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Dave Powell is not an officer of the law, but he prides himself on having a keen sense of where a man will bend and where he might break. The casual software pirate will usually respond to a sternly worded e-mail that appeals to some sort of universal sense of justice. Stealing, after all, is wrong and even though the Internet gives people a sense of anonymity, most people don’t like to think of themselves as thieves. For the more savvy software pirate, Powell must appeal to an instinct more powerful than morality: self-preservation. “A subpoena will look something like this,” Powell says, lifting an inch-thick sheaf of papers off his desk. “A pirate gets this in the mail and it’s like, ‘holy s–t.’” But we’re skipping a few steps here. For Powell, managing director of Copyright Control Services (CCS), legal action is always the last resort. It’s expensive and far from universally effective — and while it may work in Fort Lauderdale and Liverpool, it’s futile in Kiev and Beijing. No, there are many other ways to apply pressure to get the desired result, and Powell promises results in 24 hours or less. From his low-rise offices in the suburbs of southwest London, Powell and his crack team of cybersleuths work on a problem that they estimate to be worth $15 billion a year: the unauthorized copying of software, music, books, film and other fruits of the vast and growing media industry. And Powell employs a formidable arsenal of remedies. He can have almost any Web page removed from the Internet in hours. He can have a suspect’s Internet connection turned off — pedestrian dial-up or fancy broadband — within days. He has single-handedly rendered entire news groups suitable only for spam and porn. By pressuring large ISPs, he has made entire areas of the Internet a danger zone to pirates hoping to trade in his client’s software. Powell represents a small list of software companies that have been devastated by piracy over the years. The companies produce professional software for high-end audio production — companies like Steinberg Media Technologies, Emagic and Digidesign, which make industry-standard audio products such as Cubase, Logic Audio and Pro Tools. Each illegal download represents hundreds of dollars in lost sales. To measure the effect of piracy on its business, Steinberg, based in Hamburg, Germany, once offered an amnesty whereby any holder of a pirated version of Cubase, which retails for $350 to $800, could trade it in for a legal version. The number of pirated versions turned in equaled 25 percent of the company’s sales that year. It’s an industry Powell knows well; he previously worked in the recording industry, producing albums for Depeche Mode, Erasure and Michael Jackson. But since he started CCS three years ago, Powell has distinguished himself as a bare-knuckled enforcer when it comes to defending the rights of his clients. Understandably, his tactics have earned him his share of sworn enemies. A manipulated version of Eminem’s “The Real Slim Shady” circulating on the Internet chants the line “Will the real Dave Powell please f–k off?” And the CCS servers are frequent targets of attack; on Christmas Eve Powell opened Outlook Express to find he’d been mail-bombed with 15,000 messages. But his enthusiasm for pursuing pirates has earned him some unlikely foes as well. The International Federation of Phonographic Industries (IFPI) has asked Powell to take its name off his Web site, even though CCS has performed consulting work for the organization. The IFPI has reason to be concerned. Representing 48 national recording industry associations, it is charged with rooting out music piracy and has led law enforcement efforts around the world to stop the illegal production of pirated CDs. But the IFPI has been slow to move its antipiracy efforts online, and private companies like Powell’s are poised to fill the gap in the market. Until now, Powell has focused his efforts on high-value audio software. But he is in advanced negotiations to reel in a much bigger fish. He is in high-level discussions with two of the world’s biggest record labels, which are looking for an online heavy to combat the trade of copyrighted MP3s. The deals, should they be consummated, will substantially up the ante in the global copyright wars and turn up the heat on MP3 traders, who have enjoyed a few good years as the recording industry has struggled to decide how to cope with the problem. But enlisting Dave Powell to go after music copyrights could bring a backlash against the labels. Until now the labels have walked a fine line between restricting copyright online and alienating fans who have shown a preference for downloadable music. Some of the biggest copyright owners in the world are building business models around Napster-like services, under the premise that people will be willing to pay a small amount for convenient access to unlimited downloads. Bertelsmann allied with Napster last year to re-engineer it into such a service. AOL Time Warner has announced it is developing a download business, while beleaguered dot-com EMusic has been selling MP3 downloads for years. As broadband connections become more ubiquitous, the amount of intellectual property that can be disseminated — and the speed with which it can be transmitted — will increase dramatically. Policing the Net will become a bigger job, causing CCS and other online copyright cops, such as NetPD, BayTSP and newcomer Netsertion, to grow substantially. To finance and accommodate the company’s projected growth, CCS was acquired by Sunhawk, a small-cap Nasdaq company, in November. Sunhawk specializes in digital-rights management solutions, but is wise enough to understand that no copyright protection is failsafe. CCS’ turnover in 2000 was a mere $500,000, but Powell projects $5 million in revenue in 2001 and $20 million in 2002. One day soon, he says, CCS will be working for numerous record companies and big software firms such as Adobe and Microsoft. As more content comes online, Powell dreams that his company could grow to the size of a massive international consultancy like Ernst & Young or KPMG. He might be right. For now, Powell and his crew of about a dozen work in a one-room space in Fullwell, a small town about 30 minutes up the Thames River from London. A team of investigators combs the Internet for infringing sites, identifies the culprit, then e-mails the evidence to Powell and waits for him to give the word. When the evidence seems irrefutable, Powell says: “Let’s go get him.” On a recent Monday morning, Powell’s chief investigator, 25-year-old Tim Saunders, is hot on the trail of an inveterate software thief from Florida known only by his newsgroup handle, “Jammer.” Jammer is a denizen of the newsgroup alt.binaries.sounds.utilities, a site that was once a free open-air market for pirate software, but is now a place where CCS and Dave Powell have become epithets. Even so, Jammer recently had the misfortune of posting a copy of Cubase for the world to download. And now Jammer, as Powell might say, is about to get jammed. Almost all posters to newsgroups like alt.binaries.sounds.utilities use creative e-mail addresses like [email protected] and f–[email protected]; Jammer’s address is [email protected] But every post leaves a trace that identifies the ISP from which it originated. Saunders fires off an e-mail request to CCS’ Menlo Park, Calif.-based law firm Perkins Coie asking a paralegal to draw up a subpoena and send it to Jammer’s cable modem provider, Home.net. Once Perkins Coie has Jammer’s identity and address, which usually takes about 48 hours, the firm sends a letter on legal letterhead to Jammer’s home address in Fort Lauderdale, Fla., offering him a way out of his growing predicament. “We’ve instructed our attorneys to command $3,000 off him plus $1,000 per infringement,” Saunders says. “Then we offer to drop the charges. If he doesn’t want to do that, we can take him through court procedures.” Saunders is charging Jammer with five infringements for a $5,000 hit. The extra $3,000 is to cover CCS’ costs. If he chooses not to pay, he will probably lose his cable connection and will have to hire legal representation. Under U.S. law, the statutory penalty for each infringement is a mind numbing $100,000. Jammer doesn’t know this yet. He hasn’t yet received the civil writ from Perkins Coie, and from his continued posts on Usenet, it appears he thinks that by taking down his posts he’ll avoid any unnecessary bloodletting. “Some of us have very speedy connections, and we wouldn’t want to jeopardize them,” Jammer wrote. “If I was on a dial-up ISP, hell yeah, I’d bitch as I could always find another one quite easily, but with @Home, it’s the one choice around here.” Little does he know that there is almost no way he’s going to be able to keep his broadband connection without agreeing to pay out thousands of dollars. “He’s about to lose his connectivity, and he doesn’t know this yet,” Powell says. “In the U.S., there are only a few cable providers in every town. He’s about to become disenfranchised.” Keep in mind that despite the weight of evidence against him, Jammer has been convicted of no crime and unless he decides to spend thousands of dollars, he won’t have the opportunity to present his case in a legal forum. Jammer’s situation is governed in the U.S. by the Notice and Takedown provision of the Digital Millennium Copyright Act of 1998 (DMCA), which tried to strike a balance between the rights of individuals and the rights of copyright holders. In practice, however, the act can be used as a cudgel against those who appear to be violating copyright law. Even if Jammer could find a lawyer to represent him, he would probably be advised to pay the fine and move on. Jessica Litman, a professor of copyright law at Wayne State University in Chicago, says that in these cases a lawyer’s best advice would be to pay the fine. “If you’re a lawyer and someone comes to your client from Walt Disney, you are not going to tell your client to go ahead with the trial,” she says. “You could be right, but it would take seven years and $100,000 to find out.” At one point, massive court judgments were a part of Powell’s revenue model for CCS, but so far he has had no such cases actually go to court. For clear-cut infringement cases, the business-friendly DMCA works efficiently and ruthlessly. But it doesn’t work outside the U.S. Elsewhere, legal threats must necessarily give way to a repertoire of friendly appeals to enlightened self interest, some strategic bluffing and a sense of who to squeeze and how. There are a lot of companies moving into the space and promising to produce software to automate the whole notice and takedown procedure, but Powell insists the job cannot be done without the human touch. Nowhere is this more apparent than in two potentially massive havens for the theft of intellectual property: Russia and China. Since there are no legal systems to access, Powell keeps the first contact friendly, explaining the situation, the economic consequences for his client and the consequences for the ISP. Most ISPs run on extremely tight margins; bandwidth is their most precious commodity. Since most copyright infringement involves consuming huge amounts of it, Powell makes the case that copyright theft is costing the ISPs money. This is the case Powell made to one Cyril A. Vechera, the administrator of the Moscow-based ISP da.ru. Vechera balked at the boldness of Powell’s demands, claiming da.ru was no more responsible for pirate sites such as appz.da.ru/mp3 and mp3-soft.da.ru than domain name registrar Internic. But in the free-flow of global bandwidth, there is almost always an ISP upstream that is more sensitive to copyright issues. Saunders contacted the ISP that provides Vechera’s bandwidth and about 20 percent of all bandwidth in Moscow: Relcom. A growing company with ambitions to expand in Europe, Relcom wanted to comply with Western standards on cybercrime. Da.ru was building a business on piracy, and Relcom decided not to turn a blind eye to it. Close to a year after their first communication with Vechera, Tim Saunders was sending takedown requests to Vechera as if they were long lost friends. “Hello, Cyril! Could you do the usual?” “Hello, Tim. Done the usual.” In China, where state-run China.net has become a favorite with pirates, Powell is just starting to make inroads. Currently he’s trying to shut down a Hotline server that is disseminating hundreds of thousands of dollars worth of software. Hotline is a peer-to-peer network that — like Napster, Freenet and Gnutella — allows users to access the hard drive of other computers connected to the network and download what they want. China.net is run by the Chinese Ministry of Information, where Powell is communicating with a number of individuals who might be empowered to take the offending Hotline server down. Part of the initial problem in communicating with ISPs around the world is educating them in the new protocols that continue to emerge. While most are familiar with HTTP and FTP, many are not familiar with the capabilities of new peer-to-peer networks coming online. At any given time, the Hotline community has thousands of computers connected, many overflowing with copyrighted software, MP3s and porn. “Hotline is a legitimate client-server application that pirates migrated to and took over,” Powell says. It’s a time-consuming and sometimes frustrating process. Powell must first build a relationship with a foreign ISP and then often educate the administrators on the concept of copyright, as well as in the new ways that pirates are using computer networks to exchange their wares. “China is the most difficult country to deal with,” Saunders says. “Fortunately, it is still the case that we have to deal with China infrequently.” But once Powell has built a relationship with the ISP, they become amazingly compliant with CCS demands. Saunders says CCS is rarely questioned when it notifies an ISP about an infringing user. “We found ISPs remove things even though they could argue it,” he says. “They are reclaiming large amounts of bandwidth. We are providing a service to them, essentially.” Once a pirate has had a tangle with Powell, the word quickly spreads. Pirates move from ISP to ISP en masse, seeking a safer haven in which to operate. Powell’s efforts have left alt.binaries.sounds.utilities a barren place. One frustrated poster queried the group as to why his requests for software were going unanswered. “You should be aware that many regular posters are lying low right now,” came the reply. “CCS is out. They got me more than a year ago. Otherwise I’d help you out.” Some migrated to another newsgroup for video software buffs, alt.binaries.multimedia.utilities, and began to commandeer it. One poster to that group lamented: “I have no idea why all these audio freaks came over here. I guess they got blasted out of the various audio groups.” These posters are unwittingly doing Powell’s bidding. A huge part of the CCS strategy is to create the perception that piracy is dangerous. “One person posts to a newsgroup, and it ends up on thousands of servers,” Powell says. “What we do is apply pressure to certain individuals and then it trickles down to others who decide, well, it’s not worth it.” But sometimes Powell’s strong-arm tactics backfire, and the results can be messy. In December 2000, CCS ran across one of the most brazen pirate sites Powell had seen on the Internet in months. Known as “The-Den,” the site contained almost every known audio program for easy and quick download. It also had a message board for registered users to post queries. Powell acted quickly to bring the site down and in a lucky turn received a tip from an informant who knew the site’s administrative password, allowing Powell to download the e-mail addresses of all the registered users. On Dec. 19, 2000, Powell tapped out an e-mail message and sent it to about 100 registered users of the site. “Gentlemen,” he wrote, “please be aware that this is no longer a game. Software piracy is a crime. Infringement of our client’s rights will not be tolerated. Those who choose to abuse copyrights should expect to face proceedings for full recourse. Merry Christmas.” The message unleashed a furor that, a month later, Powell is still trying to quell. Furious members of the site went to the CCS Web site, Copyrightcontrol.com, and found CCS’ list of clients. The IFPI in London was deluged with complaints from members of the site who said they’d been falsely accused and rightly feared that they were about to become “disenfranchised.” The IFPI then demanded that Powell remove its name from his site, even though CCS had just finished a consulting contract with the organization in November. Powell was bewildered by the IFPI’s request and has thus far refused to comply. As he says, he completed his contract satisfactorily and if the IFPI wants to get serious about online piracy, they should really have a thicker skin. The tiff widened a growing schism between the two. Powell argues that the e-mail, while jarring to some, was a cost-effective way to defend his client’s economic interests. “You can bet that 60 of these people were involved in piracy,” he says. “If the police raid a whorehouse and you’re standing in the hallways�.” He leaves the sentence for others to finish. But his tactics leave some to wonder if the ends truly justify the means. Powell’s efforts have been, to be sure, a godsend to the relatively small pro-audio industry. Whereas other software industries have resorted to sending out compliance inspectors to see that copies of Microsoft or Adobe used in businesses are legitimate, it’s not really a realistic approach when it comes to recording studios or people’s homes. Steinberg CEO Manfred Ruerup says his company tries to stay ahead of the pirates with improved encryption, but adds that “no one on the Internet is as strong as CCS.” But for Powell to raise his current status as an attack dog for the pro-audio industry to a global business the size of a consultancy like KPMG or Ernst & Young, he will need to sign larger, higher-profile clients, such as one of the Big Five record labels that dominate the $40 billion global recording industry. To demonstrate the need for his services, Powell has been compiling a dossier representing one major’s exposure to piracy on the Internet. It’s massive, as anyone following the Napster controversy might imagine. And while some labels are experimenting with free promotional downloads to generate interest in certain album releases, Powell believes that free downloads have a direct impact on initial sales of a new album which, in turn, affects chart position. When a new album is released, sales spike as the band’s devoted fans rush out and buy it in the first week. Those initial early buyers do more than anyone to influence the position of the release on music charts, which then affect sales later on as the sales curve flattens out. But those fans are not necessarily devoted buyers; they will get the tracks they want any way they can. If too many download instead of buy, the release will be crippled and its sales stunted. There is, of course, no way to prove or disprove this theory. The evidence is subjective, because no control group exists. The Dave Matthews Band has released their next single to Napster a full month before its scheduled release in February. If sales are good, Napster will get part of the credit. If they are poor, Napster will probably get all the blame. As part of his copyright control strategy for the recording industry, Powell proposed hitting Napster, and other peer-to-peer networks, where they’re vulnerable. Napster has no quality-control mechanism, so there’s no way of knowing if the song you’re downloading is the album version or a fake. Powell’s plan, if implemented, would see a dozen or so servers linked on a broadband connection to Napster. The servers would contain the top 100 tracks of the moment by artists such as U2, Eminem and S Club 7. But they would serve special versions of the tracks that stop after the first 30 seconds to play the following message: “You are imperiling the future of music production. This is a felony in the U.S. Why not use a legitimate site and support the music you love so much. Thanks for listening. Here’s the rest of the track. Have a nice day.” Taunting pirates is definitely a part of the job Powell enjoys. Recently, he had a Qwest broadband subscriber’s account deactivated for “Napster abuse.” This, according to sworn statements provided by CCS, involved using Napster not to trade MP3s, but vast, expensive chunks of audio software — a drain on Qwest’s bandwidth and the CCS client’s bottom line. Qwest deactivated the account, but is leaving the door open to reinstatement “if they write a letter to us stating they have taken down the material and won’t violate copyright law in the future.” Chances are, a pirate clever enough to use Napster to trade software will be clever enough to give an anonymous file-sharing protocol such as Freenet a go next time around — part of the spiraling arms race between pirates and the law. Victory means driving piracy as far underground as possible. That means constantly developing new techniques, technologies and relationships with ISPs. “We enjoy this because it’s an intellectual challenge,” Powell says. “There is a real art and skill in this.” The best pirates will always know enough not to get caught. But that doesn’t mean they won’t get lazy. And when they do, Dave Powell will be waiting. Related Articles from The Industry Standard: RIAA’s Proposal Would Gut Napster Bertelsmann and Napster: We Have the Technology Hatch Comes to Napster’s Defense Copyright � 2001 The Industry Standard

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