Kevin J. Delaney. Wall Street Journal. (Eastern edition). New York, N.Y.: Apr 17, 2007. pg. A.1

“It’s out there — you just have to hunt around for it a bit,” says the 28-year-old Mr. [Sam Martinez]. Like many similar sites, YouTVpc relies heavily on video-sharing sites outside the U.S., such as a French outfit called Dailymotion and Ouou.com in China. Mr. Martinez estimates that about 40% of the shows and films on the site — including episodes of “Desperate Housewives” and Fox’s “Prison Break” are provided by Ouou.com.

Last year Mr. Martinez’s childhood friend, Mr. [Billy Duran], built on the idea and created a site called “VTele” as an assignment for a computer-science class at Central New Mexico Community College. Through it, users could view TV shows and movies that he and Mr. Martinez copied from DVDs and uploaded to the school’s computer servers. The 23-year-old Mr. Duran says he got an “A” on the project. But within a month, the site attracted so many users that some of the school’s computer servers crashed. Administrators threatened Mr. Duran with expulsion.

Mr. Duran dropped out of Central New Mexico, and the two friends relaunched the site in September. At first it relied on volunteers to store video files on their own servers, until a user pointed Mr. Martinez to Dailymotion. “I was like, ‘Oh my gosh — gold mine!'” recalls Mr. Martinez. “We had all 18 seasons of ‘The Simpsons’ in two hours.”

BERNALILLO, N.M. — From a small outbuilding alongside the train tracks in this Albuquerque suburb, two men in their twenties are peddling something that has become a big threat to big media companies.

The men, Sam Martinez and Billy Duran, use two low-end desktop computers to run a Web site that offers a remarkably broad menu of television shows and movies free of charge. They provide online access to 17 episodes of NBC’s “Heroes” TV series, 49 installments of ABC’s “Desperate Housewives,” more than 70 feature films and hundreds of other videos. Within four days of Walt Disney’s theatrical release of “Meet the Robinsons,” the men had the movie available for viewing through their site, YouTVpc.com.

As media companies fight to keep control over distribution of their shows, they have focused their guns on big sites like the YouTube unit of Google Inc. But little sites like this one in New Mexico collectively represent an equally thorny challenge. They are like guerrilla squadrons that are constantly shifting tactics to defy big media and keep offering consumers free programs.

Unlike YouTube, which stores videos on its own servers in the U.S., the guerrilla sites offer menus of shows that are often stored on servers in places like France and China. The sites act as gateways to pirated material offered on other sites and say they don’t break copyright laws because they don’t have the material on their own computers. Content owners say the sites are abetting copyright infringement, which is illegal.

Whatever the legality, it’s tough to clamp down on sites that just about anyone can set up with links to video stored on computers around the world. “If one host gets shut down, there are three others that are going to pop up,” says Mr. Martinez, who covers the site’s expenses by carrying some advertising.

“It’s obviously a very, very large problem,” says John Malcolm, director of world-wide antipiracy for the Motion Picture Association of America, Hollywood’s lobbying group. “Some of these sites are really becoming quite popular, so they are of great concern.”

While the association has managed to get some of what it calls “leech sites” taken down, some have popped back up. And it faces the risk that the sites will affect consumer expectations. In a replay of the music industry’s woes, some media companies fear people may come to expect that they can access a virtually unlimited menu of TV shows and movies over the Internet free of charge without commercials.

One gateway, Peekvid.com, was the 20th most-visited site in the U.S. for multimedia entertainment in March, just behind Viacom Inc.’s IFilm and ahead of Napster and other mainstream sites, according to research firm Hitwise. Alluc.org, run by three teenagers in Germany, was No. 43, just ahead of Sony’s Grouper video-sharing site. Some specialize in specific shows, such as southparkzone.com, which includes links to seemingly every episode of Comedy Central’s “South Park” cartoon on an attractive Web page carrying advertisements brokered by Google.

Video-link gateways generally organize the content in an easy-to-use format, linking to TV episodes listed by season and show number. Searches on mainstream video-sharing sites, by contrast, may yield more jumbled results. Unlike “peer-to-peer” file sharing services, the gateways offer nearly instant access to the videos and usually don’t require any software installation.

One shortcoming of the gateways is video quality, which typically falls short of what one would expect on a regular TV screen. The sites that host the video often will only allow it to be uploaded at lower quality to keep down costs for storing and transmitting data.

Each gateway has only a small fraction of the roughly 50 million U.S. viewers who watch video on YouTube monthly, according to comScore Inc. Viacom targeted YouTube for its biggest assault, a $1 billion lawsuit it filed in March accusing parent Google of infringing copyrights and profiting from infringement by others. Google contests the allegations, saying it complies with copyright laws.

Since last year, TV networks have been putting more of their shows on the Web themselves. They believe services that make it easy for people to download high-quality video online cheaply will attract consumers, much as Apple Inc.’s iTunes store has helped build a market for legal music downloads.

Still, it will be a challenge to tamp down the explosion of video- linking gateways around the world that help people access commercial material uploaded by consumers without the owners’ permission.

When a consumer clicks on one of the links at the YouTVpc site of Messrs. Duran and Martinez, the video appears in a box that usually can be expanded to fill the screen. The site’s roughly 16,000 daily users can send in requests for TV shows and films the site doesn’t offer yet. Mr. Duran and Mr. Martinez go looking for some of those shows themselves, and farm out some of the task to volunteer “link hunters.”

“It’s out there — you just have to hunt around for it a bit,” says the 28-year-old Mr. Martinez. Like many similar sites, YouTVpc relies heavily on video-sharing sites outside the U.S., such as a French outfit called Dailymotion and Ouou.com in China. Mr. Martinez estimates that about 40% of the shows and films on the site — including episodes of “Desperate Housewives” and Fox’s “Prison Break” are provided by Ouou.com.

Virtually anyone can set up a video-linking gateway from a home computer, paying little or nothing to a Web-hosting service to store the site’s content on computer servers. Messrs. Duran and Martinez program their site using free software that comes with their computers. They use a free Yahoo email account and instant-messaging software to communicate with users.

Messrs. Duran and Martinez say the Motion Picture Association of America had their site shut down twice this year by asking services handling their Web hosting and Internet address to block access to YouTVpc. But they soon got back online after telling the services that their site has no legal liability because it merely posts links to content on other people’s computers.

Other sites have re-emerged quickly after shutdowns. QuickSilverScreen.com says it suspended the site in December after News Corp.’s Fox threatened to sue its U.S.-based owner for $150,000 for every episode of a Fox show to which the site linked. The owner handed over control to two Europeans and the hosting moved to Malaysia. Since then the site has stayed up without any further threats from Fox, says Dunstan Low, one of the two Europeans. Fox confirms it threatened a lawsuit and says it relies on the MPAA to handle enforcement outside the U.S.

Back in 2005, Mr. Martinez, a former music-recording engineer, created a site with links to TV shows such as Fox’s “The Simpsons” and “That ’70s Show.” He found the links on YouTube. He says he was frustrated that there were few options for watching TV shows and films on the Web. Also, TV commercials annoyed him. The site effectively stopped operating after YouTube set a 10-minute limit for most clips uploaded to its site, in an effort to stem piracy.

Last year Mr. Martinez’s childhood friend, Mr. Duran, built on the idea and created a site called “VTele” as an assignment for a computer-science class at Central New Mexico Community College. Through it, users could view TV shows and movies that he and Mr. Martinez copied from DVDs and uploaded to the school’s computer servers. The 23-year-old Mr. Duran says he got an “A” on the project. But within a month, the site attracted so many users that some of the school’s computer servers crashed. Administrators threatened Mr. Duran with expulsion.

“In any court of law I’m sure we’d be found guilty,” concedes Mr. Martinez. “But how else are you going to put something together?” Mr. Martinez says he sent emails to TV networks suggesting they adopt his idea but never heard back.

Mr. Duran dropped out of Central New Mexico, and the two friends relaunched the site in September. At first it relied on volunteers to store video files on their own servers, until a user pointed Mr. Martinez to Dailymotion. “I was like, ‘Oh my gosh — gold mine!'” recalls Mr. Martinez. “We had all 18 seasons of ‘The Simpsons’ in two hours.”

Messrs. Duran and Martinez soon discovered new places to tap for videos. They learned the tricks that people uploading the videos use to make it harder for the entertainment industry to track down infringing content. Rather than searching a site for “South Park, episode 101,” they might look for SP101 or for the name of the show spelled backward. “I can find anything,” Mr. Martinez boasts.

If they’re willing to ignore copyright laws, people can put a TV show on the Web by recording it on their computer when it airs using a cable plugged directly into a PC. Or they can copy it to a computer from a DVD. Just-released films can be recorded in a theater with a video camera.

Usage of YouTVpc grew quickly late last year and early this year as the site gained notice in online circles, including through a YouTVpc page on the MySpace social networking site. Mark Joseph Kirk, a 19- year-old medical records clerk in Houston, found out about YouTVpc in December and now sometimes spends three to four hours a week on the site, watching TV series such as “The Office.” “I have mentioned it to a lot of my friends, and now they use it,” he says. “It’s really great.”

In January, YouTVpc’s Web-hosting service, Pro Net Hosting Inc., abruptly shut down the site. Messrs. Duran and Martinez say it did so at the request of the Motion Picture Association. One problem was that YouTVpc itself was hosting some infringing content, which the men say was an oversight. After they removed that content, Pro Net allowed them to start service again, they say. Pro Net confirms hosting the site but declines further comment. The association declines to comment on specific cases.

About two weeks later, The Go Daddy Group Inc., the company that handles registration of YouTVpc’s Web address, clamped down. Go Daddy stopped directing people to YouTVpc’s site when they typed YouTVpc.com into their Web browsers. Go Daddy official Ben Butler says his company acted at the MPAA’s request but relented after Mr. Martinez submitted a statement swearing his site doesn’t infringe copyrights. Mr. Butler says he hasn’t heard from the MPAA recently.

Santa Clara University assistant professor of law Eric Goldman says it’s not clear whether video-linking sites are breaking the law. But he cites several cases where courts have upheld liability for linking to infringing content, particularly when judges believe the Web site owners are operating in bad faith.

“These sites are very much on everyone’s radar and we are preparing an aggressive response,” says Rick Cotton, general counsel for General Electric Co.’s NBC Universal. Mr. Malcolm of the MPAA says the association is weighing what action to take against the linking sites. While it is sometimes complicated to get sites abroad to take down infringing video, he says the MPAA generally hopes “to work things out short of litigation” with hosting sites.

Messrs. Duran and Martinez don’t have a lot of advertising on their site, but those who do try to make big money from advertising could be more vulnerable to content owners’ pressure. Media companies can try to sever the guerrilla sites’ relationships with U.S.-based advertisers or the U.S.-based companies, including Google, that broker Web advertising.

Messrs. Martinez and Duran say if they had enough money they would be prepared to pay TV and movie studios to license content. For now, that isn’t possible. The two say their advertising just about covers their monthly Web-hosting and bandwidth charges, which add up to a little less than $1,000.

Mr. Duran still works in a tech-support job at a medical center, but he and his friend consider themselves pioneers in online television. “With the right technology and investment, this idea could blow away a lot of other ideas out there,” says Mr. Duran.

Mr. Martinez says he works on YouTVpc full-time, checking that videos are still working and answering user emails. When one link stops working, he searches for another. He was excited recently to discover two sites called 1dawg.com and Vimeo.

On a recent night, Messrs. Duran and Martinez were sitting back-to- back at computers in the outbuilding behind Mr. Martinez’s house that serves as both YouTVpc’s office and a practice room for their amateur band, called the “Desert Pirates.” Mr. Martinez downed a can of a caffeinated malt-liquor beverage called Tilt and Mr. Duran dipped into a bag of jalapeno kettle-cooked potato chips as they settled in for hours of work on the site.

Mr. Martinez read aloud an email from a YouTVpc user saying that the link to the film “Old School” didn’t work anymore. He said he would track down a working link. Another user wrote, “I want to know whether this service is legal or not,” and asked whether visiting the site would land him in prison.

“We get a lot of emails like that,” remarked Mr. Duran, adding that some came from schools concerned about what their students were up to. “I can’t say it’s completely legal,” Mr. Martinez shrugged. “But I say we stay within certain guidelines to stop from getting shut down.”

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(c) 2007 Dow Jones & Company, Inc.
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