The Pirate Bay – Backgrounder for Media February 2009 What is The Pirate Bay? The Pirate Bay is an online service that facilitates the distribution of a huge volume of copyrighted movies, music, books, television programmes, games and software without permission from the owners of the rights to those works. The service drives revenues by selling advertising to clients in Sweden and internationally. It acts as a tracker and indexer using the file sharing protocol BitTorrent. Who is being prosecuted and why? There are four defendants in the case. They are Fredrik Neij, Gottfrid Svartholm Warg, Peter Sunde Kolmisoppi and Carl Lundström. They are charged with contributing to copyright infringement by facilitating the distribution of copyrighted material. Is there a civil action as well? There is no separate civil action but music and film companies are the plaintiffs in a claim for compensation that is being heard together with the criminal prosecution. How does The Pirate Bay work? The Pirate Bay helps internet users to find and exchange the files they want. It offers a user-friendly interface and search engine, enabling users to search for specific content or browse the organised list of music tracks, movies, games and other content. It also has a number of related “trackers” that help users connect to that content and download it. How big is The Pirate Bay? The Pirate Bay is the world’s biggest BitTorrent tracker, with a huge number of users across the world. It is available in 34 language versions, from Arabic to Slovenian. In February 2009, the site reported that it had 22 million simultaneous users. Peter Sunde, one of the defendants in the trial, said in an internet TV interview given in July 2007 that 50 per cent of all torrents used The Pirate Bay trackers. In January 2009 the service displayed around 1.6 million torrent files linking to movies, music tracks and other media. What is the evidence The Pirate Bay is a commercial service? Evidence presented by the prosecutor indicates that the individuals involved in the service constructed an operation designed to make substantial revenues for themselves. For example, the evidence includes a signed agreement between the 2 defendants to share the proceeds from advertising revenue, as well as offshore bank accounts. What kind of music, movies, books and games does it help make available? A wide range of works, from Sweden and elsewhere, including music and movies that are uploaded well before their official release. The prosecution involves infringements of copyrights held by Swedish artists, such as Backyard Babies, Joakim Thåström, Petter, Cardigans and Kent, as well as the Wallander films The African and Mastermind. The most popular album on 28th January 2009 was The Killers’ Day and Age, which was being uploaded by 3,000 users. The Fox TV science fiction show Fringe was the most downloaded work in January 2009, with a total of more than 34,000 users making an episode available. How does this affect the film, music and other industries? Copyright law protects the right of creators and producers to authorise the use of their own works, including films and books. It gives creative people the freedom to decide how their works are used and the right to get rewarded for them. It also underpins the heavy investment that goes into creating content, developing artists, producing films and bringing talent to the market place. When The Pirate Bay makes works available without permission, this means that artists, investors, actors, songwriters and everyone involved in the creative process is deprived of income for their work. It also means there is less money available to invest in new works. According to a report from Value Formation and the Lund Institute of Technology, the estimated total revenue loss to the Swedish creative sector in 2006 was 5.4 billion kronor (490 million euros). What is the impact of The Pirate Bay making works available prior to their release? The Pirate Bay causes particular damage when it makes copyrighted works available before their official release date. One of the most notable recent cases in Sweden was when the international prize-winning film Let the right one enter (Lat den ratte komma in) was leaked on pirate sites 10 days before the premiere. For music, the release date is very important and heavy marketing efforts are focused around it. Music companies plan the marketing of releases for three to six months on average, investing up to hundreds of thousands of dollars and creative resources. The aim is to maximise sales in the crucial first few weeks after release, when the album is most likely to achieve success or failure. If a copy is leaked before release and made available to the public without permission, this ruins the most carefully-planned marketing campaign. That in turn blights legitimate sales of the album and the rewards that should flow back to the creators and performers of the music. The enormous costs of production and distribution makes the “film business” a high stakes, risky endeavour for both independents and the major studios. Considerable investment, of both time and finance, is required in order to bring any film or TV 3 series to the audience, and there is no guarantee that the final film will ever be released. In order to secure the investment required, film producers rely on a system of sequential and territorial releases. Few films actually recoup their investment from the theatrical release, so the subsequent windows are vital to generate income to secure the financial return and encourage future funding. This is particularly important to independent producers who secure up-front production investment in return for licensing specific release rights in individual territories. The value of these international distribution rights are diminished when they are made available illegally prior to their scheduled release. This, in turn, impacts on the availability of future investment What examples are there showing that they were making money from The Pirate Bay? Specific examples of that evidence, the details of which are outlined in the prosecutor’s pre-investigation document, include: • • • • An agreement among the defendants to split revenues by precise percentage shares. Email correspondence detailing the financial arrangements and commercial intentions of the site’s operators, including a reference to “jeopardising a 3 million dollars annual business” Correspondence estimating revenues of US$72,000 and US$86,000 in February and March 2006 respectively. An email of May 2006 refers to an advertising agency that will bring in a flat fee of US$100,000 a month. Emails in 2006 showing they tried to hide “tax free money” via a company called Random Media based in the tax-haven British Virgin Islands. What are the compensation claims against the defendants? The music companies are claiming compensation of 2.2 million euros, but this is only in respect of a small sample of 23 music works that have been selected by the prosecutor as the basis for the case, and during a limited period of time. The film industry is claiming damages in accordance with Swedish law of 10.9 million euros for lost remuneration and disturbance to the market for their works. This claim is limited to the piracy of only four films and one television series, as selected by the prosecutor. In the case of both music and film, the damage is believed to be very much higher than the amounts claimed given the huge volume of works distributed. Have there been other cases similar to this one in other parts of the world? The Pirate Bay is comparable to other high-profile services internationally that have been held responsible by courts – including Grokster in the US, Kazaa in Australia, Soribada in Korea and more recently the similar BitTorrent tracker Finnreactor in Finland. Courts elsewhere in related cases have recognised the illegality of The Pirate 4 Bay: in Denmark in November 2008 an internet service provider was ordered to block access to the site. What is the chronology of the legal process against The Pirate Bay? The Pirate Bay was raided on 31st May 2006 by the Swedish police when officers seized The Pirate Bay’s servers for examination. The individuals involved were charged with contributing to copyright infringement on 31st January 2008. Who is prosecuting the case? The case is being prosecuted by Stockholm district prosecutor Håkan Roswall. What legal ways are there to download music and other media? The music business has gone through a revolution in the last few years as music companies adapt their offerings to meet the changes in consumer demand. There are more than 30 licensed online music services in Sweden, including download stores like iTunes to free-to-consumer and advertising-supported sites. The full list is available at the website www.legalmusik.se. The consumer revolution is also coming to other creative industries. There are a number of services available in Sweden where consumers can legally access films to download.