Cape startup taps Bitcoin to fight piracy

2016-04-15 12:33 - Gareth van Zyl, Fin24
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Johannesburg - Bitcoin bounty hunters could help stem the tide of movies leaking online illegally if a South African startup has its way.

Stellenbosch-based Custos Media Technologies says it’s common for the film industry to send out pre-release digital copies of movies to recipients such as reviewers or journalists to drum up interest.

However, this activity further risks having these copies being illegally uploaded to content piracy websites.

Custos then has developed world-first, patented technology that embeds a small instance of Bitcoin wallet in each pre-release digital copy of films. The Bitcoin wallet identifies which recipient has received the copy and cannot be removed from these digital files as it is embedded in a watermark and the physical display details in the content.

If a film is uploaded to a piracy website and a bounty hunter finds a Bitcoin wallet embedded in the copy, information is released to the cryptocurrency’s global ‘general ledger’ dubbed the blockchain. This in turns reveals the identity of the uploader of the pre-release content, even if the content is uploaded in the 'dark web'.

"Movie piracy has escalated dramatically over the past couple of years. It's so easy now your grandmother can do it," G-J van Rooyen, CEO of Custos, told Fin24.

"You're seeing this unsustainable business model where a shrinking group of paying consumers are subsidising content for a growing group of non-paying consumers.

"And you're working with a very expensive art form; it's very costly to produce even a smaller movie without special effects, never mind the Hollywood triple A titles," van Rooyen said.

Currently, local independent film houses are using the technology while Custos is also rolling out the tech to e-book suppliers in the UK, van Rooyen explained.

Funding boost

Custos earlier this month also celebrated raising just under R4m in second round seed investment. One of Custos’ new investors is New York’s Digital Currency Group (DCG).

"We're extremely proud about being in the DCG portfolio because they invest in all of the big Bitcoin related successes. So, all of the big exchanges, many of the more experimental and interesting blockchain companies are in the DCG portfolio," said van Rooyen.

"They put us into a network that otherwise we would have had a lot of difficulty getting into," van Rooyen added.

The developments at Custos further come after its humble beginnings as a university project.

The initial concept was developed at Stellenbosch University. Last year, Stellenbosch University’s technology transfer office, Innovus, also gave Custos a R2.1m initial investment.

Focus on the leaks

But despite the startup gathering momentum and making it more transparent about how digital copies get leaked, van Rooyen told Fin24 that his company’s focus is not on the downloaders themselves.

"They (our clients) are not hunting the downloaders,” van Rooyen said.

“They're not trying to stop piracy after the genie is out of the bottle. We help them find what's called the original infringer and that's usually somebody they know, that's usually one of their customers, one of their reviewers,” he said.

Finally, speaking about piracy issues closer to home, van Rooyen said he expects local illegal downloads to possibly fall amid a string of internet streaming launches in the country.

In January, US streaming service Netflix launched in South Africa and in August last year Naspers launched ShowMax. SA is also getting more Hollywood movie releases at closer to US release dates, van Rooyen added.

"Piracy has been rampant in South Africa and we've seen the stats," van Rooyen said.

"It's probably predominantly an access problem as in South Africa it has traditionally been very difficult to get early access to content.

"With Netflix coming to South Africa, with Naspers' ShowMax offering, we probably going to see a drop in those numbers. I think many customers prefer being paying customers, prefer being legal customers and prefer the convenience of a fairly priced video on demand service like that,” he said.

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Read more about: piracy  |  bitcoin