Ask any content provider to name their top fears and piracy will likely rank up pretty high. CEG Tek International took a look at the most pirated shows heading up to the Cable Show earlier this month, finding that HBO and AMC had the most pirated content among cable networks. We spoke with CEG TEK co-founder and COO Kyle Reed, who previously worked at Avail-TVN and Universal studios Home Entertainment, about the problem and his company’s approach to tackling it.

How big of a problem is piracy?

If you’re talking specific to the TV side, we recently completed a test prior to the Cable Show. We tracked roughly 175 titles. The average activity we saw on those titles—this is just on the BitTorrent peer-to-peer network, unique peers was 3.7 million a day worldwide for 175 titles.

Is there a particular type of content that’s most vulnerable?

There are variations. Movies, for example. TV, software. It’s really open to anything and everything. If it can be digitized, it can be pirated. … Today, illegitimate traffic on the Internet, meaning pirated content, still accounts for about one-third of Internet traffic globally. Overall, regardless of the type of content, it is a massive problem that’s specific to each and every industry, including television.

Can you do anything? If CEG TEK finds a problem, what happens? Are takedowns effective or isn’t it just a big game of Whac-a-Mole?

There are really two different items we’re talking about here. Either websites in general, regardless of the way they are hosting or distributing the content, and then you have peer-to-peer networks, like BitTorrent. What we do that’s a little bit different is that we pursue end users on BitTorrent networks as well as having a takedown service. Our takedown service is comparable to others out there. The market is pretty saturated. There are a lot of people providing that service. We see on that end north of a 70% success rate in removing content globally for our clients. The BitTorrent and peer-to-peer issue is a bit of a different animal simply because it’s all decentralized. You can’t send takedown notices if you’re really sending it to a website that’s hosting a link or magnet link (which don’t require a continuously available host). They’re not really hosting any content. The content is on the network of users, for lack of a better term. If you and I were sharing content, it wouldn’t be on a 3rd party server, it would be shared between us using our hard drives and Internet connections.

Where we’re a little different and the market is not very saturated is on the peer-to-peer side. Not just going after the host, but going after the end user. So, looking at it as a supply and demand argument. Traditionally, a lot of the interest groups out there and a lot of the studios, record labels and rights owners have pursued legislation or court cases to try and get IP addresses blocked, to try and get websites taken down. Obviously, that’s more effective for the website because it’s centralized. But when you look at something like The Pirate Bay in BitTorrent, it’s completely decentralized. Our philosophy is taking the approach of decreasing the demand. … We have a model where we see a 50-60% decrease in peer-to-peer activity… Roughly 99% of those users, we never see them infringe again.

Decreasing the demand? How does that work?

Traditionally, you have cease-and-desist notices… A notice goes out to end user, says we tracked this, we know you did it, please stop, please deny access. Now from our perspective, what we see is that those users keep infringing. That does nothing to stop the activity. It’s really not as effective as other models. Our model is we send an electronic notice and we either try to obtain settlement from the person for a nominal amount based on what the rights owner sets or we try to convert them, meaning come over to this over-the-top platform or network’s website. Buy a subscription for x number of months, and you’ll be forgiven. What we see with that model is that when someone is actually made to pay something, they don’t infringe again. What we’re repeatedly hearing from people calling into our help centers is ‘why do I have to pay $50… where’s my warning?’. They are so used to receiving [those other warning letters with no monetary penalty] that they ignore.

 

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