Sort of.

In Sweden.

For now.

Friday saw the long-awaited verdict in the trial of the founders of the Pirate Bay, one of the most famous (or indeed, infamous) sites on the Internet. A Stockholm tingsrätt (district court) had accused the Pirate Bay of aiding copyright infringements of materials such as movies, music and books. The four defendants, Fredrik Neij, Gottfrid Svartholm Warg, Peter Sunde and Carl Lundström, were each sentenced to one year in prison and ordered to pay 30 million kronor (£2.4 million) in damages. The case will now go to appeal and may be overturned, but it does mark a significant point in the battle against Internet piracy.

The Pirate Bay was set up by the four Swedes in 2003 as part of Piratbyrån (The Piracy Bureau), an organisation opposed to the current implementation of intellectual property rights. The Pirate Bay became a stand-alone organisation in 2004 and quickly became one of the most important centres for pirated material. By late 2008 it was servicing over 25 million unique computers, and had more than 3.5 million registered users (and many more unregistered users).

Detached ethernet cable [image © copyright Photos.com]

The Pirate Bay had previously run foul of Swedish authorities; a police raid in 2006 temporarily took the site offline. A series of controversies not directly related to piracy followed. In one case, confidential photographs of a child murder victim were placed on the site and, despite pleas from the police and the family, were not removed; in another, one of the Pirate Bay’s original funders was revealed to have links to the Swedish far-right.

Despite these set-backs, the Pirate Bay has continued to grow until it now sits comfortably amongst the most visited sites on the Internet. It even spawned a new Swedish political party, Piratpartiet, dedicated to reforming intellectual copyright in Sweden. Although Piratpartiet has had little direct effect on Swedish politics, it can probably be credited with changing attitudes towards file sharing inside the mainstream political parties. Pirate Bay’s influence is so undeniable that its existence became something of a political embarrassment for the Swedish government, who were committed to bringing Swedish intellectual property laws into line with the rest of the EU and with the United States. Eventually, prosecutors tasked with reviewing evidence seized during the 2006 police raid filed charges against four named individuals; not for piracy, but for aiding it. Why not charge the four with piracy?

Because, believe it or not, the Pirate Bay doesn’t hold any pirated material.

The key to the Pirate Bay’s success is a method (protocol) of distributing files known as BitTorrent. Perhaps confusingly, BitTorrent is the name of the company founded by its creator, Bram Cohen, as well as the name for the protocol that is used by a large number of other programs. In this discussion we will be concerned with the workings of the general BitTorrent system.

Lady using a computer
[image © copyright Photos.com]

We’re going to need two Internet users, Alice and Bob. If Alice wishes to distribute a file through BitTorrent, she needs to create a seed file, known as a torrent. Alice uses software distributed with her BitTorrent client to break the single, large file into many smaller chunks (ranging from 64kb to 4Mb in size). The same software then uniquely labels each of the chunks, using a mathematical technique known as cryptographic hashing which allows other BitTorrent client programs to correctly recognise them.

Finally, the list of hashes, as well as other information, such as the name of the uploader, the name of the album or movie, the artists and so on, are written to a torrent file, which is itself only a few kilobytes in size and can easily be distributed using email or the Web.  Alice publishes the torrent, (she is said to "seed" it), so it can be picked up by other BitTorrent users.

When Bob wants to download Alice’s file he first obtains a copy of the torrent. This is not difficult to do. There are many sites (of which Pirate Bay is just one) dedicated to holding copies of torrent files; and most search engines will also turn up torrent files in their results. Chances are, if you look for a movie or DVD online, at least one torrent file will be listed in the results.

Man using a laptop
[image © copyright Photos.com]

Once Bob has a copy of the torrent, he loads it into his BitTorrent client program. Bob’s client extracts a complete list of all the unique identifiers for the chunks - it only needs to find the chunks themselves. Bob’s machine does this by contacting another BitTorrent client, known as the tracker. This client holds a record of the Internet addresses of all the clients currently sharing the requested file. If Bob is the first person to download the torrent, then the tracker will be on Alice’s machine along with all of the chunks. If the torrent has spread more widely, Bob’s client will receive several, even hundreds of addresses. Bob’s BitTorrent client then makes direct links to a number of these clients and begins downloading random chunks of the whole file. When it has finished downloading a chunk, Bob’s client makes a request for the addresses of further chunks and so on until it has received all the chunks; at which point it assembles the chunks back into a perfect copy of the original document.

In a BitTorrent system, Bob is not merely a downloader, his client is also uploading chunks to other users. Each time Bob downloads a chunk, his client informs the tracker of the identity of the chunk and Bob’s address and will provide it to other users in the system. As more and more users join a BitTorrent network, the average speed of sharing files increases, making it a very efficient way of sharing files. Popular files are shared more quickly, whilst even unpopular files will exist on enough computers to allow them to spread. BitTorrent is also extremely resilient. In a normal download service, if a computer fails, it can prevent anyone from accessing files. In BitTorrent, hundreds of users can go offline and the files will continue to download, albeit at a slower speed.

BitTorrent has proved to be a very controversial technology and has had a profound effect on how the internet is used. A survey, conducted in late 2007, estimated that the BitTorrent protocol consumed the largest share of internet capacity, ranging from 49 per cent of all traffic in the Middle East, to 84 per cent in Eastern Europe; rising to an astounding 95 per cent of all traffic at night! BitTorrent has become by far the most important technique for sharing pirated materials, so much so that many ISPs have started to identify BitTorrent users and to restrict their service, or terminate their connections. However, BitTorrent has many legitimate uses, including:

• software upgrades and bug fixes for online video games;
• Internet storage services that make files available to large numbers of users;
• obtaining legitimate movies and music through Bram Cohen’s BitTorrent Inc.

The Pirate Bay is a giant index of torrent files and trackers. Users only connect to the Pirate Bay to download a copy of the torrent file, or to use one of its trackers. None of the copyrighted material is actually distributed by, or passes through, the Pirate Bay servers.

So has the trial changed anything? It has clarified the law in Sweden to some extent (subject to an inevitable appeal which may drag on for years), but it certainly hasn’t put the Pirate Bay out of business. At the time of writing, the site was still working as normal, and it is unlikely to close any time soon. Following the 2006 raid, the Pirate Bay moved many of its servers away from Sweden to countries with less-stringent intellectual property right laws. But, even if the Pirate Bay were to close, it seems inevitable that other sites will spring up around the world to replace it. Piracy is a huge problem for the media industry and it can’t be resolved by ever more stringent laws, such as those proposed (and rejected) in France which would have struck downloaders off the Internet. The trial has not clarified why people pirate content.

A man's hands touching a laptop
[image © copyright Photos.com]

A few people will pirate anything, no matter how cheap the original item; there's probably nothing short of legal action that can dissuade them. A good number of people pirate material that is no longer available - either because the original has been withdrawn from sale, or was never available in their part of the world. Better distribution and back catalogues would bring these people back into the legitimate realm. Some pirate because they own a version of a title on one format and resent having to buy it again when technologies change or the original wears out. This is a more complex field as it requires governments to change the law so that copying from one form to another is legalised, and it requires media companies to unlock their content to make it possible without specialist skills.

If the media industry is to survive, it must first of all accept there will always be a certain level of piracy that cannot be eliminated; but it must make its own offerings so attractive that most people will be willing to spend money for entertainment. A good example is the Apple iTunes Store. All of the music on that site can surely be found on the Internet, but those illegal copies are of variable quality, hard to find and have a certain stigma attached to them. By making the iTunes site so easy to use, relatively cheap, and unrestricted (so far as most users are concerned), Apple and the music companies have been able to convince users to pay for more than six billion songs in five years. Other online music stores, especially those that sell unrestricted content such as Amazon, are seeing similar growth in sales.

The evidence is clear – make it cheap, make it easy, don’t upset the customer and they’ll buy your product. The music industry seems to be learning - so are the movie industry and the government ready to listen?

On the same theme

Darren Waters, Technology editor for BBC News, speaks to Digital Planet about the Pirate Bay's plans to appeal.

US judge and academic, Richard A. Posner reflects on the ethics of copyright.

About the author

Mike Richards joined the Open University in 1996 to help trial teaching over the Internet. Since then he has taught courses ranging from an introduction to robots to the engineering works of Leonardo da Vinci; but has spent most of his time writing about security - everything from the Enigma machines to e-shopping. He is currently working on a new course exploring the world of ubiquitous computers; imagine a world where computers so small and cheap they can be put in everyday objects - smartphones today, smartclothes tomorrow.

Subscribe to Mike Richards's posts

 

Blogging about

Money Programme

Get the facts behind the big business and finance stories from around the world – and down your street, in The Money Programme.

Many of us have ideas for new gadgets or business services that would solve a particular problem or fulfil an unmet need, but, for better or worse, most of these remain unfulfilled ideas. Even those ideas that reach the stage of being protected by a patent of copyright may remain undeveloped – indeed across Europe around a third of all patents are never exploited.

However some entrepreneurial people take their ideas forward and convert them into a reality. This entrepreneurial activity is characterised by risk and uncertainty, and while ideas are free, their realisation will require a commitment of time and money. For small start-up businesses in the UK, the initial financial investment in most cases comes from the individual and their families, and the risk can often involve their life savings and loans secured on their house. The stakes therefore are high, as are the failure rates for start-up companies.

But risks can be managed. As ideas get closer to fruition, risk and uncertainty can be reduced by product development, market research and financial projections. At the same time the level of investment escalates. The entrepreneur needs to have a strong belief in the viability of their idea, but be prepared to cut their losses at the optimum time if for example market testing shows that the market is unlikely to sustain viable levels of demand or the price required to cover costs.

risk-taking entrepreneurs who innovate create higher than normal profits

Intuitively we might think that entrepreneurs are rare or special people. That indeed was the view of Joseph Schumpeter, the economist who more than any other emphasised the key role of the entrepreneur. Working in the early 20^th century Schumpeter placed the individual entrepreneur right at the centre of global economic activity. He argued that risk-taking entrepreneurs who innovate create higher than normal profits, and this drives economic growth. For Schumpeter, the leading entrepreneurs in any field were very special people with almost superhuman qualities of vision and risk-taking. Once they had blazed a trail, others saw the opportunities for profits and jumped on the bandwagon, thus causing widespread economic upswings that could lift economies out of recession.

In his later work Schumpeter acknowledged the importance of large companies that could invest huge sums in research and development (R&D) and organise for innovation on an industrial scale, reducing the opportunities for individual entrepreneurs to compete. Whilst this remains partly true for many sectors, history has subsequently shown that innovation depends on both large and small companies. Indeed, in many areas of the economy innovation thrives on an interdependence between large and small firms. In part, this is linked to the cycle of technological change. Whereas the basic research and long-term development that lays the groundwork for a new technology such as microelectronics or new materials can only be achieved by university research labs and large corporations, small entrepreneurial companies have the flexibility to develop the opportunities offered by the technology in a myriad of niches across the economy.

An exception to this pattern is biotechnology. Here small companies, that are often university spin-offs, are able to conduct R&D over extended periods because they are backed by investors who take a longer than normal view on their investment, in the expectation of larger than normal profits in the future. And again we find a symbiosis between these small firms and the large pharmaceutical companies who can exploit the outcomes on a large scale.

Though the risks remain, there are currently unprecedented opportunities for entrepreneurial activity to exploit the technological platform provided by, in particular, information and communications technologies including the world wide web, new materials and biotechnology. These platforms can support the creation of new service-based businesses as well as entrepreneurial firms developing products, hardware and software. On the horizon, the next potential technological platform – nanotechnology – remains at an early a stage, but, no doubt in future it too will provide the basis for thousands of entrepreneurs to come up with brilliant ideas to exploit market niches.

Find out more

• Join the discussion - how do you get creative? What can your company do to help?
• What makes an inventor tick? - Sir James Dyson and Professor James Fleck shed light on the creative process, in our video extras
• Radical innovation - sometimes a new idea changes the landscape, and even well-established companies struggle to cope
• Managing innovation - how do companies get the creative juices flowing?
• Innovation and Entrepreneurship by John Bessant and Joe Tidd, published by Wiley
• The Journal of Entrepreneurship, published by Sage
• The Open University has a range of courses, and free course material, about creativity and innovation

About the author

Paul Quintas is Professor of Knowledge Management at the OU Business School. He has been researching, teaching and advising in the area of the management of knowledge and innovation for over 20 years.

Subscribe to Paul Quintas's posts