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Dear Santa: Close the Streaming Loophole

Updated: Dec 22, 2020

The lockdowns, stay-at-home orders and work- or school-from-home arrangements during this year’s global pandemic have, among other things, sparked vast upticks in digital streaming services, subscriptions and video streaming.

With movie theaters closed, music halls shuttered and sports events either canceling, barring fans or drastically reducing attendance levels, services such as Amazon Prime, Netflix and Disney+ have thrived, signing up new subscribers. While most people long for return to human interaction in these erstwhile social settings, streaming and online connectivity have brought movies, music and more into our sequestered existence.

This streaming surge has also highlighted a gaping loophole in copyright law. The streaming loophole allows content pirates unlawfully to infringe copyrighted material, merely facing misdemeanor punishment. The same pirated content downloaded or viewed on a bootlegged DVD carries felony penalties, including imprisonment and heavy fines. The difference lies in the law applying to public performance of copyrighted content, rather than the law relating to reproduction or distribution.

As a result, the streaming loophole enables criminal copyright infringement by one technology to be exploited due to lesser legal stakes. The artists and creators still lose the fruits of their labor. As the register of copyrights put it, “Under this system, criminal streaming piracy, no matter the dollar amount it involves or the number of works affected, is de facto treated as a lesser crime than the illegal downloading or reproduction of the exact same content” (emphasis in original).

The streaming loophole should be near the top of Congress’s Christmas-lame duck list. It’s easily fixed and a well-documented, widely known assault on intellectual property rights.

How big a problem?

MUSO, a research firm, reported that streaming sites accounted for 96.1% of TV program piracy, reaching almost 190 billion visits to piracy streaming sites in 2018. MUSO found “film piracy increased by over 40% when [COVID-19] lockdown measures were enforced.”

The Global Innovation Policy Center has estimated U.S. industry revenues lost to digital piracy between $29 billion and $71 billion annually — or an 11% to 24% whack to revenues. That loss translates to between almost $46 billion to $111 billion of lost U.S. GDP.

The Regulatory Transparency Project of the Federalist Society has noted, “Streaming piracy directly substitutes for legitimate content.” Thus, streaming pirated content, be it movies, TV programs, music, games or something else, packs an economic wallop on creators, actors, support personnel in production and distribution, investors and IP owners. It reduces innovation and reinvestment in future creative projects, while trimming consumers’ choices of artists, offerings, services, legitimate content outlets and market competition through quality and price.

Illegal websites offering free popular content — like “well-known movies, popular TV shows, big-league sports, and absorbing games” — often sneak malware onto your computer or device. The Federal Trade Commission tried “free” movies from five websites; all installed malware. Malware puts you at risk because it will “bombard you with ads, take over your computer, or steal your personal information.”

Clearly, the streaming loophole should be nailed shut because the streaming loophole diminishes copyright owners’ property rights, hurts our creative industry, robs from our economy and harms consumers. And streaming pirated content is against the law.

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