Popcorn Time, a relatively new online movie streaming service, is one of the most interesting stories in the tech sector. The service allows users to stream high quality HD video content of just about any popular movie, for free. The interface is well organized, slick, can be downloaded on Google Chromecast, and can be streamed to Apple TV from any computer. And, surprisingly, the software design makes it hard for the service to be taken down. As one would imagine, film studios (and companies like Netflix and Amazon), are screaming. Recently, Bloomberg reported that usage of Popcorn Time in the U.S. more than tripled between July 2014 and January 2015, accounting for one ninth of all torrent traffic in the country. Netflix discussed Popcorn Time in a recent letter to shareholders, noting that that service is used by 100 thousand Dutch people daily; “Piracy continues to be one of our biggest competitors . . . Popcorn Time’s sharp rise relative to Netflix and HBO in the Netherlands, for example, is sobering.”
Popcorn Time’s design is elegant, with grids showing thumbnails of the latest episodes or most popular movies, star ratings, synopses, and trailers. The interface is easy to use and non-spammy, with no cheap advertising like one would see on most torrent sites or other sharing applications. Popcorn Time has such a professional feel that users don’t realize that they could be committing copyright infringement by using the service. According to Kyle Reed, chief operating officer of Ceg Tek, “We send out copyright infringement notices, and they question why they received them. It just looks like Netflix to some people.”
The Online Piracy Problem
Online piracy has been a problem ever since there was an “online,” although bootleg videotapes were a staple of the New York City Chinatown scene for decades before the advent of the Internet. However, online piracy used to be something only the true geeks knew how to do, using code names, VPNs and proxies to mask their trail. Today, online piracy is mainstream and ubiquitous; it has become ingrained in our culture, at least for the younger generations. Excuses abound to justify downloading today’s popular movies;, from those claiming that piracy is a consequence of the movie industry being stuck in time refusing to give the public that they want, to those claiming that since they will eventually see it on cable or Netflix (which they already pay for), then what’s the harm in getting it now – “I am not going to pay for the movie anyway, so where is the harm?”
In other countries, piracy may be the only way to view a film. Due to archaic licensing terms and contracts that split the world into virtual regions, many films are unavailable in many countries. It is all too common for someone outside the United States to order a streaming movie through online providers, only to receive a message stating, “This movie is not available in your region.” According to new research from Irdeto.com, the lack of content available in Russia has made piracy the primary viewing model with almost three quarters of consumers watching pirated video content. The U.S., UK, Australia, Singapore, and India, are not far behind Russia in online movie piracy. In fact, as much as 20% of all internet bandwidth is attributable to internet piracy, (although, we shouldn’t forget that the size of movies are hundreds of times larger than any website).
Even in the United States where the vast majority of consumers pay for some type of media content service, whether its cable or online services, will find many movies and TV shows unavailable. Video streaming services have chosen to compete by each offering their own exclusive content rather than trying to have the most complete menu. As a result, the best video remains spread out across a multiple outlets. Consumers without HBO can’t watch Game of Thrones; no Netflix subscription means no House of Cards, without Amazon streaming, no Transparent or Downton Abbey. There is currently no one media service that contains all the available streaming content.
Popcorn Time Gives Consumers What They Want
The creators of Popcorn Time set out to make viewing easier, providing a one-stop-shop for movie and TV viewing. Members of the Popcorn Time team claim it began as a challenge by “a group of geeks from Buenos Aires who wanted to see if they could create a better way to watch movies.”
From that perspective, Popcorn time is not a business. The coders did not design it for monetization. Popcorn Time remains an open-source project, with about 20 people—programmers and designers—scattered across the planet, making up the core team; all working on the software in their free time. As well, there are multiple versions, called “forks” coded by different groups. Being open source, it is free for anyone to use, and anyone can submit changes to the code, add features, and fix bugs. If the core team thinks a contributor has been an asset to the project, they can ask him or her to formally become a team member. As such, contributors change frequently.
Robert Red English, one of the early developers summed up Popcorn Time’s philosophy during a recent interview; “We are a community… I don’t think it will ever be turned into a proper business. . . . Popcorn Time has no funding—it’s run out of the pockets of the small community behind it—and no business model. Unlike other platforms used for piracy it doesn’t even carry advertising. . . . We are a community and we are not really driven by the money of it.”
He also makes no justification for its copyright infringing use. English believes the responsibility for obeying copyright laws should fall to users. He wrote. “If it’s stealing or not varies by country and each user is given the choice to use the program, and are warned we use torrents. It’s up to them to choose if they wish to continue.” Another developer named Sebastian told TorrentFreak that he isn’t particularly worried about the industry coming after them. “We don’t host anything, and none of the developers makes any money. There are no ads, no premium accounts, and no subscription fees or anything like that. It’s an experiment to learn and share” The Time4Popcorn team told the Business Insider that the software is not illegal because “it is not hosting anything. Popcorn Time serves only information. And it’s not forbidden to collect and serve public, open-for-all, information. You can look for the same information on Google.” While it may be true that in some countries and under certain circumstances, Popcorn Time may not be illegal, the justifications put forth above serve to highlight a larger problem; the lack of understanding of copyright law by the majority of the public.
To understand why these statements misconstrue copyright law, we first need to understand how copyright law applies to streaming media. Copyright law gives the copyright holder the exclusive right to copy, distribute, publicly display and make derivatives of their copyrighted work. If the software causes a person to violate any of these rights, then the person would be an infringer, potentially liable for monetary damages. In the United States, that could be significant, as film studios generally register their movies with the Copyright Office before release, they receive certain extra rights, such as a guaranteed minimum payment of $750 to as much as $30,000 per infringement. If the movie studio can prove that the person knew they were downloading the movies illegally, then those numbers change to a minimum of $30,000 to as much as $150,000 per movie. As well, the very nature of BitTorrent puts users at risk of infringement. To see why, lets look at how BitTorrent works
How Does BitTorrent work?
From Maximum PC
The process begins with a company installing a BitTorrent server, which is an internet-accessible computer containing a directory of user–generated “torrent” files, each file corresponding to a media or text-based files such as movies, music tracks or eBooks. If a user (User #1) wishes to share a movie with the world, he or she uses BitTorrent software to create a torrent file, which gives the movie a unique identifier and breaks the movie into hundreds of little pieces. User #1 uploads the torrent file to the torrent directory on the server. Only the torrent file is uploaded, not the movie. User #2 sees the movie in the directory and wants it. So User #2 downloads the torrent file an opens it in his or her torrent software, which communicates with other torrent software around the Internet asking them if they have any pieces of the movie file. Initially, only User #1 has the movie so User #2’s torrent software starts receiving the movie from User #1’s computer.
User #1 is “seeding” while User #2 is “leeching”. User #3 then sees the movie in the directory and also wants it. So he or she downloads the torrent file and the torrent software starts asking around for the movie. User #1 has the entire movie on his computer, but User #2 may not have finished downloading the movie yet, so only has pieces of the movie. User #3’s software can get the file from both User #1 and User #2. Receiving pieces of the movie doesn’t have to be in order as the movie is assembled after all the pieces are downloaded. So, User #3 may get a piece from User #1, and even though User #2 started the torrent process before User #3, if User #3 has a pice of the movie that User #2 hasn’t yet received, then User# 2 and get it from User#3. Determining which User to receive pieces from is all determined by the torrent software. The torrent software coordinates and optimizes the process so that receiving the pieces is fast and efficient, giving more priority to those people who allow part of the files to be uploaded at high speed. The more upload speeds are limited, the slower the download speed will be.
So the more people that leech or seed at any given time, the faster the process. All those computers leeching and seeding are together called a “swarm.“ The swarms talk to each other and prioritize the exchange based on various criteria, with hundreds of users all being part of the swarm.
However, in a streaming situation like Popcorn Time, priority is placed on earlier parts of the movie so it can start playing before the download is complete. To do this, the pieces are placed into a temporary file on the user’s computer called a cache. Caching is a way of making sure that the streaming process isn’t interrupted when a connection gets slower or is temporarily lost. Once enough of the movie available, the streaming begins while in the background the movie continues to download.
Are Popcorn Time User Infringers?
That download is a copy and so an infringement. As well, by re-uploading those pieces to other users, the user is distributing the movie, and so is also infringing on the distribution right of the copyright holder. The display right is probably not infringed, as the viewing would be considered private viewing, in the same way a DVR records something. Private viewing is an exception to the rule. When movie studios sue users for copyright infringement, they must show that the user is infringing. To do this, they use software that works similar to torrent software, finding pieces of the movies on a persons computer, which it identifies using the computer’s IP address. Every computer or website on the Internet has an IP address, which is nothing more than a unique identifier, just like a street address. However, the good news for users is that lately, courts have been questioning the use of an IP address as a valid method of determining which person downloaded the file. For one thing, multiple people may use any given computer. The IP address only indicates the computer, not the user. As well, most home or public networks use routers. Because there are only so many IP addresses in the world, networks get around that issue by giving an address to the router and having the router give private addresses to the users on the network. So when the movie studios see a piece of a movie on a computer, they only receive the public address of the router, which could have many computers attached to it. So imagine someone is downloading a movie while sitting in Starbuck’s, then the only IP address the movie company has is the Starbuck’s IP and would have no idea which customer is actually downloading the movie. For those reasons and several others, courts are starting to reject the IP address as proof that a particular user is an infringer. Not every court feels that way, but it is a trend. Many people also use proxy servers, which are usually provided by third parties. Proxy servers spoof your IP address to it looks like all the subscribers have the same IP address. The proxy server doesn’t log any of the traffic so there is no way to know which user had downloaded the movie. Some forks of Popcorn Time have a free proxy server built in, while in other forks a subscription is required.
Are the Popcorn Time Creators Infringers?
We now know that Popcorn Time users are likely infringers, but what about the software’s creators? The Popcorn Time teams claim that they are not liable since they do not control or manage any of the content accessible through the service; Popcorn Time is just a method of access. “We are not selling you a product, we are not ripping you off, we are just giving something out for free,” claims one developer. The movie files are only on user machines, not hosted on torrent sites. In that sense, Popcorn Time is not copying or distributing the copyrighted movies and aren’t even hosting BitTorrent servers, but rather, Popcorn Time uses public servers from third parties. So, the software in itself is not necessarily infringing. The developers say that it is analogous to using a car; a car can be used to commit a crime, but car manufacturers are not held liable for the crime, only the perpetrators. It’s basically a “guns don’t kill people; people kill people” defense.
The problem with this line of thinking is that it neglects to take into account “the inducement rule;” a form of secondary liability in which a person or company induces another to commit the illegal act, but the inducer isn’t actually committing an illegal act. The “inducement rule” holds companies or individuals accountable for infringements if they clearly encourage users to infringe or provide access only to infringing content and no other legal content. However, according to the Supreme Court, that liability requires more than ”mere knowledge of infringing potential or of actual infringing uses . . . the inducement rule … premises liability on purposeful, culpable expression and conduct.” The key here is purposeful. Did the creators of Popcorn Time know that the software could be used for infringement purposes, but also created it for other uses? That is very unlikely based on the way the software works as well as comments from the teams. Open up Popcorn Time and you only see copyrighted content. There isn’t even a YouTube channel. Popcorn Time only delivers movies from torrent sites, without any way to input legitimate torrents. It is made specifically to watch movies that the creators know are not licensed.
From a practical perspective though, it would be hard for law enforcement to target all the contributors and team members in multiple countries. Each person would require individual prosecution, with the proof that they were malicious in creating the software. It is possible that ignorance of the law, (i.e. believing that the project was legal after advice from the “4 lawyers” they claim to have consulted on the issue), may mitigate the punishment for some. A more likely outcome, however, is that some people may go to jail. Even if that occurs, it won’t matter much as the software will still be available and probably updated regularly with many other programmers striving to keep it alive.
The more likely target for law enforcement would probably be either the torrent sites that Popcorn Time uses or the owners of the sites that are hosting the Popcorn Time software downloads. That’s not an easy task. The movie studios have been battling the PirateBay, the world’s largest torrent site, for decades having the site taken down multiple times only to find it popping back up on new servers in other countries. The fight has taken its toll on the PirateBay owners, though. In November the Pirate Bay’s servers were taken offline and were down for almost three months. The PirateBay cofounder Peter Sunde spent 5 months in a Swedish prison for assisting in copyright infringement. Founders of Pirate Bay have all recently been held in custody for their actions. In November, Cofounder Fredrik Neij was arrested in Thailand waiting to be tried for assisting in copyright infringement. Cofounder Gottfrid Svartholm-Warg got himself into a totally unrelated mess by illegally hacking into criminal records and drivers’ license records at a company called Computer Sciences, and sentenced to three and a half years in a Danish prison.
The battle against Popcorn Time would be much more difficult than the Pirate Bay action since there are no particular servers being controlled by teams. If a server is removed, the software will automatically jump to an alternate. An alternate approach has had some success. The studios have tried to have the domains names taken away form there owners, but that only temporarily stops the software form being downloaded before the owners choose a new domain name and reestablishing their sites. The movie studios successfully had the first iteration of Popcorn Time’s domain removed but new forks immediately popped up at other domains. Take any down and there are thousands of domain name registrars and hosting companies where forks of Popcorn Time can thrive.
Now it looks like at least one of the Popcorn Time teams may be pushing back. An anonymous Popcorn Time developer recently stated that the added pressure is motivating him and his colleagues to finish a version of the software that operates entirely by connecting viewers’ computers and doesn’t rely at all on central servers. “When we release this, there will be nothing to be taken down again,” he says.
It is clear that Popcorn Time’s success is due to the fact that it solves a customer need; a centralized place that people can watch all their favorite content. Is it legal . . . no, but with proxy server’s and other IP masking technologies, getting caught isn’t that easy. Why is it so popular? Some will say its success is due to the fact that the content is free, but other’s say that it is merely because the user’s receive content in a way that they want. One thing is certain, if enough people use it we could see serious implications for Netflix, Amazon and a host of other online content providers. Popcorn Time’s success highlights the broken nature of the film industry, which a bunch of technology geeks understood better than those running the media empires. Expect Popcorn Time to live for quite a while. While it may have setbacks, we are likely see projects it flourish over time, at least until the film industry starts bringing content distribution in line with consumer needs and expectations.
As a photographer and Patent Attorney with a background in marketing, Steve has a unique perspective on art, law, and business. He is currently serving as the Chief Product Officer at Artrepreneur. You can find his photography at artrepreneur.com or through Fremin Gallery in NYC.