The good, the bad and the ugly of TV piracy.

Even more than movies, television programs have become the hot Peer-to-Peer (P2P) file-sharing commodity online. But it isn't as though TV piracy comes as that much of a surprise. Not long after she was named MGM's vp of Intellectual Property in 2004, Laura Tunberg warned, "The TV business has had to deal with many changes in the past several years but none is as great a threat as piracy to the economic model of the industry. The analog hole in feeds is a particularly vulnerable point. Already 100 percent of U.S, season premieres are available [illegally] on the Internet. Before a show can air on the West Coast it is possible to download the episode online without commercials.

"As the Internet grows, this is going to become a worldwide problem," Tunberg predicted. "Pirates don't have windows."

She also admitted that the U.S. was moving more slowly against piracy than hoped. "It's difficult when you are working collectively with all the studios. Some, like MGM, are very aggressive [against piracy]; others are not, and that has slowed the process down."

Carol Flaherty, Macrovision's Technology Group svp, concurred that urgency was of the essence. "Casual consumer piracy has [increased] over the last two years. In order to stop it we've got to close the [opportunities for piracy] available to consumers in their home equipment, develop multiple layers of protection and give consumers a reason to buy instead of steal."

The first significant instance of TV show piracy occurred in October 2004 when the U.K.'s Sky One broadcast the first episode of Battlestar Galactica.

Within hours, the complete episode was being shared over the Internet. Up until then, transferring large files had been onerous in P2P environments. But the pirates were using a new technology called BitTorrent that made transferring episodes as easy as downloading a family photo.

"The thing about BitTorrent that's qualitatively different than any other system," explained technologist and lecturer Mark Pesce, "is that it's not just sitting on one centralized server. If you have something that's very popular on one website and 10,000 people try to get it at the same time, the server will rail to its knees, because it's just not fast enough; it doesn't have enough bandwidth. But with BitTorrent, all of the computers that are trying to get the data get different little parts of it, and then they start sharing the missing different little parts with each other," he explained.

Ironically, in the case of Battlestar Galactica, the piracy actually benefited the U.S. Sci-Fi channel, which aired the series in early 2005, after Sky One's original broadcast. Word of mouth from the downloads was so strong that the buzz generated resulted in the series becoming one of the most popular ever to air on the U.S. network.

"You can argue," Pesce suggested, "that the reason it's become a hit is because enough people had seen it early enough to spread the word that this was a show to watch."

A similar incident happened in 2005 with the BBC's Doctor Who. Shortly before the series was scheduled to air, a rough cut appeared on the Internet and it was reported that hundreds of thousands of fans had downloaded it. Again, the buzz generated lead to more viewers tuning in for the series, which is enjoying continued high ratings.

However, not too surprisingly, U.S. network executives do not see piracy as grassroots viral marketing but, rather, as a threat to their long-established business model. In May 2005, the Motion Picture Association of America (MPAA) sued a half dozen sites involved in illegal swapping of TV shows.

"Internet thievery of all creative materials is unacceptable and these thieves need to realize they are not anonymous," said MPAA President and CEO Dan Glickman. "There are thousands of people in the entertainment industry who are working to develop, produce, and promote television shows. Those shows and those jobs are worth protecting."

Content owners had hoped to use technology to fight piracy via a ruling by the FCC (the U.S. communications authority) that manufacturers of digital devices must include a "broadcast flag," a coding that would prevent any digital device from illegal downloads. But after the American Library Association and other consumer groups brought lawsuits, the U.S. Court ruled that the FCC had gone far beyond its authority by mandating such a flag.

Jim Denney, vice president of Product Marketing for TiVo, commented that, "Fortunately for innovators, consumers and copyright owners, the content industry [has been] saved from itself. After failing to throttle the new technologies, the content industry successfully co-opted each new technology and turned such threats into significant profits. Fair use has maintained the balance between the copyright holder's exclusive rights and the promotion of progress by innovators."

The unique issue television faces with consumers is that for most people, TV is still considered a "free" service. With movies, you go out and buy a ticket; TV beams into your home for free. While consumers pay for cable or satellite services, the programs themselves are considered free--the perception being it's the advertisers who pay for the programs. So, therefore piracy doesn't seem quite as sinister.

The reason television shows are the fastest-growing type of files downloaded and/or shared can be tied directly to consumer desire to watch what they want when they want. The Internet has become a kind of ad hoc on-demand programming venue, prompting Pesce to observe: "The problem is that the economic model for television distribution by broadcasting hasn't kept up with the distribution model of television via BitTorrent."

One of the questions is, if episodes are available online, will there still be ah international appetite for the show once it's ready to go into foreign broadcast? Plus, it's unknown whether online sharing will cut into the lucrative DVD platform. On the distribution side, cable TV operators worry that consumers might not bother to sign up for high-priced digital packages if they can download, for example, The Sopranos for free.

Although it's a growing problem, TV piracy equals only a fraction of illegally downloaded music. So, the TV industry still has time to make this new technology work for it.

"The basic point is that the audience has gained control of the distribution of television programming," stressed Pesce, "and is not giving that power back."