In Argentina, a growing concern over piracy

BUENOS AIRES -- After bringing down Megaupload, anti-piracy investigators are taking a hard look at Argentina, South America's piracy wild west.

BUENOS AIRES -- Tomás Escobar is no Kim Dotcom.

For one, he's not nearly as flamboyant as the Megaupload founder, the file-sharing magnate that the F.B.I. and U.S. Department of Justice accused of taking in over $175 million helping users pirate another $500 million in copyrighted online material. He did not legally change his last name to reflect his primary revenue stream. He does not own a $30 million New Zealand estate. And he most certainly did not wear a billowing cream suit while dancing the Hammer Time atop a yacht.

No, Escobar is a fairly unassuming 23-year-old from the Western Argentine province of San Juan, a place known for its wine, its desert moonscape, and not much else.

But officials here say he's just as big a threat.

Thanks to file-sharing sites like Escobar’s, anti-piracy investigators are now taking a hard look at Argentina and the proliferation of its open-air counterfeit markets. Because of Argentina’s lax intellectual property enforcement and the way sites like Cuevana are structured, Argentina may become an even bigger piracy headache than Dotcom ever was.

Launched in 2009, Cuevana indexes user-supplied links to movies and TV series that the public can then watch online via the Cuevana plug-in. Using the site, you can download and watch recent movies like War Horse in about five minutes. Indeed, it looks a lot like the Netflix online streaming service, save for two important differences: it doesn’t have contracts with the film studios that produce the works, and it's free.

The increasing popularity of the gratis movie site -- it now has some 15 million visitors per month -- has not pleased Hollywood. In March, an Argentine prosecutor announced an anti-piracy lawsuit against Escobar and co-founders in the name of Twentieth Century Fox, Disney, Paramount, Columbia, Universal and Warner Bros. (A local producer, Telefe, has also filed.)

What has made the legal movement against Escobar difficult is Cuevana’s technical and economic structure.

"Cuevana does not host any protected content. It’s a mere indexer, and only points to web addresses," Escobar said, comparing his site to Google and YouTube. And the site does not charge its users -- Escobar claims the site is a hobby, not a business -- making it harder to say that Escobar and his colleagues are profiting from piracy.

Escobar frames the fight in David-and-Goliath terms, saying that the site was invented to bring fast and cheap digital video distribution to a part of the world that the studios had ignored. "Cuevana was conceived to fill an unmet need and provide what the industry itself failed to deliver. Latin America showed that it was a very mature market technologically speaking and expected solutions on par with those found in the U.S.," he said. Later, when the site achieved its unexpected fame, he says he tried to partner with studios to license content, but has met with no interest.

Cuevana is not the only Argentine group in the eye of anti-piracy investigators, and the number of Argentine websites and physical markets questioned for distributing pirated and counterfeit material shows how relaxed local attitudes are toward intellectual property. Students regularly buy photocopies of entire college texts rather than pay for the book, while several Buenos Aires parks fill on weekends with vendors openly selling pirated computer software.

Part of Argentina’s fertile culture of piracy is inspired by a belief that intellectual property rights can be sacrificed in the name of helping the poor and forgotten against large corporations; part is caused by Argentina’s lax enforcement of intellectual property laws; and the rest comes from the country’s isolating economic policies, where import restrictions and high import taxes make buying genuine foreign goods prohibitively expensive.

Not surprisingly, Argentina is on the U.S. Trade Representative’s Priority Watch List for its lax enforcement of intellectual property laws. In January, when the FBI and U.S. Department of Justice filed charges against Kim Dotcom and his colleagues, they listed another hugely popular Argentine link indexer, Taringa!, as one of Megaupload’s prime sources of traffic, sending 72 million visits over a 13-month period. Much like Escobar, the owners of Taringa! were hit with criminal charges in a suit filed by local publishers last year (they reached an out of court settlement in March).

And alongside the putrid Riachuelo canal in the humble Buenos Aires suburb of Lomas de Zamora, a huge flea market named La Salada holds some 30,000 vendors selling everything from counterfeit Nike sweatpants to pirated Tom Cruise DVDs. Listed on the U.S. Trade Representative’s Notorious Markets List, La Salada is simultaneously grim and high-tech: housed in a series of ramshackle warehouses, it boasts a blanket of surveillance cameras monitored from a command center, but little law enforcement. Total sales for 2010 amounted to some $2.9 billion, according to a report from International Intellectual Property Alliance (IIPA), a lobby group of music, software, book and video publishers.

Jorge Castillo, La Salada’s administrator, looks past intellectual property issues as he defends the fair on populist grounds, much as Escobar defends Cuevana as a way to bring technology to an ignored continent.

"The fair has 30,000 vending posts, that generate about 12 jobs each, including workshops, transportations, and retail," Castillo said. "The accessible prices give an indirect to seven million monthly buyers who come from working and middle class households. The savings on clothing allow hundreds of thousands of people to spend more on food, health, transportation, education and home improvement."

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