File-Sharing Sites v. Government: The Pirate Bay’s Attempt to Limit Liability Through Magnet Links
Two years ago, the file-sharing giant, The Pirate Bay, made the switch from hosting torrent files on its website to exclusively hosting magnet links. Magnet links are a tool whereby users are able to find torrents that they want to download. The Pirate Bay recently transitioned from using traditional torrent files to using magnet links. By using this newer feature, The Pirate Bay believes it will limit potential criminal liability. This is achieved by linking clients directly with the addresses of peers and allows for them to download both the torrent file and the content. A second tactic that The Pirate Bay has used is changing its domain name from “.org” to “.se”, a move to prevent the seizure of the domain by U.S. authorities. By changing its domain name to “.se,” which means the server is now based in Sweden (.se = Sweden much like, e.g. .co.uk = United Kingdom), The Pirate Bay hopes to evade U.S. authorities, as they would theoretically no longer have jurisdiction over the site.
These moves were ostensibly a reaction to a number of moves by governments around the world that signaled the beginning of a crackdown on file-sharing websites, known as “The Piracy Wars.” In January 2012, the U.S. government took down Megaupload, a website that allowed users to upload and share files with other users, and froze the company’s assets worth more than $300 million. The Department of Justice claimed that Megaupload executives were willfully infringing copyrights. This means that Megaupload either had actual knowledge that the materials on their systems was infringing, or, alternatively, knew facts or circumstances that would make infringing material apparent. Furthermore, to be liable, Megaupload must have received a financial benefit directly attributable to copyright-infringing activity. Finally, Megaupload had to control the copyright-infringing activity, and had not removed, or disabled access to, known copyright infringing material from servers they controlled. Megaupload was visited by millions of users every month, and its outspoken founder, Kim Dotcom, is currently in New Zealand fighting extradition to the U.S. The shutdown was immediately preceded by a massive online protest of the Internet censorship bill, the Stop Online Piracy Act (SOPA), which eventually succumbed to the protests. The Pirate Bay, itself, was the target of a 2009 criminal prosecution in Sweden that resulted in jail time for the website’s founders. The charge in Sweden was “promoting other people’s infringement of copyright laws,” so it is possible that even after switching to magnet links, The Pirate Bay’s operators would still be liable in Sweden. One of the founders, Gottfrid Svartholm, has been transferred from Sweden to Denmark, where he is being kept in solitary confinement while awaiting trial for hacking charges. While these moves are seen by the online community as intimidation tactics from a power structure trying desperately to control how media is distributed, there is no question that the proprietors of file-sharing sites have been scrambling to insulate themselves from liability.
Magnet links look like they will do just that for the founders of The Pirate Bay. Torrents essentially enable a user to download a unique “hash code” that finds files that have been uploaded to the site, which the user can then download. With magnet links, however, instead of having torrent files that contain copyrighted media on a website that users can share between each other, magnet links remove the files and simply allow users to link with one other in order to share media. Furthermore, the encryption of the magnet links makes it virtually impossible for anyone to tell whether a user has actually downloaded any material. Thus, websites that follow this example will be little more than a space for users to covertly interact with each other and share media. It is important to note that there has been no subsequent legal action against The Pirate Bay in any country, and thus there is no definitive answer as to whether converting to magnet links is a legitimate way to limit liability. The US Digital Millennium Copyright Act provides safe harbor for websites that remove infringing content, but safe harbor is not extended to a site that has actual knowledge of infringement and does nothing about it. Thus, this exemption might not work for a website like The Pirate Bay, as The Pirate Bay actively knows and provides peer-to-peer connections for downloading infringing content.
It is likely that the U.S. government is waiting to pass new Internet censorship legislation before once again attempting to bring down sites such as The Pirate Bay. The Obama Administration, at the behest of lobbying giants such as the Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA), is trying to resurrect Internet censorship in an attempt to crack down on citizens who prefer not to pay for media. Torrents are a threat to the business enterprise of copyright holders, such as large music and media companies, by making entire music records, movies and videos available to Internet users free of charge. These companies are adamant in their pursuit of piracy and in their lobbying of lawmakers to implement stricter policies to protect copyright holders. A good example of the intermingling of Congress and the lobbyists is Chris Dodd, a former senator and proponent of SOPA who is now the head of the MPAA. With such cushy jobs waiting for elected officials when they leave office, it is imperative that the online community remains as vigilant in its opposition to future Internet censorship bills as it was with SOPA.
While copyright protection is an important part of creative industries, it is clear that the cartels running the movie and music industries are not realistic in the pricing of their products. The market is indicating that the prices for online copies of media such as songs and movies are far too high; otherwise there would not be a massive black market for these things. The cost of production of one additional unit, such as a song, is close to zero, and by charging $1 per song they are eliminating demand for their product. The record labels and movie studios are able to charge such a high price because they operate in industries dominated by cartels, and thus there is not really any competition that would drive the price down. The competition, in this case, comes in the form of a black market with websites like Megaupload and The Pirate Bay being at the forefront. Instead of adapting their business models to what the market is telling them, these cartels are trying to get the U.S. government to drastically increase Internet censorship and penalties for engaging in even the most innocuous copyright infringement, such as posting a video on YouTube of a karaoke rendition of a copyrighted song. While it is clear from a market perspective that these cartels are trying to influence legislators to help outlaw competition in order to keep charging extremely high prices for their products, it is important to note that many famous artists have come out in support of sites such as Megaupload. Thus, we can see the driving force behind these drastic censorship laws is not the creators of the media, but rather the cartels themselves trying to ensure an artificial marketplace devoid of competition.