B.C. file-sharing website IsoHunt to pay Hollywood $110 million

Also: isoHunt has $110 million?!

Vancouver’s Gary Fung built 10 years ago, when he was still an engineering student. It soon became one of the top places to find links to torrent files on the Internet. Not long after that, the lawsuits came. The Motion Picture Association of America and the Canadian Recording Industry Association filed copyright violation suits against Fung, and he spent the next seven years fighting them in court. His argument was predicated on the fact that he was not distributing copyrighted material, merely providing a search tool where people could find links to torrents of all kinds, illicit and legitimate (but mostly illicit).  If that makes him guilty, argued Fung, then so is Google, since you can use their engine to find torrent files as well.  The MPAA argued “inducement”: though isoHunt wasn’t providing bootlegged files directly, it was encouraging and enabling others to do so, which, they argued, counts as infringement. The U.S.Courts agreed, and Fung’s fight is now over. He has agreed to pay the Hollywood studios $110 million, and isoHunt is to be shut down.

The most surprising aspect of all this is the suggestion that isoHunt has $110 million to give. The site’s revenue streams seem to be limited to $1/month premium memberships, T-shirt sales, and down-market banner ads for off-brand e-cigarettes and the like. To be clear: Fung agreeing to pay $110 million does not guarantee that he has $110 million. But the settlement, and the court’s and the MPAA’s acceptance of it, does make one curious about just how profitable isoHunt was, and how profitable it might have become as a legitimized content site.

If indeed Fung was generating tens of millions a year based largely on banner ads, then the traffic on isoHunt must have been staggering. This is not so hard to believe. BitTorrent traffic is estimated to comprise as much as 40 per cent of all data transferred on the Internet. Most torrent transfers begin with a visit to a tracker site, and isoHunt has been listed as the Internet’s third most popular tracker. In a wider sense, according to web ranking site Alexa, isoHunt is currently the No. 423 most popular website in the world, and it cracked the top 100 regularly, before legal woes grew overly burdensome. Considering that Google indexes more than 50 billion web pages, this puts isoHunt in some pretty rare company., for example, comes in at No. 340, and is No. 96. IsoHunt is therefore among a handful of top sites that people in the world visit in order to find movies and television, and Hollywood just killed it.

Sound familiar? It’s the exact same tactic the RIAA took against Napster, the storied peer-to-peer service that for one magic moment was home to every music lover on the Internet. Napster wanted to strike a deal with the music business and go legit. Instead, it was destroyed and its fans were scattered to the wind.

The music industry realized too late that pirates and paying music fans are the exact same people. After Napster, downloaders began to use dozens of different file-sharing sites and apps. The music industry has been chasing down these new services one by one ever since, through legitimate efforts including Pandora, Songza, Rdio, and hundreds more, each one lacking the critical mass of Napster. It’s possible the music industry could have saved years of work and maintained control of the industry, had it just struck a deal with Napster from the start.

Gary Fung wanted to become legitimate, too. Here was his vision of what isoHunt could have been:

“I’m imagining a reboot of isoHunt… The only way to move forward is together, with the creators… From a mostly passive search engine, to a new system where you the consumer can be active participants in bringing creators on board, and you can frictionlessly contribute to the creators… If we can make such a system of frictionless funding, creating, consuming and sharing happen like I’m imagining, it’s going to be beautiful.”

It might have been, but we’ll never know.

Follow Jesse on Twitter @JesseBrown