Forbes Online

Profiting from The Forbidden Fruit of the Virtual Garden of Eden

Senior Fellow and Director, Center for the Economics of the Internet
Chinese youngsters play online games overnight at an internet cafe on June 11, 2005 in Wuhan, Hubei Province of China. (Cancan Chu/Getty Images)
Chinese youngsters play online games overnight at an internet cafe on June 11, 2005 in Wuhan, Hubei Province of China. (Cancan Chu/Getty Images)

Piracy threatens the viability of the Internet as we know it. A recent study by the Digital Citizens Alliance and NetNames examines one of the primary conduits of piracy, “cyberlockers,” cloud-based websites that enable users anonymously to download or stream pirated material. The ease with which cyberlockers operate as seemingly legitimate businesses undermines the integrity of the Internet and hastens its possible demise.

To some, the Internet is the Garden of Eden, a paradise where practically anything is available, simply to be taken. For a small fee or even free of charge, legitimate films, music, applications can be had with a few finger taps. Most of us are Adams and Eves on the Internet, plucking the sweet fruits that attract.

But the Garden of Eden, both real and virtual, has forbidden fruit that we have consistently been told not to choose. Teachers, friends, and messages on Internet websites warn us about the evils that lurk on the Internet: predators, con artists, pornography, and stolen intellectual property. These are the fruit of the virtual Tree of Knowledge.

For Adam and Eve, expelled from the Garden of Eden, Paradise was lost. In many ways, we have the same weaknesses as Adam and Eve. Will we, like our progenitors, lose our virtual Garden of Eden?

Apologists for piracy often argue that it is an inadvertent wrongdoing and that users should not be punished for not knowing that their actions might be wrong. If the piracy of intellectual property left users in a state of Edenic ignorance, one might expect a lack of guile. But the Internet is filled with users who not only steal intellectual property but also try to cover up their wrongdoing through cyberlockers.

The cyberlocker business model appears to be based on the distribution of pirated materials. A legitimate website, when notified about pirated materials, will usually take steps to take those materials down. Cyberlockers take few if any steps to take down pirated materials.

Digital Citizens Alliance and NetNames find that 80 percent of content on cyberlockers is pirated. Given how much legitimate content is available on the Internet, and how much of that content is available through legitimate websites, the high percentage of stolen content at cyberlockers cannot be a coincidence.

If Internet users were blissfully ignorant that their pirating was wrong and a source of potential embarrassment or worse, users would have no need for cyberlockers. But Digital Citizens Alliance and NetNames find that efforts to cover up piracy by users are widespread. The study examines 15 direct download cyberlockers for pirated materials and finds that those 15 websites alone had more than 221 million unique visitors. The study also examines 15 streaming video lockers that collectively have more than 103 million unique monthly visitors.

Together, the 30 sites from around the world have more than 320 million unique visitors in a month. These visitors take extraordinary steps not to be detected in their use of pirated materials. The users know that their activity is of dubious legality. They know that they cannot receive the copyrighted works they seek at popular websites. That is why they frequent the cyberlockers.

Cyberlockers do not act alone in encouraging Internet users to download pirated materials. The Digital Citizens Alliance and NetNames study documents the broad extent to which advertisers support these websites and the extent to which websites rely on credit card companies to facilitate their activities. The presence of advertising and credit cards for subscriptions adds an appearance of legitimacy to users seeking reassurance for the activities they otherwise know are wrong.

The study focuses on the potential profitability of cyberlockers. Whether cyberlockers are profitable or not does not limit the enormous harm that piracy does to the Internet and our broader economy. Piracy discourages investments in intellectual property impoverishing creators and the rest of us alike.

Often, we take the Internet for granted. We presume it is here today and will surely be here tomorrow. Similarly, Adam and Eve probably had little reason to doubt the perpetual continuation of the Garden of Eden. The Internet faces many threats, piracy chief among them. The Digital Citizens Alliance and NetNames study helps illustrate just how serious is the threat.