Is Software Piracy Married to the Mob?

♠ Posted by Emmanuel in , at 3/13/2009 06:18:00 AM
My post below on software piracy buoying video game console sales has prompted me to warn about the potential downsides of software piracy. Those studying marketing have noted the curious divide between stealing hardware (such as by shoplifting electronics), and stealing software (by downloading copyrighted content). Many people who not be caught dead doing the former do the latter without afterthought, thinking that it's a "victimless crime." In the digital age where more and more products will be of the IP variety, this situation raises legitimate questions. Is there really a difference between stealing physical and intellectual property, or is just a self-serving cognitive illusion? Maybe the philosophers in the audience can weigh in on this weighty matter.

In any event, the RAND Corporation gives more reason to be wary of piracy. In particular, pirated film titles my be funding the operations of a number of criminal enterprises, including India's nefarious D-Company run by Dawood Ibrahim. You can download the report and view the summary from which the following excerpt is taken. Truly, it is a case of caveat emptor:
Organized crime increasingly is involved in the piracy of feature films, with syndicates active along the entire supply chain from manufacture to street sales of pirated movies, according to a new RAND Corporation report.

While crime syndicates have added piracy to criminal portfolios that include drugs, money laundering, extortion and human smuggling, the profits from film piracy also have been used on occasion to support the activities of terrorist groups, according to researchers.

"Given the enormous profit margins, it's no surprise that organized crime has moved into film piracy," said Greg Treverton, the report's lead author and director of the Center for Global Risk and Security at RAND, a nonprofit research organization. "The profits are high and penalties for being caught are relatively low..."

Because of its image as a victimless crime and the fact that those who buy are complicit in the crime, information about counterfeiting is sparse and information about the involvement of organized crime sparser still, Treverton said. Because most instances of counterfeiting go unaddressed, there is reason to believe that the more formal data, like arrests and convictions, understate the extent of counterfeiting.

The RAND report outlines three cases where film piracy has helped support terrorist groups:

* Historically the best documented case involves the Irish Republican Army that used many criminal activities, including film piracy, to support its efforts to drive the British from Northern Ireland. A political agreement in 1998 ended its violent acts, but at least parts of the IRA continue to operate as a criminal enterprise that remains involved in counterfeiting activities.

* The D-Company is an organized crime group active for generations in India. Since the 1980s, it has been the major syndicate involved with film piracy in India. The group was transformed into a terrorist organization when it carried out the "Black Friday" bombings in Mumbai in 1993 that killed more than 257 people and injured hundreds more. It continues to advance a political agenda with its actions funded at least partly by the proceeds of crime.

* Another case involves the tri-border area of Brazil, Argentina and Paraguay that has emerged as the most important financing center for Islamic terrorism outside of the Middle East, channeling $20 million annually to Hezbollah. At least one transfer of $3.5 million was made to Hezbollah by known DVD pirate Assad Ahmad Barakat, who received a thank-you note from the Hez­bollah leader. Barakat was labeled a "specially designated global ter­rorist" by the U.S. government in 2004.
It's certainly interesting stuff.