Congress can lead the way on streaming

From talkies to national broadcasts to cable and the VCR – every few decades a new technology upends the way we connect, entertain, and inform ourselves. And today’s streaming boom is no exception, growing from a far-fetched notion just a couple of decades ago into a dominant force in modern life and culture. Today, three-quarters of American households subscribe to one of the major video streaming services.

But when technologies grow this fast, they often move faster than policymakers, regulators, and especially law enforcement can keep up. From bitcoin fraudsters to cyberstalkers, bad actors don’t hesitate to use new technologies in harmful ways, especially when gaps in criminal law shield them from meaningful penalties or risk.

That is what is happening with modern, industrial-scale streaming piracy today.

Streaming piracy is big business in the U.S. and around the world. A recent study found that pirate subscription IPTV streaming services— representing just one corner of the streaming piracy universe — divert over $1 billion a year into the pockets of commercial piracy rings from the U.S. alone. Overall, another study found that digital video piracy costs the U.S. economy at least $29.2 billion annually.

These high-tech services scrape legitimate streams off the internet or buy unlicensed programming on the dark web and package them into slick, high-tech services imitating market leaders like, Xfinity, Amazon Prime Video, Hulu, or Netflix.

For cut-rate prices, they offer virtually every kind of streaming programming: new release movies, peak TV original series, live and pay-per-view sports, and local broadcast television. All unlicensed and all diverting revenue and subscribers from legitimate services American consumers depend upon. And because they pay nothing to the creators who invested billions in producing the films and shows they sell, it’s an incredibly lucrative business. Profit margins are staggering, ranging from 56 percent to 85 percent.

The costs to consumers can also be severe. While these pirate services look legitimate, they can serve as gateways for viruses, malwares, and fraud — putting consumers’ computers at risk and compromising their credit cards and identities online.

Like all other forms of piracy, these large-scale operations violate U.S. copyright laws and should not be allowed to remain online. But because the law has not moved as fast as this technology, in the real world, streaming piracy is virtually immune from meaningful prosecution.

Virtually every significant form of willful, commercial piracy can be prosecuted as a felony under appropriate circumstances — including copying CDs, illegal file sharing, and even “camripping” movies in the theater. But unlike all of these, streaming piracy — no matter how widespread or organized, and regardless of the amount of damage done —can only be prosecuted as a misdemeanor simply because when the laws were drafted streaming video wasn’t an option. With penalties so limited, no prosecutor will bother to bring these cases and the streaming piracy rings carry on — secure in the notion that law enforcement won’t intervene.

Fortunately, Congress is working hard to solve this problem — convening negotiations and developing a simple two-page proposal that would close this “streaming loophole” and ensure that in appropriate large-scale commercial cases, felony penalties are available to federal prosecutors. This highly transparent and rigorous process which included participation from groups and organizations of all perspectives — including the creative community and victims of streaming piracy as well as those representing internet users, technology companies, internet service providers and civil society— has been lauded across Capitol Hill as a model way to vet and develop new proposals.

The resulting proposal is a consensus product with broad-based support. It is narrowly tailored to address the serious problem of commercial streaming piracy ensuring ordinary internet users, legitimate businesses, and non-commercial actors have nothing to fear from this proposal.

In fact, the most significant obstacle to this vital reform legislation is the calendar. As is common in election cycles, this legislative year was short and further time was lost as Congress adapted operations to the pandemic.

Of course, policymakers have rightly been focused on urgent national issues starting with continued relief and aid to address the COVID-19 pandemic and resulting economic crisis. In the remaining time this year, after dealing with those life and death matters, there should be room to act on non-controversial, bipartisan measures like this one to protect consumers and strengthen our nation’s infrastructure and economy.

It’s time for Congress to close the streaming loophole.

Keith Kupferschmid is the CEO of Copyright Alliance.