Arrgh, Cloudie, a (Software) Pirate is Coming for Ya!

The peaceful days in the clouds may be nearing their end. Many software companies see a future free of piracy as they move their products to the proverbial cloud (i.e., hosting the software as a service on their own server rather than offering it as a fully installable version for their customers’ machines). But their vision may be a bit too shortsighted (and perhaps too rosy). I would argue that it is simply a matter of time before the software swashbucklers undertake a concerted attack on the cloud. And the cloud technology itself may make such an attack quite an easy feast.

In 2009, I took part in a consulting project for a software company, which was interested in quantifying the lost revenue due to pirated versions of its products. As part of the project, my team and I also looked at several alternatives to fighting such piracy. One of the approaches, which was favored strongly by the company, was to move to the cloud. We agreed that such a move would shelter the company’s new products from unauthorized posting on BitTorrent sites. But we also provided some criticism to a full-hearted belief that the cloud would be the panacea against piracy. We cautioned that pirates had always been creative in their approaches and would take only a limited amount of time before they figure out a new mode of attack. At that time, our warnings were not taken very seriously and somehow got “lost in translation” among all the other insights that were packed in our report.

Last year, however, I worked on a different project, this time conducting an environmental scan of the social and technological factors that may affect consumers’ future. One trend that had been gaining momentum and definitely caught my eye was the so-called Collaborative Consumption. There are many sites dedicated to that topic, as well as a very insightful book, called What’s Mine is Yours: The Rise of Collaborative Consumption, by Rachel Botsman and Roo Rogers. In a nutshell, the idea of Collaborative Consumption is that an increasing number of people prefer to co-own or share a product or service rather than own it. Think about the rise of car-sharing services, such as Zipcar. That was just the beginning. Then people started sharing their second homes or vacant apartments on AirBnb. Nowadays, there are tons of sites where you can share, swap, or rent almost everything you can imagine.

As I was doing my environmental scan analysis, I wrote as one of my key insights that Collaborative Consumption is very conducive of a new form of piracy in the realm of entertainment media and software. Most of the people who read my report did not take that point very seriously, arguing that companies would never allow that to happen to big-brand products or services.

And then came last week, when I accidentally read on TechCrunch about an obscure new service, called Splitflix, offering its users to share their Netflix or Hulu accounts with strangers using a P2P matching system. Now, let’s take a moment to think really hard what that means. A user who wants to watch a movie without paying full price can do that by simply obtaining a log-in name and a password from a fellow “new age” pirate. There is no need to install any BitTorrent clients any more; no need to search on web sites for that coveted pirated version of the movie, then spend hours downloading it. No threat of viruses or getting caught red-handed either. Sounds like a pirate’s paradise, doesn’t it?

Of course, many would argue that Splitflix will be a one-night-sensation until Netflix and Hulu get wind and change their policies regarding multiple log-ins. Yes, in theory that is very plausible. However, let’s think about the implications for Netflix (or any other company) of forcing additional restrictions on users. Any such action risks alienating loyal customers. In this age, companies care too much about Net Promoter Scores (NPS) to risk irritating their customers too much. This has already been the big dilemma for software companies, as well as music producers and Hollywood studios for quite some time. They could always make the software a little more bulletproof, or add a slightly stronger DRM (digital rights management) to the CD or DVD. But then the average customer would be more likely to face problems installing the software or find their entertainment system incapable of playing the DRMed media. Think about iTunes — after years of offering DRMed music, Apple has finally “upgraded” its service to unprotected files. Why? I bet a big part of the reason was to make customers happy.

So with that in mind, I write this post — trying to raise awareness of a trend that may still be in its infancy stages but may quickly gain large momentum. As more companies with consumer products and services move their offerings to the cloud, pirates will get greater motivation to figure out ways to attack that cloud. It will be only a matter of time before some 15-year-old kid figures out an ingenious and elegant way to offer access to his/her buddies to all the cloud services available at his/her fingerprints.

Companies moving to the SaaS model would be well advised to use the limited (and elusive) period of “piracy-free peace” to come up with contingency plans for the time when the “new age” piracy ascends to the cloud.

What are your thoughts on this issue? Do you see it as a potential challenge to businesses? Or do you think I am reading too much into several unrelated and innocuous trends. All comments will be greatly appreciated, as always.

P.S. The simplistic sketch of the “cloud pirate” above is my first ever attempt to draw on the iPad. Please excuse my rudimentary drawing skills. 🙂

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4 Responses to Arrgh, Cloudie, a (Software) Pirate is Coming for Ya!

  1. Rebel says:

    I love Cloudie! He is awesome. 🙂

    Interesting article Emil, it’s true where value goes pirates follow but I’m thinking attacking the cloud will leave more identifiable signs than bit-torrenting (more like breaking and entering theft than back alley dealing). But your points about collaborative sharing are interesting, I hadn’t thought of account sharing and I can definitely see that taking off either by users sharing usernames and passwords or hackers sharing these online (more identity theft! Ahh!). A collaborating sharing site (like a Pirate Bay for clouds) where users can share usernames and passwords for clouds, like a swap and sell is only a matter of time…..

    • Emil_M says:

      Rebel, thanks for the comment. You raise a valid point about leaving more identifiable information about yourself (e.g., IP address) when logging into the cloud. But the burden would be on the companies to determine which log-ins are legitimate (say, different members of the same household logging in from different locations) and which log-ins are unauthorized sharing. I like Cloudie as well. He looks like a cute pirate, doesn’t he? 🙂

  2. Yiwei says:

    Emil, am seeing friends sharing accounts for e-books already!

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