Market Insight

Russia introduces first online anti-piracy law

August 01, 2013


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Russia's first online anti-piracy law, approved by the State Duma in June 2013, has officially passed into law 1 August 2013. The law was crafted with the participation of some 30 video and TV companies operating in the country, including the Russian Anti-Piracy Organization (RAPO) supported by the Motion Picture Association of America (MPAA). Initially aimed at targeting all forms of intellectual property rights, the law was revised to only cover copyright video content.

The anti-piracy law targets distributors of piracy as opposed to individual users of pirated video content. To file a claim under the new law, copyright holders must submit a complaint with the Moscow City Court, which has been given exclusive jurisdiction to uphold this specific legislation for the entire country. The law grants the Court the power to block infringing websites and/or order the removal of infringing videos.

Websites that refuse to comply will be placed on the general internet blacklist; part of pre-existing legislation passed in November 2012 as an amendment to the Act for Information. Under this act websites which are deemed to have unsuitable or harmful content can be officially targeted by the Russian government.  If such website cannot be shut completely, internet service providers and web hosting companies are forced to block access. Controversially, this blacklist targets IP addresses not URLs, which critics claim can result in lawful websites being blocked if they happen to share the same IP address as the offending websites.

 

Over the past decade, the legitimate video industry in Russia has pro-actively sought to counter-act in the country's rampant piracy problem; so common-place is the issue of piracy that legitimate social networking sites such as VKontakte (Russia's equivalent of Facebook) has openly provided pirated movies and TV content to its users. Some of the anti-piracy initiatives have included lowering physical disc prices to compete with counterfeit product and the shortening of video release windows after theatrical release.

 

However, online piracy and the market for counterfeit physical video products have proven to be extremely persistent. Attitudes towards piracy in Russia reflect a very different cultural history to that of the West. The Samizdat, recognised as a self-publishing tradition, was an important dissident activity in the Soviet era whereby individuals reproduced banned material to be passed along at a grass-roots level.

 

While there is no consensus on the exact size of the counterfeit disc market in Russia, most observers agree that as a consequence the legitimate video market in Russia has struggled to develop. As a result legitimate consumption in Russia remains a niche market, overshadowed by a much larger dark market for counterfeit product. In addition, the spread of broadband penetration in Russia has created the opportunity for online file-sharing, which not only makes it difficult for legitimate online content services, but also cuts further into legitimate physical video retail sales.

 

This has historically made Russia difficult for both international and local content owners to operate in; resulting in an underserved home video market with limited options for consumers wanting to purchase legitimate content - either on DVD, Blu-ray Disc or through online services. However, Apple's iTunes, the service largely responsible for driving measurable legitimate over-the-top (OTT) consumption of movies in any market in which it is present, launched in Russia in December of 2012. Also notable is the Russian launch of Google's Play service during December 2012.

 

Russia remains a good illustration of the kind of platform leapfrogging consumer behaviour which often occurs in emerging markets. Purchasing and renting of legitimate physical discs has remained a specialist niche in Russia. The arguably small pool of Russian consumers willing to pay for video content tend, as a result, to be more advanced consumers of media overall. Digital solutions offer a more convenient, higher-end experience and arguably in Russia a greater level of choice, thus making them a far more attractive proposition than disc-based media. Indeed, research indicates that these consumers are transitioning online and are likely to do so faster than in more developed markets where disc-based legitimate consumption is a truly mass-market habit. Conversely, file-sharing has also encouraged Russians to stop purchasing pirated physical discs; reports suggest there has been marked decline in the sale of pirated DVDs occurring in the past few years.

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