The PS3 is too hard to crack

A story came out the other day about George Hotz – the infamous hacker who released a hack for the PS3 a few months ago. His hack only works for an old version of the PS3 system, and Sony moved quickly to invalidate the hack using updates. It was the first time anyone claimed to have hacked the PS3, but now he’s giving up on the PS3, saying it’s just too difficult.

I think this hints at the direction companies will take in the future to bulletproof their systems against piracy – having tight control over the hardware. No doubt, companies will get more and more skilled at this as time passes. People will complain that “it’s their hardware and they should be able to do whatever they want with it” – citing their desire to create “homebrew” or run Linux on their machine, but they’ll be blocked on a technical level (not a legal level) from doing this.

The EFF has promoted exactly this kind of argument by analogy to a car:

“It is my automobile at the end of the day,” von Lohmann said, a reference that iPhone users should be allowed to do what they want with their phones, just like car owners do.

Of course, there’s also a major problem with that kind of argument. First, the laws do not recognize people’s legal right in all cases to modify physical objects however they want – even if they own them. For example, you cannot legally convert a gun into an automatic weapon. Your car must also conform to pollution and noise standards. In other words, it doesn’t matter that you own the gun or the car – there are limits to what you’re allowed to do with it. There’s also issues with copyright that run afoul of the “I should be allowed to do whatever I want with my property”. While some people might argue that owning a book, music, or software means they should be allowed to do whatever they want with it – including filesharing, this argument quickly runs into a problem: most people (even filesharers) dislike the idea of commercial piracy (i.e. selling pirated material for money). For example, if a guy goes and creates a thousand copies of some new DVD and sells them on the street for a couple dollars each, he’s involved in commercial piracy. Logically, “I should be allowed to do whatever I want with the stuff I own” means allowing people to engage in commercial piracy since they own the original DVD.

The other method that console makers use is what Microsoft is doing: while the XBox 360 has been cracked, they control the servers where people can buy new games or get online to play multiplayer games with other people. Microsoft can lock people out of their servers for running cracked XBoxes – and that’s exactly what they did right before the launch of Modern Warfare 2. They locked a million XBox owners out of their servers. Even the EFF had to concede that Microsoft had the right to do so because they own the servers. While this second strategy is less effective than the PS3’s hardware lockout, it seems to be pretty effective, judging from Modern Warfare’s piracy gap on the XBox 360 vs the PC – the numbers I’ve seen show that 86% of the people playing Modern Warfare 2 on the XBox paid for it, while only 6% of the people playing it on the PC paid for it.

Anyway, it’s still pretty interesting that the PS3 has weathered the attacks from hackers as well as it has. It shows the potential of technical methods to block piracy – despite the refrain of pirates that someone will immediately crack all piracy prevention systems.

EFF: Helping the Pirates

I’ve long accused the EFF of being on the side of the pirates. They downplay the effects of piracy, do their best to throw up legal challenges to prevent any possible enforcement of copyright on the internet, hire vocal advocates of legalized filesharing, and even created tools to detect if ISPs were throttling BitTorrent traffic so ISPs could be dragged into court. Now a new CNet article is making the connection even more clear. Fred von Lohmann, senior staff attorney and author of numerous EFF articles has been instructing pirate groups on how to facilitate piracy, but avoid legal responsibility.

A few quotes:

According to Wood, LimeWire founder Mark Gorton testified that he and former company Chief Technology Officer Greg Bildson received questionable advice from von Lohmann. “Gorton states that another attorney, [von Lohmann], gave [LimeWire], including Bildson, confidential legal advice regarding the need to establish a document retention program to purge incriminating information about LimeWire users’ activities,” Wood wrote in her decision.

In his zeal to keep some of these services from being sued out of existence, von Lohmann has gone too far, say critics. During the Grokster trial, MGM’s lawyers noted that von Lohmann in 2001 wrote a primer called “Peer-to-Peer File Sharing and Copyright Law After Napster.” In the piece, von Lohmann advised that to “avoid liability,” operators should create “plausible deniability” by “choosing an architecture that will convince a judge…monitoring and control is impossible.”

In a paper titled “What Peer-to-Peer Developers Need to Know about Copyright Law,” von Lohmann wrote, “The court also found that Napster had a duty to monitor the activities of its users “to the fullest extent” possible. Accordingly, in order to avoid vicarious liability, a P2P developer would be wise to choose an architecture that makes control over end-user activities impossible.”

Is von Lohmann instructing file-sharing services on how to avoid violating the law here, or is he teaching them how to violate the law and avoid responsibility?

This isn’t surprising at all. It’s clear that the EFF and von Lohmann has always had an interest in helping pirates evade legal responsibility for copyright violations.

It’s worth reiterating what Dave Winer, creator of RSS and an early supporter of the EFF said about the EFF years ago:

I gave $5000 to the EFF when they started, I think it was in 1990, with the noble goal of protecting freedoms as our technology and culture move online. I think I have supported every cause the EFF has adopted since then, but that’s no longer true. I gave this a lot of thought, believe me, and had a long email exchange with Brad Templeton, the chairman of the EFF board of directors, and think they have become as radically polarized as the entertainment industry, and like Hollywood are now working against the interests of those they were meant to serve. The issue appears to be copyright, and it appears that the EFF believes there should be no copyright….

The problem with the EFF position is that in order to remain consistent, they have had to say that copyright doesn’t exist — if a policy or law restricts what a user can do on the Internet then that is a bad policy or law. The courts can’t agree with the EFF. I don’t agree with the EFF.

EFF and Doctorow on the Dystopian Future

I’ve called out the EFF and Doctorow in the past for fearmongering. Well, their latest articles take the cake. Apparently, being a “consumer advocate” is a great way to garner fame, scare the public into doing what you want, and set yourself up for donations by protecting them from the big bad wolf. Let me explain.

The RIAA and MPAA recently released a 23-page document containing suggestions to the government on enforcing copyright law. The EFF wrote up an article commenting on it, and Doctorow picked it up and commented on it further.

From the EFF (quotes from the RIAA/MPAA article are double-indented):

The Entertainment Industry’s Dystopia of the Future

We’re not easily shocked by entertainment industry overreaching; unfortunately, it’s par for the course. But we were taken aback by the wish list the industry submitted in response to the Intellectual Property Enforcement Coordinator’s request for comments on the forthcoming “Joint Strategic Plan” for intellectual property enforcement.

“Anti-infringement” software for home computers

There are several technologies and methods that can be used by network administrators and providers…these include consumer tools for managing copyright infringement from the home (based on tools used to protect consumers from viruses and malware).

Okay, now at this point, you should be asking yourself, “Gee, why would someone install tools to ‘manage’ copyright infringement from the home? Afterall, if someone is a pirate, they aren’t going to install these tools. If they aren’t a pirate, then what’s the point of installing the tools?” One possibility is that parents could install the tools to prevent their kids from getting involved in piracy, similar to the way that “NetNanny” prevents children from accessing porn:

Net Nanny Products from ContentWatch provide Internet Protection software, including parental controls and internet filtering software, computer cleaning …

I suppose that’s one possibility. It’s not clear what exactly was meant by the RIAA/MPAA suggestion. Certainly, they would have no standing to force people to install this software, and it would be a gross violation of privacy anyway. I’m sure the RIAA/MPAA is smart enough to realize this. The EFF and Doctorow, of course, imagine darker scenarios:


In other words, the entertainment industry thinks consumers should voluntarily install software that constantly scans our computers and identifies (and perhaps deletes) files found to be “infringing.” It’s hard to believe the industry thinks savvy, security-conscious consumers would voluntarily do so. But those who remember the Sony BMG rootkit debacle know that the entertainment industry is all too willing to sacrifice consumers at the altar of copyright enforcement.

Apparently, the EFF didn’t consider the “people with children” case.

Doctorow takes the EFF’s suggestion into darker territory:

spyware on your computer that detects and deletes infringing materials;

I’ve seen Doctorow exaggerate plenty of times in the past, but this is quite a stretch. The term “spyware” is generally used to describe a program that is acting on the orders of some other third party, outside your control, while reporting information back to that third-party. None of those three items describes what they’re talking about. He also seems to be suggesting that “big content” is going to force this application onto your computer (why else would someone install “spyware”)? Nowhere in the RIAA/MPAA document does it mention “deleting infringing materials”. Gizmodo actually managed to take Doctorow’s claims and exaggerate them to shocking new heights — Gizmodo: RIAA/MPAA want government-mandated Spyware that deletes infringing content automatically. In three steps we’ve gone from “consumer tools for managing copyright infringement from the home” (original) to “voluntarily install software that constantly scans our computers and identifies (and perhaps deletes) files found to be “infringing.”” to “spyware on your computer that detects and deletes infringing materials” to “government-mandated Spyware that deletes infringing content automatically” (Gizmodo).

Amazingly, none of the commenters seem to have scrutinized Gizmodo’s claims, they simply accept it as 100% true. (It’s stuff like this that makes me think the majority of humanity is swimming in a sea of misinformation and manipulation, and even when they think they’ve found a source for accurate information – like the EFF or Doctorow, rather than the ‘lies’ of the mass-media – they’re still nowhere close to the truth; just a whole new set of misinformation.)


Pervasive copyright filtering

Network administrators and providers should be encouraged to implement those solutions that are available and reasonable to address infringement on their networks. [This suggestion is preceded by a list of filtering methods, like protocol filtering, fingerprint-based filtering, bandwidth throttling, etc.]

The entertainment industry loves widespread filtering as a “solution” to online copyright infringement — in fact, it has successfully persuaded Congress to push these technologies on institutions of higher-education.

“Protocol filtering” would allow networks to block things like P2P applications. “Fingerprint-based filtering” would allow networks to identify certain digital media by the pattern of bits sent across the network. For example, an mp3 of a particular song would have a particular “fingerprint”. The main problem with this is that one piece of media might have lots of different fingerprints based on encoding, plus there’s encryption, which makes fingerprinting pretty much useless. “Bandwidth throttling” would allow network providers to reduce the network speed of people using lots of bandwidth. Often times, it can be detected when someone is sending P2P traffic, and pirates often transfer vast amounts of data (pirating one movie, for example, is going to require sending/receiving hundreds of MB). If someone’s internet connection gets degraded to a slower speed, it becomes more time-consuming and inconvenient to send P2P data, which tends to dissuade and frustrate pirates. The EFF apparently doesn’t like that colleges and universities (where students are heavily involved in pirating digital media, in part, because they’re poor) use these techniques to put some brakes on piracy over their networks.

The EFF has three problems with this:
(1) It will block fair use (I’m unclear on specifically what situations this will block)
(2) It will fail to stop infringing behavior because pirates will use encryption, “darknets”, or transfer things hand-to-hand with hard drives and burned DVDs. (The problem with this complaint is that, while fingerprinting is useless against encryption, they still have to transfer massive amounts of data over P2P connections, which is detectable. “Darknets” sounds sinister, but it’s just a name for computers that either are in a closed network or aren’t easily visible to the internet. This makes piracy more difficult for the average person, since it’s a private network, not an obvious public system, like PirateBay. And the hand-to-hand transfer issue is nonsense. If pirates are forced to transfer pirated media on darknets or hand-to-hand, it will have a huge drag effect on piracy. Yes, piracy will still happen, but it’s so terribly inconvenient for them that 90% of them will simply stop doing it due to the inconvenience. One of the weird arguments pirates use is to say that “you can’t stop all piracy”. This is true. However, it’s as relevant as saying “you can’t stop all shoplifting” – it’s never about stopping 100% of anything, it’s about making it less frequent.)
(3) This system could become a foot in the door towards larger government surveillance. (Admittedly, I think a lot of these systems should be in place anyway to block other internet problems. For example, I think it’s a good idea for ISPs to detect traffic from botnets, viruses, denial of service attacks, spam, etc, and then notify the computer owner of such infections or even cut them off if necessary. Those systems are similar to ones that could detect P2P traffic. I suppose the EFF would also be against systems designed to defend the internet from malware, because “This system could become a foot in the door towards larger government surveillance”.)

Also, not mentioned in the EFF quote, but in the original document: “Site blocking, redirection with automated warning systems/quarantine of repeat offending sites”. So, for example, ISPs might be encouraged to block access to websites like the PirateBay. While there are ways around this, it wouldn’t run afoul of “fair use” (virtually nothing on the sites would fall under fair use), nor would it lead to government surveillance. Though, it would only slow down piracy a bit.

Doctorow, of course, has to always up the ante. He describes it this way:

mandatory censorware on all Internet connections to interdict transfers of infringing material;

Doctorow really seem to worry too much about sticking to the facts. First, this is not “mandatory” since the original document says “should be encouraged to implement those solutions that are available and reasonable”. Second, his use of the word “censorware” is also quite inflammatory. Although, since he would probably describe copyright as “censorship”, then all attempts at blocking copyright infringement is necessarily “censorship”. Third, he says that these systems are “on all Internet connections”. Since it isn’t a mandatory system, it can’t possibly be “on all Internet connections”. And, “all internet connections” sounds like he’s talking about these systems running on people’s personal computers or something. Fourth, bandwidth throttling doesn’t “interdict” anything. It just makes it less convenient to upload and download gigabytes of data.


Intimidate and propagandize travelers at the border

Customs authorities should be encouraged to do more to educate the traveling public and entrants into the United States about these issues. In particular, points of entry into the United States are underused venues for educating the public about the threat to our economy (and to public safety) posed by counterfeit and pirate products. Customs forms should be amended to require the disclosure of pirate or counterfeit items being brought into the United States.

So, the EFF turns “educate the traveling public” into “intimidate and propagandize travelers”. Now, if someone were carrying pirated media, they probably wouldn’t disclose it, it’s next to impossible to catch, and the only suggestion is that people declare these things on the customs forms. If that doesn’t sound dystopian, I don’t know what does.

While I think the RIAA/MPAA’s suggestion is completely ineffective (people won’t put it on their customs forms, 99.9999% of piracy happens internationally over the internet anyway), I still have to take issue with the over-the-top interpretation given by the EFF and Doctorow.


Does that iPod in your hand luggage contain copies of songs extracted from friends’ CDs? Is your computer storing movies ripped from DVD (handy for conserving battery life on long trips)? Was that book you bought overseas “licensed” for use in the United States? These are the kinds of questions the industry would like you to answer on your customs form when you cross borders or return home from abroad. What is more, this suggestion also raises the specter of something we’ve heard the entertainment industry suggest before: more searches and seizures of electronic goods at the border. Once border officials are empowered to search every electronic device for “pirated” content, digital privacy will all but disappear, at least for international travelers.

So, the EFF has turned “educate the public and declare counterfeit/pirated goods on customs forms” (which nobody will do anyway) into “searches and seizures of electronic goods at the border” and “digital privacy will all but disappear”. The reality is that digital storage devices are so big that I don’t really see this happening. They’ve got better things to do than search through people’s laptops for pirated copies of Photoshop. Even further, the US law already prevents exporting encryption software because the US is afraid foreign governments will use it. Obviously, the fact that it was illegal to transfer encryption software didn’t lead to a situation where “digital privacy will all but disappear”, yet, based on the EFF’s interpretation, it should’ve.

Travelers are already asked to declare lots of things on their customs forms. Does the fact that travelers must declare if they are carrying foreign species (which can be a real problem when introduced into new ecosystems) really mean “travelers will be cavity searched at the border”? Clearly, we need to make sure that nobody ever has to declare foreign animals at the border!

Ready for Doctorow’s over the top interpretation?

“border searches of personal media players, laptops and thumb-drives;”

Yup, they never said that anywhere. But, in Doctorow’s mind, “please report pirated and counterfeit material on your customs forms” equals invasive searches of everyone’s electronic equipment.


Bully countries that have tech-friendly policies

The government should develop a process to identify those online sites that are most significantly engaged in conducting or facilitating the theft of intellectual property. Among other uses, this identification would be valuable in the interagency process that culminates in the annual Special 301 report, listing countries that fail to provide adequate and effective protection to U.S. intellectual property rights holders. Special 301 could provide a focus on those countries where companies engaged in systematic online theft of U.S. copyrighted materials are registered or operated, or where their sites are hosted. Targeting such companies and websites in the Special 301 report would put the countries involved on notice that dealing with such hotbeds of copyright theft will be an important topic of bilateral engagement with the U.S. in the year to come. (As noted above, while many of these sites are located outside the U.S., their ability to distribute pirate content in the U.S. depends on U.S.-based ISP communications facilities and services and U.S.-based server farms operated commercially by U.S.-based companies.)

So, the EFF uses the phrase “Bully countries that have tech-friendly policies” to describe using trade agreements to get countries to crack-down on piracy and counterfeit goods. First of all, the word “bully” is just an inflammatory word used when you want to make someone look bad for putting pressure on someone (ignoring the fact that it’s sometimes in someone’s interest to do the wrong thing, and pressure is a way to get them to do the right thing). Based on what I’ve seen in past EFF articles, it seems like they pull out the “Bully” word whenever any kind of enforcement is suggested at all. Second, they use the word “tech friendly”. Apparently, this is the EFF’s euphemism for “pirate-friendly” or “counterfeit-friendly”. The entire Western world is “tech friendly”. To suggest that the US is bullying “tech friendly” nations is totally inaccurate. It just sounds a whole lot better than “use international trade agreements to put pressure on countries to crack-down on piracy and counterfeit goods”.

No doubt, if the EFF thought countries should be allowed to sell nuclear weapons internationally, and the US wants to crack down on that, they might say, “The US is bullying trade-friendly nations”. Or, if they thought all drugs should be legal, and the US puts pressure on countries that create or traffic in drugs, they’d say, “The US is bullying freedom-friendly nations”.

I actually find it interesting that the EFF would describe “pirate-friendly” nations or websites as “tech-friendly”. It goes along with my earlier claims that the EFF wants 100% legalization of filesharing. It’s not a bad thing that the US would put pressure on Sweden or the PirateBay to crack down on piracy, but the EFF certainly seems to think so.

Doctorow’s interpretation:

“international bullying to force other countries to implement the same policies;”

He says that the US would “bully” and “force” other countries to “implement the same policies”. What are these “same policies”? The only thing that nations that were “hotbeds of copyright theft” would be expected to do is crack down on piracy and counterfeiting. Saying “the same policies”, Doctorow implies that the other nations would be forced to implement the full list of RIAA/MPAA suggestions in the 23 page document, which is clearly not the case.

Using those same inflammatory words, he could make anything look bad:

“international bullying to force other countries to outlaw slavery;”
“international bullying to force other countries to allow freedom of religion;”
“international bullying to force other countries to reduce government corruption;”

A person’s initial response to those three statements is probably, “Well, gee, I agree with those things, but why does the US have to be such a jerk about it? I don’t think the US should be doing that.” See, now I’ve just made any kind of law enforcement look evil, just by attaching the right rhetoric. To use a real-world example, a few years ago there was talk of bringing a UN force to southern Sudan to stop the genocide there. Here’s how one article puts it:

China has the economic leverage to gain the ear of [Sudanese] President Bashir, but that hardly means it has the ability—or, more to the point, the will—to bully him into accepting a large U.N. peacekeeping contingent in Darfur. (Source)

Notice the use of the word “bully”? Instead of focusing on the genocide, the word “bully” can be used to turn anyone who tries to get UN troops there into “bullies”.

One of the interesting tactics used by Doctorow is that, as long as he can make copyright defenders look like jack-booted thugs, there’s really no reason to talk about the actual issues. Just look at them – can you not see that they are evil? A while ago, I read a short story that Doctorow had written. It involved a kindly old man who had a duplicator machine. He kept duplicating things, for the benefit of society. But, then a SWAT team wearing black flak-jackets busted into his house and imprisoned him. It was all very clear the picture he was painting, and it didn’t require thinking about the issues at all. It was all about the kindly old man who wanted to help people, and the violent, aggressive faceless government agents. You could’ve pretty much made the old guy doing anything at all, and you’d be on his side because the whole thing was setup to make you like the old man, but hate the government – if for no other reason than their violent, overaggressive behavior.


Federal agents working on Hollywood’s clock

The planned release of a blockbuster motion picture should be acknowledged as an event that attracts the focused efforts of copyright thieves, who will seek to obtain and distribute pre-release versions and/or to undermine legitimate release by unauthorized distribution through other channels. Enforcement agencies (notably within DOJ and DHS) should plan a similarly focused preventive and responsive strategy. An interagency task force should work with industry to coordinate and make advance plans to try to interdict these most damaging forms of copyright theft, and to react swiftly with enforcement actions where necessary.

Interesting idea — and by “interesting” I mean “really dumb”. I don’t think that the feds need to get involved in cracking down on pre-release leaks of movies. I also think Federal agents would probably laugh at this one.


and free copyright enforcement provided by Fed cops and agencies (including the Department of Homeland Security!).

Of course, Doctorow doesn’t bother to mention this suggestion was focused on primarily on blockbuster movies (not all copyrighted content, and not for all time – just the window before/near release), and it’s unclear from the original document that this would be “free copyright enforcement”. Not that I’m suggesting that this idea is okay, just putting it into perspective, something which Doctorow clearly does not want to do.

What have we learned today? First, being a “consumer advocate” involves lots of exaggeration to scare the general public into giving you fame and money to protect them from the evil government and corporations. Second, if you believe that piracy should be completely legalized (as, Doctorow certainly does, and the EFF seems to believe), it’s important to always make the other guy look really, really bad because it will scare people to your side. It seems to have worked quite well, for example, one commenter on Doctorow’s site writes:

I think what needs to be done is to bankrupt these industries as fast as possible.

Unfortunately, the EFF/Doctorow articles have been quite popular and people don’t seem to scrutinize their claims, choosing to actually exaggerate the claims even further (Gizmodo: RIAA/MPAA want government-mandated Spyware that deletes infringing content automatically). Like they say: a lie runs halfway around the world before the truth can get its boots on.

Scare-tactics are used by people all over the place to steer the public, and while writing up this post, I couldn’t help but be reminded of this political flier that was distributed in Arkansas:

EFF: Most Pirated Movie of 2009 … Makes Heaps of Money

As a followup to my previous blog post, where I claim that the EFF is pro-piracy.

There are a number of articles on the EFF website that make me think they are pro-piracy, or, at least, indifferent to the issue. For example, this article, posted a few weeks ago (and linked to all over the internet by pirates):

EFF: Most Pirated Movie of 2009 … Makes Heaps of Money

According to TorrentFreak, last summer’s Star Trek movie was the “most pirated movie of 2009.” So it seems that Paramount Pictures was prescient when it gave testimony before the FCC that used Star Trek as an illustrative example of how “Internet piracy” is poised to devastate Hollywood and (though the nexus here is less than clear) undermine residential broadband in America.

Funny thing is, Star Trek is on course to make more than $100 million in profits.

Here’s the financial breakdown, courtesy of The, which gathers financial data for movie industry analysts:

Production costs: $140m
Promotion costs: ~$100m
Global box office revenues: $385m
U.S. TV syndication rights: $30m
DVD & Bluray revenues (anticipated, based on sales and rentals since Nov. 2009): >$100m

When I first read the EFF’s article, my thoughts were that the movie studios picked a particularly bad example to cite as a victim of piracy. But, I also had doubts about judging the health of the industry based on one movie, and thought about the fact that Star Trek was highly rated by viewers, so maybe they can legitimately claim it should’ve made more. (Box Office Mojo readers gave the movie an “A-“.)

But, then I checked the EFF’s numbers, and I became less convinced of their argument. So, to clear up some of the sketchy numbers: According to BoxOfficeMojo, the production budget was $150 million (rather than $140 million). More importantly, “Global box office revenues” is the money taken by the movie theaters. I’ve read elsewhere that Movie studios and theaters split that money 50/50 (*see update). This means that, from the movie-production studio’s perspective, the box office revenues that they see are half of $385m.

When “DVD & Blueray revenues” say $100m, I believe that’s the amount of money paid by customers to retailers (e.g. Best Buy or Amazon), not the amount of money seen by the movie studios themselves. Like the movie-theater numbers, the movie studios might be seeing half or less of that $100m, because stores like Best Buy typically make half of the money from each sale. Plus, there’s some small packaging costs.

The updated numbers, from the movie studio’s perspective, should say:

Production costs: $150m (not $140m)
Promotion costs: ~$100m
Global box office revenues: $192.5m (not $385m)
U.S. TV syndication rights: $30m
DVD & Bluray revenues (anticipated): >$50m* (not $100m)

Using these updated numbers, then things look like this: Costs: $250m, Revenue: $272.5m. Total profit: $22.5m or 9% return on investment. And that 9% mostly disappears once you consider inflation and interest rates.

The EFF’s numbers suggest that Star Trek made a 115% return on investment. More importantly, the EFF article contains this:

As 2009 comes to a close, there is no evidence out there that “Internet piracy” is leaving us with fewer creators or fewer copyrighted works

I think that shows the EFF’s attitude towards piracy: it isn’t a problem despite what people say; it’s a non-issue, it needs no remedy, creators need no protection from piracy. Honestly, this sounds like something that the Pirate Bay could’ve written.

* I’ve seen a number of contradictory claims about how movie theaters and movie studios split the money on ticket sales. Whatever the case, it is misleading for the EFF to use the $385m “Global box office revenue” number without qualifying the fact that studios do not see 100% of that money, which is what the average reader will assume.
Source #1: “This percentage will vary from movie to movie depending on the specifics of the individual leasing deal. For instance, 2 movie theatre managers told me that for Star Wars Episode II: Attack of the Clones, the studio took 100% of the box office take for the first week of release… Now, as you move into the second and third weeks of release, the percentage starts to swing to anywhere from 45% – 55% that the theatre gets to keep. It gets better after the fourth week when theatres generally can keep up to 80% or better of the ticket sales.”
Source #2: “Except for a small operational fee paid to theaters, for the first two weeks that a movie was playing in theaters, 100% of ticket revenue went to the studio. In the third week, the studio would take about 90% of ticket revenue, while the theater would earn 10%. The fourth week, they’d split revenue 80/20, then the next week 70/30, then 60/40, until the level reached 50/50, where the division of money stayed until the end of the movie’s run.”
In response to Source #2, one commenter writes: “I study the industry and have 2 years of contract data between theaters and movie distributors. The average rental fee paid on all movies in that time period was 52%. In the first week, the highest it ever is is 70%, and it goes down from there. So you’re wrong when you say that theaters barely make any money on the tickets. They keep 48% of it on average.”
Source #3: “Upon initial release, for the first 10 days of a movie, the box office is split 80/20 in favor of the studio. For the next 10 days, it is split 60/40 in favor of the studio. For the next 10 days, the split is 50/50. For the next 10 days and usually a films final week in theaters the split is 30/70 in favor of the theater. If a movie makes it to almost 2 months in theaters the split goes to 20/80 (theater favor) for the remainder of the film’s time at the theater. For most films – this ends up being a 50/50 split over the entire run of the movie in theaters.”

It would be nice to get the numbers from some typical theater – something like “in 2009, we took in X dollars of revenue from ticket sales, and paid-out Y dollars to movie studios”.

Why I don’t like the EFF

The EFF (Electronic Frontier Foundation) does some decent stuff, and does some work to help protect freedom of speech on the internet. But, once you know that pro-piracy crusaders like Cory Doctorow and Lawrence Lessig are associated with their organization, then it should raise some red flags. Doctorow, for example, has sold “I pirate music” t-shirts on his website, and promoted books teaching people how to pirate and not get caught. Looking at EFF’s stance on issues, it becomes clear that they are (as an organization) taken a pro-piracy stance on things. This is the reason I could never actually support their work. It would be great to see a more moderate version of the EFF, one that doesn’t take a pro-freeloader / anti-creator stance.

Recently, the EFF began promoting “Real Net Neutrality”. Here’s what they say:

“Tell the FCC: Don’t let Hollywood hijack the Internet”

Already with the title, the EFF is drumming up fear-tactics with words like “hijack the Internet”. What does that mean? It sounds scary. I can imagine all kinds of terrible things. What it actually means in this context is “Content creators are unhappy with rampant piracy on the internet. Current legislation would permit ISPs to not-deliver internet packets when they contain copyright-infringing material”. That’s a whole lot less scary, but the EFF clearly wants to use a scary phrase.

Last fall, the Federal Communications Commission proposed rules for “Net Neutrality” — a set of regulations intended to help innovation and free speech continue to thrive on the Internet.

But is the FCC’s version of Net Neutrality the real deal? Or is it a fake?

Buried in the FCC’s rules is a deeply problematic loophole. Open Internet principles, the FCC writes, “do not… apply to activities such as the unlawful distribution of copyrighted works.”

The net-neutrality bill would allow ISPs to throttle the unlawful distribution of copyrighted works? Gee, it’s a good thing the EFF has stuck out their neck to fight against this. Based on the phrasing, it almost seems as if the EFF thinks that piracy should be permitted as a part of “free speech”. Personally, I actually find it “deeply problematic” that the EFF thinks throttling copyright-infringement is a problem.

For years, the entertainment industry has used that innocent-sounding phrase — “unlawful distribution of copyrighted works” — to pressure Internet service providers around the world to act as copyright cops — to surveil the Internet for supposed copyright violations, and then censor or punish the accused users.

And the EFF uses the scary-sounding phrase “copyright cops” to describe the action of not delivering or slowly-delivering packets when people are involved in copyright violations. Since Net Neutrality is only concerned with the speed of the internet, it seems that slowing down/stopping the delivery of copyrighted material is equivalent to “censoring” and “punishing”. Stopping copyright infringement is not censorship. The fact that the EFF would describe it as censorship tells you a few things about where the EFF stands — and it’s against the creators.

From the beginning, a central goal of the Net Neutrality movement has been to prevent corporations from interfering with the Internet in this way — so why does the FCC’s version of Net Neutrality specifically allow them to do so?

The claim that “from the beginning, a central goal of the Net Neutrality has been to prevent corporations from interfering with [piracy]” is historical revisionism. I support net neutrality, but not when it involves copyright infringement. (To use a page from the EFF’s playbook, perhaps we could say that the EFF is attempting to hijack the Net Neutrality legislation to make the world safer for piracy.)

Besides, if the EFF believes that the goal of Net Neutrality is to let everything flow freely, then they should take a real stand and tell us that child pornography is part of “free speech” and ISPs should never be allowed to interfere with its transmission. At least then, they would be consistent.

“Tell the FCC that if it wants to police the Internet, it first needs to demonstrate that it can protect Internet users and innovators by standing up to powerful industry lobbyists. Sign your name here to demand that the copyright-enforcement loophole be removed.”

This is clearly a false dichotomy. The EFF wants to make the internet safe for piracy, but it does this under the cloak of saying that the FCC isn’t standing up to “powerful industry lobbyists”? Whether you think big-business has too much influence in government doesn’t mean you can just trample over the legitimate rights of copyright holders. That’s the equivalent of saying that Oil Companies have too much influence on the government, and therefore, people should be allowed to steal all the gasoline they want until the government stands up to “big oil”.

The EFF really needs to straighten out their act and stop going out of their way to side with freeloaders.

Addendum, January 16:
Please see my recent post about the EFF’s attitude towards piracy where they say: “there is no evidence out there that “Internet piracy” is leaving us with fewer creators or fewer copyrighted works”. (In other words: piracy is not a problem; there is no need to address the piracy issue.)

EFF: Piracy Not the Problem – “Piracy is the red herring of the digital music distribution debate” (Ironically, that statement was made at the peak of the Music Industry’s sales – in 1999. The past ten years have seen music sales decline by over 50%.)

EFF releases tool to detect if your ISP is throttling BitTorrent.

EFF defends the makers of Morpheus, Grokster, and KaZaA against a lawsuit brought by the record companies. (Admittedly, I’m doubtful that the creators of P2P software should be held liable, but I wouldn’t want to support them in court, nor could you argue that they were naive about creating anything other than software for the purpose of sharing copyrighted material.)

At Wired magazine: “The EFF vigorously urged the Copyright Office to authorize jailbreaking, which in this case is hacking the phone’s OS, and hence allowing consumers to run any app on the phone they want, including [pirated applications and] those not authorized by Apple.”

Dave Winer, an early supporter of the EFF:

I gave $5000 to the EFF when they started, I think it was in 1990, with the noble goal of protecting freedoms as our technology and culture move online. I think I have supported every cause the EFF has adopted since then, but that’s no longer true. I gave this a lot of thought, believe me, and had a long email exchange with Brad Templeton, the chairman of the EFF board of directors, and think they have become as radically polarized as the entertainment industry, and like Hollywood are now working against the interests of those they were meant to serve. The issue appears to be copyright, and it appears that the EFF believes there should be no copyright….

The problem with the EFF position is that in order to remain consistent, they have had to say that copyright doesn’t exist — if a policy or law restricts what a user can do on the Internet then that is a bad policy or law. The courts can’t agree with the EFF. I don’t agree with the EFF.