Closing the Streaming Loophole Would Benefit Consumers

Illegally downloading copyrighted material is a federal felony but streaming the exact same content over the internet is only a misdemeanor and carries much lighter penalties. Despite the fact that broad access to faster, cheaper internet connections has spurred tremendous growth in the streaming of copyright-infringing content, which now accounts for the majority of piracy online, Congress has failed to correct this inconsistency.

More lenient treatment of illicit streaming encourages this sort of piracy and harms consumers as well as copyright holders.

Websites that offer free streaming of copyrighted content often hide malware in their files that bombards users with ads, takes over their computer, and can potentially extract personal information, including financial data. Researchers estimate that 1 in 3 websites that distribute pirated content contains malware. Often, this malicious software can infect a computer just by visiting a site, leaving users unaware of the danger.

Piracy also undermines the incentives for artists to create new works and ultimately reduces the amount of quality content available to consumers. From a creator’s perspective, it doesn’t matter whether their copyrighted works are illegally streamed or downloaded. The result is exactly the same; the availability of misappropriated content online reduces legitimate demand and reduces sales revenue.

To more effectively deter all forms of internet piracy and hold bad actors accountable, the Department of Justice has long recognized the need to strengthen penalties for illegal streaming, but lawmakers have failed to act.

For more than a century, Congress has regularly modernized copyright laws to adapt to new technologies and threats. When VCRs created new piracy opportunities in the 1990s, for example, lawmakers adjusted the potential criminal remedies. Since 1997, however, Congress has not updated the penalties for illicit streaming, despite its growing popularity.

Piracy clearly hurts content producers by reducing the amount of money they can dedicate to their creative efforts. But a secondary consequence of large-scale copyright infringement is that artists and investors become more reluctant to fund risky but valuable content. According to Jean Prewitt, CEO of the Independent Film and Television Alliance, “Spanish distributors used to finance through presales about eight to ten percent of independent film budgets. Since piracy invaded Spain, that percentage is now drastically reduced, frequently to zero.” The U.S. could suffer a similar fate.

If piracy lowers the expected revenues from a film (or music album or TV show) below the cost of its production, the film will not be created and both producers and consumers lose. It’s that simple.

Streaming piracy is a potent threat to the legitimate streaming marketplace, which has catalyzed an explosion of innovation and creativity as Hulu, Amazon, Netflix, and others have responded to the public’s appetite for streamed content.

In the film industry, the effects of piracy are tangible. According to an article in the George Mason University Law Review in 2017, “In Italy and Mexico, two countries in which piracy has strongly influenced demand, the number of [Academy Award-winning films] decreased significantly from the pre-piracy to the post-piracy period, whereas in the U.K. and France, two countries in which piracy has had a smaller effect on demand, the number of awards won increased meaningfully.”

Piracy affects quantity as well as quality. The sharp increase in film piracy in India from 1985 to 2000 coincided with a marked decline in the number of new movies released from Bollywood.

Those who traffic in large-scale illegal streaming are hurting not just artists teetering on the edge of bankruptcy but consumers as well. Piracy is ripping off movie audiences, music fans, and TV viewers who are missing out on new, quality content.

Legislation under consideration in Congress would increase the criminal penalties for illegal streaming, empowering prosecutors to target willful, large-scale infringers like commercial piracy device sellers and illicit website operators – while leaving ordinary YouTube creators and internet users unaffected.

It’s time for Congress to close the streaming loophole and create a consistent set of criminal penalties for all internet copyright infringement.

FacebooktwitterredditlinkedinFacebooktwitterredditlinkedin