Members of the U.S. Congress are reviewing a legal loophole. This loophole involves copyrighted works obtained through online streaming. Currently, there’s a legal distinction between streaming and downloading.
Streaming is considered a public performance. It’s punishable as a misdemeanor. Downloading, however, is punishable as a felony.
It seems the Subcommittee on Intellectual Property wants to close this loophole. This committee is currently chaired by Thom Tillis, a North Carolina Republican, and ranking member Christopher Coons, a Delaware Democrat.
The Senate Committee on the Judiciary held a hearing in early May of this year. Two professional sports organizations were represented.
Speakers included Michael Potenza and Riché McKnight. Potenza is the vice president and intellectual property counsel for the NBA. McKnight is the Global Head of Litigation for the UFC’s parent company, Endeavor.
Both Potenza and McKnight spoke to legislators. They explained that streaming piracy was significantly impacting their business models.
The NBA and UFC representatives offered some solutions. These included the following.
- Social media and other digital services should close accounts. These accounts should belong to those known to infringe on copyrights.
- Digital platforms should think about sending piracy notices to users. These notices should be sent before live events. If not feasible before events, send reminders periodically. These reminders should explain that piracy is against the law.
- Renew the call to make online streaming a criminal offense.
The NBA’s Michael Potenza spoke about the need for stronger deterrents. He said, “Without a real fear of criminal prosecution, pirates feel empowered.” He noted they continue their illegal distribution of sports content. This includes producing and selling illegal streaming devices (ISDs). It also includes operating illegal streaming services.
Potenza added, “We need to change criminal law.” He explained that it’s important to recognize illegal streaming as a felony. This change would be a more effective way to deter illegal streaming.
2011 Commercial Felony Streaming Act
Eight years ago, there was a similar effort in the Senate. They aimed to criminalize streaming then, too. But, the bill faced public backlash and didn’t become law.
The Commercial Felony Streaming Act was introduced in the United States Senate. Amy Klobuchar, Chris Coons, and John Cornyn proposed it on May 12, 2011. The amendment targeted US Code Title 18 Section 2319.
It would have made unauthorized streaming of copyrighted works a felony. Specifically, this applied when done for “commercial advantage or personal financial gain”. Currently, unauthorized streaming is only a misdemeanor. The penalty could have included up to five years in prison.
The bill defined illegal streaming in a specific way. It was streaming ten or more times within 180 days. Also, the illegally streamed material’s value had to exceed $2,500. Or, licensing fees had to be over $5,000.
Questions to the Copyright Office
Tillis and Coons sought help after the initial hearing with NBA and UFC representatives. They turned to the US Government’s Copyright Office. The senators requested assistance with four questions related to streaming. 
The Copyright Office responded with answers.
1. Does unauthorized streaming infringe on the copyright holder’s right to public performance? If so, why?
Yes, it does. Unauthorized streaming affects the right of public performance. It involves delivering digital media content to the public in real-time. This allows for watching, listening, or playing at the same time the media transfers to a device.
Former Register of Copyrights Maria A. Pallante offered her perspective. In her 2011 testimony to the House Subcommittee on Intellectual Property, she noted that streaming transmits a performance to the public. It fits within the legal definition of public performance.
In the 2014 Aereo case, the Supreme Court examined the public performance right. They concluded that the public performance right includes streaming. This aligns with Congress’s stated purposes when writing the laws. The Copyright Office also agreed with this conclusion.streaming implicates the right of public performance. We addressed this in our 2016 report, *The Making Available Right in the United States*. Therefore, unauthorized streaming infringes the right of public performance, unless a specific exception or limitation applies.
As a recent industry report illustrates, there’s been a surge in consumer demand for streamed video content. Currently, over 500 licensed online video portals worldwide provide television, motion pictures, and sports programming.
This report also notes that the digital video industry is significantly affected by piracy, leading to losses of at least $29.2 billion annually. A significant portion of these losses, 80%, are attributed to unauthorized streaming. Similarly, streaming is increasingly important for public access to recorded music. In 2018, streaming’s share of global music revenue hit 46.9%. However, stream-ripping continues to pose major piracy challenges.
On an international level, the United States Trade Representative this year flagged eight sites for their involvement in streaming piracy. These sites were included in its list of notorious online markets. This list aims to “highlight prominent examples of online marketplaces that reportedly engage in piracy and counterfeiting.” These sites might host pirate streams, distribute stream-ripped files, or provide illicit streaming devices (“ISDs”).
2. Does unauthorized streaming violate the copyright holder’s right to control reproduction and distribution? If not, why not? If so, Under what Circumstances?
While streaming copyrighted content primarily affects the public performance right, it could also involve reproduction and/or distribution rights. This depends on the technology involved. The specific copyright right(s) affected will vary based on the situation. Partially for this reason, it’s important that penalties for violating the public performance right are comparable to those for violating reproduction and distribution rights. In criminal infringement cases, prosecution shouldn’t be hindered based solely on how the creative content was delivered illegally.
3. Do you believe that increasing the criminal penalty for the unauthorized streaming of copyrighted material from a misdemeanor to a felony would better deter illicit streaming? If yes, what specific statutory changes would you recommend?
The Copyright Office has previously advocated for statutory changes. We believe that felony-level penalties for criminal streaming should be the same as those for criminal reproduction and distribution. Though streaming can sometimes involve reproduction or distribution, in many cases, it primarily constitutes public performance. As noted earlier, there are instances where it might not be immediately clear which right is at issue. Thus, the Copyright Office recommends consistent felony-level penalties for violating public performance, reproduction, and distribution rights. This approach would provide federal authorities with comprehensive tools. We believe this can be achieved without impacting individual users of streaming services.
Currently, the Copyright Act outlines three grounds for prosecuting criminal copyright infringement. All three require the infringement to be willful. The first basis covers infringement “for purposes of commercial advantage or private financial gain.” This can be used to prosecute infringements of the right of public performance. However, under the U.S. Criminal Code, only violations of distribution and reproduction rights can be prosecuted as felonies. Violations of the right of public performance can only be prosecuted as misdemeanors. The other two bases for criminal infringement in the Copyright Act only mention reproduction and distribution.
The Copyright Office supports the same felony penalties for violating the public performance right as for reproduction and distribution rights, a stance supported by the increasing importance of streaming to the U.S. economy and the current law’s inability to effectively address unauthorized streaming. This policy recommendation has been endorsed by the Department of Justice, the Intellectual Property Enforcement Coordinator (“IPEC”), and the Department of Commerce Internet Policy Task Force. We also note that a bill was proposed in the 112th Congress to address unauthorized streaming. The Office is ready to assist Congress in developing future legislation to tackle this issue.
4. Are there additional legislative solutions that you believe would address the growing issue of unauthorized streaming of copyrighted content?
The Copyright Office is committed to working with the Subcommittee and its members, as well as our colleagues in the Department of Justice. Together, we can develop effective enforcement tools to combat the unauthorized streaming of copyrighted content.
One potentially beneficial tool for smaller copyright owners is a small copyright claims tribunal. This would help them enforce their rights civilly. The Copyright Office is also currently reviewing the section 512 notice-and-takedown system. We may have further recommendations as part of that review. We look forward to collaborating with you on these and other relevant issues.
Download Copy of Letters
Letter to Copyright Office from Tillis & Coons
Reply from Copyright Office to Tillis & Coons
Streaming Loophole Resolution
Where will this all lead?
This will be a compelling issue to monitor in the coming months. We will continue to update this article as events unfold.
Troy’s Opinion
Please remember that this is my personal opinion. I don’t represent the views of any partners/contractors affiliated with TROYPOINT.
This situation clearly demonstrates how our tax “contributions” are wasted and time is squandered in DC.
Let’s briefly consider the two organizations filing this complaint. They are certainly not struggling financially.
The average NBA team’s value is $1.9 billion. This represents a 13% increase over last year and is three times the value from five years ago.
Dana White, UFC President, asserts that the UFC is now valued at $7 billion, a $3 billion increase since its sale in 2016.
I’m a big UFC fan and have attended about 10 live events. I also have a subscription to their UFC Fight Pass service. I believe both products are priced fairly, and I appreciate the opportunity to support the fighters. Would I ever pay $79.99 to watch a single Pay Per View event? Absolutely not.
Pay Per View is an outdated model. Those who still use it are clinging to the past.
These businesses should start exploring new business models. They should adapt to the changing preferences of consumers. Instead of lobbying for stricter laws, maybe these organizations should try catering to customers. Customers are looking for reasonably priced options.
By charging less, they could attract a wider audience. This could also boost revenue in other parts of their business, wouldn’t it?
How Can We Tell Which Streaming Sites Are Legal and Which Aren’t?
I’ve always believed that it shouldn’t be up to the consumer to figure out if an online streaming service, app, or add-on is legal. It’s not their job to police the internet.
How can we be sure that these streaming portals have obtained the necessary licenses? Is there a reliable way to verify this information?
Yes, common sense should usually be our guide. But many of these IPTV sites appear completely legitimate. They look just like services such as Sling, YouTube TV, and DirecTV Now.
This makes it very challenging to create a law that can actually be enforced effectively. The lines are blurred, and it’s easy for these sites to mimic legitimate services.
SET TV, which was shut down last year, was infamous for its marketing tactics. It claimed to have the proper licensing for the media it provided, despite not actually having it.
Their website had a professional look. It even offered all the account management tools you’d find on most legal streaming services.
It’s Time for a Business Model Overhaul
We witnessed a similar legal battle unfold in the music industry. This happened with Napster, torrent sites, and others.
Now we have services like Spotify. They offer a premium service for $9.99 a month. This model gives music lovers access to a vast library of songs at a reasonable price.
I’d much rather pay $9.99 a month than deal with downloads and torrents. It’s a fair price, and most people are willing to pay it. It beats wasting time on file-sharing sites. The cable, satellite, and film industries need to embrace a similar model, and quickly!
During the second quarter of 2019, AT&T saw a significant drop in video subscribers, losing 946,000. Comcast lost 224,000 video subscribers, and Charter lost 150,000.
The message is clear: people are tired of paying exorbitant prices for cable and satellite packages. These packages are bloated and often include numerous channels that people never watch.
What about offering an à la carte option? This would allow consumers to pay only for the channels they actually want. Instead, we’re forced to pay for hundreds of channels we never even use!
The entertainment industry’s current approach is like playing whack-a-mole with legal actions. They take down one service or app, and several more spring up. This cycle will continue because of the digital age we live in.
The internet makes it incredibly easy to access free or cheap media. There are countless IPTV providers out there. Trying to shut them all down is a futile effort. It would be a logistical nightmare.
Lawmakers are wasting valuable time and taxpayer money by pursuing this pointless complaint. Instead of focusing on unenforceable laws, these companies should adapt to the current landscape. It’s time for them to modernize their business models.
As long as consumers can use a VPN for streaming or downloading, these criminal threats hold no weight. A VPN provides anonymity and makes it difficult to track online activity.
I’d love to hear your opinions on this push to criminalize streaming. What do you think about it? What kind of business model would you like to see from major media companies? Share your thoughts in the comments below. Let’s start a discussion.
Share Your Thoughts!
We want to hear your perspective on this new effort to criminalize streaming in the US. What type of business model would you prefer from these large media providers? Share your insights in the comments section below.