Secret Movie Moguls

Nearly halfway around the world from Hollywood, a 17-year-old high-school student is trying to make a name for himself as a film distributor.

Unlike the moguls in Tinseltown, though, he and his colleagues in a group called MysticVCD don’t cut deals, take meetings or campaign for Oscars. Instead, their goal is to put a movie on the Internet first, long before it’s officially released on tape or disc. If MysticVCD wins the race, the digital copy it produces will be downloaded onto tens of thousands of computers around the globe, potentially reaching more screens than the film itself did in theatrical release.

MysticVCD is one of dozens of “ripping” or “release” groups that obtain, prepare, package and feed movies, songs and games into a secretive and complex distribution scheme that functions a bit like the illegal drug trade -- minus the bloodletting.

Insiders and piracy experts say the groups are motivated mainly by ego. Instead of cash, the online underground is powered by bartering -- admission to these elite circles is granted only to those with something valuable to offer, such as computer parts or a pre-release copy of a DVD.

“I am in the scene in order to provide movies to the people” and to gain access to private sites with pirated goods, the founder of MysticVCD said via e-mail. Asking not to be named, he would say only that he lives in the Greenwich mean time zone, which stretches from the British Isles south to western Africa.

There’s also a social aspect to the scene even though most groups’ members know one another only by code names such as “markalso” and “bambino” and never meet in person.

Common to most groups is a disdain for selling pirated goods in favor of giving free access to anything and everything.

“Please remember: We do this for FUN. We do not make money off this whole business,” said a posting from a group called Centropy. “All of us go to the movies regularly and pay for our tickets just like everyone else.”

Not everyone in the scene is so pure. Some players -- including members of Centropy -- are suspected of selling pirated movies and music to commercial bootleggers who have made billions of dollars peddling knockoff CDs and DVDs on the streets of cities around the world.

Regardless of whether there’s money involved, what the ripping groups do violates copyright law. Federal agents recently mounted three sweeps of online piracy groups that netted at least 46 guilty pleas and 19 prison sentences. Those nabbed range from a 40-year-old Australian to a 20-year-old student at Duke University. More investigations are underway.

“The risk that really wasn’t there for them a few years ago is now, I would say, pretty significant,” said Bob Kruger, vice president of enforcement for the Business Software Alliance, which has been chasing online software pirates since the early 1990s.

On the whole, however, music and movie groups have operated with near impunity, protected in part by the elaborate steps they take to screen participants, conceal their identities and disguise their locations. The entertainment industry has focused on filing suits against file-sharing networks such as Kazaa and their users, who ultimately copy much of the ripping groups’ works. The industry also is trying to deter piracy at the grass-roots level with electronic locks for CDs, DVDs and downloadable items.

Kruger said online piracy groups have been around at least since the early 1990s. The initial focus was “warez,” or computer programs that had been stripped of their anti-piracy protections.

Although most piracy groups still concentrate on software and computer games, a steadily growing number dedicate themselves to movie and music piracy. NFOTemple.com, a site that catalogs the boastful explanatory notes, or NFO files, posted by release groups, listed 140 crews devoted to movies in 2003, up from 32 in 2002.

The growth was fueled by the skyrocketing capacity of computer hard drives and the proliferation of high-speed Internet connections. The technology for turning analog audio and video signals into compact digital files improved rapidly too, slashing the time needed to transmit movies or albums online.

The scene is closed to much of the world; would-be participants have to gain the trust of insiders and prove their worth before gaining entry. And the lifespan of groups tends to be short, at least on the Net, where players come and go.

The ripping groups often share similar structures, with officers who grant or revoke privileges, set policies and assign duties to the members. And their members, who share a love for free access to virtually any movie, song, game or software program, include not only teens but also 30-something professionals with families.

The first task for a movie-focused group is getting its hands on a film, possibly by obtaining a disc or tape from someone in the industry’s distribution pipeline before its official release. A ripping crew that calls itself Chosen Few alluded to these sources in a recent online posting.

“If you or someone you know works at a video store, movie review affiliate, DVD distribution warehouse, production studio, Academy Awards/Oscar staff and/or have some other means of getting your hands on screener/retail VHS or DVDs ahead of store date, contact us now.”

Another approach -- the one typically used first -- is to sneak a digital camcorder into a cinema, then record the film as it is projected. That’s what MysticVCD did in November, obtaining a version of “Elf.”

Music-oriented groups, meanwhile, try to grab pre-release copies of CDs and vinyl records from radio stations, reviewers and record-label insiders. For example, the group RNS obtained and released a copy of “In Time: The Best of R.E.M.” a week before the disc went on sale in late October.

Once a movie is in a ripping group’s hands, it may be passed along a virtual assembly line where members with different skills perform time-consuming tasks. For example, an encoder would convert the tape or disc into a computer file, then leave it for other members to edit out the identifying marks studios insert to track copies, break the file into pieces small enough to move easily through the Net and check the final package for errors.

The next step is to release the pirated goods online and claim the credit.

Many groups, particularly the more established ones, have at least one member operating private Internet sites as banks for their pirated goods. These members -- often skilled computer technicians who work on corporate or university networks -- have access to computer servers with ultra-fast connections to the Internet, which they use to power the group’s sites.

Other crews release the fruits of their labor to sites operated by better-known groups. To make sure everyone knows whom to credit, ripping crews include their monikers in each release’s file name and add a boastful explanatory note to the package.

Mike Nguyen, a network administrator, operated two sites for the warez group Drink or Die until federal agents descended on him late in 2001. He pleaded guilty to criminal copyright infringement and was sentenced in September to five years’ probation, with an obligation to perform 2,400 hours of community service.

Although he told group members that he’d hidden the sites’ hardware in an air conditioning duct at the California university where he worked, Nguyen actually kept the two computers tucked under his workbench. The computers were stuffed with extra hard drives and other upgrades that Nguyen had collected from people who wanted to be granted access to the site’s goods. The drives gave each computer 20 to 40 times the storage of a typical PC, enough to hold “the functional equivalent of every piece of software, music and movie sold at a Best Buy or Circuit City or CompUSA,” said Assistant U.S. Atty. Christopher Johnson.

A few dozen digital vaults known as “topsites” have acquired a leading role by having the fastest Internet connections, the largest capacity, the earliest copies of the most sought-after goods and the most capable couriers for delivering material around the Net.

As soon as an item is released online, a second set of groups, called couriers, goes into high gear. Like drug mules or drones in an anthill, the couriers’ job is to move pirated goods to other private sites on the Net.

Even groups with their own topsites want their releases copied to other sites. The point, said a source close to the scene, is to spread the word of their exploits and earn praise from the rest of the groups, which is the main reward for 99% of the people involved.

Sometimes group members will send files to other sites themselves, using a technique called File Transfer Protocol instead of e-mail. But there’s so much data involved -- a typical movie can consume 2 gigabytes -- that using multiple couriers with fast Internet connections in various locations around the globe accelerates the process.

Couriers who bring new booty to a site are rewarded with credits that they can use to download other pirated goods. These credit accounts act as a sort of currency and fuel the rapid and widespread distribution of movies, music and other digital goods online.

It’s not easy to get into any of the private sites, which typically conceal their Internet addresses and communicate only with pre-approved computers.

The general rule, Nguyen said, is that “you have to know someone who can vouch for you or have something you can offer that is of interest to that site operator or group.” Topsite operators tend to have everything they want, “but on non-topsites you might be able to work a deal.”

Such a deal might involve providing storage capacity and bandwidth, especially outside the United States.

Another way to gain entry is to offer a movie that is in high demand. The main factors affecting the value of a pirated film are how early it’s released, how good the video and sound are and how highly it’s rated on the Internet Movie Database.

“The higher the IMDB rating, the more sites that will accept it,” said the source close to the scene.

MysticVCD’s release was the fifth version of “Elf” to hit the Net -- three came out before the movie’s Nov. 7 premiere, two after -- but the group justified it by claiming superior picture quality. It was released on three topsites operated by members of the group, the founder said, adding that he expects to be offered access to more sites after the group puts out more movies.

He may have to improve the quality of his product first. MysticVCD’s version of “Elf” got mixed reviews from online commentators, with some praising the effort but others complaining about blurry images.

According to Nguyen, it takes minutes for a newly released item to reach all of the topsites, but it may take hours or days to reach the lower echelon of private sites. After that, the digital booty leaks out intermittently to online areas more accessible to the public, such as chat channels and news groups.

That process, which is haphazard, can take days or even weeks. “The lower down the totem pole you go, things are not as organized as they are in the higher echelons,” Nguyen said.

“When things start flying around on the Internet,” Kruger said, “I don’t know that you can identify where they’re coming from.”

One way pirated goods move from private to public sites is through a new layer of groups that operate on the chat channels. These groups compress and re-release the ripping groups’ movies, often adding their own brand to the file names. Unlike the private sites, most of the chat channels and news groups are open to anyone who can master their relatively arcane protocols.

The last stop is one or more online file-sharing networks, which is where the piracy problem mushrooms for the movie industry and other copyright owners. The cross-pollination often comes from a “middle-level geek” who trolls the chat channels and news groups for newly pirated goods, then offers them on a file-sharing network, said the source close to the scene.

Randy Saaf of MediaDefender, an anti-piracy company based in Los Angeles, estimated that 20,000 to 30,000 people have access to the private sites and close to 100,000 use the news groups. By contrast, at any given moment more than 3 million people around the world are using Kazaa, the most popular file-sharing network.

According to BayTSP, another anti-piracy firm, nearly 15,000 copies of “Elf” were on the three leading file-sharing networks as of Dec. 15. That’s pretty tame compared with “Finding Nemo,” which showed up on more than 100,000 file sharers’ computers in June.

“As long as there’s material potentially out there, there’s going to be people dedicated to doing it,” said Tom Temple, director of worldwide Internet enforcement for the Motion Picture Assn. “All it takes really is two people, or even one person who’s motivated to keep up the activity, and then it will go on.”