With Sky-High Stakes, What Can Studios Do to Fight Piracy?

Sam Blake

Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake

With Sky-High Stakes, What Can Studios Do to Fight Piracy?

The entertainment industry is navigating choppy waters in a sea of uncertainty that is evidently filled with pirates.

Content pipelines have been crimped due to shooting moratoria and the suspension of live events. Advertising revenues are plummeting. Although streaming consumption is up, many viewers will soon face tough choices about how to spend their money amid an economic downturn. Competition continues to grow. And ongoing health concerns stemming from the coronavirus may put an irreversible dent in businesses that require congregating in close quarters, like movie theaters and theme parks. Speculation of consolidation and bankruptcy is bubbling.


Given such headwinds, anti-piracy has arguably never been more important. Protecting revenues has taken on more urgency in these turbulent times.

Yet new analyses suggest that anti-piracy measures are failing. Muso, a British anti-piracy firm, recently found that film piracy in the U.S. was up an "unprecedented" 41% in the final week of March compared to the final week of February.

Reports have suggested that all the unreleased episodes of The Last Dance, a Netflix-ESPN collaboration about the Michael Jordan-era Chicago Bulls that has been a lifeline to starved sports fans, are available for unsanctioned viewing.

Unreleased episodes of "The Last Dance," a Netflix-ESPN collaboration about the Michael Jordan-era Chicago Bulls, are available for unsanctioned viewing.ESPN

And an analysis exclusively shared this week with dot.LA found that four major studios lost $100 million in 23 days due to pirating across six major releases made available on streaming platforms from March 20 - April 11. The finding comes from Videocites, a video analytics firm founded in 2014 with offices in Israel and Beverly Hills. Videocites did not wish to disclose specific titles or studios.

In 2019, the U.S. Chamber of Commerce found that TV and film piracy costs the industry up to $71 billion annually. When sports are included, that number climbs to nearly $230 billion.

While determining an exact dollar figure is ripe for miscalculation because of the uncertainty over whether pirate consumers would have otherwise bought the title legally, three things about piracy are clear, said Mike Smith, professor of marketing at Carnegie Mellon and co-author of a report on digital piracy recently presented to the U.S. Patent & Trade Office.

One is that piracy hurts sales. For some time the question was unclear, since theoretically piracy can provide promotional benefits. But after 29 out of 33 peer-reviewed articles reached the same conclusion, "it's not an interesting debate anymore," Smith told dot.LA.

Also true, though not quite as well documented in the literature, is that digital piracy reduces investment in creative content -- and therefore the volume of creative output.

"If I were a studio executive," Smith said, "I'd be worried that people are getting comfortable with piracy right now."

Whack-a-mole?

It is often said that fighting piracy is like a game of whack-a-mole, explained James Maysonet, head of business development at Videocites and author of their new paper. In other words, there will always be new ways for pirates to circumvent content protections.

A globalized marketplace doesn't make deterrence any easier, noted Smith, since not all countries protect copyright equally.

Further complicating matters is the sheer variety of reasons why pirates post illegal content, Muso Chief Executive Andy Chatterley told dot.LA. "The whack-a-mole analogy doesn't give justice to the actual reality," he said. "It's more complex." A pirate's motives may be financial, malicious, fame-seeking or otherwise.

Smith also disagrees with the analogy: "The argument makes perfect sense, except it's wrong. Because it doesn't take into account the fact that people are lazy."

What to do?

The final thing the academic literature makes clear, Smith says, is that pirate consumers are just like regular consumers in one essential way: they respond to incentives.

"Making it harder to consume pirated content reduces illegal consumption, and increases legal consumption," Smith said. He emphasized that it isn't necessary to remove every single nefarious on-ramp to illicit content. For example, when the British government blocked access to The Pirate Bay, a popular piracy site, there was little change in pirated consumption. "But when they blocked the next 18 and then the next 53 most popular sites, that's when you saw increases in legal streaming consumption. You don't have to make it impossible."

When the British government blocked access to popular piracy site The Pirate Bay, there was little change in pirated consumption.upload.wikimedia.org

Indeed, Maysonet claims that 90% of illegal streaming is done in broad daylight, on social media sites like Facebook and YouTube. This, he proposes, suggests that relatively modest increases in piracy protection could make a big difference.

"We're not talking about the sinister dark web that requires a person to download Tor, buy a VPN, and navigate the backwaters of internet hell," Maysonet wrote in his Videocites paper.


Much of the illegal viewing is done on normal social media sitesVideocites


One solution he touts is his own company, which uses video-based artificial intelligence to create a "fingerprint" for visual assets, then scan the internet intermittently to identify and flag illegal copies.

Muso offers a similar service, except according to Chatterley it focuses more on an asset's metadata. Maysonet, speaking generally about anti-piracy methods, claims a metadata approach has lower capability than fingerprinting to find pirated assets, employing as they do disguise tactics like removing or obscuring metadata, flipping the video feed upside-down, chopping it up into tiny segments, or obscuring an asset's watermark. Chatterley says the advantage of a metadata approach is its cost and speed.

As for legal recourse, a content-protection battle is currently underway in the European Union. According to Maysonet, the key issue is whether digital platforms should be held liable for displaying pirated content. In March, the U.S. Senate's Intellectual Property subcommittee held a hearing to examine how other countries handle digital piracy, with particular attention paid to this EU Article 17 debate.

Maysonet said that U.S. companies are closely watching the proceedings. Whatever happens, he believes studios should invest more in IP protection. And he thinks Guilds ought to demand it to protect the financial interests of their members.

From Control to Convenience

But for the major studios, Smith wonders if the writing is already on the wall.

"I think the studios should be much more worried about Netflix's business model than they are," he said, echoing the thesis in a 2019 piece he co-wrote for Harvard Business Review.

Never mind that Netflix, which blew earnings expectations away last week, isn't vulnerable to today's advertising squeeze. Nor that, unlike many of its competitors, it isn't tied to other business units that have been hammered by the coronavirus fallout. What really sets Netflix apart, says Smith, is that its business model is based on convenience rather than control.

"For (the studio) business model to work, you've got to be able to control when people get access to the content," he explained. Piracy undermines that control.

"I think we're seeing a transition from a control-based business model to a convenience-based business model," Smith concluded. "You see that with Disney+, HBO Max, NBC Peacock, and the others."

Maysonet doesn't entirely agree that the theatrical model is done. Nor does he think it makes much difference.

"If we continue with the status quo," he wrote, "the pirates will continue to damage our industry."

---

Sam Blake covers media and entertainment for dot.LA. Find him on Twitter @hisamblake and email him at samblake@dot.LA

https://twitter.com/hisamblake
samblake@dot.la
OpenAI's $6.6B Power Play: The Future of AI Just Got a Massive Boost 💰🚀
Image Source: Open AI - Sam Altman

🔦 Spotlight

OpenAI is making some exciting moves! The company just completed a massive $6.6 billion funding round, pushing its valuation to an impressive $157 billion. Thrive Capital led the charge, with big names like Andreessen Horowitz and Founders Fund also joining in. This investment will allow OpenAI to further scale its operations and advance AI technologies like GPT-4 across various sectors such as healthcare, entertainment, and business.

But that’s not the only exciting news. OpenAI has also secured an additional$1 billion credit facility, giving the company even more financial flexibility to execute its ambitious growth plans. This safety net ensures that OpenAI has the resources to scale safely and effectively while continuing to lead the AI space.

AI is becoming integral to industries worldwide, and OpenAI’s products—like ChatGPT—are seeing rapid adoption. From education to enterprise solutions, the company is driving significant advancements in how AI is integrated into everyday life.

Following Microsoft’s $10 billion investment earlier this year, this latest round underscores the market’s confidence in OpenAI’s potential. With its strong focus on responsible AI deployment and ethical scaling, the company is set to shape the future of AI in a way that benefits a broad range of industries and addresses global challenges.

As AI evolves, OpenAI remains dedicated to pushing boundaries while ensuring that its innovations prioritize safety, scalability, and social impact. Keep an eye on this space—big things are on the horizon!


🤝 Venture Deals

LA Companies

  • Impulse Space, a Redondo Beach-based company specializing in in-space transportation services, raised $150M in Series B funding led by Founders Fund, bringing its total funding to $225M, to expand its team and advance production of its Helios and Mira vehicles. - learn more
  • Nusano has secured over $115M in Series C financing, led by The Wasatch Group, to accelerate the commercialization of its radioisotope production technology, aimed at improving cancer treatment and medical diagnostics. - learn more
  • Future Trash, a multidisciplinary creative studio, has raised a $5M Seed funding round from TIRTA and General Catalyst to develop original intellectual property (IP) within Fortnite, focusing on building unique in-game content and experiences. - learn more
  • XType, the leading software company for multi-instance management on the ServiceNow platform, has raised a $21M Series A funding round led by Norwest Venture Partners to accelerate innovation and expand its platform capabilities on the ServiceNow platform. - learn more
  • 3Laws Robotics, a robotics company focused on building AI-powered platforms to enhance the safety, security, and operational efficiency of robotic systems, has raised a $4.1M Seed funding round led by TenOneTen Ventures. - learn more

LA Venture Funds
  • Watertower Ventures participated in the $8M Series A funding round for DocJuris, a leader in AI-based contract review and negotiation software that automates key tasks to streamline the contract process for enterprise teams and general counsels. - learn more
  • Progression Fund participated in a $3.7M Seed funding round for Permanent, a company focused on advancing sustainable agriculture by developing solutions that improve soil health and productivity. - learn more


LA Exits

  • Loom, an educational community platform that empowers women by providing comprehensive resources on reproductive health, sexual wellness, and parenting education, has been acquired by women's health brand Perelel, marking a significant expansion in the women's health and wellness sector. - learn more

Download the dot.LA App

⚠️📲🌩️ Your Digital Lifeline: Top Tech Apps for Natural Disasters

Living in LA means being ready for anything—quakes, wildfires, crazy weather, you name it. Luckily, there’s a suite of tech apps designed to keep you informed, connected, and safe when disaster strikes. From real-time alerts to staying in touch with loved ones, these apps have you covered. Here’s the ultimate list to help you handle whatever chaos comes your way in LA County.

Get Real-Time Alerts

Image Source: MyRadar

FEMA App
  • What it does: Provides real-time alerts from the National Weather Service, along with shelter and disaster recovery info.
  • Key features: Weather alerts, shelter locator, and preparedness resources.
  • Available on:iOS | Android
MyRadar Weather Radar
  • What it does: Offers real-time, animated radar for tracking severe weather and storms.
  • Key features: Live radar, storm tracking, and severe weather alerts.
  • Available on:iOS | Android
Clime: NOAA Weather Radar
  • What it does: Delivers real-time radar and weather updates, with wildfire and flood tracking.
  • Key features: Customizable weather alerts, disaster tracking.
  • Available on:iOS | Android
American Red Cross Emergency App
  • What it does: Provides real-time alerts for over 35 types of emergencies, plus disaster preparedness tips.
  • Key features: Alerts, safety check-ins, and emergency tips.
  • Available on:iOS | Android
My Earthquake Alerts & Feed
  • What it does: Sends real-time earthquake alerts, with maps and detailed data.
  • Key features: Earthquake alerts, customizable notifications, detailed maps.
  • Available on:iOS | Android
Citizen
  • What it does: Delivers real-time alerts for emergencies, including natural disasters and crime near your location.
  • Key features: Safety alerts, live incident reports, and community updates.
  • Available on:iOS | Android

Stay Connected with Loved Ones

Image Source: Life360

While social media apps like Facebook and X provide real-time updates, additional tools can help with communication and location sharing, ensuring you stay connected and safe.

Nextdoor
  • What it does: Connects neighbors with real-time local updates on emergencies and community events.
  • Key features: Neighborhood alerts, local info, resource sharing.
  • Available on:iOS | Android
WhatsApp
  • What it does: Enables secure messaging, location sharing, and video/voice calls with family and friends.
  • Key features: End-to-end encryption, location sharing, voice/video calls.
  • Available on:iOS | Android
Zello Walkie Talkie
  • What it does: Turns your phone into a push-to-talk walkie-talkie for communication in low-signal areas.
  • Key features: Push-to-talk, works over Wi-Fi/data, group communication.
  • Available on:iOS | Android
Glympse – Share Your Location
  • What it does: Lets users share real-time locations with family and friends without needing an account.
  • Key features: Location sharing, ETA updates, private tracking.
  • Available on:iOS | Android
Life360
  • What it does: Tracks real-time location of family members and provides emergency SOS alerts.
  • Key features: Family location tracking, emergency alerts, crash detection.
  • Available on:iOS | Android

Stay Mobile

Image Source: PlugShare

For navigating road closures and traffic during disasters, Google Maps and Waze are essential tools that offer real-time updates and alternate routes. Along with these go-to options, there are additional apps that can help you stay mobile when it matters most.

GasBuddy
  • What it does: Locates nearby gas stations and provides real-time updates on fuel availability and prices.
  • Key features: Gas station locator, fuel prices, availability checks.
  • Available on:iOS | Android
PlugShare
  • What it does: Provides a comprehensive map of public EV charging stations worldwide. It offers real-time availability, pricing, user reviews, and photos of charging stations, helping you find the best nearby options.
  • Key features: Real-time station availability, detailed station info, user reviews, and trip planning.
  • Available on:iOS | Android

Traditional Preparedness Tips

In addition to these tech apps, it’s crucial to prepare for natural disasters with traditional methods:

  • Build a disaster kit: Gather essential supplies like food, water, first aid supplies, and a flashlight.
  • Develop an evacuation plan: Determine where you will go and how you will get there in case of an emergency.
  • Keep emergency contacts handy: Make a list of important phone numbers.

Maximize Battery Life and Data During Emergencies

During disasters, power outages and increased network traffic can affect your device's battery life and data usage. Consider the following:

  • Keep your devices charged: Use portable or solar-powered chargers to extend battery life.
  • Conserve data: Use Wi-Fi hotspots when available to avoid excessive data charges.

These apps are your go-to tools for staying informed, connected, and ready for anything in Los Angeles County. Whether you need real-time alerts, navigation assistance, or ways to keep in touch with loved ones, having these apps on hand can make all the difference when it matters most.

Download the dot.LA App

Luxurious Second Home Ownership without the Headache: How Pacaso is Changing the Landscape of Real Estate

🔦 Spotlight

Pacaso addresses the pain points of second home ownership, offering a luxurious, flexible, and financially sound alternative to traditional second homes and ultra-luxury hotels. Co-founded in 2020 by entrepreneur Austin Allison and former Zillow executive and prominent LA tech figure Spencer Rascoff, Pacaso, an unicorn startup, has redefined vacation home ownership with its unique co-ownership model. Rascoff's contributions to the LA tech scene extend beyond real estate; he also founded 75 & Sunny, an LA-based startup studio and venture fund, and co-founded dot.LA, an LA tech news and events company.

LA residents adore Pacaso for its lush vacation destinations that also make for smart investments. Pacaso offers everything from serene weekend getaways in Aspen to sophisticated escapes in Paris. Each residence, valued between $200k to over $2M for 1/8th, boasts meticulous design, high-end furnishings, and premium amenities. Unlike traditional second home ownership, which involves high costs, maintenance, and underutilization, or ultra-luxury hotels, which lack the personal touch and investment potential, Pacaso's co-ownership model offers a superior solution. Co-owners enjoy the benefits of a high-end vacation home without the full financial burden and hassle of sole ownership, making it a smarter and more flexible choice for discerning buyers.


Image Source: Pacaso

Cabo, Mexico

$822,000 (1/8th ownership)

5 bds. l 5 ba. l 4,969 sq ft

View Here


Image Source: Pacaso

Paris, France

$600,000 (1/8th ownership)

2 bds. l 2.5 ba. l 1,410 sq ft

View Here


Image Source: Pacaso

Malibu, California

$750,000 (1/8th ownership)

3 bds. l 3 ba. l 1,880 sq ft

View Here


Image Source: Pacaso

Park City, Utah

$755,000 (1/8th ownership)

4 bds. l 4.5 ba. l 2,584 sq ft

View Here

Head to Pacaso to learn more about its innovative co-ownership model that addresses the common challenges of second home ownership!


🤝 Venture Deals

LA Companies

  • Oak Essentials, the natural skincare brand founded by Jenni Kayne, has raised an undisclosed amount in Series A Funding from Silas Capital and Unilever Ventures. This investment will drive the brand’s expansion, focusing on product development, boosting marketing efforts, and expanding distribution channels. - learn more
  • Playhouse MD, an upcoming children’s healthcare platform that incorporates play to enhance health outcomes, has raised $4M in funding, according to a recent SEC filing. - learn more
  • FluidLogic, a high-performance hydration system provider, raised $15M in a Series A Extension led by Solyco Capital to support product development and innovation for adventure sports and outdoor endurance categories, with consumer products launching in early 2025. - learn more
  • Reflect Orbital, which uses in-space reflectors to direct sunlight to solar farms and large-scale lighting applications after sunset, has raised $6.5M in seed funding led by Sequoia Capital. The funding will help the company develop production vehicles and expand its team as it builds space-based energy infrastructure. - learn more

LA Venture Funds
  • Smash Capital led a €20M Series B round into Vilnius-based Ovoko, an e-commerce platform for buying and selling used car parts across Europe, marking Smash Capital's first investment in Lithuania. The funds will support Ovoko's product development, market expansion, and team growth as it aims to dominate the European market for second-hand automotive components. - learn more
  • M13 led a $9M Series A Funding Round for Zenlytic, the world’s first self-serve business intelligence platform. - learn more



LA Exits

  • Continuum Global Solutions’ healthcare vertical has been acquired by Everise, a customer service management company, enhancing Everise’s capabilities in pharmacy benefit management and expanding its growth prospects in the healthcare sector. - learn more
  • Radical Semiconductor, a company specializing in processing-in-memory technology, has been acquired by BTQ Technologies, a leader in post-quantum cryptography. This acquisition strengthens BTQ’s ability to secure data in the post-quantum era by integrating Radical Semiconductor's advanced technology portfolio. - learn more

Download the dot.LA App

RELATEDEDITOR'S PICKS
Trending