FOCUS: War on video piracy raises disputes as Yandex faces blocking threat

By Yekaterina Yezhova

MOSCOW, Sep 10 (PRIME) -- Russian Internet company Yandex has narrowly avoided blocking of its video service and problems for the whole portal by obeying a court decision to delete all links to pages with Gazprom-Media Holding’s disputed content as the government tightens the screws on the 12 billion ruble video market, though some experts doubt its measures.

“The situation with piracy improves in the country by the year, and consumption of legal content grows at solid rates, but it’s clear that the share of illegal content is rather big, especially in the segment of watching video via search engines, and about 50% of content is on the gray side so far,” General Director of information and research agency Telecom Daily Denis Kuskov told PRIME.

He said that Russia’s online video market increased 39.2% in 2017 to 11.820 billion rubles, value-added tax excluded. The pay model market – when users pay for watching – jumped 55.5% to 6.557 billion rubles, and the advertising model market – when users watch content for free after commercials – rose 23.2% to 5.264 billion rubles.

Financial analyst at BCS Premier Sergei Deineka agreed that distribution of pirated video content shrinks every year thanks to tougher laws, higher unavoidability of punishment, and blocking of pirate resources.

“It becomes less comfortable for users to watch pirated content, but easier to find licensed films through various applications, multimedia libraries, and options to pay for video via Apple and Google,” the analyst said.

However, a more serious approach to pirating can become a headache for search engines, like Yandex, used to look for videos, because search engines do not upload content in the Web and cannot delete it.

“Besides, Yandex cannot establish the fact of the presence of rights for content at a website. Correspondingly, Yandex cannot separate disputed content from legal. This is why the links we’ve deleted may include those to the content released by copyright holders themselves. As a result, users lost an opportunity to find legal content on Yandex, and resources of Gazprom-Media could have lost some of traffic,” Yandex said.

Four TV channels of local Gazprom-Media Holding – Super, TNT, TV 3, and 2x2 – went to the Moscow City Court with a complaint about Yandex, whose video service gave links to the channels’ series on unauthorized resources. The court took interim measures, and the communications watchdog threatened Yandex with blocking of its video service unless it erased the links. The move could have caused problems for the whole of yandex.ru.

Yandex challenged the court’s decision on September 4, and dates for hearings will be announced later. The four channels again went to court on September 5 with a demand of a complete blocking of the pirated content by Yandex, which the latter found unjustified and plans to contest as well.

Gazprom-Media Holding said it hopes for an amicable settlement of the matter at court.

Deineka from BCS Premier supposed that Yandex and Gazprom-Media Holding could reach an agreement and outside the court, but the other polled analysts were less optimistic.

Kuskov at Telecom Daily said, “The court process may become a big precedent in fighting against piracy. On the whole, despite the fact that the resources are certainly guilty of disclosing illegal content, but the search engine is also to be blamed because it can and should act against piracy by blocking such resources in search results.”

Chief analyst at the Russian Association for Electronic Communications (RAEC) Karen Kazaryan was even more critical. “The process will certainly become important both in showing the lameness of the chosen blocking model by the Moscow City Court, which does not want to go into detail of the law, and in further application of the ‘information intermediary’ notion in the legal terrain of the Russian Federation,” he said.

Sberbank CIB said, “Though we estimate that Yandex.Video contributes less than 1% of Yandex’s total revenues, the case may nonetheless generate some negative sentiment toward Yandex.”

The court decision will not tackle the issue of piracy. “Even if blocked on Yandex.Video search results pages, resources with pirated content will remain available on other search engines and social networks. Yandex published a statement saying that the Moscow court’s ruling contradicts its own legal precedent, including that a court ruling should contain the exact links to the piracy website. Yandex…also confirmed that it was working with market participants to find an appropriate solution,” Sberbank CIB said in a research note.

The analysts said all parties involved should cooperate to squeeze pirates out of the market. “Copyright holders could not withdraw content from Yandex services, making it more difficult for users to find legal content,” Kazaryan at RAEC told PRIME.

“The right question is how to raise incomes from legal content, and the government could do here a lot. For example, it might not have adopted the silly law on regulation of online cinemas, which has not started working yet but has already cut Russian services from many sources of funding and did not let (U.S. over-the-top media services provider) Netflix to enter the market,” he said, referring to the law banning foreigners from owning more than 20% in local popular audio visual services.

“The matter of adjacent rights in online broadcasting should be also tackled. The war on piracy is good only for professional fighters against pirates and lawyers so far,” Kazaryan said.

(69.0286 rubles – U.S. $1)

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