Darknet

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Darknet has been accorded a place of honor among some heavyweight tomes at DeepBlog Books. Nice.

Top 10 assaults on digital liberties

After interviewing experts in the intellectual property wars over the past three years, I've come up with this list of Top 10 infringements on U.S. citizens' digital liberties. (Those living abroad are seeing their digital freedoms eroded as well, thanks to WIPO agreements signed under U.S. pressure.) Feel free to make your own list, or comment below.

1. INDUCE Act

The proposed legislation in Congress, with bipartisan backing, was beaten back at the 11th hour, but some form of this legislation will undoubtedly be back. The INDUCE Act would effectively outlaw innovative new technologies, such as peer-to-peer networks and devices that could be construed as "inducing" a copyright violation. Think: iPod.

2. Broadcast flag

The Federal Communications Commission bowed to the entertainment industry's demands to make digital televisions less capable for viewers, but a federal court struck down the ruling in May 2005. Think the fight is over? It now moves to Congress.

3. DMCA

The 1998 Digital Millennium Copyright Act prohibits citizens from circumventing locks on digital media even for legitimate purposes. The anti-circumvention provisions need to be repealed.

4. Copyright Extension Act

The 1998 Sonny Bono Act extended copyright terms -- already unreasonably long -- by another 20 years, preventing vast numbers of digital materials from the 1920s from entering the public domain and frustrating Internet publishers, scholars and users.

5. Fair use — going, going, gone?

The entertainment industries have launched a systematic attack on fair use, restricting the ways in which the public can access and use media — especially visual media — so that citizens can no longer make legal uses of materials that were readily accessible in the analog era.

6. Trusted computing

The jury is still out on this one, but if inter-industry efforts succeed in reengineering the personal computer according to Hollywood's wishes, computers will no longer be general computing devices but entertainment playback machines.

7. Hollywood's strategy of chilling innovation

The entertainment industry has effectively thwarted innovative startups from bringing disruptive new products and technologies to market because of fears of a major lawsuit.

8. Overly restrictive DRM

Onerous, anti-consumer uses of digital rights management have chipped away at the traditional ways in which the public can access and use media, paving the way for a pay-per-view universe.

9. Proposed audio broadcast flag

If the FCC is granted authority by Congress, it may adopt the RIAA's request to lock down copyrighted audio content, making it difficult to time-shift and transfer copyrighted audio shows between different devices.

10. Consortium collusion

Corporations that work on networking and the interoperability of devices frequently set standards that prevent citizens from doing what they want with content they legally own.

Honorable mention: The No Electronic Theft Act of 1997.

Interview: A major pirate in the movie underground

record labels themselves are due to die. the artists are the ones who will eventually control their own productions, as they should — beneaththecobweb

Following is the transcript of an Apple iChat between J.D. Lasica and the head of six movie release groups — the first published interview with a major movie pirate. This transcript (which does not appear in "Darknet") is appearing here for the first time in this Web exclusive as an unfiltered look at the mindset of a leader of the scene.

JD: wanna introduce yourself pleez?

well, why not.. i'm beneaththecobweb
my birth given name means nothing, so ill stick to that one

ok. tell me about your background and main interests

sure, im currently living in europe, and based on the reason for this conversation in the first place.. i am very interested in the "scene"

ok. what attracted you to the scene?

the amazing part of the scene is that it represents an inner-circle
its a place where people in hundreds of different countries connect, and work for a common purpose

whats wrong with the way Hollywood and the music biz release their stuff now?

ah, good question, i've been thinking about this a lot lately
both hollywood and the music businesses are not adapting to changing times
for example, the music business is attempting to force consumers to pay ridiculously high prices for cds, even when realistically the cds cost them nothing to make, and only a small fraction of the money made goes to the creators, the artists

what would you say to Jack Valenti if you had the chance?

interesting question, perfect timing too.. if you've been paying attention to his recent policy, his attempt to ban dvd screeners, you'd see exactly what i meant in the above 'lack of adapting,'' .. dvd screeners are NOT what cause piracy, or even make dvd studios or movie industries lose money, dvd screeners if anything promote movies, especially the limited or low budget films that many people wouldnt otherwise hear about
and for what its worth, i have an evergrowing dvd collection, and i pay for the movies that are worth the money to pay for
if i'm not willing to pay for Dude Where's My Car 2, i apologize greatly
lol

if you arent uncomfortable, could you mention some of your more important releases of the last year

i can't go into specifics, because it would be easy to pinpoint certain things if i went into a long list of specifics
however..
if i mentioned movies either of equal or greater revenue to matrix and/or lord of the rings, i wouldn't be making an understatement

ok

and of course, the low budget quality films, Hollywood cannot compete with such films
perfect example: memento.

can you simply lay out how something is released

i can give you a basic outline, of course avoiding specifics
basically you have a dvd, let's call it dvd x
when you put it into your computer, the dvd is composed of several 'vob' files, defined as basically the meat of the dvd, the data
what you basically need to do, is rip those vob files, decrypt them, and downsample both the audio and the video to a smaller, more containable and transferrable size
you can perform that using several forms, SVCD, VCD, XviD, DivX, 4 major and commonly used encoding types
in the end, you turn an 8GB (8000mb) dvd into .7GB (700MB), a much easier to transfer file
with minimal or no loss of quality
thats basically it

after it's made, you mentioned 'releasing'

releasing is simply making it available
whether it is by Kazaa, IRC, word of mouth, or whatever method shows up along the way, thats how you get it out
because people WANT it, its not hard to get them what they want

thats great
ok about members of a release group - what are the average demographics? Male? College age?

the 'scene' consists of a greatly mixed demographic
to put it simply
i've seen people as young as 14
and as old as .. 62
if i were to pinpoint an average age, i'd say 21
mostly male

now, do some group members do it just for fun or do they make a profit doing this (like blanket sales on NY streets)

most group members i come across do not do this for profit
ill give you an example
you're a high school student and you're 16
you're trying to become 'known' in your school, so you decide to design your schools website
problem comes across, you have no suitable a) html editor and b) photo editor
is someone of your statute capable of paying for the likes of Adobe Photoshop and Microsoft Frontpage?
*stature, it think thats how its spelled
so you go to Kazaa and you download it, knowing its not 'right,' but also knowing you don't have a choice
you have no intent to sell or use it in any form but helping yourself

hm ok
do you consider copyright infringement ethical in this particular application?
movies, etc

in my mind, copyright infringement is a loose and unadaptive policy
pretty soon, everything will be on the internet
if it isn't already
the only reason major corporations are arguing the merits of copyright infringement is because they themselves haven't adapted to changing times
but me specifically, i buy what i can buy, and i download what i cannot
i do not make enough money to pay for Adobe Photoshop or Windows XP
but i dished out the money for office XP and windows 2000

ok what do you say to the studios when they argue that piracy will make it harder to create big budget films

i'd have trouble saying anything at all, i'd be busy laughing my little head off.. but what i'd try to say is that any quality movie, such as return of the kings that premieres in december, will be paid for. the crap will not be paid for and will inevitably lose money. it's competition, its what america was made for and its what europe is going towards

can you say how many people are in a typical release group

realistically, the scene is not a very big place
the largest group i've seen is around 30 members
and the smallest i've seen is 2
avg lets say, 15

cool
very broadly, in what area do you work legitimately?

you mean my personal occupation in life? or in the scene?

your personal occupation....like student, businessman, IT guy....

i'm a network administrator

good enough
broadly....what part of europe are you in...eastern, western, northern....

western

do you look at this as more of a enjoyable pursuit or a philosophical cause

to say the scene isn't at least a small 'movement' would be a lie, becasue much of the scene does disagree with 99% of the policies issued by the riaa/mpaa/etc, but as the scene grew it became much more an enjoyable situation with a hierarchy that you can climb up

what should movie studios and record labels be doing now?

ill go into one of them, its basically the same plan for both
record labels themselves are due to die
the artists are the ones who will eventually control their own productions, as they should
the artists should start meeting up with large corporations that deal with consumer products, for instance.. snapple.. and make a deal with them
'we'll give out your music for free, and you'll get a percentage of our sales and we'll promote your concerts'
selling cds isnt really all that important anymore, most of the cash gets pocketed by the record labels themselves, its about time the artists see more of their money

whats the greatest misconception about release groups and filesharing

ah, good question
the news/media/mpaa/riaa paint the release groups as kniving [conniving] thieves
(sorry if spelling is wrong on that word)
basically, we don't go out to steal peoples money for their hard work
its not about theft, its about, to put it simply, equal opportunity
if you want me to elaborate on that i can, but i think based on what i've said before it should be pretty clear

just tell us a little more about 'equal opportunity' -- does that mean early access to movies, easy access to affordable music in digital format, or what else is involved?

i think everyone should be allowed to experience great music
(for example)
throwing a $20 price tag on a great album is limiting your audience
if you give it to them for free, whether it be by downloading or free promotions, everyone will be able to experience it
no matter their social class, taste, or budget
the key is removing the middle man, in this case the record label

so far the riaa and mpaa have not identified a single movie release group member, much less gone after them legally. why is that? are they incompetent or do you all take extreme precautions?

i'd take the position
of alot of both
they are extremely incompetent, they have no idea about what is going on around them
but, equally as much
group members take every precaution available to them
they do not speak on public networks, they use encryption to speak to each other
they often don't even give specific life information to their fellow group members
constant paranoia would be putting it lightly

are your release group members in the us, europe or both?

everywhere
as i said earlier, the scene is international
you'll find group members in asia, europe, the US, and i've even seen a few from africa and south america
oh, and i'm forgetting the aussies

i've heard that often release group members have never met one another. is the work done in these groups largely independent, with people working alone/solitary?

you'd be correct
very few members have met each other
(that part was correct)
but the work itself is done as a group
a cooperative mission if you will
some members are fit for certain parts of a task, and some members are not
it becomes the equivalent of an assembly line

is there anything you can tell me about the different facets of that assembly line ... rippers and distributors and couriers?

what do you want to know? rippers rip the DVD (from DVD to compressed footage)
couriers are in charge of 'making the release available' for the enduesr
distributors? i've never heard of that word in this context

distributors like on irc. but: i don't want to use my terms. just thought it would be interesting to hear from someone on the inside how it all works, what roles the different people play. is it all just rippers and couriers, and the occasional donator?

yup
different forms of donating though
whether it be money, supplies, etc
ripping is very CPU intensive, you need to have the latest gear

how does someone hook up with a release group (someone who legitimately wants to help the cause and join the scene)?

not going there, i apologize

cool
wondering why you've agreed to give this interview today.

well, first off, i'm happy i was able to convey my outrage with the common misconception
the misconception that we're evil little thieves
if all i needed to do was answer a few questions to clear that misconception
i'm all ears

where do you see all this heading, in a year or 5 years? who'll win, how will the music and movie industries (and TV?) change or evolve?

refer to music is free
that's where i see us
as soon as a year, and as late as 5
ultimately, the record labels are fighting a losing battle
subpoenas for kazaa downloaders get the RIAA nowhere
banning dvd screeners gets the MPAA equally as far

so they need to work on their digital distribution model?

that's putting it lightly
they need to change their entire business model
they need the 'dynasty leaders' out
and the youth in
running their companies based on antiquated models has brought them close to extinction

but they still have a right to make a profit, no? or should the distributors be removed from the process and only the artists receive compensation?

the latter
the labels are thieves
they are complaining of cd sales dropping and money losses
but its not their money
they consider their advertisements and promotions of artists to be almighty and powerful, you don't need to give the labels 99% of your cash to achieve the same purpose

but you're mostly involved with releasing movies, not music, and we can't get the movie studios out of the movie business, right? Isn't the problem with Hollywood the release windows and their current business model?

i don't think you can completely eliminate movie studios from the business
that's absolutely correct
release windows and their current business model need changing

ok. anything else you want to add, or that we haven't covered, or that you'd like to get out to a national audience?

basically, above everything else, i'd like to make it known that the RIAA and MPAA are accomplishing nothing for the studios of both media businesses, and i dont understand why the studios are cooperating with any of their policies

cool. appreciate your forthrightness.

no problem, its been a pleasure to meet you JD

Interview conducted 2:42 PM to 3:55 PM on Oct. 27, 2003

Story: The Prince of Darknet

Forest is in many ways the ultimate digital renegade, the kind of copyright-flouting, authority-taunting Young Turk who gives movie studio titans and record company executives the cold sweats. Except for one thing: He is being paid to commit piracy by a major media company.

The following account is an exclusive look inside the high-tech bunker of the corporate spy who oversees the rippers, coding wizards and unrepentant scofflaws of the Internet movie underground.

Bruce Forest rocks back in his office chair, convulsed in laughter at the latest attempt by federal agents to smash the pirates of Darknet. The U.S. Attorney General had just announced the FBI’s latest crackdown on Internet piracy, this time against 7,000 members of the Underground Network who had been trading movies, songs, games and software over secret online networks.

Forest cradles his computer keyboard and taps out another scorching barb to his fellow renegades at the authorities’ expense. “If the goal was to slow down file trading in the underground, then it failed completely,” he tells me, running stubby fingers through a mop of unkempt brown hair as a one-carat champagne diamond stud earring gleams in his left earlobe. “The people they raided are nobodies — not even near the top. It’s had no effect whatsoever on the scene.”

The scene is the name insiders use for the vast, hidden file-trading underground. Outsiders sometimes call it the Darknet, for nearly all of this illicit activity takes place in the shadows. Either way, it’s a domain Forest knows perhaps better than anyone.

Nearly every day, he holds forth under multiple identities as a master of the digital underworld. He does so from the home office of his ranch house in suburban Connecticut, a five-acre wooded tract that he and his family share with moose, fox, and a flock of guinea fowl that keep Lyme-carrying ticks under control. None of the residents suspects that their bucolic little town is home to the Prince of Darknet.

Forest belongs to several major movie piracy groups. He is also a channel operator on Internet Relay Chat on numerous piracy channels. Forest is in many ways the ultimate digital renegade, the kind of copyright-flouting, authority-taunting Young Turk who gives movie studio titans and record company executives the cold sweats.

Except for one thing: He is being paid to commit piracy by a major media company.

Forest is, in effect, working both sides of the fence. The underground movie groups do not know that he is a full-time consultant for a well-known global entertainment conglomerate — it would be bad news for Forest (his real name) if his online identities were revealed. In turn, his corporate benefactor allows Forest to ply the piracy coves like a swashbuckling one-man Jolly Roger — swapping movie and music files, building up cred in the seamier corners of the Darknet — as a way to infiltrate and keep tabs on the illegal trading networks.

“I guess you can call me a true double agent,” says Forest, outfitted in jeans, casual nylon shirt, and tan socks. He stretches out his 5-foot-8 frame and perches his shoeless feet atop a desk. “I lead a very comfortable double life.”

Forest has become the eyes and ears of an industry that is ramping up plans to make sure the motion picture studios do not suffer the fate that has befallen the record labels. In November, the MPAA announced is intent to begin suing individuals who swap films over peer-to-peer networks. Movie executives worry that Hollywood could become the next modern-day Carthage as Internet connections become lightning-fast, computer hard drives bulk up in size, compression technologies improve, and P2P networks become harder to foil. The battle over movie piracy may prove to be even more fierce and intractable than the one being waged in the music world, given Hollywood’s formidable firepower on Capitol Hill and its presence in nearly every aspect of our celebrity-infused culture. While no one has yet shown a link between movie file sharing and a loss of revenue at the box office or at the video rental counter, Forrester Research estimates that one in five teenagers has illegally downloaded a feature film. Between 400,000 and 600,000 movies are already being illegally traded online every day, studio chieftains have said in Congressional testimony. Some 17 million pirated movie files now float around the Internet, according to research firm BigChampagne, the Nielsens of file trading.

Which brings us back to Forest, who seems to be close at hand — like a veritable Forrest Gump — whenever movies and Internet piracy intersect. It was Forest who came up with Hollywood’s estimate of movie piracy levels, a number he devised after staking out the darkened street corners of the movie underground one blockbuster weekend in May 2002 — the same weekend CNN shot footage of a silhouetted man downloading “Star Wars: Attack of the Clones.” (The shadowy figure was Forest.) When five of the major Hollywood studios unveiled Movielink, their Internet film rental service touted as an alternative to piracy, Forest was one of its key architects, and he owns a patent on the technology. Forest has just unveiled a new business model for digital distribution of music and movies. And when I wanted to interview leaders of the movie piracy underground for this article, it was Forest who successfully set the table for me.

“It has taken me years to build up the trust and respect of my peers,” he says in a breezy, broadband-fast delivery honed during a boyhood on the streets of Forest Hills, Queens. “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. It’s rough frontier justice. You have to earn your way in by offering value to other members in the form of gear or coding talent or access to the newest, coolest material.”

Forest acknowledges that in 1997, as he was scratching his way up the piracy hierarchy, he joined his first release group — clusters of individuals who work secretly in teams to illegally distribute digital goods in the Darknet. He started out as a “server,” a low-level position he sardonically likens to a Mafia button man. A server is at greatest risk of criminal prosecution because he distributes infringing movie files on an open Internet address. Performing such yeoman’s work offers advancement in the scene. (Not surprisingly, no one in the scene uses the term “pirate.”)

Forest no longer serves, having parlayed his familiarity with the scene into a lucrative consulting business. “I don’t do anything illegal,” he tells me on more than one occasion. Yet, to prove his privacy chops and to maintain the trust he has gained in the movie underground, Forest shares with a few of his peers the password to his private server, a secret stash of digital goods accessible only by invitation. When I stop by later, I spy a treasure trove of copyrighted booty: thousands of songs, music videos, movie files, television shows (including every episode of The Simpsons), computer games for Microsoft’s Xbox, and software programs that fill up 2 terabytes on his networked hard drives. (Comparisons can be misleading, but the entire Library of Congress is only 10 times larger. Forest's 2 terabytes would fill 1.4 million 3.5-inch floppy disks.) His online hideout includes the Billboard Top 100 of every hit song from the past 44 years and films such as Spider-man, Gangs of New York, Gladiator, The Godfather II, and Austin Powers.

Take what you want, he offers.

College students who run similar private file-sharing networks have been busted for less, but Forest does not fear the copyright cops. When he negotiated his contract, he insisted on an indemnification clause, a hold-harmless provision that shields him from being prosecuted for downloading pirated movies belonging to the major movie studios. He also consults for the music industry and has been indemnified by the Recording Industry Association of America. Forest may be a spy, but he is no snitch, and he takes pains to make clear that he will not fink on anyone in the scene.

Those encounters have come in the form of various personas. He maintains multiple identities, from an entry-level server to a powerful and petulant elder statesman, on different IRC channels as a way to expand his sphere of contacts. “I have different personas on every channel, so I have to be careful that I don’t blow my cover,” he says.

As a full-time consultant, he writes a 200-page report for his corporate client every two weeks in which he outlines his latest findings, charts levels of movie piracy and suggests strategies to protect the company's intellectual property. (Though his work chiefly concerns film piracy, he also tracks the file trading of television shows, music and computer games.)

Release groups and the scene have received little attention in the mainstream press for a simple reason: No participant wants to talk about it. Publicity attracts the attention of law enforcement. But the bulletproof Forest has no such reservations. He agreed to share the highlights of what he has observed during the three years he has infiltrated the darkest corners of the piracy underworld in return for a pledge to protect his online identities and a disclaimer that his personal views do not necessarily represent those of his employer.

This is the first time he has taken a stranger on a tour of the digital badlands.

Most people associate the Internet with the candy-colored playground of the World Wide Web, but millions of others — geeks, college and high school students, hard-core pirates — navigate to other harbors on the Internet. The Darknet is cyberspace’s equivalent of Al Capone country, a lawless, ethics-free frontier impervious even to a legion of industry lawyers. The Darknet is where epic battles over copy protection and file sharing will be joined.

Today, Forest has arranged for me to interview two leading figures in the Internet movie underground. The ground rules are simple. The interviews will be conducted over Apple’s iChat, a software program that allows participants to type messages back and forth on screen. The connection is untraceable, thanks to the “bounces” both they and Forest have set up. They can see me through a Webcam, but I can’t see them. “They want to make sure you’re not wearing a uniform,” Forest half-jokes.

The first underground figure I contact goes by the name of beneaththecobweb. Forest, who has known him for five years, says he is a member of nine movie release groups and heads up six of them. As such, he is one of the highest-ranking members of the scene. Forest describes him as a man in his late 20s from a western state. Beneaththecobweb will say only that he is a U.S. citizen and network administrator temporarily living in western Europe.

“The amazing part of the scene is that it represents an inner-circle … a place where people in hundreds of different countries connect, and work for a common purpose,” beneaththecobweb tells me. The scene is all about giving people of every social class or budget equal access to great music and movies. Hollywood and the music industry must “adapt to changing times,” he says.

The second figure takes the name Ninja. Forest tells me he is a college student on Long Island and a former high-level Internet pirate who left the scene not long ago after running three movie release groups and one music release group. Ninja says he was primarily drawn to the scene because of easy access to new Hollywood releases.

For the next three hours we trade messages about how the scene operates, while Forest tosses in running color commentary.

When copies of The Incredibles, Terminator 3 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. Although movie groups first appeared around 1997, the scene got a kick-start in late October 1999 when a Norwegian teenager wrote a few lines of code that made it easy to pluck a Hollywood movie from a copy-protected DVD. A typical release group, bearing names like Flair, Esoteric or Opium, consists of anywhere from a handful to as many as 30 individuals, with 15 members on average. Today there are an estimated 140 underground movie groups worldwide, up from 32 in 2002. Other release groups focus on games, software, television shows, even e-books.

Releasing a movie onto the Internet follows a process that beneaththecobweb likens to a factory assembly line. While decrypting, encoding, and distributing a single movie could be done by a single individual, the chore is sufficiently labor-intensive that it makes more sense to parcel out the duties to a team of specialists. And so an underground cottage industry was born.

To begin the process, release groups usually obtain the movies from a surprising source: Hollywood insiders. A study published by AT&T Labs in September 2003 found that 77 percent of the illegal movies on file-sharing networks come from people associated with the movie industry.

Films leak into the piracy pipeline in several ways. Most treasured is a copy of a master print obtained during a film’s postproduction, when the shooting has been completed and hundreds of employees typically have access to the film master to make edits, adjust colors and sounds, add special effects, and perform other finishing touches. Equally tantalizing for the release groups are “screeners” released on DVD to a select group of viewers before a film opens in theaters. Another source is the pressing plant, where hundreds or thousands of discs with imperfections might be discarded months before a DVD’s retail release. A “telesync” is created when a movie theater employee or his friends set up a camcorder on a tripod and videotape the film from the projection room. Most commonly, someone sneaks a camcorder into a theater and aims it at the screen, though such “screen cams” can produce images with jerky movements and shots of the back of patrons’ heads. Still, the audio quality can be excellent; pirates can get good sound quality by plugging into jacks designed to help the hearing-impaired. (Not long ago, Los Angeles police arrested two eighteen-year-olds for videotaping Star Trek: Nemesis and a twenty-eight-year-old man for videotaping The Passion of the Christ in L.A. movie theaters.) The movie studios have lately tried to thwart screen cams by arming movie theater attendants with metal detectors and night-vision goggles to catch video operators in flagrante cinema. Another link in the chain is the video store employee who has access to DVDs after the film’s theatrical release but a few days before their release to the public.

Let’s follow the trajectory of a typical title through the movie underground. It begins with a supplier, usually someone who works at a production studio, DVD pressing plant, video store, or some organization with ties to the motion picture industry. The supplier hands off the unreleased or recently released film—say, a preview DVD of Mission: Impossible 3—to a contact in a release group or at a drop site. Next, the file is transported as quickly as possible to a ripper, or cracker, either by sending the DVD by Federal Express or by allowing the ripper to grab the file from his computer through a virtual private network connection. The ripper’s task is to copy the movie’s raw video and audio files and strip out any copy protection. Then he or an encoder edits out the identifying marks studios insert to track copies and also compresses and optimizes 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—ultrasecure underground digital vaults. From there, couriers transfer the file to a lower-level dump site or to high-speed distribution servers (computers configured to share files). These members, skilled programmers who often double as university or corporate network aces, have access to powerful computers with fast Internet connections. “Couriers are the drug mules of the distribution chain,” Forest says. The final link in the chain are the channel operators, who announce the movie’s availability on individual IRC channels like mongers at a fish market, setting off a feeding frenzy. (An estimated fifteen hundred IRC channels are devoted exclusively to movie piracy.) The entire process typically takes two to three days—with handoffs that often cross international borders.

“It’s the balance between Europeans, Americans, and Asians that makes it work across different time zones,” Ninja says. Forest adds: “I know of one group that has Belgian encoders, U.S. rippers, Asian hard goods people, and Canadian administrators.”

Much of this happens in a loose-knit fashion, with individuals working independently—usually late into the night—in cloistered bedrooms, college dorms, and offices rather than a central location. “Very few members have met each other” in person, beneaththecobweb notes. During all of this, administrators help the operation run smoothly, buying hardware, network bandwidth, or shell accounts on the computers that distribute the movie. One or two group leaders organize the entire enterprise. And then there are the donators, generally sympathetic, older benefactors who donate equipment, bandwidth, facilities, or funds to a release group 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 camcorders to various release groups on his dime. Forest, who must have balls of silicon, deducts all such donations on his income tax return, saying, “I have an honest accountant. He said I can tax-deduct it as a legitimate business expense.”

Some groups specialize only in ripping or encoding, while others distribute the title, and still others handle all aspects of a release. Once released, a title filters out into Usenet news groups (go to Google, click on Groups, and you’re there) and the Web-based file-sharing services. The movie piracy network might be described best as an inverted pyramid, with a few thousand members of the elite release groups at the top; a wider group of 50,000 to 200,000 users who operate both public and private servers that store the digital goods; another 3.5 million tech-savvy users who swap files on IRC channels, news groups, and public FTP sites; and finally hundreds of millions of people worldwide—perhaps 60 million in the United States—who use peer-to-peer networks such as Kazaa, eDonkey, and iMesh. By the time a movie or song funnels down to the bottom of the pyramid, it may have picked up a virus, or it may be a bogus file. But the material at the very top is gold.

Standing atop the piracy pyramid are the technologically savvy men (and it is an overwhelmingly male enterprise) who seem to share a youthful swagger, a disregard for authority and a conviction that, as beneaththecobweb says, “everything” should be up on the Internet. Forest says of movie release groups: “Most members are guys in their late teens to early 20s. 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. On the IRC channels you see a lot of adolescent interplay, with guys talking about girls and breast size, but when they start talking technology, they sound like Stephen Hawking.”

While some release groups aspire to be swiftest in releasing a title, other groups try to produce the best-looking digital fare. Two groups with reputations as the “class acts” of the movie underground are Centropy, known for its high-quality releases, and VCD Vault, whose mission is to convert movie classics from the 1940s to 1970s into a downloadable digital format. There’s a concerted effort under way to make available to the public any movie ever made. The undertaking even has a code name: the Netflix Project, named after the mail-order company with a catalog of 15,000 DVD titles. Dozens of release group members sign up for a Netflix account, which allows them to obtain as many DVDs as they want in a month. “I know people who have ripped 50 movies in a month from Netflix,” Forest says.

What motivates these young men is less a political movement or philosophical cause than a desire to belong to an edgy, secretive, forbidden brotherhood. And while zinging the Hollywood Goliath is satisfying in itself, at its rawest level the scene is a sporting competition between outsize egos. Whoever beats the opposing “teams” wins the challenge — and bragging rights.

Forest, who races a catamaran on water and Formula Dodge on land (he has survived two bad accidents), offers this take on the scene’s allure: “The little edge of danger involved is kind of cool. People like belonging to a tight-knit community. It just happens to be a community that skirts the law."

When I leave, Forest tells me, “I’m shocked they’ve told you as much as they have.”

(From Darknet: Hollywood's War Against the Digital Generation. You may copy excerpts from this entry to comment on or critique the work or to otherwise engage in fair use.)

Transparency notice: A longer version of this article was slated for publication in the New York Times Sunday Magazine late last year before the editors seemed to lose interest. I reworked it for Legal Affairs, and it appears in the current issue.

Also see:

• For the reaction of Jack Valenti and John G. Malcolm, the MPAA's head of worldwide anti-piracy operations, and for a fuller discussion of this topic, see "Darknet" the book.

• Transcript of IM chat with beneaththecobweb, the head of six major movie release groups.

The new face of file sharing?

Jon Healey, LA Times: The new face of file sharing?

Interview: Andy Wolfe, former CTO, ReplayTV

[The Hollywood studios] essentially wanted to control what anyone could record on TV. They wanted sole discretion over how long you could keep a show after you recorded it. They wanted to limit how many episodes of the same show you could record. They wanted to ban thirty-second skip buttons and to prevent fast forward from reaching a certain speed. — Andy Wolfe

Andy Wolfe was chief technology officer of Sonicblue, the company that acquired ReplayTV and shipped the first units with video-sharing capabilities. He reveals what the Hollywood studios and television networks were really after in their lawsuit against Sonicblue's ReplayTV: control of your television. He spoke by telephone with J.D. Lasica.

Are you familiar with the term file serve television?

We actually think we invented it. The Replay 4000 shipped in 2001. It was the first networked PVR. You can connect two of them together and you can file serve from one to the other. A year and a half before that, in 2000, we did the first file serve music with a device under two names. We put it out as a Real receiver under the Dell brand. And that was a thin client that you could put on your network and go back to your computer to serve MP3s. We built that as a theme across a number of our products.

We also did a dedicated product called the Rio central, named one of the best in show at CES 2002. Seeing that product was one of the reasons that led us to buy ReplayTV. They had a proposal to do this networked video in the home on the next platform. They didn’t have it designed yet, they didn’t have it developed, but they developed some core technology, and that was why we bought ReplayTV and that was the product we brought to market. Internally, to us, that was always the killer app.

I have 3 of them in my house — two 4000s and the 4500 – and they’re all networked and they all talk to each other.

Tell me the backstory of ReplayTV.

ReplayTV was a dotcom that had raised $150 to $160 million funded by Anthony Wood and Kleiner Perkins and others. And then the networks came in: NBC and AOL and lots of industry partners. In the end there were over 100 investors. They burned through all their capital. We came in, late 2000 at Christmastime, and they were close to bankruptcy, and they had stopped manufacturing products and they were gonna become an IT house. They asked Anthony Wood to come back in and sell the company. Anthony rallied the troops around the idea of building this network platform, client-server technology into the product. We actually had been working on the same idea. We worked with another company, Sensory Science, a Linux based Intel architecture box that played DVDs and was really a home server, but when ReplayTV came in we saw they were further along in software development and held patents on personal video recording, we bought both companies. By December 2002 Replay was up to a 35 to 40 percent share of the PVR retail market.

TiVo was the other big dog.

They both showed up together at CES in 1999. TiVo shipped a month or two before. In March 2000, TiVo got a big influx of cash by going public. Replay was scheduled to go public in April 2000, but the market suddenly soured and the IPO got canceled.

And file serve TV was one of Replay's big selling points.

That was the model, file serve TV, and it was inside and outside the home. So we designed the Replay platform to be able to serve from one to another; we designed it to be scalable with a thin client so you could record it on one Replay and access it on a thin client built into a TV, and we designed it using ichannels, an outside-the-house file serving technology. The idea was to build servers that would operate commercially and you could purchase content. It would be downloaded to the box in your house. And that’s where we got into fights with the industry. When we went out and proposed our own DoD servers around the ichannels, that’s when things started to get nasty.

We went to the content creators proposing to use their content, with them getting 65 percent of the revenue, and they basically said no. The same thing happened in the early days of the digital music era, none of the music labels wanted to license their music.

Why were the studios so opposed?

I might talk about it after the lawsuit dismissed. But a lot of it is, they just don’t have these rights. The truth is nobody has the rights for Internet distribution for a lot of this stuff. The contracts they have give them the rights for certain kinds of distribution, and they’ve also given away certain kinds of rights exclusively. For example, they’ve given HBO and Showtime exclusive rights for subscription services, so they can’t license their content to Internet subscription services. If you wanted to have a service where you pay 20 bucks a month and get 10 movies, nobody has the rights to do that because they’ve given HBO and Showtime the rights for subscription services. I haven’t seen the contracts. At least they’re worried that it would.

The other thing is that in a lot of cases, it’s not that they don’t have the rights to the show — they don’t have the rights to the music. Because when they signed the contracts, it was originally intended only for broadcast TV.

Eventually that’s going to change, they’ll realize there’s a business in licensing this concept. But the big issue for them is, they don’t want you to have stuff archived in your house. And that’s the model we are starting to get to. I could record everything I want to watch and decide later which I want to watch. I could record 50 shows a day and watch only one of them. The truth is, very soon you won’t have to throw away the 50, you can store them for a year. Or forever. And that scares the hell out of the studios.

If you’ve ever talked with them, they know you’re not gonna watch the commercials for recorded material, for anything that’s not live. But the other thing is, if you talk to people in the industry, they’ve got this buggy whip problem. For 50 years they’ve been taught that their brilliance is in programming, and programming is the art of deciding what shows get watched when. They get you to watch shows that come on after other shows, or to attract a particular demographic to increase the value of advertising dollars. If you sit down with TV execs, that’s what they think their skill is. Not creating quality television, somebody else does that. Their art is in programming, and that’s going away. And they haven’t learned how to make the adjustment. You’ve taken away their tool for manipulating the public or their tool for extracting the value of their assets. They haven’t learned how to make that adjustment.

Did you chiefly deal with the networks or the Hollywood studios?

It’s interesting. The New York people were always interested in new business models, and the L.A. people would tell them to shut up. You always expect New Yorkers to be the arrogant ones, but the people we were dealing with from the relatively younger companies like HBO, Showtime, and MTV always wanted to listen. It was the L.A. people from Disney and MGM — relying on a business model developed more than fifty years ago — who ultimately said, ‘You don’t understand our business, you’re a threat to our business,’ and they set about to crush us.”

I thought the main thrust of the lawsuit was skipping commercials and network sharing.

Not true. If that had been what the lawsuit was about, it would have been settled in a few weeks. That was a smokescreen. They knew those things could have been negotiated.
we believe to this day we would have won in court. The real issue involved a couple of things. They wanted to be able to control what you could record — the same thing involved in today's clash over the broadcast flag. They essentially wanted to control what anyone could record on TV. They wanted sole discretion over how long you could keep a show after you recorded it. They wanted to limit how many episodes of the same show you could record. They wanted to ban thirty-second skip buttons and to prevent fast forward from reaching a certain speed. They wanted to limit the total amount of the stuff you could record. They came up with a number, but I can’t tell you what it is.

Have we already surpassed it today?

On my laptop.

So those were all things that we felt were non-negotiable. They conflicted with existing usable models. Nobody makes videotapes that self-destruct, right? Or that lets you record The Simpsons only once a week. And we just didn’t want to get into regulating customer behavior in those ways, and we didn’t think there was any law that backed it up at all.

As far as sharing files with others, they had an argument. At least there was some level at which those things were legitimate. We were pretty clear that somebody could use Send Show in a way that wasn’t permissible. But that’s never been the basis for getting rid of something.

As for commercial skipping, it’s never been clear that they have any defensible position there – at least it’s a very obscure argument. Because they were saying that if they were suffering economic harm, it was by default unlawful. I’m not sure they even got close to making their case there.

But the other stuff was just — we want our way. That their business models were being threatened. We couldn’t imagine a judge sitting there making a ruling that nobody will ever be allowed to have hard disks recording video bigger than this many gigabytes.

In ReplayTV's Send Show, how did you settle on the figure of limiting it to 15 people?

There were two functions. There was streaming in your house, and that was limited to eight units, and there was Send Show, where you could email a show to somebody else, and that was limited to 15 people and only second-generation copies. If I sent it to you, you couldn’t send it to anyone else. By the time we made that final decision, we knew there was a possibility of a lawsuit. We wanted to make sure there weren’t people running commercial video distribution services on our platform. That wasn’t what it was for. It was for: Hey, I saw this episode of this great new show and I’m going to send it to my friend, or look, my kid was on the news today, I’m going to send a copy to Grandma.

Fifteen was just a number that prevented any commercial use.

An average customer sent one show per month. We never knew of any commercial applications built on top of our platform. Why bother with it, when with the Internet you can just send what you want?

That’s why we were amazed there was such rigamarole around this. We sold 60,000 of these things. ATI sells a million cards a year that lets you record shows and attach it to your email. They still do. Sony sued us, but they let you record stuff on your Vaio and burn it to DVD and email it to anyone. AOL lets you attach a show to Instant Messaging. It’s amazingly hypocritical, with these companies and their software that are out there and can do all this stuff on the PC, they took it for granted, but when we came up with this device that ordinary people could use, they panicked.

Is ReplayTV a computer?

It’s a computer but it’s all proprietary software. You couldn’t get into it and run your own software. It had a hard drive and processor and a PCI card.

How do you see the file-sharing wars playing out?

My theory has been, the only way to get away from the free-for-all piracy situation is to have these boxes where you have access to value-added services. Put all the back B shows up for sale, or have movies on demand, or have streaming music with the latest bands, and have that so it only works with boxes that have somebody’s logo on it. And then people will use the boxes with the restrictions as long as they’re not too unreasonable.

It’s easy to get stuff online. People aren’t going to want to swap shows in great numbers – they’re on these file sharing networks because they can’t find the stuff through legitimate means.

Some of the other stuff we went through was kind of silly. The networks have this concept that nobody ever records their programming. And yet, right in the middle of our discussion, the FX Network showed all 24 episodes of 24 from midnight to midnight, and we asked them, You think that many people sat through it? I mean, you guys program knowing that people will record this stuff, it’s your business model.

Were you dealing with the CEOs?

Never. The lawyers and the business development people. In the early days, we dealt with the presidents of HBO and Showtime and the small networks.

Where do you see all this going?

Three possibilities. One is that everything becomes centralized, and the cable companies are gonna win and they’ll offer services delivered to your set top box. A least common denominator thing. They own the content, they’ve got their own servers, and you subscribe to pay per view and get the shows from the cable provider. It's low quality, low service level, very few choices in terms of product, but they have the relationships in terms of licensing contracts. Your box will offer only a few features. We're starting to see some of that with Time Warner.

The second possibility is that Microsoft drives it, that everything lives on your PC as a client server, and there’s a cheap thin client box that connects your TV to the PC. They’re pulling strings in the industry to make that work.

The third possibility is a retail play. Now it’s likely that tier 2 or tier 3 guys like Apex or another company in China tries to copy what ReplayTV and TiVo have done. And they build boxes that have no rules, that are feature heavy. They don’t care what the networks say, they can change brands or owners. An Ethernet is a $3 connector these days. We did it the first time and it was hard because there were performance issues and software complexity, MPEG decoder chips were complicated and buggy, but all that stuff has been worked out. The guys who make DVD chips are now all making PVRs on a chip and now they can pressure TiVo and Replay to decide what goes in the product. But once there are 50 different brands out there … Apex became one of biggest DVD brands by getting the parts, slapping them together and selling them cheap.

So you don't see TiVo or a DVR-driven DirecTV as part of the equation?

DirecTV maybe. They’re in chaos because of the merger. They and Echostar will be part of the story. In the end they’re the same as the cable providers. They can’t cross any lines or else they start losing programming from the networks. So they’ve got a tough line to walk. They will generate some of the PVR volume, but they can’t do too many innovative features. They can’t do video on demand because they’re satellite, they don’t have enough bandwidth. All they can really do is in-home recording. Will they allow you connect together in a client-server environment and build your own libraries? There’s not much incentive for them to do that.

But they can download stuff to your box, right?

They can, and they might. There's no indication yet that they’re thinking that way. But they have copyright issues. They have a contract with the networks and for them to save stuff on the box may be in violation of their contract. There's a difference between me deciding to save stuff on the box and a satellite company. I have a fair use right to do that as a consumer. For them to do so, they need specific commercial rights to do that, they can’t save stuff on the box without permission.

TiVo is in a tough spot. They have the brand, but very quickly other people are sneaking up in terms of price. They had network executives on their board of directors. At certain levels we had an open relationship with them. They would tell us we’re stupid for picking fights with the studios, and we would tell them they’re stupid for spending $400 million on advertising. Because we didn’t have $400 million to spend on advertising we needed some other way to get the attention of customers, and we did that by putting in features that customers were demanding and no one else had.

Did the entertainment companies' lawsuit bankrupt Sonicblue?

Not even close. At the end, the lawsuit cost $1 million a month, and general expenditures were $7 million a month over that. What bankrupted the company was that we grew from an $18 million CE company to a $400 million CE company in 24 months and we never built the infrastructure to support it. We were leaving millions of dollars in the supply chain left and right. We had millions and millions of dollars in supply chain problems. Plus we were $56 million in debt from the purchase. But lawsuit was almost irrelevant, it represented only 3 percent of the expenses over a two-year period.

What do you make of the file sharing of TV shows on the Net?

Intentionally, we made certain that we didn’t have a clue about that stuff. I’ve never seen it, I’ve never tried it. We occasionally talked to people who were involved. But we didn’t know much of what was going on.

You look at what gets file shared, it’s not what’s on TV. It’s to rip off movies still in theater that are not yet on DVD. Occasionally I have some sympathy for these guys. You can’t say to them, hey, the day after something appears in the theater you should put it on DVD so that nobody steals it.

What about grassroots programming?

We did a marketing study and found that two things were in high demand: porn, and Bollywood, because Indian films are not widely distributed in the U.S.

That’s part of why this whole thing got a little threatening. We think that if there was a real service, that independent content would become an important part of that service. We didn’t think people would sign up for a service if it only had independent content. They’ll sign up for Harry Potter or Terminator 3. It’s the blockbusters that get people’s attention.

We got a call from churches who wanted to distribute their sermons on Sunday mornings by sending videos around. There are also surveillance applications. We found lots of people who were interested in building new things on top of this. We felt these other things would follow, but the entertainment had to drive it.

Will file-serve TV happen in our lifetime?

It’s gonna happen in the next 5-7 years. If one of the powerful guys gets out there first and gets momentum, it’ll be corporate. If they don’t, then the equipment will get spun off and it’ll happen anyway without any structure around it.

You mean some facet of this on-demand service, but you’re not talking about universal jukebox.

Well, what I’m saying is if it doesn’t happen legally, I think somebody will do it offshore as an internet service.

Interview conducted June 23, 2003

Digital radio recording raises eyebrows

Reuters: Digital radio recording raises eyebrows. 'A lawsuit waiting to happen,' expert says.

It's like TiVo for radio, but is it legal?

Various devices that enable listeners to record Internet radio streams and then convert them into MP3 files are catching on and making Web radio and streaming services more appealing to the general public.

But some legal experts say the recording software may violate digital copyright laws and does little more than promote piracy. ...

Under the Digital Copyright Millenium Act, users have no right to duplicate copyrighted material from a computer hard drive, only from a digital or analog recording device and then only for personal use and not for redistribution.

Webcasters similarly are restricted from promoting the recording of their content.

But with products such as San Francisco-based Applian Technologies' Replay Radio, users can split, chop, trim and edit their recorded MP3 files from streamed music services.

The company's Web site says the product "works like a TiVo for Internet Radio" and can turn streaming music into perfectly tagged MP3 song files. ...

P2Pnet.net has it right:

"Actually, the thing to ask is: Violation of what? And according to whom?"

'Darknet' interviews

Jack Valenti
Jack Valenti, former CEO and president of the Motion Picture Association of America, gives perhaps the most wide-ranging interview on record of the MPAA's views on piracy, fair use, the DMCA, DRM and technological innovation.

Andy Wolfe
Andy Wolfe was the chief technology officer of Sonicblue, the company that acquired the groundbreaking technology ReplayTV. He reveals what the Hollywood studios and television networks were really after in their lawsuit against Sonicblue's ReplayTV: control of your television.

Movie pirate
beneaththecobweb was the name chosen by the head of six movie release groups. He describes how "the scene" operates for this first published interview with a major movie pirate. Web exclusive.

Roger McGuinn
Roger McGuinn, the acclaimed solo artist who was lead singer of the Byrds in the mid-'60s, talks about McGuinn's Folk Den, a Web site devoted to continuing the folk tradition of storytelling, which he says is in danger of being obliterated by commercial interests.

Intel solders DRM into the motherboard

PC World:

SYDNEY -- Microsoft and the entertainment industry's holy grail of controlling copyright through the motherboard now comes closer as Intel said it is embedding digital rights management within in its latest dual-core processor Pentium D and accompanying 945 chip set.

Officially launched worldwide on May 26, the new offerings come digital-rights-management-enabled and will, at least in theory, allow copyright holders to prevent unauthorized copying and distribution of copyrighted materials from the motherboard rather than through the operating system as is currently the case. ...

Why the broadcast flag won't work

Tech attorney Jim Burger, whom I quote extensively in Darknet, writes an opinion piece in CNET News.com: Why the broadcast flag won't work.

Of course it won't. But that won't stop Hollywood from taking the fight to Congress, now that they've lost in the courts.

See MPAA chief Dan Glickman's accompanying piece, Why the broadcast flag should go forward.

Also, see Engadget: TV execs don’t care whether or not the Broadcast Flag makes watching TV more frustrating.