to lay out footpaths where it is convenient for pedestrians.
Analyzing different opinions on building a legal scheme, it is possible to single out several standpoints. The toughest one was set forward by rights holders and their representatives. They talk mostly about intellectual property as about any other property, and the copyright holders are free to do with it whatever they want: to sell it when and to whom they deem necessary, to set any price and procedure.
Tatiana Pasternak, Research Center for Advanced Technology, and Oleg Dolinsky, Comp Music Publishing, talked about how to better protect copyright without violating others. It is not just about video content, since similar problems arise with music and even cartoon characters (for example, the rights holders of “Masha and the Bear” claimed royalties for pictures). Oleg Dolinsky urged to be careful with copyright and told about cases when large companies like MTS and Lifecell had to pay fines for using music without any consent of the rights holders. Mr. Dolinsky also gave a number of valuable and practical tips how and where to find music. A song in a TV program may cost about 6 thousand hryvnas, moreover, it is required to be very careful in choosing the rights holder for not to run into fraud like MTS did. Apparently, the best solution is to compose own music. According to Mr. Dolinsky, the Comp Music negotiated with Ex.ua to design a paid music service, but the latter refused. The failed negotiations to legalize content on Ex.ua were also mentioned by other market players before, including Fedor Grechaninov, StarLightMedia.
Pavlo Mykolyuk, law company Vindex, was directly involved in fighting against crimes in the field of intellectual property and computer technology while working at the Department for Fighting against Economic Crimes, and now he cooperates with the Media Group Ukraine. Upon first request, the pirate resources remove content in 80-85% of cases. The technology solutions greatly simplify and speed up the search for illegal video over the Internet, and it is no longer done manually. Mr. Mykolyuk esteems very important the closure of Ex.ua and Fs.to.
“Only the largest pirate resources earn on advertising. The players like EX and FS has not operated for the first year, and while earning on advertising, they build up muscles, contacts, and lobby groups in the Parliament. And this is dangerous, because they can affect the entire market. To lobby draft laws like on giving up government support for the development of Ukrainian cinematography. It will modify the whole structure of business and lawmaking in general. Therefore, it is extremely important to shut them down and make these portals’ activities regulated. This is an important point in anti-piracy, as their example will make smaller players realize that this is a matter of time to visit them for seizing servers”, as Mr. Mykolyuk said.
The representatives of legal OTT platforms are also expressly against piracy, but their speeches actually focus on users with their needs and comfort. Arkadiy Kanyuka, Divan.TV, lays emphasis on building a convenient legal service, referring to personal experience, i.e. he subscribed to a paid music service because it was convenient. Banning torrents, according to Mr. Kanyuka, will not lead to a rapid and significant increase in paying subscribers, as the most users of pirate resources will go on searching for a free content.
A few days later, Andrey Kolodyuk, Divan.TV, stated thatthe number of Divan TV’s users grew by 1.5 times in two weeks after closing Ex.ua and Fs.to. Apparently, it is not about subscribers, but free-content viewers. Neither Megogo, nor VOLIA noticed the burst of subscriber growth over those two weeks, as reported by the companies’ representatives.
Denis Beregovoy, partner at the law company Axon Partners, was previously Juskutum employee, the law company representing Ex.ua. Setting aside the debate flared up immediately on the comparison between Ex.ua and YouTube, and which was already featured by the Mediasat, it is worth pointing out that Mr. Beregovoy repeatedly emphasized necessity of looking for new ways to exercise copyrights: “The copyright in its traditional sense died with the advent of the Internet, so it requires an alternative”. The idea that it is better to cooperate with pirates, and not to fight tough against them remained unseconded.
The idea of cooperation with pirates would be unpleasant for any law-abiding citizen, but Mr. Beregovoy’s idea that it is essential to look for the most functional, convenient, viable, and legal monetization model sounds quite reasonable. This model, in fact, is YouTube. The advertising monetization model ContentID allows a rights holder to set own rules, it is user-friendly and easy-to-use. Can the pirate sites move to such a model?
Ivan Shestakov, Megogo, argues that there are no technological barriers, and he is even willing to render a free help to pirates with a system similar to the ContentID. “But they are unlikely to take advantage of it, according to Mr. Shestakov, since it is not profitable”. Megogo prefers developing as a paid service.
Divan.TV, according to Andrey Kolodyuk, is not interested in implementing a similar YouTube system as well.
The advertising model makes no economic sense, as the owners of OTT services insist. Speaking about the results of Megogo’s operation over 6 years, Ivan Shestakov referred in detail on the business model, admitting that the main source of revenue was subscribers. The platform has a free library with add viewing, TVOD is a piece sale of films, but the main goal of the marketing strategy is to bring a user to a full-range subscription.
SUBSCRIPTION IS A MAIN GOAL
For this purpose, the service is designed as convenient as possible (availability on any platform and in any operating system, a comfortable payment system, content localization, etc.). During 2016, the number of paying users has grown by 2.3 times and reached 850 thousand.
The legal scheme, which is convenient to users, may work fine. It can and should be improved by studying behavior of users and their way of “walking on the grass”. Without legal, convenient, and low-cost services it is hard to speak of any results of anti-piracy campaign. The same refers to working legislation and the courts. Let me recall the case of the Serbian SBB pay-TV platform, which was featured by the Mediasat. Victoria Boklag, CEO at SBB, informed that it resulted possible to build pay-TV just after implementing anti-piracy legislation.