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Accused 'Wolverine' pirate calls charges 'ridiculous' The FBI has accused the man who allegedly was first, or among the first, to upload a pirated copy of "X-Men Origins: Wolverine" that circulated online in April. What authorities have apparently yet to do is identify the original source of the leak. On Wednesday, after Gilberto Sanchez was charged in New York with violating federal copyright laws by posting "Wolverine" to a file-sharing site a month before the film's theatrical release, he told reporters from The New York Daily News: "It's just ridiculous. I bought it from a Korean guy on the street for five bucks. Then I uploaded it. I didn't make any money." Sanchez, who is 47 and works as a glazier, doesn't appear to have any direct ties to 20th Century Fox, the Hollywood studio that produced "Wolverine," or the film industry.To hear Sanchez tell it, he was way downstream from the original leak and authorities should be on the lookout for one of the thousands of New York street vendors.But Sanchez's explanation raises more questions than it answers. The first of which is whether the trail of the person who first leaked the movie has gone cold in the eight months since the unauthorized copy first appeared on the Web. Security experts I've spoken with, however, say long delays are common with these kinds of file-sharing cases, which sometimes require law enforcement officials to spend months compiling evidence. The two things that almost everybody agrees on are: 1) the case illustrates once again how hard it is to protect digital content, and 2) Sanchez isn't the original source of the leak.In April, someone posted to the Web an incomplete version of "Wolverine," which cost $100 million to make and stars actor Hugh Jackman. The indictment filed against Sanchez in Los Angeles earlier this month did not say whether he was allegedly the only person to upload it or the first, but Sanchez is the only person who's been indicted in connection with the investigation. The copy that began circulating online was missing music and many computer-generated effects but was still a popular attraction. According to Big Champagne, which tracks file sharing, the movie was viewed 4 million times before it was screened in theaters on May 1. In the months after the leak, "Wolverine" went on to gross $375 million worldwide,so it doesn't appear the pirated copy prevented the film from turning a profit. But 20th Century Fox, which produced the movie, argues the unauthorized version was watched about 14 million times online and no matter how one slices it, the leak cost the studio big money. A man accused of uploading "Xmen Origins: Wolverine" suggests leaked copy circulated on discs before appearing online.20th Century FoxMore recently, the U.S. Attorney's office has begun efforts to extradite Sanchez to Los Angeles, according to Philip Weinstein, his attorney. Weinstein said he has advised his client not to comment on the case.According to my Hollywood sources, the authorities have ruled out Sanchez as the original source of the leak. At many top studios, security is tight. Access to working copies is restricted. Copies are tracked and the names of anyone who touches them are supposed to be recorded. That happens not only at the studios but often at the firms hired to do post-production work, such as special-effects houses. While sources say Sanchez didn't have that kind of access, what isn't clear is whether he knows someone who did. The government said in its indictment against Sanchez that he posts comments on the Internet under such usernames as "SkillfulGil" and "SkillyGilly." A Google search showed that those names are prevalent at some video-sharing sites as well as numerous music-themed community sites, including MySpace and "I had FBI with search warrant in my place. They took my PC. Now (they're) building a fed case on me for the same thing. Copyright Infringement ...So I guess I'll (be) made an example of."--Web post from SkillfulGil Many of the posts from these sites are accompanied by snapshots of a person resembling the Gilberto Sanchez who was photographed by the Daily News on Wednesday. In one 2008 post at, SkillfulGil discussed ripping and posting movies to the Web. At the same site on July 7, two months after the "Wolverine" leak, SkillfulGil wrote: "I had FBI with search warrant in my place. They took my PC. Now (they're) building a fed case on me for the same thing. Copyright Infringement...So I guess I'll (be) made an example of." An FBI spokeswoman said Tuesday that Sanchez's residence was searched by agents last summer. Tracing the source of the leakIf, like Sanchez says, the leaked "Wolverine" copy was first available on bootleg DVD and was sold from a street corner to any passerby, then isn't it logical to assume others uploaded the movie to the Web? Couldn't tracing the discs back to their source help lead agents to the original leak? And if there were others who uploaded the film to the Web, wouldn't the government be arresting them as well? According to my film industry sources, one possible reason that federal officials haven't arrested anyone else is that they may be building a case. One example for how long it can take to build a case was illustrated in last year's leak of "The Love Guru."FBI agents had to follow a long trail before filing a criminal complaint nine months after the original leak. (Ben Sheffner, a well-known pro-copyright blogger and attorney, posted a copy of the criminal complaint at his site, Copyrights & Campaigns). In that case, agents had strong suspicions early on about who leaked the much-maligned Mike Meyers film, according to court documents. Jack Yates, an employee of Los Angeles Duplication & Broadcasting ("LADB"), was asked to make screener copies that were supposed to appear on talk shows for promotional purposes (one of the copies went to Jay Leno). Yates, however, was seen on the company's video cameras making an extra copy and taking it to his car. In interviews with agents, Yates denied knowledge of the copy. So federal officials were forced to track down the IP address associated with the first uploading of the movie. The trail of who obtained a copy of the film involved multiple people but Yates was eventually undone when investigators traced it back to his cousin. Last summer, the 28-year-old Yates was sentenced to six months in jail.Ad blockers get Interactive Advertising Bureau exec Mike Zaneis' blood boiling (Q&A) Mike Zaneis says he's generally a relaxed guy. But when the subject of online ad-blocking technology comes up, calmness vanishes from the voice of the Interactive Advertising Bureau's general counsel and executive vice president for public policy."Ad blocking to me is so fundamentally wrong, it just boils my blood," he seethed in an interview, predicting a coming showdown in which publishers start blocking people who block ads.Of course, plenty of consumers loathe online advertising, which can inflict flashing gaudiness and subject people to behavioral targeting. That's why Adblock Plus, AdBlock, and other browser add-ons exist to strip ads off Web pages and, increasingly, mobile apps. It's also why Adblock Plus' acceptable ads manifesto is getting attention. Adblock Plus developer Eyeo encourages a relatively unobtrusive style of ads that it doesn't block -- but publishers must apply to get on its whitelist, and big ones such as Google also have to pay.Zaneis called the approach a "ransom note." Ad blockers are a mortal enemy for the IAB, which represents more than 600 companies that are responsible for showing 86 percent of ads in the US.He might speak grandly of the threat to the advertising-supported businesses, but he's not wrong about ads fueling the Internet. eMarketer forecasts worldwide digital ad spending to grow 14.8 percent to $137.5 billion in 2014. Ads have generated fortunes for Facebook and Google, and Apple is trying to follow suit with mobile ads. How many people would use Facebook social networking or Google search if, like a Sunday New York Times subscription, it cost $4.30 per week? Probably not 1.23 billion people.Zaneis talked to CNET's Stephen Shankland on Thursday. (Disclosure: CBS Interactive, publisher of CNET, is a general member of IAB.) The following is an edited transcript of the conversation.Shankland: How does the IAB see ad blocking?Mike Zaneis: It's a huge economic problem for the industry, one the industry is just coming to grips with and to see as the fundamental threat that it is.How big a problem are ad blockers for publishers?Zaneis: It varies wildly. For some publishers, it's a blip on the radar screen -- less than 5 percent of users or ads are being blocked. That's what we in the business call a discrepancy: it's not that big a differential. But one gamer site, Destructoid, has a young, tech-savvy audience, and 40 to 50 percent of its users are running ad blockers. That's putting extreme pressure on his [Destructoid's publisher] ability to stay in business.So will publishers start building paywalls or charging for subscriptions to content?Zaneis: Part of it is basic economics. To date, the growth in industry has been so robust, with double-digit expansion, so the industry has been able to handle this free-rider problem, with X percent not consuming advertising yet having access to the content and services.Analysis firm eMarketer predicts digital advertising will grow to $204 billion by 2018. The spending includes ads shown on PCs, tablets, and phones.eMarketerIf growth begins to level off, there will be further pressure to monetize every eyeball -- and to keep costs down. It costs something to deliver these services. Bandwidth is not free, server capacity is not free.There is only one endpoint: an unsustainable economic situation that ad blockers create. The industry will have to rise up and answer it. You see some sites beginning to block users with ad blockers. Maybe you'll see paywall offerings to users that are using ad blockers, but you're not going to see a mass migration off ad-supported content, the economic engine that drives the Internet.You mean publishers will show an error message to those with blockers that says, "Sorry, we're not going to show you our content"?Zaneis: Yes.How hard is it for Web sites to detect ad blockers?Zaneis: It's not difficult at all.Do you know of publishers doing that?Zaneis: Destructoid began to do that. He decided he didn't want to be in an all-out war with his users, so he took it down. He ran it on a trial basis.Ad blockers use use different technology for blocking. Sometimes the ad blocker just won't send the call from the Web site to the ad network. Sometimes it will allow the call to go through, but block incoming delivery of the ad. Sometimes the ad will render on the page [in the browser], but then the ad blocker will obfuscate the ad itself. If you're a publisher, there are different ways of detecting and resolving that, and there are different harms. If the call was never made, then the publisher is never able to make any money, because it wouldn't show as an [advertising] impression. If the call went out and and back in, the marketer is being essentially defrauded -- it paid for an impression that was not showed to a consumer.You can see why publishers and marketers have an incentive to figure this out.What do you think of Adblock Plus' acceptable ads manifesto, which Eyeo says is an attempt at compromise between obnoxious ads and no ads?Zaneis: It's a ransom note. These people are no better than Internet pirates facilitating the theft of content. To do it under the guise of "these ads aren't acceptable" is a complete facade. It's a sham. They block all ads by default.Well, to be clear, by default, Adblock Plus shows ads from whitelisted advertisers.Zaneis: They allow ads to come through for those who pay the ransom. Tens of millions of people have downloaded this. The default is Adblock Plus blocks all ads, then they allow ads to get through if you pay them money. They don't review all those ads. It's a complete sham to say they only whitelist acceptable ads.You sound pretty worried. When is this really going to be a problem for publishers?Zaneis: It's major already a problem for some publishers.But you think it'll be a big problem for everybody at some point?Absolutely. There is only one end point to this challenge: over time more ads will be blocked, and it will become such an important economic issue for our industry that we will have to act very aggressively. It's Economics 101.What response is more likely? Paywalls, ad-block blocking, or something else?Zaneis: I predict publishers will not provide for content and services for free. People who don't participate in the economic exchange of digital advertising are unlikely to partake in the benefits of it. That doesn't compute from an economic standpoint.But what's the most likely response?Zaneis: The paywall option is not viable for the vast majority of the Internet. Consumers don't want that. The next logical solution is that people won't give away content and services to folks who aren't part of the value chain [those using ad blockers].When will this come a head?Zaneis: I can't predict that. I'm not privy to publishers' economic numbers. I think you'll see it on an individual company basis as they make the decision. Once you get a handful of publishers committed to resolving the problem, I think you'll see a cascading effect throughout the industry.Won't it be pretty unpleasant for them to go to war with their audience?Zaneis: Absolutely. Some companies will make the decision not to pay the ransom, but a lot of folks will. When you're sitting there and somebody has a knife to your throat, a lot of people will pay that ransom.I do know one thing. Adblock Plus -- these people don't understand advertising and the economic model of the Internet. They talk about acceptable ads, but they're way behind the curve of where the Internet is progressing. They don't want disruptive ads, and they don't want things that come over the content on the page. Maybe they've never seen ads on mobile page, maybe they have no idea about interstitial ads [which appear between transitions from one page or screen to the next] and rich-media ads and digital-video ads and prerolls that take over the screen for a predetermined amount of time. That is the here and now, and the future.How big a problem is it really? Most people don't install ad blockers. Earlier you were talking about 5 percent, which is about one in twenty people. Could publishers offer more moderate ads so people aren't as likely to install ad blockers?Zaneis: It's a tragedy of the commons problem. It only takes one Web site to do something bad, for a person to say, "I don't want that advertising," and install an ad blocker.You can have more and more people installing ad blockers and undermining the economic model of the Internet. So that puts pressure on to monetize the other people, so they'll see more ads.And ad blocking applies to mobile developers as well as Web sites.Zaneis: Mobile is becoming the Internet when you look at time spent. This concept that Adblock Plus is going to dictate to our industry what ads are acceptable and what aren't, but they have no concept of how a mobile ad works...They say we wouldn't accept [intrusive ads] in the offline world? Bullshit. What do you think a TV commercial is? It's a preroll ad or a midroll ad. On mobile, the predominant ad is interstitial. When I open an app, I get an ad. Adblock Plus says that's disruptive and not acceptable. There we are at loggerheads, and we won't be held ransom. In reality, this is not a moral imperative for them, this is for-profit company that wants to make money, which is why you pay them off and ads get shown. The hypocrisy is outrageous. Do publishers and advertisers have a publicity problem, though? Lots of people object that with advertising, the user becomes the product that a publisher is selling to the advertiser, and people don't like being treated like something to be sold, as a source of revenue to be mined.Zaneis: There's not a single study that supports that. People understand being marketing to. My grandparents were marketed to their entire lives. The oldest form of advertising in this country is the Sears catalog. People are OK with that. The Internet is the greatest revolution of our time, and it's supported by ad revenue. So there's a consumer revolt against it? The exact opposite has happened. It's a wild success.We need to be respectful. There are bad ads. Nobody likes the belly-fat ads. We're working at making advertising a more positive experience for users. We're doing that because we want the experience to be better. Adblock Plus is doing this because they just want people to pay them off.