The Big Question: First music, now film – so can the entertainment giants defeat piracy?

(INDEPENDENT GRAPHICS)

Why are we asking this now?

Last week an unfinished copy of the forthcoming summer blockbuster X-Men Origins: Wolverine, was leaked online and downloaded an estimated 100,000 times in just 24 hours.

Film studio 20th Century Fox called in the FBI and Motion Picture Association of America (MPAA) to investigate the leak; but this week its affiliate news operation, Fox News, was forced to fire a columnist who admitted to downloading the film himself. Roger Friedman, who worked for the Fox News website for 10 years, wrote in his regular Thursday column that downloading the Wolverine movie was "much easier than going out in the rain" to see it in the cinema – it's released on 29 April.

What else is happening?

In Stockholm, the young men behind the Pirate Bay – a Swedish file- sharing website that indexes links to pirated content from across the internet (including the Wolverine rough cut) – are awaiting the verdict in their trial for copyright infringement, which is due next week. The trial has generated considerable attention as a test case for future prosecutions of those who facilitate the distribution of illegal online content.

How does file sharing work?

Internet piracy began with Napster and its ilk, so-called "peer-to-peer" (PP) programmes that allowed two internet users to share files with one another. In 2000, Napster was successfully sued by the record companies and shut down, but in 2001 a new form of filesharing software was invented: Bit Torrent.

What is BitTorrent?

Rather than sharing files between two users, BitTorrent allows downloaders to collect pieces of a file from many users, simultaneously, across the entire file-sharing network. This "file-swarming" makes downloading more efficient, and much faster. Though BitTorrent itself is legal, it is inevitably used to share illegal content, such as pirated versions of films, music and games. With the advent of fast home broadband, millions of people are able to download entire, DVD-quality films in just a few hours. "Torrent portal" sites such as the Pirate Bay and Mininova (which is based in the Netherlands) do not actually host pirated BitTorrent files; they merely collate links to those files elsewhere on the internet. They would argue that they are merely search engines, much like Google, and thus should not take responsibility for the files their users choose to share.

How many people are involved in this illegal activity?

A lot. BitTorrent has more than 150 million users worldwide. The Pirate Bay has almost 3.5 million registered users, approximately 21.5 million unregistered users, and gets a billion page views per month. According to a 2006 study by the internet consultancy Envisional, filesharing networks account for at least 60 per cent of all internet traffic. In 2007, in the UK alone, more than 6 million people shared an estimated 98 million illegal downloads, and it is becoming ever easier for the average user to find pirated material online; The Pirate Bay recently created a "share on Facebook" function, allowing users to recommend downloadable content (legal or illegal) directly to their Facebook contacts.

Who is responsible for placing the content on the internet?

The Pirate Bay and Mininova are just two of many torrent tracking sites. And their content is provided by countless enthusiastic uploaders, who race to be the first to upload copies of a film to the net before its release. These anonymous pirates often mark their files with pseudonymous identity tags, such as FXG, Klaxxon and the most popular pirate of all: Axxo, a mysterious figure whose most uploaded films (recent Axxo titles include Role Models, Seven Pounds and Punisher: War Zone) are downloaded by up to a million users each week.

How much money does the entertainment industry lose every year?

Nobody really knows, whatever its representatives might claim. Large numbers are regularly cited, like £486m a year in lost revenue for British television and film-makers, or $18bn per year in losses to piracy for the global film industry. None of them are proven, and some rely on the shaky premise that each pirated copy of a film represents one lost ticket or DVD sale. Piracy might be booming, but so are box offices. The major studios suspect this year will be the first in which they reap $10bn in ticket sales. British cinema admissions are up 16 per cent on 2008.

Of course, piracy does considerably more damage to the home entertainment market. Hence DVD sales, which studios use to shore up the losses from any poor box office performances, continue to tank. Still, the most pirated film of 2008 was, according to the blog TorrentFreak.com, The Dark Knight, which was downloaded more than seven million times on BitTorrent. This didn't seem to hurt its box-office numbers, though; it was also the biggest-grossing film of the year, earning almost $1bn worldwide. And 3 million copies of the DVD were sold on its first day in the shops.

What can be done to stop this?

In January Lord Carter, the communications minister, drafted legislation that would require internet service providers (ISPs) to issue warnings to users suspected of sharing illegal files. Should they persist, the offenders would be reported to the entertainment industry and rights holders, who could then take legal action. It remains to be seen whether such a law will succeed. A similar measure was recently scrapped in New Zealand after the parties involved failed to agree upon a code of conduct. The Swedish government has enacted a controversial new law allowing rights holders to acquire the names of internet users suspected of pirating their copyrighted material. In the US, a bill signed by his predecessor requires president Obama to nominate a copyright "czar" to oversee such issues, though he currently has more pressing appointments pending.

Has prosecution had any effect?

Generally speaking, the prosecution of individual downloaders has earned the entertainment industry few friends, and plenty of bad press. Prosecuting uploaders such as Axxo unfortunately requires them to be identified first. And sites such as The Pirate Bay, which provide a shop window for prospective pirates, can currently argue their innocence under the law.

Should they even bother trying to catch the perpetrators?

Piracy, by its nature, spots gaps in the mainstream market and exploits them. It may prove simpler not to stop pirates at all, but to beat them at their own game – and the film industry could do worse than following the example of the music industry.

What has the music industry done?

iTunes produced a legitimate alternative to illegal MP3s, and quickly became the world's biggest music store, on or off-line. Radiohead, to the dismay of their former label EMI, cut out the middlemen and distributed their album In Rainbows themselves using an online, pay-what-you-want system. Experts suspect the band made more money from In Rainbows than from their previous six albums combined. Now, ad-supported free music streaming sites such as Spotify and Last.FM have provided a new, legitimate model for music sharing that would have been impossible without the innovations generated by piracy.

Is online piracy always a bad thing?

Yes...

*Piracy causes huge losses to the entertainment industry and puts the jobs of countless workers at risk

*Without any income, the film and music industries will be unable to produce or distribute films or music

*Artists deserve to be remunerated for their work. Piracy is theft, plain and simple

No...

*Piracy forces the entertainment industry to innovate and modernise its practices to match the market

*If at least 6 million Britons are breaking copyright law every year, it's the law that needs changing

*The extent of piracy's effect on profits remains unproven. They told us home taping was killing music