According to MUSO’s Global Film & TV Piracy Market Insight Report 2016, pirate sites received 141 billion visits in 2015, with visits to streaming sites accounting for almost 80 per cent of the total. The United States tops the list. By Tom Jackson
Digital film piracy costs moviemakers in the United Kingdom alone £500 million each year, backing up the claim of G-J van Rooyen that piracy is by no means a “victimless crime”.
“Rather, it often ends up with a victim who has no criminal, because digital file sharing makes it so difficult to identify either the uploader or the downloader,” he says.
“Content piracy has a chilling effect on the creative industries, because less revenue is available to plough into future movies, albums, or games.”
Unlikely as it may sound, van Rooyen, a professor at Stellenbosch University, not far from Cape Town in South Africa, has come up with what he feels might be the answer. His company - formed at the university - has come up with a way of identifying “dealers” in digital piracy - using the blockchain.
The blockchain is a public ledger of all transactions made using bitcoin and other digital currencies, which is constantly growing as new completed transactions are added to it.
Custos Media Technologies, formed last year, uses the blockchain to turn piracy communities on themselves. It embeds some bitcoin into each copy of a file that is sent to a licensed recipient, usually a reviewer. A part of the licence agreement is that the recipient is responsible for keeping the digital content - and the bitcoin inside it - safe from digital pirates.
“If a legitimate recipient breaks the license agreement by redistributing content, Custos makes it trivial for anyone in the downloading community to claim the embedded bitcoin, instantaneously and anonymously,” van Rooyen says.
The moment an embedded bounty is claimed, Custos can see the transaction on the blockchain.
“We don't know who the claimant - the bounty hunter - is, but we can identify the original infringer in a cryptographically secure way. This helps our clients mitigate the effects of leaks, and avoid distributing content to risky individuals,” he says.
This goes right to the heart of the problem with piracy, that it is usually extremely difficult to identify the “dealer”. Hence they have little fear of consequence. Custos is looking to change all that.
It has received plenty of interest at it rolls out its technology in a careful and controlled way. Its online service - ScreenerCopy - is targeted at independent studios producing between one and 20 feature films a year, and who need a way to manage the distribution of movie screeners to reviewers, festivals and buyers.
Essentially, the system can be thought of as placing a virtual bounty on each film that is pirated - and this bounty can be claimed, anonymously, while still revealing to the film industry who is leaking all of the films.
“We've been testing it with a small number of beta clients, but have just opened it up so that any studio in the world can apply to use it,” van Rooyen says.
Custos has also signed a large deal is with British e-book service provider Erudition Digital, which has the exclusive licence to provide Custos' technology to the publishing industry. This offering will go live later this year.
Van Rooyen says the company is also exploring opportunities to similarly licence its technology to established players in the film industry. But are bitcoin bounty hunters common enough for the idea to really take off.
“Not yet, and we prefer to keep it that way for now,” he says. “A small group of dedicated bounty hunters in the right piracy communities can solve a large part of our clients' problem. We are carefully onboarding new bounty hunters, at the same pace as which our media client base is growing. It is important that we scale both sides of the business in a balanced way at this early stage.”
Eventually, though, as the business model matures, and if enough content is in the market, Custos can start letting market forces control the demand for and supply of bounty hunters.
The company is unusual in the African context for its application of bitcoin outside of financial services. While most bitcoin companies on the continent have been focused on the remittance space, van Rooyen and his team of academics at Stellenbosch deliberately sought to prove its worth elsewhere.
“When Bitcoin emerged we became interested in its application outside traditional financial technology,” he says.
“We started exploring ways to combine cryptocurrencies and digital media as a side project. We literally stumbled on the core concept while brainstorming some ideas around the coffee machine one morning.”
Custos’ key insight was that possession of a bitcoin private key imposes some vulnerability on the individual holding it, and that it could use this to give a media recipient “skin in the game” in protecting the content.
Van Rooyen does not rule out bitcoin having a serious role to play in Africa’s financial services landscape, in spite of the lack of uptake experienced by bitcoin for remittances companies.
“A large percentage of the population remains unbanked, and banking services are somewhat fragmented between many countries,” he says. “It is certainly a continent waiting for better ways of moving funds and ownership.”
But non-fintech blockchain applications like Custos' technology will also have an important place in the African media market.
“The digital content market has rapidly become much less regional. In Africa, there is a demand for US and European content, and when distribution rights don't keep up with demands, it fuels piracy,” says van Rooyen. “Similarly, the African diaspora has led to a demand for locally-produced content on other continents, giving rise to services like iROKOtv, which streams African content to viewers across the globe.”
Since production and consumption of content is becoming more global, it makes sense to have content protection mechanisms that are unconstrained by geographic boundaries. That’s where Custos comes in.
The company is, of course, looking further afield than Africa. Van Rooyen identified Europe, North America and Bollywood as important target regions for Custos, and says he is optimistic of strong uptake as the technology itself has a broad addressable market.
“Our patents cover video, audio, e-books, software, documents – basically any type of media that should not be redistributed by the intended recipient,” he says. “We chose film as our "beachhead market", since this is a sector that urgently needs improved ways to manage digital rights in order to sustain the industry.”
Indeed, piracy threatens entire business models within the film industry, especially in Hollywood and Bollywood, with van Rooyen saying these were regions where it would be valuable for clients to integrate Custos’ technology directly.
The concept has certainly proven popular with investors both in South Africa and overseas, excited by the prospects for long-term returns from the kind of positive impact Custos can have in these industries.
“The technology provides a unique solution to a very large content market, across media types. The company has a very large market to grow into,” van Rooyen - who has seen Custos raise hundreds of thousands of dollars in investment - says.
“We see Custos' core technology as a critical building block in a much larger reshuffling in how digital content will be distributed and accessed in future. In five years, we see ourselves as a broker of trust in media distribution.”