The recent federal takedown of notorious file-sharing service Megaupload was initially seen as a huge victory for owners of copyrighted music and movies, but new research shows this may not be the case. Federal prosecutors successfully shuttered the service last month and arrested seven men associated with Megaupload including site founder Kim Dotcom, who is said to have earned $42 million from the site in 2010 alone. What was initially thought to be a victory for movie studios and record labels is turning out to be an empty win, however, as Megaupload’s closure has had almost no impact on file-sharing. Read on for more.

Internet consulting firm DeepField Networks analyzed Web traffic from six companies that provide the storage facilities responsible for roughly 80% of all file-sharing traffic. According to the firm, Megaupload’s files accounted for a huge portion of that traffic before a series of raids took the service offline last month; between 30% and 40% of all file-sharing downloads came from Megaupload.

The service moved so much data that global Internet traffic immediately decreased by between 2% and 3% when Megaupload’s services were taken offline on January 18th.

As big as Megaupload was, however, the service’s closure has not had the effect on file-sharing that copyright owners might have hoped. According to DeepField, Web traffic related to file-sharing recovered almost immediately as users simply utilized other services such as Rapidshare and Mediafire.

To compound matters, it looks like Internet Service Providers in the United States will likely take the biggest hit following Megaupload’s closure. ”Instead of terabytes of North America Megaupload traffic going to U.S. servers, most file sharing traffic now comes from Europe over far more expensive transatlantic links,” DeepField noted.

Federal prosecutors in Virginia have shut down notorious file-sharing site Megaupload.com and charged the service’s founders with violating piracy laws. The Associated Press broke the story on Thursday, reporting that the indictment accuses Megaupload.com’s owner with costing copyright holders including record labels and movie studios more than $500 million in lost revenue. Seven people tied to Megaupload.com have been charged and four are already in custody, including the site’s founder Kim Dotcom. Dotcom earned $42 million from the the site in 2010 according to the indictment. Megaupload.com allowed users to upload and share content without any measures in place to ensure files being hosted on the site’s servers were not protected by copyright. The company claims that it responded to copyright complaints as they were received. According to court documents made available on Thursday, Megaupload.com was at one point the 13th most trafficked website in the world.

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Considering all of the concerns major music and movie studios have over piracy and file sharing, one would think the studios could at least manage to keep their own employees from stealing content. That is apparently not the case, however. TorrentFreak has a new tool that reveals what a specific IP address has downloaded from BitTorrent, and used it to snoop around a few popular studios. The site found that employees at Fox, Sony and NBC Universal were downloading illegal content from BitTorrent. A Sony employee, for example, downloaded Conan the Barbarian, an album from The Black Keys, and a Beavis and Butthead video. An NBC Universal Employee downloaded HBO’s hit series Game of Thrones, Cowboys and Aliens and a trance album. Fox typically contacts the FBI when a movie has been leaked, but TorrentFreak found an employee downloading a 1080p HD version of the movie Super 8. “By highlighting the above our intention is not to get anyone into trouble, and for that reason we masked out the end of the IP addresses to avoid a witch hunt,” TorrentFreak said. “An IP address is not a person, IP addresses can be shared among many people, and anyone can be behind a keyboard at any given time.” A Google employee was also caught downloading Windows 7, and the Church of God was busted for downloading two popular TV shows.

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A new study conducted by the Business Software Alliance — a software license enforcement and lobbying group formed by Microsoft — found that the global market for pirated software reached a commercial value of $59 billion in 2010. The massive figure represents a 14% increase over 2009. According to a survey of 15,000 PC users conducted by Ipsos Public Affairs, most people do recognize intellectual property rights and prefer legal software to pirated software. According to the report, however, many users of pirated programs do not realize they are using unlicensed copies. ”The software industry is being robbed blind,” said BSA President and CEO Robert Holleyman in a statement. “Nearly $59 billion worth of products were stolen last year — and the rates of theft are completely out of control in the world’s fastest-growing markets. The irony is people everywhere value intellectual property rights, but in many cases they don’t understand they are getting their software illegally.” Hit the break for the full press release.

Emerging Markets Drive Software Piracy to a Record $59 Billion in 2010, BSA Reports

Global survey finds too many people don’t understand they are stealing

Washington — May 12, 2011 —

Theft of software for personal computers leapt 14 percent globally in 2010 to a record commercial value of $59 billion, the Business Software Alliance (BSA) reported today in the 2010 BSA Global Software Piracy Study. That amount has nearly doubled in real terms since 2003. Emerging economies are the driving forces behind the trend, the report finds, because that is where PC shipments are growing fastest.

Software piracy is escalating in value even though large majorities of PC users around the world believe in intellectual property rights and prefer legal software to pirated software, according to surveys of approximately 15,000 PC users in 32 countries, conducted Ipsos Public Affairs as part of BSA’s report. But a startling finding is that too many people do not realize they are using unlicensed copies.

BSA has created a rich, interactive presentation that shows how these trends play out in 116 countries and regions around the world. It is featured at www.bsa.org/globalstudy.

“The software industry is being robbed blind,” said BSA President and CEO Robert Holleyman. “Nearly $59 billion worth of products were stolen last year — and the rates of theft are completely out of control in the world’s fastest-growing markets. The irony is people everywhere value intellectual property rights, but in many cases they don’t understand they are getting their software illegally.”

“Software piracy is an urgent problem for the whole economy, not just the software industry, because software is an essential tool of production,” Holleyman said. “Businesses of all sorts rely on software to run their operations. Properly licensed companies are being unfairly undercut when their competitors avoid overhead costs by stealing software tools.”

Key findings of the 2010 BSA Global Software Piracy Study:

• While the number of PCs shipped to emerging economies in 2010 accounted for more than 50 percent of the world total, paid software licenses in emerging economies accounted for less than 20 percent of global sales.
• Six years ago, the commercial value of software piracy in emerging economies accounted for less than one-third of the world total. Last year, at $32 billion, it accounted for more than half.
• The global piracy rate for PC software was 42 percent in 2010. That is the second-highest global piracy rate BSA has found in the eight years it has been conducting annual studies with leading market research and forecasting firm IDC. In 2009, the global rate was 43 percent.
• The regional piracy rate rose by 1 point in the Asia-Pacific region and in Latin America — two economic hotbeds of the developing world.
• Seven PC users in 10 support paying innovators for their creations to promote more advances, while just three in 10 say no one should control technologies that could benefit society.
• Around the world, solid majorities see clear economic benefits from IP rights and protections: 59 percent think IP rights benefit local economies, 61 percent think they create jobs.
• Eight PC users in 10 say they value legal software over pirated software because it is more reliable and secure.
• The most common form of software piracy is buying a single license for a program and installing it on multiple computers: 60 percent incorrectly think this is legal at home, and 47 percent think it is legal at work (including 51 percent in emerging economies).

“The software industry is doing everything it can to promote legal software use,” Holleyman said. “We need governments to step up their efforts on this issue by supporting public education efforts, enacting and enforcing strong intellectual property laws, and leading by example.”
Full copies of the 2010 BSA Global Software Piracy Study are available for download, along with videos about the study’s methodology and findings, on BSA’s website: www.bsa.org/globalstudy.

Google announced and launched its Music Beta service on Tuesday, and record execs aren’t too pleased with its decision to move ahead before reaching a deal. “People are pissed,” one record label exec told Hollywood Reporter, which explained in one article why it took so long for Google and the music industry to reach an agreement. Reportedly, Google offered some labels larger advances than others, which resulted in some firms holding out for more money. Similarly, the music industry is concerned that Music Beta users will upload music stolen from P2P sites — that the industry already wants removed from Google’s search results — to Google’s music storage locker. Lastly, the recording industry was concerned that Google’s music service could weaken the revenue stream from other sources, such as Apple’s iTunes. Ultimately, driven by competition from Amazon’s Cloud Drive, Google decided to pull the trigger and launch anyway.

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Speaking to the Associated Press on Friday, Nintendo CEO Satoru Iwata revealed that his company’s upcoming Nintendo 3DS will in fact gamers the choice of playing titles in both 3D and 2D. Exactly how one would switch from 3D to 2D and vise versa is unclear, but Iwata mentioned one of the primary reasons for the ability to remove the extra dimension is for the health of children’s eyesight. Also revealed by Iwata was the fact Nintendo is going to introduce a new set of anti-piracy measures with the 3DS. Unfortunately with this one, Iwata would not comment further saying he did not want to give pirates any clues about how the measures will work. Said Iwata on the piracy of video games: “We fear a kind of thinking is become widespread that paying for software is meaningless. We have a strong sense of crisis about this problem.” The Nintendo 3DS is scheduled to make its debut at E3 this June and go on sale in Q1 2011.

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Just because we might associate the company with loveable characters like Bugs Bunny and Daffy Duck doesn’t mean the characters who are running the show at Warner Bros. Entertain UK have similar personalities. After all, they’re the ones that came up with the brilliant idea of hiring a student intern, paying him or her £17,500 ($26,212 USD) over the course of a year and having them engage in a bit of digital espionage. The intern, who is to be “IT literate” and currently enrolled as a student pursuing a degree in computer science, will be charged with infiltrating torrent sites and creating bots which sniff out media which Warner Bros. and NBC Universal hold the copyrights to. Here’s a snippet from the job description:

During the 12 month internship, duties will include: monitoring local Internet forums and IRC for pirated WB and NBCU content and in order to gather information on pirate sites, pirate groups and other pirate activities; finding new and maintaining existing accounts on private sites; scanning for links to hosted pirated WB and NBCU content and using tools to issue takedown requests; maintaining and developing bots for Internet link scanning system (training provided); preparing sending of infringement notices and logging feedback; performing trap purchases of pirated product and logging results; inputting pirate hard goods data and other intelligence into the forensics database; selecting local keywords and submitting local filenames for monitoring and countermeasure campaigns and periodically producing research documents on piracy related technological developments. Various training will be provided.

Yikes.

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In an uncharacteristically rational move, on the surface at least, the Recording Industry Association of America (RIAA) has decided that it will stop suing individuals caught downloading pirated music and will instead focus solely on asking the pirates ISP to either serve warning or kill their internet connections. This tactic is by no means new and is in fact standard practice in many countries across the world where, you guessed it, it makes little to no difference in levels of music piracy. But hey, at least the RIAA has finally realized that its spending $100,000 to sue a struggling single-mom diner waitress for $25,000 after catching her downloading a few pirated CDs is plain stupid, especially when there isn’t a hope in the world that it’ll ever collect a penny from her.

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On October 13, President Bush signed a highly controversial anti-piracy law. The dictator President has put into effect a law that will appoint an intellectual property czar (yeah folks, you heard it right) that will report directly to the President (again, you heard that right) on how to keep hax0rz from illegally obtaining copyrighted materials. The targets are primarily music, movies, and TV, but you can bet this will be leaking over to other stuff with copyrights. The bill was, of course, backed by none other than the RIAA and MPAA (our favorite institutions!). Say good-bye to the phrase “DRM Free” everyone. Apparently, counterfeiting and piracy costs the U.S. $250 billion annually… that’s a lotta billions for free tunes and movies. Any devices used in piracy may have to be forfeited to Big Brother, lest “firemen” come into your house and burn down your gadgets Fahrenheit 450 style.

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